16 Chief Executive’s Report/Continued


Finsbury Food Group Annual Report and Accounts 2020


Finsbury has a strong track record of successfully navigating macroeconomic pressures, but the events of the past few months were entirely unprecedented and presented a new set of challenges. I am pleased with how the business has coped, really illustrating the strength of our Group and commitment of our teams. A crisis tells us a lot about ourselves, and I believe we have responded brilliantly.


Review of Performance As previously reported, the first half was both a period of growth and of successful delivery against our strategic priorities, primarily driven by organic performance in UK Bakery as well as new business wins and the first full financial year contribution from our acquired Free From business, Ultrapharm.


Performance in the second half was reflective of continued momentum in January and February in line with market expectations, followed by significantly weaker trading as a result of the outbreak of Covid-19 at the end of March and the dramatic changes in demand the Group experienced thereafter.


The benefit of the Group’s geographical, channel, customer and product diversification has been evident throughout the pandemic. Our European customers and bakeries experienced lockdown first and were able to share their learnings quickly across the Group.


Our largest channel, Retail, remained relatively resilient throughout, although it was impacted by rapid changes to shopping behaviours, which we are pleased to say we adapted to quickly. Helped in part by the warm weather, some areas of retail demand clearly benefited such as round cakes and buns and rolls, while foodservice and food to go were hardest hit. Celebration cake sales were dented but to a lesser extent than one might expect, with households keen to continue marking special occasions despite restrictions on celebrating with extended family and friends.


Our ability to adapt quickly to changing consumer needs is evident in the steady monthly sales improvements we have seen since March as our customers are now gradually moving back towards normalised ranges in line with the gradual relaxation of the nationwide lockdowns. Following the staggered re-opening of some customer sites our foodservice and food to go volumes have started to recover.


Response to Covid-19 We have detailed our response to the outbreak of the coronavirus in our previous updates but it is worth reiterating that from the outset, everything we have done has been within the parameters of, first and foremost, keeping our colleagues, suppliers and customers safe.


25%


Early on, after ensuring our facilities were meeting government standards for social distancing and safe working, we were focused on meeting volatile and unforecastable swings in demand at a time where there was widespread concern about the availability of food stock across the UK.


year-on-year reduction in waste delivering significant benefits across the whole Group.


Thanks to our colleagues, who have worked tirelessly and under difficult circumstances, the Group adapted quickly and effectively to the situation, and has continued to deliver.


At the same time, we knew that communities were in need, and I’m delighted we were able


to work with our customers to play a small part in the national effort against the virus by producing loaves to be included in food boxes for the shielding housebound, in conjunction with several of our major customers, as well as provide charitable food donations to NHS and key workers as well as local care homes.


Developing Group Scale Benefits Covid-19 has demonstrated the importance of the investment and hard work that has been undertaken to create a cohesive Group that operates at scale. While the focus has been on strengthening the business for the long- term, there is no doubt the improvements and efficiencies we have already achieved have been valuable in coordinating an effective and agile crisis response.


This time last year, we rolled out six Group Operating Principles, a set of practical building blocks that establish best practice and how we want to consistently run our businesses. They are:


• Operating Excellence – we continually invest in our bakeries to improve our efficiency and customer satisfaction;


• Sustainable Approach – we optimise our use of energy resources and focus on reducing waste throughout our supply chain and in our bakeries;


• Quality and Innovations – our innovative, high-quality bakery products reflect changing customer need and anticipate key market trends;


• Cost Effectiveness – we maintain strict cost controls without compromising quality, streamlining our processes from sourcing to delivery;


• Growth With Our Partners – through long-term relationships with our customers and suppliers, and an understanding of their needs, we can all enjoy profitable growth; and


• People Who Care – we invest in our people, who take personal pride in their contribution to our success, and are strong advocates of our business and products.


I am pleased to report they are now a common framework used across Finsbury to translate our Group strategy into action. This is thanks in large part to the investment we have made in our IT infrastructure, making it easier to introduce Group-wide information which facilitates improved collaboration for improvement initiatives and leveraging scale benefits across the Group.


One of these initiatives within Operating Excellence is our Process Blueprint project which is now active in all Finsbury bakeries. The project is designed to establish, embed, and optimise knowledge of all our processes while encouraging collaboration and exchange of ideas to help us achieve our goal of making fantastic and consistently high-quality products in as efficient a manner as possible.


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