Strategic Review
84 Finsbury Food Group Annual Report & Accounts 2019
Notes to the Company’s Financial Statements (forming part of the Financial Statements)
Corporate Governance
Financial Statements
32. Accounting Policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Financial Statements.
Basis of Preparation The financial year was the 52 weeks ended 29 June 2019 (prior financial year 52 weeks ended 30 June 2018). These Financial Statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”).
In preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where necessary in order to comply with the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next Financial Statements.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own Profit and Loss Account. The profit or loss for the year is set out in the Statement of Changes in Equity.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under the standard in relation to the following disclosures;
• Presentation of a Cash Flow Statement and related Notes • Capital management • Comparative period reconciliations for share capital and tangible fixed assets • Impairment of assets • Transactions with wholly owned subsidiaries • The effects of new but not yet effective IFRSs • Key management personnel
As the consolidated Financial Statements of Finsbury Food Group Plc include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures:
• IFRS 2 Share Based Payments in respect of Group settled share based payments • Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures
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.
Where required equivalent disclosures are given in the Group accounts of Finsbury Food Group Plc, which are available within this report. The Financial Statements are prepared on the historical cost basis except where stated at their fair value. The principal accounting policies of the Company are as follows:
Investments Investments are stated at cost less provision for any permanent impairment. Any impairment is charged to the profit and loss as it arises. Impairment to investments is tested via impairment testing performed over goodwill, as discussed in Note 1 of the Group Significant Accounting Policies.
Foreign Currency Transactions in foreign currencies are translated to Sterling at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the period end date are retranslated to Sterling at the foreign exchange rate ruling at that date.
Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the Consolidated Statement of Comprehensive Income in the period in which they arise.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Sterling, at foreign exchange rates ruling at the period end date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. This revaluation is recognised through Other Comprehensive Income.
Derivative Financial Instruments The Company has derivative financial instruments in respect of interest rate swaps and foreign exchange hedges. The Company does not hold derivative financial instruments for trading purposes. The existing interest rate swaps and foreign exchange hedges used by the Company while they function as hedges, do not meet the criteria for hedge accounting set out by IAS 39, and have thus been treated as financial assets and liabilities which are carried at their fair value in the Company Balance Sheet. Fair value is deemed to be market value, which is provided by the counterparty at the year end date.
Changes in the market value of interest rate swaps have been recognised through the Consolidated Statement of Comprehensive Income as finance income or cost. Changes in the market value of foreign exchange hedges have been recognised through the Consolidated Statement of Comprehensive Income within administrative costs.
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