23 Finsbury Food Group Annual Report & Accounts 2018


Risk Report


The Directors recognise the need for a healthy system of internal controls and risk management. We have identified the following as the principal risks and uncertainties the Group faces.


Principal Risks and Uncertainties


The Group's management team assesses risks regularly and develops strategies for dealing with them. We carry out an annual formal review of risks. This process involves identifying risks, and determining the likelihood of them affecting the business, the potential severity of their impact, and what we need to do to manage them effectively. This risk management is essential to our ability to achieve our strategic objectives.


The risks we consider are as follows:


Strategic Risks: Retailer Consolidation There have been a number of high-profile mergers and prospective mergers reported in the press in the past year, including those of Tesco and Booker, and of Asda and Sainsbury’s. There is always a risk in these situations that as the newly merged entities look to offer the consumer lower prices through economies of scale, they rationalise their supplier base.


Also, the exceptional buying power of these new entities could pressurise suppliers into lowering prices to preserve trade.


As a supplier to all parties mentioned above, we are not immune to this risk. However, we strive to be the highest-quality, most-innovative and lowest-cost supplier and believe this, along with our strong relationships with our customers, will ensure we are strongly placed to continue to supply them.


Competitive Environment and Customer Requirements The Bakery sector remains competitive. Monitoring key performance indicators at customer level, such as service or customer complaints, is part of our risk management process. Providing high-quality products, investing in innovation, and competing in value, helps strengthen customer relations and support growth initiatives. We invest heavily in category management, new product development and marketing. This investment has helped create an insight into customer and consumer demands.


Consumer Trends Since the EU referendum, consumer optimism and spending has remained resilient. However, trends suggest that as we move closer to the exit deadline, uncertainty over what Brexit deal will be implemented is having an impact on sentiment. British consumers have stopped taking on more debt and have started saving their money again, in a reversal to the trends that upheld economic growth over the last year. The risk to the Group is that spending on non-essential goods and treats will fall, affecting the demand for our key products.


We will continue to focus on quality and value, and will look for new channels, new products and new formats to gain competitive advantage.


Health continues to be a major focus for the business. Special teams continue to work on reducing sugar and salt as part of the Government obesity strategy and Public Health England recommendations. Our development teams work closely with our customers to ensure we meet or exceed all guidelines for health and nutrition, and work continuously with suppliers to reduce salt, fat and sugar in our products. We are committed to meeting the FSA 2017 salt targets and are already over 90% compliant.


Operational Risks:


Health and Safety The importance of health and safety is widely recognised across the Group. Failure to adhere to health and safety regulations within the workplace not only puts our employees at risk, but could also carry serious financial, reputational and legal risk. We have appointed a Group Head of Health and Safety to create a largely uniform system across all business units and to promote our 'Home Safe Every Day' strategy.


The Group’s technical function is responsible for implementing and maintaining high standards of food safety, striving for best practice. We manage quality assurance procedures at site level, and review and audit them continually, making improvements as appropriate.


All manufacturing sites are registered under the British Retail Consortium (BRC) Unannounced Scheme. The sites are subject to regular internal and independent food safety and quality control audits, both announced and unannounced, including those carried out for our customers. We maintain appropriate insurance cover, including product recall insurance, to mitigate the potential financial impact of a breach in food safety compliance.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100