Finsbury Food Group Plc Annual Report 2020

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FY2020 Annual Report · Finsbury Food Group Plc

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Better…
Together

Annual Report & Accounts 2020

Annual Report & Accounts 2019
Annual Report & Accounts 2019

Finsbury Food Group
Annual Report and Accounts 2020

Introduction

Better…
positioned
for future
growth

We continue to create and supply
high-quality bread and cakes through
a variety of brands and channels.

We supply major retailers and the
foodservice channel across the
UK, and in Europe, with proprietary,
own brand and licensed brand
bread and cakes.

Find out more

www.finsburyfoods.co.uk

Investors

Annual Reports

Contents

Strategic Report

Highlights

Our Business

Market Review

Strategy and Objectives

Business Model

Chairman’s Statement

Chief Executive’s Report

Key Performance Indicators

Risk Report

Financial Review

Governance Report

Chairman’s Introduction to Governance

Report on Corporate Governance

The Directors

Directors’ Report

The Group Executive Committee

Audit Committee Report

Directors’ Remuneration Report (unaudited) 52

Independent Auditor’s Report to the
Members of Finsbury Food Group Plc

Statement of Directors’ Responsibilities
in Respect of the Annual Report and the
Financial Statements

Financial Statements

Consolidated Statement of
Comprehensive Income

Consolidated Statement of Financial Position 64

Consolidated Statement of Changes in Equity 65

Consolidated Cash Flow Statement

Notes to the Consolidated
Financial Statements

Company Balance Sheet

100

Company Statement of Changes in Equity 101

Notes to the Company’s
Financial Statements

Advisers

102

109

Our Business
We have continued to serve
a diverse mix of customers.

Market Review
An overview of the markets we operate
in, and a summary of the key trends
we aim to take advantage of.

Our Strategy and Objectives
Our Purpose, Strategy and Operating
Principles provide a vision and framework
for strategic governance, creating value,
sharing best practice and working
effectively as a Group.

Better Progress Toward Growth
As we reported in our interim results in
February, the first half of the financial year
was a period of encouraging progress for
the Group.

Peter Baker
Non-Executive Chairman

Better Adapting to Change
I am pleased with how the business has
coped, really illustrating the strength of
our Group and commitment of our teams.

John Duffy
Chief Executive Officer

Quality and Innovation
The Health targets are part of our
development process. Over 98% of our
products achieve the FSA salt targets,
and we are making good progress in all
categories to reduce sugar in line with
PHE targets.

Engaging with Stakeholders
This section serves as our section 172
statement and should be read in conjunction
with the Strategic Report and the Company’s
Corporate Governance Statement.

Growth with Our Partners
Customers, licence owners and suppliers
are our partners, and we work with them to
create a constant stream of high-quality,
innovative products.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance2

Strategic Report
Highlights

Resilient Group Revenue
Summary
Resilient Group revenue of £306.3 million.

Adjusted*1 EBITDA down 4.4% to £24.4 million (up 2.8% to £26.2 million
including impact of first-time adoption of IFRS16 of £1.8 million).

Adjusted*1 profit before tax is £13.9 million which is before significant
and non-recurring items of £10.3 million.

Adjusted Basic EPS*2 7.9p.

Net bank debt of £26.5 million, decreased by £9.1 million
(2019: £35.6 million) at 1.1 times annualised EBITDA of the Group
(2019: 1.4 times).

The impact of the first-time adoption of IFRS 16 will be to increase
operating profit by £0.1 million, interest costs by £0.2 million, EBITDA
by £1.8 million, debt of £11.8 million (previously operating leases under
IAS 17) and assets of £9.4 million.

Strategic Highlights
The business has proven to be resilient, responding quickly to Covid-19
to deliver a robust trading performance.

In order to understand the business performance, adjusted measures
for the Group are presented, which exclude the impact of significant
non-recurring items and new accounting standards to present adjusted
EBITDA, operating profit and profit before tax. The analyses below show
the movement from Adjusted to Statutory measures, the figures are for
the 52 weeks ended 27 June 2020 and 52 weeks ended 29 June 2019:

Adjusted EBITDA

Adjusted EBITDA excluding IFRS 16 impact
IFRS 16 lease costs
Adjusted EBITDA including IFRS 16 impact
Significant non-recurring items
– Reorganisation (Note 4)
Significant non-recurring items – Impairment
of goodwill and non-current assets (Note 4)
Difference between defined benefit pension
scheme charges and cash cost
Movement in the fair value of foreign
exchange contracts
Adjustments, significant non-recurring
and other items
EBITDA

2020
£000
24,408
1,840
26,248

2019
£000
25,527
-
25,527

(1,594)

(1,200)

(8,737)

200

(162)

(73)

(178)

(10,204)

(1,540)

16,044

23,987

2020
£000

2019
£000

Covid-19 and resultant lockdown had an immediate and
adverse impact on Group revenue and profit.

Adjusted Operating Profit

• Foodservice business adversely impacted;
• Retail business had winners and losers depending on subsector; and
• Polish business struggled with fall in demand and logistics barriers.

Responded rapidly to create a safe working environment for
our employees.

Continued focus on driving productivity and efficiency.

• Integrated IT system embedded in all manufacturing sites

(excluding Ultrapharm);

• Implementation of Group-wide review and standardisation of bakery
processes leading to improved quality and reduction of waste; and
• Systematic focus on quality with a 10% reduction in complaints year

on year.

Opening of new gluten free bakery in Poland to expand capacity
for the continental market.

Further innovation in line with consumer trends with the launch of:

• BOSH! branded plant based, vegan friendly whole cakes and

celebration cakes;

• Celebration Cake factory now nut free with re-engineered

character licensed celebration cakes;
• New Line of Harry Potter licensed cakes;
• Growing gluten free cake range rolled out across new retail

customers; and

• Artisan sourdough bread range expanded into new retail customers.

Continued development of HomeSafe programme with 15% decrease
in number of accidents during the year.

Implementation of Group-wide environmental framework in line
with ISO14001.

Product excellence illustrated by the winning of several
Quality Food and Drink ‘Q’ Awards.

Adjusted operating profit excluding IFRS 16 impact

14,833

16,833

IFRS 16 impact on operating profit

106

Adjusted operating profit including IFRS 16 impact

14,939

16,833

Significant non-recurring items – reorganisation
(Note 4)
Significant non-recurring items – impairment
of goodwill and non-current assets (Note 4)
Difference between defined benefit pension
scheme charges and cash cost
Movement in the fair value of foreign
exchange contracts
Adjustments, significant non-recurring
and other items
Operating profit

Adjusted Profit Before Tax

Adjusted Profit before tax excluding
IFRS 16 impact
IFRS 16 impact on profit before tax
Adjusted profit before tax including
IFRS 16 impact
Significant non-recurring items – (Note 4)
Significant non-recurring items – impairment
of goodwill and non-current assets (Note 4)
Difference between defined benefit pension
scheme charges and cash cost
Movement in the fair value of foreign
exchange contracts
Discounting of deferred consideration
Movement in the fair value of interest rate swaps
Adjustments, significant non-recurring
and other items
Profit before tax

(1,594)

(1,200)

(8,737)

200

(162)

(73)

(178)

(10,204)

(1,540)

4,735

15,293

2020
£000

2019
£000

13,869
(141)

15,919
–

13,728

15,919

(1,594)

(1,200)

(8,737)

–

(56)

(444)

(73)

(178)

(14)
(386)

(139)
(382)

(10,860)

(2,343)

2,868

13,576

*1 Profit is before significant non-recurring and other items.

*2 Adjusted EPS has been calculated using earnings excluding the impact of

amortisation of intangibles and significant non-recurring and other items as
shown on the face of the Statement of Comprehensive Income.

Adjusted EBITDA, operating profit and profit before tax exclude significant and non-recurring
and other items as shown in the tables above. The adjusted operating profit has been given as,
in the opinion of the Board, this will allow shareholders to gain a clearer understanding of the
trading performance of the Group.

Finsbury Food Group Annual Report and Accounts 2020Strategic Report

Corporate Governance

Financial Statements

Finsbury Food Group
Annual Report and Accounts 2020

Group Performance
Measures
(excluding IFRS 16)

Group Performance
Measures
(including IFRS 16)

Statutory
Measures

Group Revenue

£306.3m

down 2.8%

Adjusted EBITDA*1

EBITDA

£24.4m

down 4.4%

£26.2m

up 2.8%

£16.0m

Adjusted Operating Profit*1

Operating Profit

£14.8m

down 11.9%

£14.9m

down 11.3%

£4.7m

Adjusted Operating Profit*1 Before Tax

Adjusted Operating Profit*1 Before tax

Profit Before Tax

£13.9m

down 12.9%

£13.7m

down 13.8%

£2.9m

Basic EPS

(0.6)p

Adjusted EPS

8.0p

down 14.0%

Adjusted EPS

7.9p

down 15.1%

Capital Investment

£4.7m

down 57.3%

Net Bank Debt

Net Debt (incl. leases)

£26.5m

down 25.6%

£38.3m

up 7.6%

£38.3m

Group performance measures have been
calculated including and excluding the impact
of the first time adoption impact of IFRS 16.
This is to allow year-on-year comparability
of the key performance measures.
Statutory measures include first time
adoption impact of IFRS 16.

The impact of first time adoption
of IFRS 16 is as follows:

Net increase in operating profit
Increase in interest costs
Net increase in PBT
Net increase in EBITDA
Increase in debt
Increase in assets

27 June 2020
£000
106
(247)
(141)
1,840
(11,823)
9,434

*1 The Group uses Alternative Performance Measures (APMs)
which are non-IFRS measures to monitor performance of
its operations and of the Group as a whole. These APMs
along with their definitions and reconciliations to IFRS
measures are provided in the Adjusted EBITDA, operating
profit and profit before tax tables on the previous page
and the tables in the Financial Review Section. APMs are
disclosed as, in the opinion of the Board, this will allow
shareholders to gain a clearer understanding of the trading
performance of the Group.

Adjusted EPS has been calculated using profit, excluding
amortisation of intangibles, significant non-recurring and
other items as shown in the tables above net of associated
taxation. In the opinion of the Board, the adjustments made
will allow shareholders to gain a clearer understanding of
the trading performance of the Group.

*2 Measures that do not vary are shown in the first column only.

Our Business

We have continued to serve
a diverse mix of customers…

Our business is split into UK
bakery and Overseas. The
UK bakery manufactures
and sells bakery products
to the UK’s multiple grocers
and foodservice customers.
The split of manufacturing,
products and customers
is shown below.

Our Customers
Our UK bakery segment supply
supermarkets, discounters and
convenience stores within the
retail sector and hotels, pubs,
restaurants, high street chains,
fast food outlets and contract
caterers within the UK
foodservice sector.

Our overseas businesses have
a meaningful presence in the
retail sector in France as well as
Belgium and Holland. The recent
acquisition of Ultrapharm has
given us additional markets
of Scandinavia, Italy and, to a
lesser extent, Germany, Austria
and Switzerland.

Manufacturing
Finsbury Food Group includes
eight manufacturing facilities
and bakery companies and one
distribution company.

Fletchers Bakeries
Sheffield

Johnstone’s Foodservice
East Kilbride

Kara Foodservice
Manchester

Lightbody of Hamilton
Hamilton

Memory Lane Cakes
Cardiff

Nicholas & Harris
Salisbury

Ultrapharm UK
Pontypool

Ultrapharm Poland
Rybarzowice and Żywiec, Poland

Lightbody Europe
(Distribution Company)
Rennes, France

Finsbury Food Group Annual Report and Accounts 20205

…building strong brand
relationships within retail sectors.

Character Licensed Portfolio
Finsbury has a broad portfolio of character
based licensed brands that meet a broad
age demographic and consumer occasions.
We work with some of the biggest character
licensed brands in the world. Our ever-
evolving portfolio is vital in meeting
consumer trends and expectations.

Across the year we have continued to
strengthen our core evergreen product
range, by keeping our product offering fresh
and innovative from pre-school through
to teen/adult. This has also been further
supported by the expansion of our core range
of licenses, through our Disney and Warner
Bros. partnership in the form of Frozen 2,
Princesses, Cars and Harry Potter respectively.
Also further supported with the introduction
of new licenses partnerships through Mario
Bros., Hey Duggee and Nerf. We are also
proud to say that our core range of licensed
birthday cakes are now Nut Free and clearly
marked on the pack.

Vogel’s
Alfred Vogel was a pioneering Swiss
nutritionist who used natural ingredients.
Vogel’s loaves are baked without added
sugar, emulsifiers, enzymes, or artificial
preservatives or flavourings, and are
bursting with seeds and grains.

Village Bakery
The range of organic fresh rye bread brands
for those looking to avoid wheat. All made
with no added yeast, emulsifiers or enzymes.

Cranks
Wholesome, simple, nutritious bread baked
with organic stoneground wholemeal flour
and fermented for longer, made without any
additives such as emulsifiers and enzymes.

Our Products
We make a wide range of
Cake and Bread products
to serve the UK retail and
foodservice markets.
Our Cake products are
retailer own label and
licensed brands, our Bread
products are retailer/
wholesaler own label with
our Kara foodservice brand
representing a significant
proportion of our total
foodservice business.

Bread, Morning Goods and Cakes

• Speciality breads

• Buns and rolls

• Celebration cakes

• Sharing cakes

• Snacking cakes

• Gluten Free Bread, Morning Goods

and Cakes

Kara Foodservice
Kara is our own foodservice brand. The range
covers an ever-growing portfolio of sweet
and savoury baked goods, including floured
baps, artisan breads, brioche buns and
single serve cakes focusing on the latest
consumer trends.

Licensed Brands
We have a long-standing relationship with
many licensed brands, manufacturing quality
bread and cakes for some of the biggest
names in the market.

Thorntons
We are now in our 21st year with Thorntons
on our cake partnership. This brand
partnership has allowed Finsbury to bring
a premium feel to the category through

Celebration, Sharing, Snacking, Food to Go
and Seasonal cake formats. Thorntons is the
5th biggest brand within the Cake category
and the biggest single brand in celebration
cake overall.

Mary Berry
We continue to work closely with Mary on NPD
particularly with our sharing and celebration
range of cakes. The Mary Berry range of cakes
has now established itself as a core range of
products at retailers.

Mars
The Mars cake range is now well established
within the celebration cake category and this
year has seen a broad level of new product
launches across the key Mars brands of Galaxy,
M&M, Maltesers and Milky Way. The important
aspect of the Mars product range is each
product is true to each respective brand in
terms of flavour and profile, which is the main
driver of success as consumers’ expectations
have been met. The Mars celebration cake
range (comprising a number of recognisable
brands) is now the largest branded range
within the cake category.

