13 Finsbury Food Group Annual Report & Accounts 2016
Principal Risks and Uncertainties
The Group operates in an environment which is continually changing and as a result the risks it faces will also change over time. The assessment of risks and the development of strategies for dealing with these risks are achieved on an ongoing basis through the way in which the Group is controlled and managed internally. A formal review of these risks is carried out by the Group on an annual basis. The review assessment to determine the relative likelihood of them impacting the business and the potential severity of the impact, and determination of what needs to be done to
the principal risks and uncertainties that face the Group:
The environment remains competitive within the bakery sector. The monitoring of key performance indicators at customer level such as service levels and customer complaints is part of the risk management process associated with investing in innovation (with our innovation centre fully operational) and competing on value helps to strengthen customer relations and support growth initiatives. The Group invests heavily in category management, new product development and marketing skills. This investment has helped create an insight into customers and consumer demands.
Product quality is a key strength of the Group and failure to maintain a high standard of food quality and safety would have a severe impact on service levels and customer relationships. The Group’s quality assurance procedures, managed at site level, are reviewed continuously with improvements made as appropriate. The operating subsidiaries are subject to regular internal and independent food safety and quality control audits including those carried out by, or on behalf of, our customers. The Group maintains product recall insurance cover to mitigate the potential impact of such an occurrence.
The Group, along with other food businesses, both commodities cost increases, further driven by currency weakness post Brexit and the
The Group maintains a high level of expertise in its buying team and will consider long-term contracts where appropriate to reduce uncertainty in input prices. The team also cultivates strong relationships with major suppliers to ensure continuity of supply at competitive prices. Regular renovation and innovation in our product range can help manner as far as the competitive environment allows. The Group also purchases forward foreign currency in order to minimise the currency conversion rates. Ongoing capital investment and improvements in operational
The market place remains challenging and there is an uncertain macro-economic outlook following the vote to leave the EU. Currency hedging and long-term contracts give the Group time to plan and formulate strategies to face future challenges. The Group will continue to focus on quality and value and will explore new channels, new products and new formats to gain competitive advantage. Forging strong customer relationships and aligning strategic business plans through innovation and category management helps create mutual growth opportunities.
scheme on a technical provision basis can cause outside of the Group’s control. There is an agreed or until a new schedule is agreed based on the next valuation which will be at 31 December 2018. The Company enjoys a close relationship and regular communication with the trustees.
Trading Results
The year to 2 July 2016 is a 53 week year, a week longer than the previous year. Continuing Group revenue for the 53 week period to 2 July 2016 was £319.7 million (2015: £256.2 million). The continuing Group revenue for the 52 week period is £313.5m (2015: £256.2 million).
4.8%). Capital investment, improvement in main drivers for the improvement in margin. and returns from capital investment.
Administrative expenses have increased driven by the full year impact of acquired businesses, having the correct level of infrastructure in place for the enlarged Group, increased retailer marketing support, new product development, range support, remuneration for outperformance of targets and improvements in the fabric of the workplace.
Group IT Business System
The Group is upgrading its systems with the objective of having a common ERP across UK bakery. The ERP system is the latest version of the existing system within the Fletchers business acquired in 2014. Recognising the inherent risks to a systems upgrade, an appropriate Corporate Governance structure has been put in place, the key aspect of which is the establishment of a Steering Committee comprising senior operational management from both businesses and chaired by an independent implementation specialist. Furthermore, KPMG have been engaged to sit on the Steering Committee and to act as independent auditors of the whole project. The fact that the new ERP system is the latest version of the existing system in operation within the Fletchers business
Dividend
Subject to shareholder approval at the Company’s AGM on 23 November 2016, the paid on 16 December 2016 to all shareholders on the register at 18 November 2016 and will 1 July 2017.
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