14 Finsbury Food Group Annual Report & Accounts 2017


Providing quality products, investing in innovation and competing on value helps to strengthen customer relations and support growth initiatives.


Principal Risks and Uncertainties


The Board recognises the need for a robust system of internal controls and risk management. 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 process involves the identification of risks, 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 manage them effectively. Risk management is integral to the ability of the Group to deliver on its strategic objectives.


The Directors have identified the following as the principal risks and uncertainties that face the Group:


Economic Environment 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.


The Impact of Brexit Brexit brings uncertainty in the following areas:


Labour: The food industry employs many non-UK nationals, the sector in general could see a shortfall in workers. Increasing reliance on UK workers which may push up wage costs may prompt a change in business model.


Material: The weakening of the pound post Brexit has had an impact on ingredient prices.


Regulations: All current regulations on food safety, labelling or health and safety will continue to apply to UK businesses. Product standards will need to be observed by UK companies when trading with the EU.


The Group will respond to the challenges that Brexit brings once negotiations are advanced.


Competitive Environment and Customer Requirements 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 this specific risk. Providing quality products, investing in innovation 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 Product quality is a key strength of the Group and failure to maintain a high standard of safety and food quality would have a severe impact on service levels and customer relationships. The Group’s technical function is responsible for the implementation and maintenance of high standards for food safety striving for best practice. Quality assurance procedures are managed at site level and 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.


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