BOSH!
We have joined forces with the BOSH! brand
and created a number of delicious plant-
based, vegan-friendly ranges of sharing,
celebration and Food to Go cake products.
The driving forces behind the BOSH! brand are
friends Henry Firth and Ian Theasby who have
become the voice of vegan cooking. They have
launched an online vegan channel watched
by an audience of millions across the UK and
Worldwide and have written multiple top 10
bestselling vegan cook books. Most recently
they have a vegan cookery show on Sunday
mornings on ITV. The brand is now on target
to be the biggest vegan-based brand within
the cake category.

Baileys
The Baileys brand has been a fantastic
experiential brand for the business this year
which was born out of the “boozy cake”
trend within the market. The range is a core
celebration Freak Shake cake and a Christmas
range of a Baileys yule log and cupcakes.
The Baileys product range is now an integral
brand for our business.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance6

Market Review

An overview of the markets we operate
in, and a summary of the key trends
we aim to take advantage of.

Free From
The retail Free From bread and morning goods
market is valued at £137.0 million (source:
Kantar Worldpanel 52 w/e 19th April 2020).
The retail Free From cake market is valued at
£52.0 million (source: Kantar Worldpanel
52 w/e 17th May 2020).

Foodservice
UK foodservice spans many sub-sectors
including coffee chains, restaurants, pubs,
hotels and the non-profit sector such as the
prison service or education. Each has different
routes to market.

The UK foodservice B&MG sector is worth
£587.0 million per annum (source: Derived
from MCA data 52 weeks to 31 December
2019). We have a significant presence in
this sector, primarily with our buns and rolls
business and with our Kara brand.

The UK foodservice cake and sweet treat
bakery sector is worth approximately
£765.0 million per annum (source: Derived
from MCA data 52 weeks to 31 December
2019). Our presence in this sector is primarily
within the coffee chains and, through the
larger wholesalers, restaurants and pubs.

Overseas
Our overseas markets are primarily Europe,
principally France, Benelux and Ireland,
with a smaller presence in most other major
European countries. The size of these markets
is significant, and their structure is similar.

Broad Consumer Trends
Innovation and product development are
essential to the Group’s strategy, helping
our customers differentiate themselves
and meet the needs of their end customers.
Our challenge is to maintain a dynamic
product portfolio that matches and satisfies
macro consumer trends and niches. One of the
key macro consumer trends that continues to
grow in relevance and importance has been
health and wellbeing. Consumers continue
to look for products that help them to lead a
healthier lifestyle whether that be via ‘better
for you’ products or by making better ethical
and environmental choices. This trend is
evident across grocery and our markets are no
exception. Relevant significant market trends
have been categorised as follows:

Our Markets
UK bakery is a large market valued at over
£6.2 billion. In its broadest sense, UK bakery
comprises the cake market and the bread
and morning goods market. Both these
markets straddle the grocery retail market
and foodservice market, often also known
as out-of-home eating.

We can break the whole market down
further into smaller subcategories:

• Cake: Sharing, Bites, Celebration

and Seasonal.

• Bread and morning goods: ‘plant’ (packaged

or factory) bread, artisan bread, buns
and rolls, seasonal hot cross buns, pastry,
muffins, doughnuts, Italian and many more.

• Both cake and bread products also have
a wide range of ingredients that can be
allergens – including wheat, dairy, eggs
and nuts – in which there are growing
sub-markets such as Free From.

Cake
The total UK ambient cake market (including
prepacked cake and in-store bakery) is valued
at over £965.0 million (source: IRI, 52 w/e 20th
June 2020). We trade across all categories,
with large presences in the Celebration,
Sharing and Seasonal categories.

Bread
The annual retail bread and morning goods
market has a value of £4.7 billion (source:
Kantar Worldpanel 52 w/e 19th April 2020).
This market is further divided as plant bread
(£1.6 billion) and the rest, bread and morning
goods (B&MG) (£3.1 billion). We trade only in
B&MG, with sizeable presences in buns and
rolls, hot cross buns and artisan bread.

Economic
Consumer confidence has been weak for
some time, and price and value will remain
important. Although consumers will remain
cautious and price-conscious, they will
continue to want affordable treats, so pricing
needs to reflect household economics.

Grocery and Convenience Channels
Online and discount will be the two fastest-
growing grocery channels, and will account for
23.5% share of grocery expenditure by 2022
(IGD August 2020). The convenience channel
is also forecast to see strong growth.

Out-of-home
In the out-of-home market, volume growth
has declined, driven by Covid-19 which has
weakened consumer confidence, meaning
people eat out less. The casual dining
restaurant sector is likely to struggle, but fast-
food outlets, coffee shops, supermarket cafés
and food-to-go offers will see better growth.

Healthy Eating
Consumers continue to pursue more healthy
eating options, though indulgence is also a
key trend in ‘sweet-treating’. Media focus
and regulatory pressure will continue to drive
recipe reformulation and portion size. The
‘better for you’ market is proliferating rapidly,
with protein, gut health, low sugar, vegetarian,
plant health, grains and seeds, and slow energy
release all growing in popularity over recent
years. Our Cake business has responded to this
trend in a number of ways:

Nut Free
The Free From cake market has been growing
strongly over the last few years. It is now
valued at £52.0 million and grew by +12% in
the last year (Source: Kantar Worldpanel 52
we May 2020), significantly outperforming
the wider cake market. Nut-free products
are an important part of the wider Free From
market and medical research has shown that
the number of people in the UK with a nut
allergy continues to grow. Our own consumer
research revealed that more than a quarter
of the 2,000 people we spoke to had or knew
someone that had a nut allergy. Our research
also concluded the allergy of most concern
for shoppers when buying a Celebration Cake
was nut. As the UK’s leading manufacturer
of celebration cakes, we felt it was important
to take a lead on this growing issue and
have therefore invested significantly in our
Celebration Cake bakery in Hamilton over
the last year to turn it into a fully nut-free
site. From May 2020 we started to roll out a
range of character licensed based products,
all clearly marked with our unique Nut Free
logo on pack. The range includes some of our
most popular licenses including Disney Frozen,
Spiderman, Harry Potter, Batman and Peppa
Pig which are all now available to a wider
audience than before thanks to their
nut-free status.

Finsbury Food Group Annual Report and Accounts 20207

Healthier Choices
We have also relaunched our WW cake brand
to cater for the needs of consumers looking for
a range of cakes with lower sugar and calories
in every serving. The new WW products
come in a range of three flavours and have
been developed to offer the shopper a more
permissible cake treat. The products are
under 100 calories per slice and declared
as a source of fibre which is based on what
consumers are looking for as part of a
balanced diet. WW, formerly known as Weight
Watchers, was rebranded two years ago and
is now positioned as a wellbeing brand that is
inclusive to everyone’s lifestyle.

Free From
The overall Free From market (all types of
food ranges and products) continues to grow,
doubling in size in the past five years. Mintel
(February 2020) forecasts for the total UK Free
From Market to grow to £1.30 billion by 2024
from £934.0 million in 2019. It is boosted by
consumers who don’t cite a specific allergy
or intolerance, but choose to avoid certain
ingredients as part of a general healthy
lifestyle. Dairy-free and gluten-free are the
biggest sub-sectors. The Free From bakery
market is valued at £191.0 million and has
grown +10% year on year (source: Kantar
Worldpanel 52 w/e 24th May 2020).

Artisan Bread
The artisan bread market has grown due to
the perceived health benefits, the wider trend
of provenance and the ‘craft’ movement.
Consumers respond well to products they
perceive to be less mass-manufactured.

Fragmentation
Social and demographic trends have a major
bearing on the food sector. These include
smaller households, single-person mealtimes,
an ageing UK population, urbanisation, and
an increasingly mobile population with less
time to eat. These are fuelling the growth
of convenience, online and out-of-home
channels. But the growing fragmentation
of consumers, channels, eating moments
and needs will also translate into increasing
demand for personalised products to meet
individual needs. Thus single-serve and
individually wrapped products are becoming
more prevalent and important.

Pastime
One of the growing trends in licensing has
been the rise of gaming brands. This may
well have been accentuated by the Covid-19
pandemic where more time has likely been
spent on gaming activities in and out of the
home vs. other leisure pursuits such as going
to the cinema. To capitalise on this evolving
trend and as part of our strategic commitment
to growing licensed brands in Celebration
Cake we have signed partnerships with X-Box,
Mario and Nerf. This area of gaming is popular
respectively both in and out of the home and
where we have identified consumer demand
within our category for game based licensed
themed products.

Technology
Technology is fundamentally changing
the relationship between businesses and
customers, who are increasingly using mobile
devices to make purchases. Demand for
anytime, anywhere purchasing and access to
information will accelerate. Online ordering
is not just for the weekly shop, it is also for
top-up and ‘dinner tonight’ shopping.

Our challenge is to
maintain a dynamic
product portfolio that
matches and satisfies
macro consumer trends
and niches. One of the
key macro consumer
trends that continues to
grow in relevance and
importance has been
health and wellbeing.

£6.2 billion

value of the UK bakery markets

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance8

Strategy and Objectives

Our Purpose, Strategy and Operating Principles provide a
vision and framework for strategic governance, creating value,
sharing best practice and working effectively as a Group.

Our Purpose and Strategy

Our Operating Principles

Baking
brilliance
makes every
day special

To achieve baking brilliance, we have to constantly raise
standards and work effectively as a Group. The Finsbury
Operating Principles are a set of practical commitments
and guidelines for how we run our business, and which
bring our strategy to life in our day-to-day work.

Our Purpose
People love the high-quality products we
make. They are essential parts of their daily
lives and offer enjoyable treats and choices
for every occasion. So we are committed to
building the leading speciality bakery group
– because baking brilliance makes every
day special.

Our Vision and Strategy
Our strategic objective is to create sustainable
value for our shareholders, customers and
other stakeholders by building the leading
speciality bakery group. We produce a broad
range of high-quality bread, cake and bakery
snacking products targeted at growing
channels and market niches. These offer
growth potential and differentiation for our
major customers, while fulfilling the changing
needs and desires of end consumers.

To achieve this, our strategy is to:

• Invest in our people and our manufacturing

sites to form a strong foundation for
our strategy;

• Create innovative, high-quality bakery

products that anticipate key market trends;

• Ensure customer and consumer needs
are at the heart of our decision making;

• Develop a strong licensed brand

portfolio to complement our core retailer
brand relationships;

• Aim to succeed in both the retail grocery

and out-of-home channels; and

• Grow through a combination of organic

growth and targeted acquisitions.

Finsbury Food Group Annual Report and Accounts 20209

1. Operating Excellence
We continually invest in our bakeries to improve
our efficiency and customer satisfaction.

2. Sustainable Approach
We optimise our use of resources and focus on reducing
waste throughout our supply chain and in our bakeries.

3. Quality and Innovations
Our innovative, high-quality bakery products reflect
changing customer needs and anticipate key market trends.

4. Cost Effectiveness
We maintain strict cost controls without compromising
quality, streamlining our processes from sourcing to delivery.

5. 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.

6. 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.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance10

Finsbury Food Group
Annual Report and Accounts 2020

Business Model

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

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.

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.

1.
Operating
Excellence

2.
Sustainable
Approach

3.
Quality and
Innovations

• 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.

• 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.

• 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

• We continue to drive conversion to LED

food safety standards.

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.

• 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

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.

See pg 20-21
For more information

See pg 22-23
For more information

Strategic Report

Corporate Governance

Financial Statements

Finsbury Food Group
Annual Report and Accounts 2020

Manufacturing Capital
• Plant and machinery well invested and

to ensure they are all given the skills
required for their role.

Social and Natural Capital
• Signed up to Fairtrade, sustainable

maintained, with flexibility to cover niche to
mainstream products.

• The Group owns all major sites, with available
space for new production or consolidation
of facilities.

• Common Group IT ERP platform.

Human Capital
• Structured people strategy to attract and
retain employees and to provide training

• Talent management programme to attract

sourcing for ingredients.

and develop graduates and other employees.

• Food safety and technical standards are

• Structured learning programmes and

maintained to the highest level.

performance development review processes.

• Health and Safety (H&S) is a top priority for

Relationship Capital
• Long-term relationships with key
partners, suppliers and customers.

the Group, with a largely uniform H&S system
across the business units and the drive forward
of the "Home Safe Every Day" strategy.

4.
Cost
Effectiveness

5.
Growth with
Our Partners

6.
People
Who Care

• Centralised Group buying focused on

high-quality and cost-effective
ingredients and efficiency of scale in
the procurement of indirect items (e.g.
personal protective equipment).

• Operational excellence initiatives focused
on achieving lowest-cost-producer status
in areas where we have niche strength
(e.g. artisan breads or round sharing cake).

• Our capital investment is focused on

capability and cost reduction.

• Our scale and diversity of products across
UK bakery means the relationship with
grocery retail customers is a partnership.
• Our business with discounters is growing in
line with their growth within UK grocery.
• Our channel diversification into foodservice,
our Kara foodservice brand, and our broad
frozen food service range of products sees us
as the leading foodservice partner.
• We are growing with partners in the UK

and across the rest of Europe in both bread
and cakes.

• Our Lightbody Europe subsidiary in France
and the Ultrapharm business in Poland
gives a growing presence in Europe.

• A health and safety risk management team
with their mantra of ‘Home Safe Every Day’
is supported by resource and a common
Group-wide strategy and programme.
• Values of teamwork, honesty, ownership,

respect and communication.

• Workplace by Facebook communication
tool is transforming communication with
employees and between employees.
• A people strategy for all employees,

embracing courses in basic English, an
engineering apprenticeship programme,
a graduate recruitment programme and
leadership development programmes.
• Biennial employee survey to obtain our

See pg 28-29
For more information

See pg 34-35
For more information

employees’ views.

See pg 38-39
For more information

Bread and Cakes for
Customers and Consumers
We define ourselves as a speciality bakery
group. Everything we do is with a view
to achieving baking brilliance. We are
predominantly a ‘retailer brand’ manufacturer,
but target our product development at 'wowing'
consumers, in line with emerging trends and
shopping evolution. We constantly innovate
and refresh our hot cross buns, artisan breads,
celebration cakes, sharing cakes, Christmas yule
logs, and our Kara range of foodservice bakery
products. We are rapidly expanding our range of
gluten free products in both Bread and Morning
Goods and Cake.

We measure success by the closeness of our
long-term relationships with our retail and food
service partners, by our growing presence in the

discounter and convenience channel, and by
the growth in our foodservice business, where
we are one of the leading suppliers in bakery.

Our products reach a broader base of consumers
through a strategy to diversify across all UK
channels and European markets. Our customer
base is broad, and having no single dependency
lowers risk and creates value.

Employment and Development
Opportunities for Individuals
and Communities
People are important to our business. We have
over 3,000 employees, ranging from unskilled,
through semi-skilled, to management.
Opportunities exist within all our bakeries for
training and development programmes and
talent management initiatives. We recognise

potential and develop skills, facilitating personal
development and advancement.

