Strategic Report
Corporate Governance
Financial Statements Notes to the Consolidated Financial Statements/Continued
Finsbury Food Group Annual Report and Accounts 2020
85 13. Other Financial Assets and Liabilities
2020 £000
Non-current Other financial assets
Current assets – derivatives Fair value of interest rate swaps
Total of derivatives with positive fair values
Current liabilities – derivatives Fair value of interest rate swaps
Fair value of foreign exchange contracts Total of derivatives with negative fair values
2019 £000
-
- -
(210) (291) (501)
28
176 176
-
(218) (218)
Investment in Associates During the prior year the Group assessed the carrying value of its investment in Dr Zaks and in the challenging economic environment the carrying value has been fully impaired.
Interest Rate Swaps at Fair Value The Group has two forward dated interest rate swap arrangements to hedge its risks associated with interest rate fluctuations:
• £20.0 million for five years from 3 July 2017 (fixed) at 0.455%; and • £5.0 million for three years from 28 March 2019 (fixed) at 1.002%.
There was £25.0 million coverage in place at the year end (2019: £25.0 million). A charge of £386,000 (2019: charge £382,000) is shown in finance income for the period reflecting changes in the fair values of interest rate swaps.
Forward Foreign Exchange Contracts at Fair Value The Group has entered into a number of forward foreign exchange contracts to minimise the impact of fluctuations in exchange rates. A charge of £73,000 (2019: charge £178,000) is shown in administrative expenses for the period reflecting changes in their fair value.
14. Pension Schemes A number of companies within the Group operate defined contribution pension schemes with one company also operating a defined benefit scheme.
Defined Contribution Scheme The Group made contributions in respect of its defined contribution pension arrangements of £2,099,000 (2019: £1,681,000).
Defined Benefit Scheme The Group’s defined benefit scheme is the Memory Lane Cakes Pension Scheme, which is a separately administered plan. At the financial year end, the Scheme had no active members accruing benefits (2019: nil), 168 deferred pensioner members (2019: 175) and 229 pensioner members (2019: 227).
The scheme was closed to future accrual on 31 May 2010. The assets of the Scheme are held separately from those of the Company. The amounts in the Financial Statements for the 52 weeks ended 27 June 2020 relating to defined benefit pension are based on a full actuarial valuation dated 31 December 2018.
A £200,000 contribution was paid during the financial year by Memory Lane Cakes Limited (2019: £200,000). The Group’s contribution has been agreed based on the outcome of the full actuarial valuation dated 31 December 2015. An updated contribution schedule based on the outcome of the full actuarial valuation dated 31 December 2018 was effective from 1 July 2020. The valuation of the Scheme on an equity/bond basis and projected unit method, showed that there was a deficit at 31 December 2018 of £12,742,000 equivalent to a 42% deficit of liabilities over assets. The valuation was conducted by a qualified independent actuary. This deficit is payable at a rate of £500,000 per annum until April 2047. The next full valuation will be prepared as at 31 December 2021 and will be an opportunity to challenge the appropriateness of this recovery plan taking into consideration the deficit recovery contributions and actual returns realised on the pension scheme assets.
The present value of the Company’s committed deficit reduction contributions does not give rise to a net pension asset or additional Consolidated Statement of Financial Position liability in accordance with IFRIC 14.
The investments are managed by a fiduciary investment manager River and Mercantile who were appointed as fiduciary investment manager in December 2018. A new Statement of Investment Principles (SIP) in compliance with the Pensions Act 1995, the Pensions Act 2004 and the Occupational Pension Schemes (Investment) Regulations 2005 was agreed in January 2019. All of the Scheme’s investments meet the criteria detailed in the SIP relevant for the Scheme year to 31 December 2018. A change of investments has taken place during 2019 aligning to the new SIP with the introduction of hedging strategies to its investment portfolio. The expected return on cash balances held is based on the current Bank of England base rate rather than long-term deposit rates as cash is held to cover short-term requirements.
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