Strategic Report


Corporate Governance


Financial Statements Notes to the Consolidated Financial Statements/Continued


Finsbury Food Group Annual Report and Accounts 2020


99 30. Prior Year Acquisition


On 3 September 2018 the Group acquired the entire share capital of Ultrapharm Limited (Ultrapharm) for £16.9 million plus up to £3.0 million payable in annual instalments to the period to 30 June 2021 and a final incentive payment subject to performance criteria over the period to 30 June 2021. No provision has been made for an incentive payment as the criteria are not currently expected to be met. As a specialist ‘Free From’ bakery, the business has an extensive product range including bread, buns and rolls and other morning goods. Ultrapharm has a diverse customer base with long term blue-chip customers, including Finsbury itself, where it supplies Free From products to Lightbody Europe.


The cash outflow under ‘purchase of companies’ of £16,915,000 on the face of the Consolidated Cash Flow Statement in the 52 weeks ended 29 June 2019 relates to the following:


£000


Initial consideration Debt settled Cash acquired


Cash consideration (excluding acquisition costs) Working capital adjustment


Discounted deferred consideration net of deferred taxation Total consideration including working capital adjustment


The acquisition had the following effect on the Group’s assets and liabilities:


Fair value and book value £000


Acquiree’s net assets at acquisition date: Property, plant and equipment Stock


Trade and other receivables Deferred tax liability


Trade and other payables Net identifiable assets Intangible Goodwill


14,869 2,792 (746)


16,915 (60) 2,737 19,592


5,766 1,200 2,392 (381)


(2,652) 6,325 1,721


11,546 19,592


The post-acquisition revenue included within 52 weeks ended 29 June 2019 amounts to £15,690,000 (including £2,584,000 of inter-company sales) and an operating profit of £295,000.


31. Post Consolidated Statement of Financial Position Events


Against a macro-economic backdrop that continues to be defined by high levels of uncertainty, encouragingly, sales continued to improve month- on-month in the first two months of the new financial year. As the recent tightening of restrictions designed to curtail the spread of the virus have demonstrated, though, it remains difficult to forecast potential bumps in the road and the impact they may have. The trajectory of sales in our foodservice business in particular is sensitive to this type of policy change. While it is hard to say when levels of demand will return to normal in this division – or what normal looks like longer-term – we continue to carefully manage our resources and operations to meet demand levels in an appropriate and sustainable way. Given the ongoing market uncertainty we are unable to provide guidance at this time.


Looking ahead, we will continue to monitor and respond to the pandemic as it evolves, working more closely with our customers and global brand partners than ever before to ensure we anticipate changing demand patterns and manufacture products and ranges that meet changing consumer needs. We have delivered a robust performance in the circumstances to date, and are confident that with the comprehensive optimisation of the business that has taken place in the past few years and the extensive operational improvements that have been introduced and accelerated as a result of the pandemic, we are well-positioned to continue to successfully navigate the challenges we face.


We remain focused on becoming the leading speciality bakery group and, notwithstanding coronavirus-related disruption, we have continued to make good progress towards that goal. There will inevitably be further obstacles to overcome as the pandemic plays out and with Brexit approaching, but there is a sense of cautious optimism in the business, and we are confident that by continuing to manage the business in a disciplined and pragmatic way, we will emerge a stronger, more streamlined and efficient organisation capable of delivering sustainable growth and healthy returns for shareholders.


32. Ultimate Parent Company Finsbury Food Group Plc is the ultimate Parent Company.


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