Our 'People Who Care' Operating Principle, and
initiatives that support it, reflect the importance
of people to our business.

Tax Paid
Finsbury generates substantial tax for the
country. Our employees pay tax on their earnings
and the Company pays National Insurance on
those earnings. The Company pays Corporation
Tax with an effective tax rate of circa 24.2%
(French corporation tax rates 31% from 1 January
2019), as well as paying indirect taxes such as
packaging, apprenticeship levies and in areas
such as energy where there are significant
government imposed renewable taxes.
Our French and Polish-based subsidiaries pay
similar taxes in their respective jurisdictions.

Better…
progress toward
our ambitions

It is important the
pandemic does not
overshadow the
significant operational
progress the Company
has continued to make,
which will stand it in
good stead to deliver
on its longer-term
growth ambitions.

A resilient performance

£306.3m

Group Revenues
2019: £315.3m

£24.4m

Adjusted EBITDA
(excluding £1.8m uplift from
first time adoption of IFRS 16 leases)

Finsbury Food Group Annual Report and Accounts 2020Chairman’s StatementAs we reported in our
interim results in February,
the first half of the financial
year was a period of
encouraging progress
for the Group, with the
benefits of our long-term
investment programme
and operating initiatives
coming on stream. Indeed,
this continued through
until almost the end of
our third quarter.

The outbreak of the coronavirus, with the
consequential lockdown in March, had a
major impact on businesses across the UK
and Finsbury was no exception. Food was
suddenly consumed almost entirely in the
home. The demand profile across our product
portfolio underwent rapid change and we had
to act decisively and adapt quickly to continue
producing food products in a way that kept
our colleagues safe, whilst at the same time
protecting the long-term sustainability of
the business.

There are now encouraging signs that we
are moving in the right direction once again,
after a challenging few months. However,
it is important that the pandemic does not
overshadow the significant operational
progress the Company has continued to make,
which will stand it in good stead to deliver on
its longer-term growth ambitions, once more
normal trading patterns return.

A Resilient Performance
Considering the extent of the impact of
the pandemic from March, the financial
performance for the year was a very credible
one. Group revenues were £306.3 million
(2019: £315.3 million), adjusted EBITDA was
£24.4 million (excluding £1.8 million uplift
from first time adoption of IFRS 16 leases).
We have impaired assets by £8.7 million,
considered to be overvalued considering their
expected cash generation, delivering a profit
before tax of £2.9 million (see Note 10).

From the start of our new financial year, strong
sales growth, profit and cash generation were
driven by ongoing delivery against our strategy
of selling an ever-expanding and diverse range
of innovative products through a broad range
of channels while seeking opportunities to
drive increased productivity and efficiency.
This pattern continued until the nationwide
lockdown in March.

Since then sales in the largest part of our
business, Retail, have remained relatively
resilient and have continued to recover
month by month since April. Everyday bakery

products such as rolls proved popular but
demand for celebration cakes was more
subdued as a result of lockdown restricting
social gatherings. It is hard to overstate the
magnitude of the impact the outbreak of the
pandemic had on our foodservice and food-
to-go division, which in the prior financial year
was 20% of sales turnover. Their end markets
suddenly disappeared, almost completely,
as restrictions on travel were introduced
and consumer behaviour was thrust into
unchartered territory. Encouragingly, this
improved and sales in foodservice and food
to go recovered to around 39% of prior year
levels for Q4.

As outlined in our Covid-19 trading updates,
management implemented a range of
measures to control costs and preserve cash
while scaling back production in response to
reduced demand. As a result of these actions,
we find ourselves in a healthy and secure
financial position. The Group has remained
cash generative throughout the period, has
not needed to make use of any government
financial assistance schemes aside from
furlough, and has extensive headroom
remaining of its £55 million revolving
credit facility.

The coronavirus presented our teams with
significant operational challenges, the likes
of which had not been encountered before,
but they met them with enthusiasm and
tenacity and I am proud of the way they were
able to keep the business running without
compromising on the high standards we set
for ourselves.

Considerable Strategic Progress
Despite the Pandemic
Finsbury Food Group comprises several once
independent businesses; a major strategic
focus of the past few years has been on
introducing initiatives to ensure they operate
as one cohesive unit with a greater uniformity
of process and procedures, and better
communication. Work on that front continued
apace during the year, despite the disruption
caused by the pandemic.

I am proud of the way
our teams met
operational challenges
with enthusiasm and
tenacity and I am proud
of the way they were
able to keep the business
running without
compromising on the
high standards we set
for ourselves.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance14

Chairman’s Statement/Continued

With the business on a
sound financial footing,
in the near-term we will
continue to prioritise the
health and safety of our
colleagues while carefully
managing our resources
and operations to meet
the returning demand
in a sustainable way.

The Chief Executive’s review outlines in more
detail the progress we have made, however,
I would like to pick out three examples:

• IT has been a key investment theme in recent

periods and is now at a level of maturity
where we have standardised management
information across the sites and can use it to
keep introducing new initiatives to further
drive productivity and efficiency gains
across the Group;

• More broadly, the Company-wide rollout of
professional communications software such
as Workplace by Facebook and Microsoft
Teams has made collaboration and sharing
of information across the Group during
the pandemic easier than it was before the
lockdown restrictions were introduced; and

• In April we completed the migration of

our third-party training academy online.
This meant that several projects that
otherwise would have had to have been
put on hold were able to go ahead.

Delivery Down to the Hard Work
and Commitment of our Team
The coronavirus pandemic has tested the
mettle of everyone at Finsbury and I would
like to take this opportunity to pay tribute to
them all for the way they have responded,
particularly in adapting to the new ways
of working. Their courage, dedication and
professionalism in the face of adversity has
been first class, from the senior leadership
team through to those in our bakeries and
countless others whose efforts have meant
we could continue to make a contribution to
keeping the UK’s food shelves stocked.

Dividend
The Board withdrew the interim dividend
of 1.23 pence per share on 29 March 2020
and have decided not to propose a final
dividend in the context of the continued
uncertainty surrounding the pandemic and
Brexit. The Board is minded to reinstate a
dividend for F21 and will provide an update
as these unknowns pass and our outlook is
more certain.

Board
The Board composition remains unchanged
since last reported and we continue to comply
to the QCA Corporate Governance Code.
The Board met at sites as usual until March
and since then has met using online meeting
facilities and will continue to do so until it is
felt safe to go back to meeting on sites.

Positioning the Business for Growth
After the initial impact, we are starting to see
some positive monthly sales trends that hint at
the beginnings of a recovery. Furloughed staff
at its peak totalled 534; by 31 August 2020 the
number had reduced to 94. The outlook now
versus where it was when the pandemic first
took hold is much improved, but with market
volatility likely to persist, it remains difficult to
predict with any accuracy the rate at which the
recovery will take place.

With the business on a sound financial footing,
in the near term we will continue to prioritise
the health and safety of our colleagues
while carefully managing our resources and
operations to meet the returning demand in
a sustainable way.

Longer-term, we remain just as focused on
our goal of becoming the leading speciality
bakery group as we ever were. Finsbury is a
fundamentally strong business engineered
to be resilient, and for all the negatives
associated with the crisis, there is no doubt
it has accelerated a number of positive
operational improvements which will benefit
the Group for many years to come.

Coronavirus risks and Brexit uncertainty
remain, but with the good work we have done
before and during the pandemic to improve
and refine our working practices, we are
confident we will emerge a stronger, more
streamlined and efficient organisation.

Peter Baker
Non-Executive Chairman
18 September 2020

Finsbury Food Group Annual Report and Accounts 2020Chief Executive’s Report

Better…
in adapting
to change

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.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance16

Chief Executive’s Report/Continued

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.

25%

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

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.

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.

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.

Finsbury Food Group Annual Report and Accounts 202017

With the systems, resources and knowledge
base we now have in the Group, our provision
of management information is much
improved, granting us greater optionality over,
for example, buying materials and services on
a Group basis rather than by site at a local level
or optimising our Group-wide supply chain
distribution efficiency and agility.

Until recently, we have been mainly focused
on significant capital investment – whether
that be in IT or physical capacity increases
across our sites. Now, with that phase of our
investment programme largely complete, our
efforts have shifted to filling that capacity and
further optimising our operations.

In isolation these are small examples but they are
indicative of the direction of travel of the business
and its evolution into a more progressive, expert
organisation. A number of strategic initiatives
have already been introduced and we continue
to see further productivity and efficiency gains
as a real long-term opportunity for us.

Investing in Our People
Within the People Who Care principle, we
continued to make good progress against
our People Strategy during the period with a
focus on improving employee engagement.
One example of this is the Group-wide
sentiment survey we ran to gather feedback
from staff regarding our handling of the
coronavirus crisis, covering areas such as
health and safety, demonstrating care,
communication and leadership. The response
was positive across all areas and sites, while
also providing valuable insight to inform
initiatives we are now actively engaging with
local teams to action.

Communication is a key driver of engagement
and this has been transformed by the rollout of
Workplace by Facebook as our primary Group-
wide communication tool. Workplace has been
invaluable during the pandemic, enabling
us to communicate and operate effectively
remotely, whilst also enabling us to remain
connected and drive business performance.

During the period, we continued to embed
the Talent Management process, enabling
us to identify, retain and develop existing
talent, create a pipeline for future talent,
and identify capability gaps aligned to the
business strategy. We also ran our third
graduate recruitment campaign, specifically
targeted at bringing entry level finance talent
into the business, and are continuing with the
business-wide Engineering Apprenticeship
Programme to address what we know to be
a future national and industry shortfall in
engineering talent.

Committed to Ensuring
our Bakeries are Sustainable
We are committed to a sustainable approach
throughout our supply chain and in our
bakeries and have implemented sustainability
metrics and goals embedded within all our
business strategies.

One example of the tangible impact that
this approach is having is our focus on waste
reduction which, at one of our sites, has
resulted in a 25% year-on-year reduction in
waste but it is delivering significant benefits
across the whole Group. 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 to identify further opportunities
to reduce waste at source.

As part of our work to reduce our energy
consumption, we have successfully trialled
localised energy monitoring which resulted in a
10% reduction of energy. This initiative is now
being rolled out across the business with all key
assets in all bakeries implementing localised
energy monitoring to enable measurement of
key energy reduction projects. Alongside this,
we continue to drive conversion to LED lighting
across all of the individual group bakeries, with
around 60% of the total already completed.

Whilst almost all our plastic packaging is
recyclable with almost 80% of it being readily
recyclable in the UK, we are working to ensure
all plastics are recyclable.

Continued Product Innovation
to Meet Consumer Needs
Notwithstanding the demand shifts in recent
months, key trends of health and wellbeing,
and ethical and environmental choices remain
a driving force with consumers.

Responding to consumer demand has always
put us at the forefront in our categories and our
teams have launched a number of innovative
and appealing lines in the period. These include
plant-based, vegan-friendly whole cakes
and celebration cakes, launched with the
BOSH! brand. Having identified nut free as an
important concern for shoppers hosting family
and party occasions in particular, we have
invested significantly in our Celebration Cake
bakery in Hamilton over the last year to turn
it into a fully nut-free site, a first in the cake
industry. We have since launched a range of
character licensed based products, all clearly
marked with our unique Nut Free logo on pack.
The range includes some of our most popular
licenses including Disney’s Frozen, Spiderman,
Harry Potter, Batman and Peppa Pig.

We are committed to growing our licensed
brand portfolio and had several successes on
that front in the period. We were able to tap
into the fast-growing gaming market through
signing partnerships with Xbox, Mario and
Nerf, and our long-standing relationship with
Mars went from strength to strength, with
the Galaxy Ripple becoming our bestselling
celebration cake in the period further to its
launch in April 2019.

Innovation remains at the core of what we do
across all our licenses. Our desire to provide
consumers with on-trend, exciting and
delicious new products drives us and enables
us to maintain our market leading position.

In Artisan bread, we continued on our strategic
growth journey, with increasing expertise
reinforcing our market leadership position.
During the period, we carefully invested
in additional capacity and state of the art
production equipment, driving efficiencies and
quality improvements and adding a further
50% capacity. With world-class production
facilities now in place and a strong innovation
pipeline, we anticipate further success in this
on-trend growth sector moving forwards.

Current Trading and Outlook
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.

John Duffy
Chief Executive Officer
18 September 2020

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance18

Engaging with our stakeholders

This section serves as our section
172 statement and should be read
in conjunction with the Strategic
Report and the Company’s Corporate
Governance Statement. It also
provides guidance to the disclosure
of non-financial information that is
necessary for an understanding of
the development, performance, and
position and impact of the Company’s
activity. The Board’s aim, collectively
and individually, is to always uphold
high standards of conduct. When
taking decisions, the Board always
considers the long-term view
and looks to act in the interests of
shareholders as a whole and to ensure
all shareholders are fairly treated.

The Board also believes that the business will be best served to
grow and prosper in the long term if it understands the views and
needs of its shareholders and other stakeholders and factors these
into its decisions.

Accordingly, engagement with our shareholders and wider
stakeholder groups plays a key role throughout our business.
We engage with our stakeholder groups in a variety of ways across a
range of channels to facilitate information flows in both directions
with a view to ensuring our stakeholders are heard and taken into
account in Board decision making, and also to ensure that our
stakeholders understand the Group’s perspective and needs. Indeed,
some of our key stakeholders – our employees (“People Who Care”),
our customers and suppliers (“Growth With Our Partners”), and the
environment (“Sustainable Approach”) – have been built into the
very core of the Finsbury business through our Operating Principles.
Our “Quality and Innovation” and “Operating Excellence” Operating
Principles also embed our commitment to a long-term approach.
Examples of how we engage and put our Operating Principles into
action are set out throughout this report and our Operating Principles
are set out in detail on pages 8 to 9.

See pg 8-9
For more information

Our People
Investing in Our People
People Who Care
Involvement of Employees

Page
Numbers

Report on
Corporate Governance
Pages 40-43

17
11, 16, 38-39
48

Section 3
Section 8

Our Customers
Growth with Our Partners

Page
Numbers

Report on
Corporate Governance
Pages 40-43

11, 16

Section 3

Finsbury Food Group Annual Report and Accounts 2020

Our Suppliers
Growth with Our Partners

Page
Numbers

Report on
Corporate Governance
Pages 40-43

11, 16

Section 3

Our Environment
Ensuring our Bakeries
are Sustainable

Sustainable Approach

Page
Numbers

Report on
Corporate Governance
Pages 40-43

17
10, 22-23

-
-

Our approach to Diversity and Equal opportunities is addressed
in The Directors’ Report set out on pages 46 to 48 and
whistleblowing approach is noted in the Audit Committee
Report on pages 50 to 51.

This statement is made in conformity with the requirement to
explain how directors fulfil section 172 of the Companies Act 2016.

