25 Financial Risk Management (continued)


The Group’s strategy is to focus on supplying UK multiple grocers and foodservice distributors, the nature of these customers is such that there is a relatively low risk of them failing to meet their contractual obligations. There is no impairment necessary to the value of trade receivables at the period end date over and above the specific credit note provision and bad debt provision held at the year end. The balance of £1.1 million past due by more than 30 days is equivalent to less than 2 day sales (2014: £0.2 million, equivalent to 1 day).


Deferred consideration amounting to £3 million was received from Genius Foods Ltd on 27 February 2015. d) Market Risk


i) Interest Rate Risk The Group’s interest rate risk exposure is primarily to changes in variable interest rates. The Group has entered into three interest rate swap arrangements in order to hedge its risks associated with any fluctuations. Details of swaps are given in Note 14.


The profile of the Group’s loans including deferred consideration and overdraft at the period end date were split as follows:


2015 £000


Variable rate liabilities 21,274


2014 £000


9,406


Swaps amounting to £14,000,000 (2014: £14,000,000) limit the risk associated with the variable rate liabilities, the weighted average interest rate at 27 June 2015 is 2.5% (2014: 2.5%).


Sensitivity A 1% increase in the base rate or LIBOR would have the following impact on interest charges and associated net assets for the Group, this sensitivity relates to interest-bearing bank borrowings and interest rate swaps only and excludes possible changes in pension financing costs.


2015 £000


Profit decrease Decrease in net assets


A 1% decrease in the base rate or LIBOR would have an equal and opposite impact to those listed above. The above movement is not equal to 1% of interest-bearing loans because of interest rate swap cover that is in place.


ii) Commodity Prices Any rises in commodity prices can adversely impact the core profitability of the business. The Group will aim to pass on its increased costs to its customers as far as is reasonable in the circumstances whilst maintaining its tight control over overhead costs to mitigate the impact on consumers. The Group maintains a high expertise in its buying team and will consider long-term contracts where appropriate to reduce uncertainty in commodity prices. Further information on input prices and risks is contained in the Strategic Report.


iii) Foreign Exchange Risk The Group currently supplies UK manufactured products to Lightbody Stretz Ltd, its 50% owned selling and distribution business trading primarily in Europe. The Group also purchases some raw materials in foreign currency. The consequence of this is that the Group is exposed to movement in foreign currency rates. Forward foreign exchanges contracts are used to manage the foreign exchange exposure.


e) Debt and Capital Management The Group’s objective is to maximise the return on net invested capital while maintaining its ongoing ability to operate and guaranteeing adequate returns for shareholders and benefits for other stakeholders, within a sustainable financial structure. An interim dividend for the six months to 27 December 2014 of 0.83p per share was paid on 24 April 2015 to shareholders on the register at the close of business on 7 April 2015. Subject to shareholder approval at the Company’s AGM on 25th November 2015, the final dividend of 1.67 pence per share will be paid on 10 December 2015 to all shareholders on the register at 13 November 2015. It is the Company's intention to pay dividends at an affordable rate so that the Company can continue to invest in the business in order to grow profits.


318 318


2014 £000


160 160


69


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