10 Business Model
Finsbury Food Group Annual Report and Accounts 2020
Our vision is to be a leading speciality bakery group, producing a broad range of high-quality products targeted at growing channels and market niches, and which deliver growth and differentiation for our customers while fulfilling the needs of end consumers.
The Resources we Employ
1. Operating Excellence
• Our Operating Brilliance program has a number of workstreams that deliver Operating Excellence: – Process Blueprint is a product design framework delivering quality and efficiency. A standardised process across all bakeries with results evidenced by increased efficiencies and lower waste;
– The Engineering Forum with common engineering standards and approach across all bakeries. This forum embraces the asset care programme optimising the performance of our production assets;
– The newly formed Operational Forum to retain the momentum from the initiatives and forum above; and
– A newly formed Supply Chain Forum with a view to optimising inbound and outbound material and product flow.
• Sustained strategy to invest in the capability and capacity of our manufacturing assets: – Automated single-serve cake bar packing, improving capability and cost effectiveness;
– New frozen doughball line targeted at the foodservice sector; and
– New gluten-free bakery in Poland with modern travelling ovens, improving capacity and efficiency.
• Optimisation of Group-wide common IT platform.
Financial Capital The Company is AIM-listed giving it the potential to access institutional funding. The Group also benefits from bank support for strategic investment and acquisitions.
• 3 banks supporting total facilities up to £90.0 million.
• Scottish and Welsh businesses benefit from local government initiatives to promote investment and employment opportunities. • Low leverage with net debt to EBITDA of 1.1x.
2. Sustainable Approach
• Following successful trial on localised energy monitoring, which resulted in a 10% reduction of energy, this initiative is being rolled out across the business. All key assets in all bakeries will have localised energy monitoring in place to enable measurement of key energy reduction projects.
• We continue to drive conversion to LED lighting across the Group, making progress at all sites with a group conversion rate of around 60% to date.
• We have engaged with specialist group- wide providers in waste management to drive our zero waste to landfill target across all sites by the end of 2020 and are working with WRAP to identify further opportunities to reduce waste at source. Our Operating Brilliance programme has focussed on waste reduction, delivering some significant benefits. For example, work in this area has delivered a 25% YOY reduction in waste at one of our bakeries.
• Continuing to drive plastics reduction by optimising pack sizes wherever possible. Significant work undertaken to ensure all plastics are recyclable. Currently almost all our plastic packaging is recyclable with almost 80% of it being readily recyclable in the UK.
Intellectual Capital • Extensive speciality bakery product know- how, category insight and understanding.
• Extensive customer relationships in both the retail and foodservice sectors in the UK, France and throughout Europe.
• Known brand in foodservice in the UK. • Licence arrangements with brand owners in the UK and in Europe.
3. Quality and Innovations
• Extensive insight capabilities mean new product development is in line with market trends.
• Over 60 employees are engaged in developing new products.
• Manufacturing Process Blueprint embraces the production of high-quality premium products.
• All sites hold BRC A-grade or above for food safety standards.
• The Health agenda is embedded into the development process, with over 98% of products achieving 2017 FSA salt targets. Good progress made across all categories in reducing sugar in line with PHE targets, and further research underway to achieve their 2020 objectives.
See pg 24-25 > For more information
Creating Value
See pg 20-21 > For more information
See pg 22-23 > For more information
Value for Shareholders Using our Operating Principles achieves our Purpose and Strategy, creating long-term shareholder value through share price growth and attractive dividends. Following the outbreak of Covid-19, cash conservation was a priority and as a result the interim dividend was cancelled. Other initiatives included tighter control over Capital Expenditure and all discretionary spend. All directors and the GEC took a 30% and 20% (respectively) reduction in salary in April to June. The reduction in debt with the debt to EBITDA ratio being 1.1x at the year end is testimony to the success of the initiatives taken and to the strength of the Company’s balance sheet.
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