Visit https://www.finsburyfoods.co.uk/investor-relations/
annual-reports/
For more information

Our Investors
Shareholders and dividends
Shareholders and dividends

Page
Numbers

Report on
Corporate Governance
Pages 40-43

14
46

Section 2
Section 10

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Operating Excellence

Better…
operating
standards

We have continued to improve operational
excellence, despite the disruption caused
by Covid-19. We run a number of different
programmes under the banner of Operating
Excellence, which we describe on this page,
all designed to ensure we continue to make
fantastic, consistently high-quality,
high-margin products efficiently – every day.

S TANDARDISING …
Our Process Blueprint project
is now active in our bakeries,
establishing a standardised
process across them all,
mostly based on lean thinking.
Location: Group
It enhances employees' knowledge of all our
processes while encouraging collaboration
and exchange of ideas with results evidenced
by increased efficiencies and lower waste.

One of the outputs from our Process Blueprint
will be our Product Design Framework
Information which will drive and govern
operational improvement activities across the
Group in a standard way.

1source of good information

An increasing level of Operating Brilliance
process techniques being used to correct and
establish best practice across the Group.

Finsbury Food Group Annual Report and Accounts 202021

DECISION MAKING …
IT has been a key
investment theme in recent
years, and following the
Group-wide theme,
Location: Group
our IT Forum has created Group-wide
standardised management information KPIs
to support business decision making, helping
us introduce new initiatives to further improve
productivity and efficiency.

7sites now have a fully integrated

common IT system embedded

ENGINEERING …
There are clear links
between Process Blueprint
and the work of our
Engineering Forum.
Location: Group
This is an asset care programme that ensures
common engineering standards across all the
bakeries, so our equipment creates consistent,
repeatable results.

OP TIMISING …
Following a review
of our supply chain,
Location: Group
we are now in a position to implement
a Group-wide supply chain solution
that will optimise inbound and
outbound material and product flow.

With systems, resources and
knowledge base we now have in
the Group we are able to improve
our Group-wide supply chain
distribution, efficiency and agility.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance22

Sustainable Approach

Better…
environmental
footprint

We've established sustainability goals in all
our business strategies. We are implementing
a Group-wide environmental framework to create
a consistent approach to monitoring, and have
recruited environmental specialists to improve
our skill and knowledge in this area.

REDUCING …
We have worked across
the Group with waste
management specialists
Location: Group
to move towards our target for no waste to
landfill by the end of 2020. We are working
with WRAP to identify further opportunities
to reduce waste. Our Operating Brilliance
programme has focused on waste reduction,
and at one bakery, we have achieved a 25%
reduction in waste over the year.

REC YCLING …
We are continuing to
reduce our use of plastics
by optimising pack sizes.
Location: UK
We are also aiming to ensure all our plastics
are recyclable – we are almost there, with
nearly 80% of it being readily recyclable in
the UK.

80%of our plastics are readily recyclable

in the UK

SAVING …
We have migrated sites to an
in-house centralised payroll
shared service centre.
Location: Group
We've moved almost 3,000 employees
onto electronic payslips, replacing the need
for paper payslips and their distribution.
With around 75% of employees paid weekly,
we're saving nearly 130,000 paper payslips a
year. The move was made possible by our new
centralised payroll function, migrating our
seven UK sites onto a common platform and
standardised payroll processes.

Finsbury Food Group Annual Report and Accounts 202023

REPL ANTING …
With opportunities for
biodiversity now limited
in the former gardens of
our Fletchers bakery site
in Sheffield,
Location: Sheffield
we've been working with pupils from a local
primary school on ideas that would benefit
them at school – such as bird-watching
shelters, and areas to grow flowers and
vegetables. We will fund the project, and the
work will be carried out by volunteers from
both Fletchers and the school.

RE-LIGHTING …
We continue to move
to LED lighting
Location: Group
across the Group, having now converted
around 60% of our bakeries.

60%move to LED lighting across the Group

MONITORING …
We are reducing our
energy usage.
Location: Group
The use of localised energy monitoring has led
to a 10% reduction of energy at the Sheffield
site. With this innitiative being rolled out
across all bakeries.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance24

Finsbury Food Group
Annual Report and Accounts 2020

Quality and Innovations

Better…
customer-
focused
innovation

Responding to consumer demand
has always put us at the forefront in
our categories, and this year our teams
have launched a number of innovative
and appealing lines.

Strategic Report

Corporate Governance

Financial Statements

Annual Report and Accounts 2020 25

Finsbury Food Group

REINFORCING …
In Artisan bread, we continue
to strengthen our leadership
in this growing market.
Location: Salisbury
During the year, we invested in existing state-of-
the-art artisan bread production equipment and
adding a further 50% capacity. With world-class
production facilities now in place, and a strong
innovation pipeline, we anticipate further
success in this market.

50%

further capacity
in artisan bread

REDUCING …
The Health targets are part
of our development process.
Location: Group
Over 98% of our products achieve the FSA salt
targets, and we are making good progress in all
categories to reduce sugar in line with Public
Health England targets of a 20% reduction in
sugar content. Our average sugar reduction,
weighted for sales, was 12.4% up from 8.2%
reduction in the year previous. We have made
good progress and have a number of sugar
reduction replacement projects in progress to
aim for the Public Health England 2020 target.

12.4%sugar reduction

REL AUNCHING …
We have refreshed our
WW cake brand to cater
for the needs of consumers
looking for a treat,
Location: East Kilbride
but with lower sugar and calories. The new
WW product range offers three flavours, is
under 100 calories a slice, and is a source of
fibre, all innovations based on what consumers
are looking for as part of a balanced diet.
WW was formerly known as Weight Watchers,
rebranded two years ago and is now positioned
as a well-being brand that is inclusive to
everyone’s lifestyle.

DE VELOPING …
Our extensive insight
capabilities keep our new
product development
Location: Group
in line with market trends, with over
60 employees engaged in developing
new products.

This is enhanced by our manufacturing
Process Blueprint, which embraces and
supports the production of high-quality
premium products.

Finsbury Food Group
Annual Report and Accounts 2020

Key Performance Indicators

Key Performance Indicators
Financial

Sales Growth

Performance

2020

-2.8%

Definition
Revenue £ this year/revenue £ last year as
a percentage.

2019

+3.8%

Definition
Adjusted operating profit £/revenue
£ as a percentage.

2020 Performance
Pre Covid-19 trading was in line with market
expectations of growth in revenue, at the first
half year growth was 4.7%. Covid-19 had a
significant impact on our foodservice business
which accounts for c20% of total revenue.

2020 Performance
Covid-19 has had an impact not only on
revenue but the mix with a shift in demand
from premium products to more staple
products. Prompt action to reduce
overheads mitigated the reduction
in H2 operating profit %.

Adjusted Operating Profit

Performance

2020

2019

4.9%

5.3%

Adjusted EPS

Performance
Basic

2020

2019

Diluted

2020

2019

7.9p

9.3p

7.7p

9.0p

Adjusted EBITDA (Pre IFRS 16)

Performance

2020

2019

Net Debt

Performance

2020

-26.5m

2019

-35.6m

Debt to Adjusted EBITDA

Performance

2020

2019

1 .1

1.4

Return on Capital Employed (ROCE)

Performance

2020

2019

9.6%

10.8%

Definition
Adjusted Basic: adjusted profit attributable to
the equity holders/weighted average number
of ordinary shares in issue during the period.

2020 Performance
With a year-on-year decline in operating profits,
driven by the impact of Covid-19, there is a
decline in the EPS.

Adjusted Diluted: adjusted profit attributable
to the equity holders/(weighted average
number of ordinary shares in issue during the
period + dilutive effect of share options).

24.4m

25.5m

Definition
EBITDA (operating profit before significant
non-recurring and other items adding back
depreciation and amortisation).

2020 Performance
The first half growth in EBITDA was 4.1%,
Covid-19 had an impact in the second half
driving a full year on year decline of 4.4%.

Definition
Interest-bearing loans and borrowings plus
unamortised transaction costs, including
cash balances.

2020 Performance
In response to the impact of Covid-19, a
number of cash preservation measures were
taken and with a decline in business, working
capital holding has naturally fallen.

Definition
Net debt (as above) expressed as a ratio to
adjusted EBITDA (operating profit adding back
depreciation and amortisation).

2020 Performance
A fall in net debt and a decline in EBITDA
with the net impact being an improved ratio.
Comfortably below covenant condition of 2.5x.

Definition
Adjusted operating profit (OP)/average
capital employed.*

2020 Performance
A decline in ROCE driven by the fall in OP due
to Covid-19.

* Average capital employed = net assets, excluding cash,
interest-bearing borrowings, deferred consideration,
fair value derivatives and pension deficit

Strategic Report

Corporate Governance

Financial Statements

Annual Report and Accounts 2020 27

Finsbury Food Group

Key Performance Indicators
Non-Financial

Revenue £k per Employee

Performance

2020

2019

Definition
Revenue/the average number of persons
employed by the Group including Directors
and excluding agency staff during the year.

103

2020 Performance
A decline in sales due to Covid-19 and a
steady average number of people employed.
Average employees includes +500 employees
furloughed at the peak over a period of 14
weeks and has exaggerated the decline in
this measure.

Number of Employees

Performance

2020

2019

Definition
The average number of persons employed by
the Group including Directors and excluding
agency staff during the year.

3,177

3,062

2020 Performance
An increase during the year primarily due
to the full year impact of the acquisition of
Ultrapharm. Included in the headcount are the
peak of +500 employees who were furloughed
for up to 14 weeks during the pandemic.

Number of BRC A Grade Ratings

Performance

2020

2019

Complaints per Million Units

Performance

2020

2019

17.1

18.9

RIDDORs* per 100k Hours Worked

Performance

2020

0.28

2019

0.22

Definition
Number of sites attaining BRC A grade ratings
for food safety.

2020 Performance
A consequence of our focus on operational
excellence, it underlines our strategy,
and our purpose – of Baking Brilliance.

Definition
Number of complaints/(number of units
sold/1,000,000).

2020 Performance
Our long-term commitment to product quality
makes this a key measure. Process Blueprint
has progressed throughout the Covid-19
period delivering tangible benefits and should
drive further improvements across all sites.

Definition
Number of RIDDORS in 12 months/(number
of hours worked in 12 months/100,000).

* RIDDOR is the Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations 2013.

2020 Performance
The KPI has deteriorated year on year. We are
unhappy with the increase but believe we have
the appropriate resourcing in place to focus on
identified root causes of accidents.

Cost Effectiveness

Better…
efficiency
all round

In a competitive market, cost effectiveness
is essential to success. We maintain strict
cost controls without compromising quality,
streamlining our processes from sourcing to
delivery. Our Group-wide review and standardisation
of bakery processes has led to improvements
in quality, efficiency and reduction of waste.

BUY ING …
Our centralised buying
process focuses on
high-quality and cost-
effective ingredients,
Location: Group
as well as efficiency of scale in how we
procure indirect items such as personal
protective equipment.

INVE S TING …
We focus our capital
investment on capability
and cost reduction.
Location: Group
We aim for achieving lowest-cost-producer
status in areas where we have a niche strength
such as artisan breads or sharing cake.

25%

reduction in waste year-on-year
at one of our bakeries driven by our
Operating Brilliance Programme

Finsbury Food Group Annual Report and Accounts 202029

PRODUCING …
We consistently monitor
the cost-effectiveness
of our manufacturing assets,
with improvements
Location: East Kilbride & Poland
this year in our automated single-serve cake
bar packing, and modern travelling ovens
improving capacity and efficiency at our
gluten-free bakery in Poland.

We have developed and implemented an asset
care programme supported by a Group led
engineering team of experts to optimise the
performance of our production assets.

10%
reduction in complaints

with Fletchers business achieving
27% reduction year-on-year as
Operating Excellence has led to
improvements in quality.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance30

Risk Report

The Directors recognise the need for a healthy
system of internal controls and risk management.
We have identified the following as the principal risks
and uncertainties the Group faces.

Risk management is regarded as essential
to achieve the Group’s strategic and
operational objectives. An annual, formal
review of risks is carried out as an integral
part of our strategic planning process.
Each business updates its risk register
and the registers are presented to the
Audit Committee together with
mitigating actions.

External

01 Covid-19 Pandemic

Movement
in year

Following a preliminary recommendation
by the Audit Committee, the Board reviews
the highest risk items for the Group
and the mitigations.

Principle Risk
The pandemic has resulted in significant changes to the retail and
foodservice sectors. Consumers have changed their shopping
behaviour within retail with both positive and negative implications
for Finsbury’s products. Foodservice volumes continue at less than
half their pre-outbreak levels.

The risks considered material, how they
have evolved year on year and the principal
mitigating actions are:

Finsbury’s bakeries have easily adjusted to social distancing guidelines.
The ongoing risk of the disease is absenteeism that, at elevated levels,
could restrict the ability of our bakeries to meet demand.

Mitigation
Crisis team formed; meeting daily to oversee the impact of the pandemic.

The priority is and was to ensure the safety of all employees and to make
rapid changes to the way the business operates by establishing safe
ways of working based on social distancing and home working.

Financially the business moved to manage cash while ensuring no
adverse consequential impact to our customer and supplier base.

Commentary
New risk with significant
impact on commercial,
operational and
financial performance.

Finsbury Food Group Annual Report and Accounts 202031

02 Brexit

03 Cyber Security

Movement
in year

Principle Risk
The risk of a no-deal Brexit is financially material. WTO tariffs will
adversely affect the cost of inbound raw materials. There will also be
tariffs on exported finished goods, primarily to our French subsidiary,
Lightbody Europe.

The impact is likely to be inflationary and will affect all customers and
competitors alike. The consequential risk is to volume loss or decline.

Mitigation
Since the referendum in 2016 the Company has decreased the amount
of raw material imported from Europe and continues to work with
suppliers in this regard.

Principle Risk
The exposure to random and malicious attacks from Cyber criminals
always exists. Protecting key information assets is of critical importance.

Mitigation
The Audit Committee has reviewed in depth the cyber risks and
mitigating actions which include:

• Maintenance of protections software and real-time back-ups;

• Independent penetration testing;

• A new Group-wide information system with standardised protection,

operating requirements and security protection;

Capital investment has been targeted at automation and
operational efficiency.

• In 2020 will migrate to a Cloud-based platform with enhanced

protection as standard; and

Investment in new bakery in Poland to expand capacity for
continental Europe.

• Training and regular communications, including warning

of common frauds to be aware of.

Commentary
Similar to last year –
hard Brexit risk and
continued uncertainty,
but well prepared.

Commentary
Increase risk offset by
enhanced mitigations.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance32

Risk Report/Continued

Operational

04 Health and Safety

05 Business Interruption

or Fire

Movement
in year

Principle Risk
Injury to employees remains an ongoing risk with potentially
significant consequences.

