Strategic Review


54 Finsbury Food Group Annual Report & Accounts 2019


Notes to the Consolidated Financial Statements (forming part of the Financial Statements)


Corporate Governance


Financial Statements


Presentation of Financial Statements


Basis of Preparation These accounts cover the 52-week period ended 29 June 2019 (prior financial year is the 52-week period ended 30 June 2018). The Group Financial Statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The Company is a public company which is incorporated, domiciled and registered in England and Wales.


The Group Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), IFRS IC interpretations and the Companies Act 2006: The Company Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union (“Adopted IFRSs”), IFRS IC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS, these are presented on pages 82 to 90.


The prior year comparatives in the Financial Statements have been restated to reflect the following prior year adjustments.


The other interest-bearing loans and borrowings within current liabilities has been reduced by £24.7 million and the other interest-bearing loans and borrowings within non-current liabilities has been increased by £24.7 million to reflect the appropriate classification of the Group’s Revolving Credit Facility which has a maturity date of February 2023. This adjustment does not impact any other primary Financial Statement.


Having reviewed the Group’s short and medium-term plans and available financial facilities, the Board has reasonable expectations that the Group has adequate resources to continue in operational existence for the next 12 months and the foreseeable future.


The Group meets its funding requirements through internal cash generation and bank credit facilities, which are committed until February 2023. Committed banking facilities are £55.0 million with a further accordion of £35.0 million, of which £47.1 million was drawn at the year end. The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, including the possible effect of the UK’s decision to withdraw from the EU, show that the Group will be able to operate comfortably within its current bank facilities. The Group has a relatively conservative level of debt to earnings. As a result, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.


The Board reviews the Group’s covenants on a regular basis to ensure that it has adequate facilities to cover its trading and banking requirements with an appropriate level of headroom. The forecasts are based on management’s best estimates of future trading. There has been no breach of covenants during the year and none expected during the next 12 months. All covenant tests were passed at the year end.


After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in the preparation of the Financial Statements. Accordingly, the Board continues to adopt the going concern basis in preparing the Financial Statements for both the Group and the Parent Company. The Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of derivative financial instruments and pension Scheme assets.


Critical Accounting Estimates and Judgements


Judgements In the course of preparing the Financial Statements, judgements which do not involve estimation have been applied. The key accounting judgements, without estimation are as follows:


• Basis of consolidation Lightbody Stretz Limited, which is 50% owned by the Group is consolidated into the Group accounts as a subsidiary with a corresponding non-controlling interest on the basis that the Group has the controlling interest. Control arises by virtue of the fact that Lightbody Group Limited, a wholly owned subsidiary of Finsbury Food Group, has a majority of voting rights arising from an agreement between Lightbody Group Limited and Philippe Stretz, the owner of the remaining 50%.


• Classification of items as significant non-recurring The Group presents certain items as non-recurring and significant. These relate to items which, in management’s judgement, need to be disclosed by virtue of their size or incidence in order to obtain a more meaningful understanding of the financial information. They reflect costs that will not be repeated and therefore do not reflect ongoing trading of business which is more meaningful to users. Group management exercises judgement in assessing each exceptional item and analysing whether the treatment of exceptional items is consistent with accounting policies and practice. Exceptional costs are analysed fully each period and audited annually.


No other significant judgements have been made in the process of applying the Group’s accounting policies, other than those involving estimations.


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