Chairman’s Statement
Our achievements are clearly towards the upper end of the expectations of our stakeholders. I believe our historical investors recognise that the re-rating of the Group has started and that the value of their holdings are beginning to reflect the real value of the business.
An Enlarged Business An opportunity arose in the first half of the year and the Board reacted decisively. Fletchers Bakery Group was an ambitious acquisition, a company in a product area that was related but clearly distinct.
The acquisition has provided us with diversification not only in terms of product but also of channels and customers. It has delivered benefits of scale in conjunction with access to fresh markets and opportunities.
Both businesses have similar approaches; we’re very much in tune culturally and the sum, in our view, is far greater than the respective parts.
Our strategy has always been to take advantage of bolt on acquisitions if the right opportunity arises. In June 2015 this occurred and we acquired the Johnstone’s business out of administration. Johnstone’s supplies snacking cake products to the leading coffee chains and its acquisition represents the initial step of the acquired foodservice business into Cake products.
I would like to welcome everyone from Fletchers and Johnstone’s to the Finsbury Food Group.
“We have gone from being a relatively small Group.... emerging to become a Group with an annualised turnover of close to £300m.”
Implementing Comprehensive Structures to Support Growth The pace of growth demands an evolution in the structure of the business to ensure the Group’s success is supported.
A key role for me as Chairman through such evolutionary times is ensuring an appropriate composition at Board level and further upgrades to our structures of corporate governance. The Nomination Committee is currently undertaking a review of the structure of the Board to ensure that it has the appropriate balance of skills, including experience and independence, required to lead the Group through this period of growth and development. Implementation in these areas is advanced, but not yet complete.
The Board is currently conducting an extensive review of remuneration across the business to ensure that we have appropriate rewards and recognition in place to retain and attract individuals with the skills that the business demands. The Remuneration Committee has already delivered some excellent proposals which we are currently in the process of adopting.
In line with the review of remuneration, the Government’s National Living Wage initiative, presents a challenge that the Board is preparing for through a number of initiatives. As with other businesses in our market, expenditure on employment is a high proportion of our costs by comparison with many other industries and this change is potentially inflationary. Adjusting and mitigating the impact will take time and will require ever-greater focus on efficiency improvements and cost reduction programmes.
The Opportunity Ahead Finsbury Foods has undergone a transformation. We have gone from being a relatively small Group with challenges, effecting a turnaround of the core and emerging to become a Group with an annualised turnover of close to £300m. And yet we still have aspirations and the capabilities to grow further.
The economic and market environment remain challenging. Our customers are having to adjust their offering and formats and we must be responsive to these changes. While the last financial year offers cause for satisfaction, there is a dynamic environment at senior level, a restless desire to pursue our ambitions, to continue to grow organically and to seek out further opportunities.
Our primary focus for this year was on completing and integrating a major acquisition whilst driving organic growth. The consolidation phase is now well advanced and attention is already focussed towards a new set of strategic objectives. I see the next 12 months as another year of opportunity, another year of moving ahead.
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