Mitigation
Led by the H&S Committee, the Group is embedding a Homesafe
Every Day Strategy.

Induction and training programmes underpinned by our
Operating Principle - People who Care.

Regular Board reviews and site visits.

Principle Risk
Risk of serious injury and loss of production capacity.

An increased number of largescale losses in the bakery sector has
resulted in increases in insurance premium costs and a restriction in
affordable capacity. The financial exposure may well be self-insurance
and partial exposure to any actual loss.

Mitigation
Continued focus on preventative measures to reduce risk including
regular fire audits. Re-engineering insurance programme including
an element of self-insurance.

Commentary
An area of continued focus
and development.

Commentary
Deteriorating insurance
market conditions with cost
and capacity implications.

Finsbury Food Group Annual Report and Accounts 202033

Financial

06 Pension Deficit

07 Commodity and
Labour Costs
Pressures

Movement
in year

Principle Risk
Changes in inflation, investment performance and demographics
(life expectancy) leads to a larger deficit requiring increased Company
contributions under a recovery plan.

Mitigation
Introduced Fiduciary Management Investment approach which enables
scheme trustees to execute their long-term strategies efficiently and
target better outcomes.

Principle Risk
Global commodity inflation and increasing volatility in addition
to the Brexit risk identified above.

Continuing increases in National Living Wage.

Mitigation
Tight control of costs and mitigation where possible through
price and product engineering.

Appointed Professional Company Trustee to challenge approach
and to bring knowledge from experiences with many other clients.

Continued programme of Operating Brilliance and capital expenditure,
focused on Continuous Improvement and cost reduction. All led by
Group Efficiency Improvement Director.

Leverage economies of scale from the enlarged group, including Group
Purchasing strategy.

People strategy focussed on staff retention by upskilling of workforce.

Commentary
Worsening external factors
offset by positive changes.

Commentary
Our Operating Principles
of Operating Excellence,
Cost Effectiveness and
People who Care are key
to continued efficient
operations.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance34

Growth with Our Partners

Growth with our Partners

Better…
business
relationships

Customers, license owners and suppliers are our
partners, and we work with them to create a constant
stream of high-quality, innovative products. We
have built these relationships over many years – and
recent growth in our share of the licensing market
and in the convenience and discounter channels,
is testament to our strong partnership credentials.
We work with suppliers to source high-quality
ingredients from around the world, and also to
innovate in raw materials and packaging.

INVE S TING …
Having identified nut-free
foods as an important concern
for shoppers hosting family
and party occasions
Location: Hamilton
in particular, we have invested significantly
in our celebration cake factory in Hamilton.
It's now a fully nut-free site, a first for the
cake industry. We have launched a range
of character-licensed products, all clearly
marked with our unique Nut Free logo on the
pack. The range includes some of our most
popular licenses, including Disney Frozen,
Spiderman, Harry Potter, Batman and
Peppa Pig.

DIVER SIF Y ING …
Our channel diversification
into foodservice, our Kara
foodservice brand, and
our broad frozen range of
foodservice products
Location: Manchester and Sheffield
sees us as the leading foodservice partner.
This year we launched our Kara brand vegan
buns for the foodservice market, meeting a
rapidly developing consumer trend.

Finsbury Food Group Annual Report and Accounts 202035

GROWING …
We are growing with
partners in the UK and
across the rest of Europe
Location: Europe
in both bread and cakes. Our Lightbody
Europe subsidiary in France and the
Ultrapharm business in Poland give
a growing presence in Europe.

11%
of Group revenue made

through European sites

GAMING …
Aiming to grow our
licensed-brand portfolio, we
had several successes this
year as we tapped into the
fast-growing gaming market,
Location: Cardiff and Hamilton
signing partnerships with Xbox, Mario
and Nerf. And through our long-standing
relationship with Mars, we went from strength
to strength, with the Galaxy Ripple becoming
our best-selling celebration cake,
following its launch in April 2019.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance36

Financial Review

Group revenue for the
52-week period to 27 June
2020 is £306.3 million,
2.8% lower than last year.

Following a strong first-
half performance, which
saw Group revenues grow
4.7% to £159.4 million,
performance in the second
half was impacted by the
outbreak of the Covid-19
pandemic, with sales down
9.8% to £146.9 million.

20% of Group revenue is within foodservice/
out-of-home eating which was largely
shut down in response to the pandemic.
The reduction in sales to the foodservice/
out-of-home eating, starting 23 March, is
the primary driver behind the reduction in
second-half Group revenue. Monthly sales
since 23 March have improved from being
24% down in April to 15% down in June against
the prior year. This reflects the beginning of a
recovery in foodservice/out-of-home eating
but also reflect growing volumes in our Retail
business as consumers adjust to a changed
environment. Adjusted operating profit at
£14.9 million is down 11.3% on last year.
Adjusted operating profit margins are 4.9%
(2019: 5.3%), a consequence of Covid-19.

Impairment and Other Significant
and Non-recurring Items
At the year end we identified a non-cash
impairment of goodwill in Ultrapharm of
£7.5 million a consequence of forecasted future
earnings that do not support the carrying value.
In addition, strategic reorganisation costs on
the back of the pandemic of £1.3 million, a value
write down in unused bakery assets in Cardiff of

£1.2 million and pre-pandemic commissioning
costs of our new bakery in Poland of
£0.3 million, have all been classified as
significant and non-recurring. Items identified
as significant and non-recurring have been
excluded from operating profit in the table
below to better reflect the ongoing trading
position. Adjusted operating profit is deemed
to provide a clearer presentation of the trading
performance and sustainable cash generation
of the Group.

Dividend
The Company announced the cancellation
of the interim dividend on 29 March 2020.
The Company has decided not to pay a
dividend for the 52 weeks to 27 June 2020,
given the uncertainty of Covid-19, as well as
the additional risks that will be faced in the
case of a no-deal Brexit.

The tables below show what the Directors
consider to be the trading performance of
the Group. The adjusted measures eliminate
the impact of significant and non-recurring
items and other accounting items that are not
deemed to reflect the continuing performance
of the Group.

52 week period ended 27 June 2020

Revenue
Cost of sales
Gross profit
Other costs excluding depreciation & amortisation
EBITDA
Depreciation & amortisation
Operating profit
Finance income
Finance costs
Profit before tax
Taxation
Profit for the year

Operating
performance
£000
306,348
(210,881)
95,467
(69,219)
26,248
(11,309)
14,939
61
(1,272)
13,728
(3,398)
10,330

Significant
non-recurring
impairment
Note 4
£000
-
-
-
(8,737)
(8,737)
-
(8,737)
-
-
(8,737)
235
(8,502)

Significant
non-recurring
other items
Note 4
£000
-
-
-
(1,594)
(1,594)
-
(1,594)
-
-
(1,594)
303
(1,291)

*Refer to Note 4 for further details on significant non-recurring items.

52 week period ended 29 June 2019

Operating
performance
£000
315,281
(219,849)
95,432
(69,905)
25,527
(8,694)
16,833
77
(991)
15,919
(3,605)
12,314

Significant
non-recurring
items
£000
-
-
-
(1,200)
(1,200)
-
(1,200)
-
-
(1,200)
128
(1,072)

Defined
benefit
pension
scheme
£000
-
-
-
200
200
-
200
-
(256)
(56)
11
(45)

Defined
benefit
pension
scheme
£000
-
-
-
(162)
(162)
-
(162)
-
(282)
(444)
75
(369)

Fair value of
interest rate
swaps/foreign
exchange
contracts
£000
-
-
-
(73)
(73)
-
(73)
-
(386)
(459)
87
(372)

Discounting
of deferred
consideration
£000
-
-
-
-
-
-
-
-
(14)
(14)
1
(13)

As per
Consolidated
Statement of
Comprehensive
Income
£000
306,348
(210,881)
95,467
(79,423)
16,044
(11,309)
4,735
61
(1,928)
2,868
(2,761)
107

Fair value of
interest rate
swaps/foreign
exchange
contracts
£000
-
-
-
(178)
(178)
-
(178)
-
(382)
(560)
95
(465)

Discounting
of deferred
consideration
£000
-
-
-
-
-
-
-
-
-
(139)
24
(115)

As per
Consolidated
Statement of
Comprehensive
Income
£000
315,281
(219,849)
95,432
(71,445)
23,987
(8,694)
15,293
77
(1,794)
13,576
(3,283)
10,293

Finsbury Food Group Annual Report and Accounts 2020

Earnings Per Share (EPS)
EPS comparatives to the prior year can be distorted by significant non-recurring items and other items highlighted above. The Board is focused on
growing adjusted diluted EPS which is calculated by eliminating the impact of the items highlighted above as well as amortisation of intangibles and
incorporates the dilutive effect of share options. Adjusted diluted EPS is 7.7p (2019: 9.0p).

52 week
2020
(0.6)p
7.9p
(0.6)p
7.7p

52 week
2019
7.3p
9.3p
7.0p
9.0p

Financial and Non-Financial
Key Performance Indicators
We monitor a range of financial and
non-financial KPIs at site level covering,
amongst others, productivity, quality
and health and safety.

The Group Board receives a regular overview
of all KPIs. We discuss these KPIs in further
detail on pages 26 and 27.

The Strategic Report was approved by the
Board of Directors on 18 September 2020
and was signed on its behalf by:

Stephen Boyd
Director

Basic EPS
Adjusted basic EPS
Diluted** basic EPS
Adjusted* diluted** EPS

* Further details on adjustments can be found in Note 9.

** Diluted EPS takes basic EPS and incorporates the dilutive

effect of share options.

Cash Flow
There was a decrease in our working
capital of £1.0 million (2019: £5.6 million
increase) in the financial year driven by
the downturn in trading as a result of the
pandemic. Corporation Tax payments made
in the financial year totalled £1.8 million
(2019: £2.0 million). The payments in the
current and prior year took account of the
research and development tax relief due to
the Group, tax losses being utilised, and a
higher tax rate charged on overseas profits.
Capital expenditure in the year amounted to
£4.7 million (2019: £11.0 million).

Debt and Bank Facilities
The Group’s total net debt is £26.5 million
(2019: £35.6 million), down £9.1 million from
the prior year. Responding to the Covid-19
pandemic, the Board immediately took a
number of cash and cost-conserving actions
to ensure the business remained on a sound
footing to deliver on its longer-term growth
ambitions. These included:

• The freezing of all discretionary expenditure

and capital investment;

• Careful management of cash resources; and
• The suspension of the interim dividend.

In addition to these measures, the Board and
Executive team took a 30% salary reduction
between April and June whilst other senior
executives took a 20% reduction.

Throughout the year which includes the
Covid-19 affected final 3 months the Group
has remained profitable and has generated
cash which has resulted in a reduction in
net debt of £9.1 million. It has remained
comfortably within its credit facility of
£55.0 million. Furthermore, the Group has
not looked to utilise any of the Government
Loan schemes.

The Group recognises the inherent risk from
interest rate rises, and uses interest rate swaps
to mitigate these risks. The Group has two
swaps, one for £20.0 million for five years
from 3 July 2017 (fixed) at 0.455% and one for
£5.0 million for three years from 28 March
2019 (fixed) at 1.002%. The total balance
of swaps at 27 June 2020 is £25.0 million
(2019: £25.0 million). The counterparty to these
transactions is HSBC Bank Plc. The effective
interest rate for the Group at the year end,
taking account of the interest rate swap in place
with base rate at 0.10% and LIBOR at 0.691%,
was 2.2% (2019: base rate 0.500% and LIBOR
0.501% effective interest rate 2.0%.

Financial Covenants
The Board reviews the Group’s cash flow
forecasts and key covenants regularly, to
ensure it has adequate facilities to cover its
trading and banking requirements with an
appropriate level of headroom. The forecasts
are based on management’s best estimates
of future trading. As noted earlier, there has
been no breach of covenants during the year
and the Board does not expect any in the
forecast periods.

Interest cover (based on adjusted earnings
before interest, tax, depreciation and
amortisation – EBITDA) for the 52 weeks to
27 June 2020 was 25.3 (2019: 28.0). Net bank
debt to EBITDA (based on adjusted EBITDA) for
the year to 27 June 2020 was 1.1 (2019: 1.4).

Taxation
The Group taxation charge for the year was
£2.8 million (2019: £3.3 million). The effective
rate of tax on profits before significant and
non-recurring and other items is 24.8%
(2019: 22.6%). You can find further details
on the tax charge in Note 8 to the Group’s
Financial Statements.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance
38

People Who Care

Better…
employee
engagement

We continued to make good progress with
our people strategy, engagement being a
major part. With our planned two-yearly survey
postponed due to Covid-19, we instead ran a
sentiment survey to gather employees' views
on our handling of the crisis. The response
was positive providing some valuable lessons
and insights.

UNDER S TANDING …
We held the fourth FFG
Conference, in October 2019.
Location: Manchester
Involving the top 100 leaders across the
business, the objective was to ensure a
consistent understanding of our business
strategy and operating principles. It is also
a great opportunity for people to meet and
forge collaborative working relationships.

100
top leaders across the business

were involved in our fourth FFG Conference

RE WARDING …
We launched the Shining
Example Awards to publicly
recognise and reward
individual employees each
month for bringing our
values to life.
Location: Group
We also launched the Brilliance Awards, to
each year reward and recognise teams who
have achieved outstanding results based on
each of our operating principles.

Finsbury Food Group Annual Report and Accounts 2020CRE ATING …
We have transformed
communication around
the Group by introducing
Workplace by Facebook as our
primary communication tool.
Location: Group
It has been invaluable during the pandemic,
helping us communicate and operate
effectively while working remotely.

RECRUITING …
We ran our third graduate
recruitment campaign
Location: Group
aiming specifically to bring talented entry-
level finance specialists into the business.

APPRENTICE SHIP…
We are continuing with the
business wide Engineering
Apprenticeship Programme.
Location: Group
To address what we know to be a future
national and industry shortfall in engineering
talent. We have engaged with a number of
apprenticeships across other functions.

engineering apprentices
14

across the Group

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance40 Finsbury Food Group

Annual Report and Accounts 2020

Corporate Governance
Chairman's Introduction to Governance

As Chairman of the Board it is my
responsibility to ensure that the Group
has both effective corporate governance
and Board leadership. The Group has
decided to adopt the Quoted Companies
Alliance Corporate Governance Code (the
‘QCA Code’) and this report follows the
structure of these guidelines and explains
how we have applied the guidance. The
Board considers that the Group complies
with the QCA Code in all respects.

The Board
The Board believes that corporate governance
is more than just a set of guidelines; rather
it is a framework which underpins the core
values for running the business in which we all
believe, including a commitment to open and
transparent communications with stakeholders.
We believe that good corporate governance
improves performance while reducing or
mitigating risks.

There have been no significant changes to the
Company’s corporate governance arrangements
during the past year.

Peter Baker
Non-Executive Chairman

Report on Corporate Governance

QCA Principles

1. Establish a strategy and business
model which promote long-term value
for shareholders
The Group’s vision is to be the UK’s most
innovative speciality bakery group, providing
differentiation for our customers. Our business
model, and the Finsbury ‘recipe for growth’
operating principles by which we manage our
business, are shown on page 8. Our strategy
and markets are explained in detail in our
Strategic Report on pages 1 to 39.

2. Seek to understand and meet shareholder
needs and expectations
Relationships with our shareholders are
important to us and we seek to provide
effective communications through our Interim
and Annual Reports along with Regulatory
News Service announcements. We also use the
Company’s website, www.finsburyfoods.co.uk
for both financial and general news relevant
to shareholders. The Executive Directors meet
shareholders and other investors/potential
investors at regular intervals during the year
and host broker and analyst meetings at
operating sites from time to time.

The broker and NOMAD, Cenkos, is briefed
regularly and updates the Board during the
year on shareholder expectations.

The Annual General Meeting (AGM) is regarded
as an opportunity to meet, listen and present
to shareholders, and their participation is
encouraged; all Directors attend the AGM and
are available to meet shareholders individually
or as a group. All 2019 AGM resolutions were
passed comfortably.

3. Take into account wider stakeholder and
social responsibilities and their implications
for long-term success
The Board considers that it has operated in
full regard of its responsibilities under section
172 of the 2016 Companies Act as outlined in
the Strategic Report on page 18. The Group’s
Purpose is widely understood and drives the
decision-making which aims to optimise the
long-term value of the business.

Our continued success is built entirely on
the talented people who work here, and
employee engagement forms a major part
of our operating principles. Everyone at
Finsbury Food Group is a valued member of
the team, and our aim is to help every
individual achieve their full potential.

We offer equal opportunities regardless of
race, gender, gender identity or reassignment,
age, disability, religion or sexual orientation.

Another key element of our recipe for growth
is to work for mutual benefit with our partners,
including retail grocery and foodservice
customers, all of whom benefit from tailored
innovation and service. Joint business plans are
agreed, customers visit our sites on a regular
basis to be involved in product development
and business planning activities.

Our key strategic suppliers are long term in
nature and work in partnership with the Group
on innovations in both product and service.
We believe an ethical supply chain is a
sustainable one. Finsbury Food Group
is a long-standing member of Sedex, an
organisation for promoting improvement in
responsible and ethical business practices in
supply chains.

4. Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
The Board recognises the need for a robust
system of internal controls and risk management.
The assessment of risks and the development
of strategies for dealing with these risks are
achieved on an ongoing basis through the way
in which the Group is controlled and managed
internally. A formal review of these risks is carried
out by the Group on an annual basis.

The review process involves the identification
of risks, assessment to determine the relative
likelihood of them impacting the business
and the potential severity of the impact and
determination of what needs to be done to
manage them effectively. Risk management is
integral to the ability of the Group to deliver on
its strategic objectives.

The system of internal control is structured
around an assessment of the various risks to
the business and is designed to address those
risks that the Board considers to be material, to
safeguard assets against unauthorised use or
disposition and to maintain proper accounting
records which produce reliable financial and
management information.

The key features of the Group’s system of internal
control are as follows:

• An ongoing process of risk assessment to

identify, evaluate and manage business risks
• Management structure with clearly defined

responsibilities and authority limits
• A comprehensive system of reporting

financial results to the Board

• A rolling programme of internal audit
activities carried out by group finance
reporting to the Audit Committee

• Appraisal and authorisation of capital

expenditure projects

• Dual signatories on all bank accounts

5. Maintain the Board as a well-functioning,
balanced team led by the Chair
The Board is currently made of up two
Executive Directors, the Chairman and three
other independent Non-Executive Directors.

The Chairman is responsible for the
leadership of the Board and ensuring its
effectiveness in all aspects of its role. He is
also responsible for creating the right Board
dynamic and for ensuring that all important
matters, in particular strategic decisions,
receive adequate time and attention at
Board meetings. The Executive Directors are
responsible for the day-to-day running of the
business and developing corporate strategy
while the Non-Executive Directors are tasked
with constructively challenging the decisions
of executive management and satisfying
themselves that the systems of business risk
management and internal financial controls
are robust.

A calendar of meetings and principal matters
to be discussed is agreed at the beginning of
each year. Board papers are circulated at least
one week before meetings, allowing time for
full consideration and necessary clarifications
before the meetings. Board dinners are
held on the evening before meetings and
allow broader discussion and development
of effective Board relations. Meetings are
open and constructive, with every Director
participating fully. Meetings are held at
operating sites on a rotating basis, enabling
the Board to meet the senior site teams and to
visit the bakeries.

The Board held five scheduled meetings during
the year under review, the April and June
meetings were held online this year, due to the
impact of Covid-19. Attendance by individual
Directors at Board and scheduled Committee
meetings was as follows:

Director

John Duffy
Steve Boyd
Peter Baker
Bob Beveridge
Ray Duignan
Marnie Millard

Board
Meetings
(5 meetings)

Audit
Committee
(3 meetings)

Remuneration
Committee
(2 meetings)

5
5
5
5
5
5

-
-
-
3
3
-

-
-
-
-
2
2

The Company’s Non-Executive Directors
are expected to commit between 15-18 days
per year to the Company and the Chairman
is expected to commit at least 3 days per
month to the Company. Terms of reference
for the committees are published on the
Group’s website. The committees have the
necessary skills and knowledge to discharge
their duties effectively.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance42

Report on Corporate Governance/Continued

6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Non-Executive Directors have both the breadth and depth of skills and experience to fulfil their roles. With the Executive Team, the Board
contains a broad range of relevant skills, experience and contacts which are deployed to the benefit of the Company. Details of the Directors’
individual experience and areas of expertise are outlined on pages 44 and 45. The Nominations Committee is responsible for considering board
composition, including diversity issues and making appropriate recommendations. Diversity and gender balance will be taken into account in
respect of any future Board appointments with the overriding objective of securing the right person for the role.

The Non-Executive Directors met during the year without executives present and maintain ongoing communications with executives between
formal meetings.

In addition to their general Board responsibilities, Non-Executive Directors are encouraged to be involved in specific workshops or meetings, in line
with their individual areas of expertise.

The Audit Committee Chairman updates his technical and financial experience by attending workshops held by the major accounting firms.

The Remuneration Committee utilises specialist remuneration consultants to provide advice in relation to remuneration policy decisions and the
Board utilises specialist pension advisers to provide advice in relation to Group pension arrangements.

All Directors have access to the Company Secretary, who is responsible for ensuring that Board procedures are followed and that the Company
complies with all applicable rules, regulations and obligations governing its operation. If required, the Directors are entitled to take independent
legal advice and if the Board is informed in advance, the cost of the advice will be reimbursed by the Group.

7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board evaluation exercise is designed and led by the Company Secretary, working closely with the Chairman of the Board. Anonymous questionnaires
are used to promote disclosures with the results being collated and returned to the Board for consideration and action where appropriate.
The areas covered are structure and skills, operating effectiveness, operating efficiency, quality of information and ongoing development.

During the year under review, the Non-Executive Directors undertook a review of the performance of the Chairman. The Chairman also met on an
on-going basis with Executive Directors and the Non-Executive Directors to discuss their performance and any suggestions they have for improving the
function of the Board. All reviews sought feedback from other directors to ensure a balanced approach.

In respect of succession planning, the Company has, where possible, identified internal candidates as possible replacements for senior managers/site
managers. In the event of a site manager leaving the Company in a situation where an internal candidate has not been identified or has been deemed
not to have the requisite experience, the Company will seek to recruit externally.

The 2019 Board evaluation exercise was completed in June 2019 with evaluation scores improving relative to the 2018 evaluation exercise.
No particular areas for development were noted. Key areas of improvement included the level of interaction between the Non-Executives Directors
and the Executive Directors and divisional Managing Directors in terms of challenging, agreeing and finalising the Group’s strategy.

8. Promote a corporate culture that is based on ethical values and behaviour
As an innovative food business in a highly competitive market our success depends crucially on people who care and are fully engaged to
do their best for Finsbury. The values of Communication, Respect, Ownership, Honesty and Teamwork are integral to the corporate culture.
The management of the Group and all bakeries is underpinned by the Operating Principles which are:

• Operating excellence;
• Sustainable approach;
• Quality and innovations;
• Cost effectiveness;
• Growth with our partners; and
• People who care.

By visiting all sites during the year, the Board is able to talk to staff and observe behaviour in order to satisfy itself on the status of the culture.

The Group has rolled out Workplace by Facebook to facilitate promotion of the corporate culture and values, communication across the Group
and sharing of ideas and best practice through all our sites and across all staff. Senior staff attend an annual conference which is again based on
communicating and embedding our core values throughout the business. A survey of employee engagement is also carried out every two years to
assess employee engagement with our corporate values and satisfaction with the Group and the employee experience.

Finsbury Food Group Annual Report and Accounts 2020Strategic Report

Corporate Governance

Financial Statements

Finsbury Food Group
Annual Report and Accounts 2020

Report on Corporate Governance/Continued

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board is committed to high standards of corporate governance and has chosen to adopt the QCA Corporate Governance Code and to join the
QCA. We review our corporate governance arrangements regularly and expect to evolve these over times.

The Board has reviewed the schedule of matters reserved for its decision during the year. These matters include:

• Strategy;
• Acquisition policy;
• Corporate governance;
• Risk management;
• Health and safety;
• Approval of major capital expenditure;
• Approval of annual budgets;
• Approval of Annual Reports; and
• Dividend recommendations and policy.

The Board delegates authority to three Committees to assist in meeting its business objectives while ensuring a sound system of internal control
and risk management. The Committees meet independently of Board meetings.

Audit Committee
The Audit Committee has two members, Bob Beveridge (Chairman) and Ray Duignan. The Group Finance Director and external auditors attend
meetings by invitation. The Audit Committee’s responsibilities include the review of the scope, results and effectiveness of the external audit, the
review of half-year and annual accounts, and the review of the Company’s risk management and internal control systems. The Committee had three
scheduled meetings three times during the year. A separate report of the Audit Committee activities is outlined on pages 50 and 51.

Remuneration Committee
The report of the Remuneration Committee is set out on pages 52 to 56. The Audit Committee has two members, Marnie Millard (Chairman) and
Ray Duignan. The Committee is responsible for setting the remuneration arrangements, including short-term bonus and long-term incentives, for
Executive Directors as well as approving, the remuneration principles for senior staff. The Committee had two scheduled meetings during the year.

Nominations Committee
The Nominations Committee has two members, Peter Baker (Chairman) and Ray Duignan. The Nominations Committee considers succession planning,
reviews the structure, size, skills, diversity and composition of the Board and nominates candidates to fill Board vacancies. Although the Committee met
informally twice, no formal scheduled meetings of the Nominations Committee were considered necessary during the year under review.

Group Executive Committee
In addition to the Board Committees, the Company has a Group Executive Committee comprising the CEO and a team of senior executives
supporting him in the delivery of the strategy and running of the Company.

10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Board maintains a general policy of keeping all interested parties informed by regular announcements and update statements. In doing this,
we keep in mind the proportions of direct, nominee and institutional shareholders, and distribute communications between them accordingly.
The Company retains a financial PR firm to assist it in ensuring that key messages reach the appropriate audiences.

Specific methods of communication are:

• The Annual General Meeting;
• The Annual Report;
• Corporate website;
• Broker briefings;
• Broker and analyst visits to operating sites; and
• One-to-one meetings with investors.

The Board believes its shareholder communications to be healthy, effective and appropriate bearing in mind the composition of its shareholder
register. The Annual General Meeting provides a forum for shareholders to air their views, ask questions and talk to the Board inside and outside
of the formal meeting. It is primarily attended by members of our retail shareholder base. Meetings throughout the year with key institutional
shareholders (by the Executive and Non-Executive Board members) help to ensure that the Board is kept up to date with shareholder sentiment on
key issues and is able to take it into account where necessary and appropriate. The Company has also sought to provide a comprehensive website to
educate and inform all interested parties about the Company’s business, strategy and values.

Shareholders with a specific query can contact us on finsbury@almapr.co.uk or for company secretarial matters on
company.secretary@finsburyfoods.co.uk.

Peter Baker
Chairman
18 September 2020

The Directors

Better…
skills for
future growth

The Board is made of up two Executive
Directors, three independent Non-Executive
Directors, and the Chairman, Peter Baker,
who is also considered to be independent.
The matters overseen by the Board are
detailed in section 9 of the Corporate
Governance Report.

Peter Baker
Non-Executive
Chairman

Appointed to the Board
1 July 2014

Peter joined the Board on 1 July 2014
and is also Chairman of the Nominations
Committee. Peter has over 30 years’
senior CEO and Board level experience
within the global bakery and consumer
packaged goods industry. He chairs one
other Board, is a Non-Executive Director
and a Trustee of two charities. Peter held
the position of Managing Director of
Maple Leaf Bakery from 2009 to 2013,
moving into this position after the sale
of La Fornaia Bakeries, where he was
the CEO. Prior to these roles, Peter held
COO and Divisional Managing Director
positions at RHM in the Consumer
Brands, British Bakeries and Cereals
Divisions (including Rank Hovis Mills).
Peter was previously a Non-Executive
Director at Jordan’s Cereals, now a part
of Associated British Foods.

He has also served as Vice President
of CIAA now Food Drink Europe (a
European trade association for food
and drink) and was on the Executive
Board of FDF, the UK Food and Drink
Federation. Key areas of expertise are
knowledge of food industry, strategy,
change management, leadership,
corporate governance.

John Duffy
Chief Executive
Officer

Appointed to the Board
30 September 2009

John was appointed CEO of Finsbury
Food Group with effect from 30
September 2009 to lead a turnaround of
a then overleveraged and decentralised
Group. Through a combination of
strong organic growth, M&A activity,
restructuring and investment, it has been
transformed into a broadly diversified
speciality bakery Group with over £300
million of sales across both retail and out
of home channels in the UK and Europe.

Following an engineering degree and
initial career with Shell International,
John completed a full-time MBA
before pivoting into the food industry
and enjoying 10 years in director
level manufacturing and logistics
roles at Mars. This was followed
by private equity experience as
Operations Director at crisps and
snacks manufacturer Golden Wonder
and Managing Director of WT Foods’
largest chilled foods subsidiary, Noon
Products, before and after its sale to
Kerry Foods. John has non-executive
director experience in both start-up and
established businesses.

Key area of expertise are strong
leadership and general management
skills, operations and engineering
experience, turnaround and change
management, M & A.

Finsbury Food Group Annual Report and Accounts 2020The Directors/Continued

Steve was appointed Group Finance
Director in January 2010. Steve has spent
24 years in the food manufacturing
sector and previously was Group Finance
Director at Golden Wonder. Subsequent
to that, he was Group Finance Director
and Chief Operating Officer at WT
Foods Group Plc. Steve worked with
John Duffy at both Golden Wonder
and WT Foods. Key areas of expertise
are strong financial management and
cost control, M&A, investor relations,
financing, strong leadership and general
management skills.

Stephen Boyd
Group Finance
Director

Appointed to the Board
January 2010

Raymond Duignan
Non-Executive
Director

Appointed to the Board
July 2013

Raymond was appointed to the Board
in July 2013. He has extensive industry
experience, having set up a specialist
investment bank, Stamford Partners, in
the mid-1990s, advising the European
food and drink industries, with clients
including many blue chip companies.
Key areas of expertise are strategy,
finance and detailed knowledge of the
European food and drink industry.

Marnie Millard
Non-Executive
Director

Appointed to the Board
1 February 2016

Marnie was appointed to the Board on
1 February 2016. Marnie, is currently
Group Chief Executive of Nichols Plc,
an AIM-listed branded soft drinks
group, serving both the UK retail
and out of home channels, as well as
achieving international sales across 85
countries. Marnie joined the Nichols
group in October 2012 as MD of Vimto
Soft Drinks. She has worked in the soft
drinks industry for the last 25 years
in a number of senior roles, including
with Macaw Soft Drinks and Refresco
Gerber Ltd. She was appointed Nichols
Plc Group Chief Executive in May 2013.
Marnie also Chairs the board of UA92
and is the current President of the
Soft Drinks Industry. Marnie chairs the
Remuneration Committee. Key areas
of expertise are sales and marketing,
manufacturing, supply chain and
international trade.

Bob Beveridge
Non-Executive
Director

Appointed to the Board
1 July 2017

Bob was appointed to the Board on 1 July
2017. He is a Chartered Accountant with
extensive financial management, city
and corporate transaction experience
in consumer goods and technology
companies, including Cable & Wireless
Communications Plc, Marlborough
Stirling Plc, and McBride Plc, a European
private label manufacturer. For the
last 8 years he has been a portfolio
Independent Director and Audit
Committee Chairman and is currently
Senior Independent Director on the
Board of Inspiration Healthcare Plc.
He also provides mentoring services
to aspiring and existing Finance
Directors via the Institute of Chartered
Accountants. He chairs the Audit
Committee.
Key areas of expertise are board level
financial skills, risk management,
corporate governance, M&A and digital
technology.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance46

Directors’ Report

Background
The Group is a speciality bakery group which is focused on premium, celebration and well-being products. These products are supplied both under
the retailers’ own brands and through a number of licensed brands to which the Group has access.

A review of the activities and any likely future developments in the business of the Group is given in the Chairman’s Statement, Chief Executive’s
Report and the Strategic Report on pages 1 to 39.

Dividend
The Coronavirus crisis has had a profound impact on the economy and heightened uncertainty around future economic recovery, therefore the
Board took the decision as announced on 29 March 2020, to withdraw its proposed interim dividend. While the Board remains committed to the
payment of dividends, it believes it is prudent to conserve the Group’s cash at this time of heightened instability. The Board will assess the Group’s
cash position and the outlook for the business at time of the full year results, and will adjust its approach to the final dividend accordingly. It is the
Company’s intention to pay dividends at an affordable rate so that the Company can continue to invest in the business in order to grow profits.

Directors and their Interests in the Company
The Directors and brief biographies are detailed on pages 44 and 45.

In accordance with the Articles of Association, Stephen Boyd and Raymond Duignan retire by rotation and being eligible offer themselves for
re-election at the Company’s forthcoming AGM.

The beneficial interests of the Directors in the Ordinary Shares of the Company on 27 June 2020 and 29 June 2019 are set out below:

Ordinary Shares

P Baker
R Beveridge
S A Boyd
J G Duffy
M Millard

27 June 2020

29 June 2019

96,817
14,000
1,095,543
2,443,679
9,366

Details of Directors’ share options are set out in Note 6 to the Financial Statements. There has been no change to the Directors’ share interests since
27 June 2020.

Details of the emoluments of the Directors are given in Note 6 to the Financial Statements.

Share Capital
Details of the changes in the share capital of the Company during the year are set out in Note 25 to the Financial Statements.

Substantial Interests
The following substantial interests (3 percent or more) in the Company’s issued share capital have been notified to the Company as at 28 August 2020:

Ruffer (London)
FIL Investment International (London)
Investec Wealth & Investment (RS) (London)
Canaccord Genuity Wealth Mgt (London)
Premier Miton Asset Mgt (London)
London Finance & Investment Group (London)
Hargreaves Lansdown Asset Mgt (Bristol)

Research and Development
Research and development (R&D) expenditure is expensed in the year in which it is incurred.

Number of shares

% shareholding

25,772,674
13,123,829
11,590,894
10,194,522
9,446,639
6,000,000
4,202,315

19.8
10.1
8.9
7.8
7.2
4.6
3.2

Finsbury Food Group Annual Report and Accounts 2020

Directors’ Report/Continued

Streamlined Energy and Carbon Reporting
The UK Government’s Streamlined Energy and Carbon Reporting (SECR) policy was implemented on 1 April 2019, this is the Company’s first time
adoption of disclosures on energy and carbon. The table below represents Finsbury Food Group’s energy use and associated greenhouse gas (GHG)
emissions from electricity and fuel in the UK for the year ended 27 June 2020. The data covers 7 manufacturing sites in the UK.

UK Greenhouse gas emissions and energy use data for the period 30 June 2019 to 27 June 2020

Energy consumption used to calculate emissions (kWh)

Total Energy Consumption (kWh)
Energy consumption break down (kWh):
Natural gas
Electricity
Transport
Diesel
LPG

Scope 1 emissions in metric tonnes CO2e
Natural gas
Refrigerant emissions
Diesel
LPG
Company owned/leased vehicles

Scope 2 emissions in metric tonnes CO2e
Purchase of electricity
Private vehicles on company business
Total gross emissions in metric tonnes CO2e
Intensity ratio tonnes CO2e per tonne produced

kWh

106,904,756

67,208,470
38,714,433
433,331
367,909
180,613

tonnes CO2e

12,357.62
179.90
93.00
38.74
18.85

9,025.88
85.28
21,799.27
0.18

Emission factors are based on Government published 2020 GHG conversion factors.

Finsbury Food Group – SECR Methodology Statement 2020
The SECR submission has been compiled using the 2019 HM Government Environmental Reporting Guidelines.

Emissions have been grouped according to the GHG Protocol Corporate Standard.

We have used the following data sources for the report for the:

• Energy and Fuel Data – Energy supplier billing data and electricity half hour data;
• Transport Data – Company mileage records; and
• Refrigerant Emissions – Engineering maintenance records.

CO2 emissions have been calculated using the 2020 UK Government Conversion Factors for Company Reporting.

Emissions have been calculated for the company financial year 30 June 2019 to 27 June 2020.

Directors and Officers Liability Insurance
The Company maintains a Directors and Officers liability insurance policy.

Financial Instruments
The Group’s financial instruments comprise a revolving credit facility, cash and liquid resources, and various items arising directly from its
operations, such as trade creditors. The main purpose of these financial instruments is to finance the Group’s acquisitions and operations. It is the
Group’s policy that no trading in financial instruments shall be undertaken.

The bank facility is a £55.0 million revolving credit facility provided by a club of three banks – HSBC, Rabo Bank and RBS. The facility is available until
February 2023 and also includes scope for the facility to be increased by up to a further £35.0 million.

The main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk. The Board reviews and agrees policies for
managing these risks, which have remained substantially unchanged for the year under review. The policies are summarised below:

Interest Rate Risk
The facility totalling £55.0 million available, of which £36.2 million was drawn at 27 June 2020 leaving a headroom of £18.8 million plus a cash
balance of £10.2 million with a further approved accordion facility of £35.0 million. The interest rate risk is managed through interest rate swap
transactions. The Group has two interest rate swaps. A five-year swap from 3 July 2017 with a coverage of £20.0 million fixed at a rate of 0.455% and
a three-year swap from 28 March 2019 with a coverage of £5.0 million fixed at a rate of 1.002%.

The counterparty to these transactions is HSBC Bank Plc.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance48

Directors’ Report/Continued

Foreign Exchange Risk
The Group uses forward foreign exchange contracts to manage its exposure to fluctuations in foreign currency rates. Full details are given in Note 23.

Diversity
Finsbury Food Group is committed to encouraging diversity, promoting a diverse culture where everyone is treated with respect and valued for
their individual contribution and creating a work environment free of bullying, harassment, victimisation and unlawful discrimination. We have a
Diversity Policy in place to ensure that selection for employment, promotion, development or any other benefit is on the basis of merit and ability
and does not impact negatively upon diversity. It is a key objective to ensure that all employees are helped and encouraged to fulfil their potential.

Equal Opportunities
It is our policy to ensure equal opportunity in recruitment, selection, promotion, employee development, training and reward policies and we have an
equal opportunities and diversity policy in place. It is a key objective to ensure that successful candidates for appointment and promotion are selected
taking account of individual ability, skills and competencies without regard to age, gender, race, religion, disability or sexual orientation.

Involvement of Employees
Employees are key to the Company’s success and we rely on a committed workforce to help us achieve our business objectives. Employees are
encouraged to operate in an open environment, embracing teamwork and aligning personal development with the strategy of the business and
their behaviours with Company values. We are keen to engage our employees by providing an environment where they can contribute their own
ideas and challenge those of others. We are committed to involving employees and consider that good communication helps to achieve this.
All sites have regular briefings, employee forums and communication mechanisms which are designed to keep colleagues informed of, amongst
other things, the financial and economic factors that affect the Company’s performance. Many sites also hold open days to allow employees’
families to see the environment in which their family members work. We have also rolled out Workplace by Facebook across the Group to improve
communication between employees, increase engagement and drive forward idea generation and sharing of good practices.

Political and Charitable Contributions
During the year charitable donations amounting to £9,000 (2019: £9,000) were made. No political donations were made.

In response to the pandemic and support needed in the local communities we provided charitable food donations to NHS and key workers as well as
local care homes.

Going Concern
There have been major disruptions to markets since March 2020 as a result of the impact of the Covid-19 pandemic. Post Covid-19 consumer
spending behaviour and lifestyle choices are an unknown. Since the start, the Company has been guided by clear priorities to protect employees,
safeguard supply, respond to new patterns of consumer demand and to preserve cash. The response by the Company to mitigate cash outflows
was swift and proportionate with prioritisation and limitation of capital expenditure, salary reductions across senior executives, use of the furlough
scheme and cancellation of interim dividend. We have continued our close working relationship with our banking partners and have full support
with a reset of debt: EBITDA covenant tests at 26 December 2020 and 26 June 2021. Debt levels have decreased over the year by £9.1 million to
£26.5 million with a debt to adjusted EBITDA measure of 1.1x down from 1.4x at 29 June 2019.

With knowledge and experience since lockdown a bottom-up full year 2021 budget and strategic forecast to June 2023 has been compiled,
challenged and sensitivities have been considered. Our supply chain and manufacturing have been robust when faced with unprecedented
fluctuation in demand. Revenue trends have improved over the final quarter, with April 24% down year on year, May, 19% down and June 14% down.
The Group has a debt facility to February 2023 of £55.0 million with scope for the facility to be increased by up to a further £35.0 million, providing
increased capacity for the Group to explore future growth opportunities and support its long-term investment strategy and the Group has a
relatively conservative level of debt to earnings. Having taken all the above factors into account the Directors believe that it remains appropriate to
prepare the accounts on a Going Concern basis.

Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution for the appointment of PricewaterhouseCoopers LLP as auditors is to be
proposed at the forthcoming AGM.

• So far as each Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
• Each Director has taken all the steps that they ought to have taken as a Director in order to make himself or herself aware of any relevant audit

information and to establish that the Company’s auditor is aware of that information.

The Directors’ Report was approved by the Board of Directors on 18 September 2020 and was signed on its behalf by:

Stephen Boyd
Director

Finsbury Food Group Annual Report and Accounts 2020The Group Executive Committee

The Executive Directors are responsible for implementing and
achieving the strategy through the day-to-day running of the
business. They are supported by a team of Executives on the
Group Executive Committee.

Ian joined Finsbury Food Group in 2005.
He now has 24 years’ experience in
the food industry as well as 19 years’
experience in process control in non-
food manufacturing. Ian’s first role in
food was in engineering and operations
for a prepared vegetable business,
before moving to chilled high-care food
manufacturing with Food Partners,
where he was Managing Director.

Jackie joined Finsbury Food Group in
2015. She has over 21 years’ experience
in the food manufacturing sector.
Before joining Finsbury she was HR
Director at Burton’s Biscuit Company
for a number of years and also worked
in the meat processing sector. Her early
roles were operational and HR positions
within Rank Hovis McDougall, having
completed their graduate programme.
Jackie holds a BA Hons degree from
the University of Leeds and a Diploma
in Personnel Management as well as
qualifications in occupational testing.

Simon joined Finsbury Food Group
in 2005 as Managing Director of
the Nicholas & Harris speciality
bread business. Before this he was a
Commercial Director at Greencore.
This followed a long career at Unigate,
having joined after graduating from
Manchester University with a degree
in Management Sciences. He held
many roles within the St.Ivel division,
including Sales Director. Simon has
been Managing Director of Finsbury’s
bread business for the last 3 years.

Ian Chree
Group Efficiency
Improvement
Director

Jackie Kent
Group Human
Resources Director

Simon Staddon
Managing Director
– Bread and
Morning Goods

Sat joined Memory Lane Cakes in 1998
as a Packaging Buyer. Memory Lane was
subsequently acquired by Finsbury Food
Group and Sat progressed to his current
position. After studying Chemical
Engineering, Sat started his career with
Cima Foods as a Process Controller.
He moved to the purchasing side
of the business looking after juice
procurement and logistics. Cima was
acquired by Princes Foods and during
his 15 years with the company, Sat
progressed to Senior Buyer, before his
move to Memory Lane.

Frances joined Finsbury Food Group in
October 2009. She has worked in the
food industry for over 30 years, 20 of
them at Technical Executive or Director
level. Previous positions include senior
roles at Greencore, Fresh-Pak, Geest
Prepared Foods and United Biscuits
in a range of operational, technical,
manufacturing and engineering roles.

Sat Hanspal
Group Purchasing
Director

Frances Swallow
Group Technical
Director

Lawrence joined Finsbury Food Group
in May 2009 as Cake Sales Director,
progressing to his current role in 2015.
He offers over 21 years’ senior and Board-
level experience in the UK FMCG industry.
Before joining Finsbury, Lawrence was
Director of Sales at Allied Bakeries, having
been with the firm for seven years.Prior to
this Lawrence had sales roles in the media
industry for companies such as Shop
Smart and Katz media.

Lawrence Trist
Managing Director
– Cake

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance50

Audit Committee Report

As Chairman of the Audit Committee I am pleased to outline below the responsibilities of the Committee and how the Committee has carried these
out during the year.

Overview
The Committee met three times during the year. The external auditors attended all meetings at the invitation of the Committee Chairman.
The Committee also met with the external auditors without the presence of Executive Directors or management.

Terms of Reference
The principle duties carried out in the year were to:

Review and monitor the integrity of the Financial Statements, reviewing significant financial reporting issues and judgements which they contain,
and recommend to the Board whether the Financial Statements give a fair, balanced and understandable view of the Group’s assets, liabilities and
financial position.

Receive reports on and keep under review the effectiveness of the internal controls and risk management processes, carry out an annual
assessment of these processes and approve statements to be included in the Annual Report concerning internal controls and risk management.

Oversee the Company’s relations with the external auditors and consider and make recommendations on the appointment, reappointment and
removal of the external auditors.

Monitor and review the effectiveness of the internal audit programme in the context of the overall risk management system to ensure that
the internal audit is operating efficiently and effectively within the organisation, review and assess the internal audit plan and reports,
recommendations and management responses.

Financial Reporting
During the year, the Committee concluded that the Annual Report and Financial Statements, taken as whole, were fair, balanced and
understandable and provided the information necessary for shareholders to assess the Group’s business model, strategy and performance.
During the year, the Committee considered the following key matters of judgement:

• Revenue recognition policy;
• Valuation of goodwill and intangible assets;
• Impairment;
• Pensions; and
• Significant non-recurring items.

In terms of Going Concern the Committee considered the impact of Covid-19 on the budget for 2021/2 and a range of scenarios for both the budget
and the business plan for 2023/24 including a reasonable worst-case scenario. It was concluded that the Going Concern basis is appropriate.

The Committee reviewed the full-year and half-year results announcements, Annual Report and Financial Statements and considered reports
from the external auditors. The Committee also reviewed the Strategic Report and concluded that it presented a useful and fair, balanced and
understandable review of the business.

External Audit
The Committee considered the effectiveness of the audit, which was the second audit undertaken by PwC. The audit process was more efficient
than previous years due to the use of new communication systems and a common business system used for the full year throughout the major sites.
The discussions relating to judgemental items were carried out in a timely manner and the audit challenges were rigorous and appropriate.

During the year, the fees paid to the auditors, PwC, were £183,000 (2019: £193,000 for audit services, and £20,000 (2019: £nil) for non-audit
services. No services were provided pursuant to contingent fee arrangements.

The Committee reviewed and considered a number of factors to assess the auditors’ objectivity and independence, including their internal
procedures, the degree and nature of challenges and scepticism shown by the partner. The Committee is satisfied with PwC’s independence,
objectivity and expertise and believes the Group is subjected to a rigorous audit process. The Board will recommend their ongoing appointment
at the AGM.

Finsbury Food Group Annual Report and Accounts 2020Audit Committee Report/Continued

Risk Management and Internal Controls
The risk management process this year was improved by incorporating it into the early stage of the strategic planning process. A report was prepared
that identified the risks, the procedures in place to mitigate those risks and uncertainties and the potential impact on the Group. The Committee
reviewed this report and reported its views to the Board. The principal risks and uncertainties to which the Group is exposed are set out in the Strategic
Report on pages 30 to 33.

During the year the Committee completed a full review and refresh of the Group’s internal Control Framework, across five key process risk areas and
approved revised delegated authorities. Related IT controls have been implemented, following the completion of the roll out of the new Financial M3
system. Policies and controls have now been harmonised across all sites and a process of a regular review of the Consolidated Statement of Financial
Position has been introduced. It was agreed that the revised Controls Framework would provide a robust structure for future internal audit reviews.

A programme of rolling internal audit reviews was reviewed by the Committee together with follow up actions required. In particular the reviews
this year focused on the implementation of the new M3 financial system and there were no material matters arising. The Committee agreed new
internal audit procedures based on compliance with the new internal Control Framework.

Whistleblowing
The Committee considered reports of whistleblowing from the independent service provider and during the year approved a new policy to clarify
the circumstances in which it is appropriate to use the whistleblowing procedure and to explain the legal protection for employees.

Other Matters
During the year the Committee completed a deep dive into cyber-security and received an independent assessment from Willis Tower Watson.
The NCSC Cyber Essentials accreditation was achieved and the business is working to obtain the Essentials plus rating in 2021.

The Committee also received a presentation from the Group’s Health and Safety Manager, outlining progress on the strategy. HSE engagement has
increased significantly and goals agreed for all sites. Workplace is now used for inter-site communications and sharing best practices.
The Committee recognised significant improvement during the past year.

Additional duties were to review foreign exchange, interest rate and commodity hedging policies, review the Group’s insurance policies and a review
of the Audit Committee’s effectiveness.

Conclusion
Having given due and full consideration to all the matters referred to above, the Committee is satisfied that the Group has in place effective
internal control systems and risk management process. The Committee is also satisfied that the Financial Statements present a fair, balanced and
understandable view and provide shareholders with the necessary information to assess the Group’s position and performance, strategy
and business model.

Bob Beveridge
Chairman of the Audit Committee

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance52

Directors’ Remuneration Report (unaudited)

Statement from the Chairman of the Remuneration Committee
Dear Shareholder,

I am delighted to present the Directors’ Remuneration Report as Chair of the Remuneration Committee of Finsbury Food Group for the year ended
27 June 2020.

A copy of our Directors’ Remuneration Policy (the “Policy”) which has been applied since 2017-18 is available on our website at
www.finsburyfoods.co.uk/investor-relations/corporate-governance.

The Annual Report on Remuneration which is on pages 52 to 56 provides details of the amounts earned in respect of the year ended 27 June 2020.

Similar to previous years and as a matter of best practice, the Annual Report on Remuneration has been prepared taking into account the
remuneration reporting regulations applicable to fully listed companies in the UK.

Review of the 2019-2020 Financial Year and Remuneration Outcome
The first half of the financial year 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 experienced 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. This impacted the financial performance of the Group with revenue and profit
below the prior year levels. As set out on page 54, based on adjusted EBITDA performance of £24.4 million (pre first time adoption of IFRS 16),
the Executive Directors did not earn a bonus for 2019-2020.

The Board also elected to take a 30% salary reduction between 1 April 2020 and 30 June 2020. This reduced the salary costs of the Group
during this period. I would like to thank the Board for supporting the organisation during 2020.

The LTIP awards granted on 26 October 2017 were based on a three year performance period ending on 27 June 2020. The LTIP awards have lapsed. EPS
(50% of the total award) as at 27 June 2020 was 7.70p which was below the threshold EPS target of 10.29p; and relative total shareholder return (“TSR”)
performance (50% of the total award) was below the threshold target of being ranked at median against the FTSE Small Cap (excluding investment).

The Committee awarded nil-cost share options as Performance Share Plan (“PSP”) awards under the LTIP to Executive Directors, (and participants
including senior management), during the year. The number of shares awarded to each Executive Director was equivalent to 100% of salary based
on the average price of the shares over the three business days immediately prior to the end of the Company’s financial year ended 29 June 2019.

As outlined in the Directors’ Remuneration Report last year, in order to recognise the contribution made and the importance of retaining and
motivating the Executive Directors and the wider management team, the Committee also made an additional nil-cost share option award as
Restricted Stock Awards (“RSA”). These awards are subject to continued employment for three years from the date of grant. The number of shares
awarded to each Executive Director was equivalent to 100% of salary based on the closing price of the shares on the day prior to grant.

These awards and the respective conditions are detailed on page 56.

Remuneration in respect of the 2020-2021 Financial Year
The Committee is mindful of external developments linked to Covid-19. None of us are currently certain what the impact will be, or how long it
will be felt. As set out below, we will proceed with great care in determining the operation of our Policy as detailed on www.finsburyfoods.co.uk/
investor-relations/corporate-governance. for the year ending 26 June 2021. We will monitor business conditions and exercise judgement in applying
discretion relating to 2020-2021 remuneration in the context of all relevant factors.

Salary and Fees
No base salary increases are proposed for the Executive Directors for the year ending 26 June 2021. The next review of Executive Directors’ salaries
will be undertaken in October 2021. It is intended that the Executive Directors’ salaries will increase in line with the general increases applied to the
wider workforce.

Following a review of the Chairman and Non-Executive Directors’ base and additional fees, it was agreed no changes will be made to the base fee
and additional fees for the Chairman and Non-Executive Directors for the year ending 26 June 2021.

Annual Bonus
No changes are proposed to the bonus opportunity. The maximum bonus opportunity for the Executive Directors will be up to 100% of salary.
The annual bonus will continue to be based on adjusted EBITDA performance as the Committee considers this to be the most appropriate short
term measure for assessing Executive Directors performance. At year-end, when we determine the performance outcomes for the year, we will
be thoughtful in our assessment of results, balanced with the shareholder and workforce experience. Details of the performance targets for the
2020-2021 bonus will be reported in the 2021 Annual Report.

LTIP
Awards under the LTIP will be made following the announcement of our results. The maximum opportunity for the Executive Directors will be 100%
of salary. The LTIP awards will be subject to EPS and relative TSR performance conditions. The targets will be disclosed in the Remuneration Report
next year.

Marnie Millard
Chairman of the Remuneration Committee
18 September 2020

Finsbury Food Group Annual Report and Accounts 2020Directors’ Remuneration Report (unaudited)/Continued

The full policy can be viewed in the investor section of the website at www.finsburyfoods.co.uk/investor-relations/corporate-governance.

The main aim of the Company’s Policy is to align the interests of Executive Directors with the Company’s strategic vision and the long-term creation
of shareholder value. The Company aims to provide returns to shareholders through both organic and acquisitive growth. The Policy is intended to
remunerate our Executive Directors competitively and appropriately for effective delivery of this and allows them to share in this success and the
value delivered to shareholders. The Policy is based on a broad set of remuneration principles:

• Promote shareholder value creation;
• Support the business strategy;
• Promote sound risk management;
• Ensure that the interests of the Directors are aligned with the long-term interests of shareholders;
• Deliver a competitive level of pay for the Directors without paying more than is necessary to recruit and retain individuals;
• Ensure that the Executive Directors are rewarded for the contribution to the success of the Group and share in the success delivered to

shareholders; and

• Motivate the Directors to deliver enhanced sustainable performance.

Unaudited Annual Report on Remuneration

Single Total Figure of Remuneration
The tables below detail the total remuneration earned by each Director in respect of the financial years ended 27 June 2020 and 29 June 2019:

2020

Executive Directors
J G Duffy
S A Boyd

Non-Executive Directors
P Baker
R Beveridge
R P E Duignan
M J Millard

Salaries/
fees
£000

Taxable
benefits
£000

Annual
bonus
£000

LTIP1
£000

Total
remuneration
£000

394
274

668

79
51
53
51
234
902

12
12

-
-
-
-
-
24

-
-

-
-
-
-
-
-

-
-

-
-
-
-
-
-

406
286

692

79
51
53
51
234
926

To mitigate cash outflows at the outset of the pandemic the Directors elected to take a 30% salary reduction between 1 April 2020 and 30 June 2020.
This reduced the salary costs of the Group during this period. This reduction is reflected in the Executive Director and Non-Executive Director base
salaries and fees in the table above.

2019

Executive Directors
J G Duffy
S A Boyd

Non-Executive Directors
P Baker
R Beveridge
R P E Duignan
M J Millard
Z Morgan

Salaries/
fees
£000

Taxable
benefits
£000

Annual
bonus
£000

LTIP1
£000

Total
remuneration
£000

420
294

714

85
56
57
53
59
310
1,024

12
12

-
-
-
-
-
-
24

-
-

-
-
-
-
-
-
-

-
-

-
-
-
-
-
-
-

432
306

738

85
56
57
53
59
310
1,048

No long-term incentive awards vested with respect to a performance period ending during the year to 29 June 2019 or with respect to a
performance ending during the year to 27 June 2020.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance54

Directors’ Remuneration Report (unaudited)/Continued

Notes to the Table

Base Salaries
The base salaries for the Executive Directors are set with effect from 1 October each year. The salaries in the financial years ended 29 June 2019 and
27 June 2020 were as follows:

Executive Directors
J G Duffy
S A Boyd

From 1 October 2018
£420,000
£294,200

From 1 October 2019
£427,980
£299,790

Percentage increase
1.9%
1.9%

As outlined in the single figure table on page 53, the Executive Directors elected to take a 30% salary reduction between 1 April 2020 and 30 June
2020. This reduction is not reflected in the base salaries in the table above.

Taxable Benefits
The taxable benefits for the Executive Directors in the year included a car allowance and private medical insurance. The Executive Directors do not
receive a pension allowance.

Annual Bonus
The annual bonus is the total value of the bonus earned in respect of the financial year (including the amount delivered in shares). For the financial
year ended 27 June 2020 Executive Directors were able to earn a bonus of up to 100% of annual base salary subject to the achievement of stretching
EBITDA performance targets. Based on adjusted EBITDA performance of £24.4 million, the threshold adjusted EBITDA target of £27.7 million was not
achieved. Thus, the Executive Directors did not earn a bonus for 2019-2020.

The following table sets out the bonus pay-out to the Executive Directors for 2019-20 and how this reflects EBITDA performance for the year.

Performance measure
Earnings before interest, tax, depreciation
and amortisation (EBITDA)

Actual performance

Resulting level of award
for each Executive as a
percentage of salary

Bonus to be paid

EBITDA £24,408,000

nil

Long-term Incentives
Awards granted on 26 October 2017 were based on performance over the three financial years to 27 June 2020 and vested as to the amounts set out
below. These awards are subject to a two-year holding period.

Performance conditions

Actual performance % of this element vesting

% of award

50% of the award subject to
adjusted diluted Earnings Per
Share in the final year of the
performance period

50% of the award based upon
Relative Total Shareholder
Return against the FTSE Small
Cap (excluding investment
trusts) (“TSR”) over the
performance period

Total % of award vesting

Adjusted diluted EPS

% vesting

Below 10.29p
10.29p
Between 10.29p and 12.46p
12.46p

0
25%
Straight-line vesting
100%

Relative TSR ranking

% vesting

Below median
Median

Between median and
upper quartile
Upper quartile

0
25%

Straight-line vesting

100%

7.7pps

Below median

nil

In arriving at the adjusted EPS out-turn of 7.70p the Committee has excluded the significant and non-recurring costs relating to restructuring
and impairments.

J G Duffy
S A Boyd

Number of
shares granted
438,200
315,269

Number of
shares vesting
nil
nil

Value of LTIP
shares vesting
nil
nil

Finsbury Food Group Annual Report and Accounts 2020

Directors’ Remuneration Report (unaudited)/Continued

Chairman and Non-Executive Director Fees
Details of Chairman and Non-Executive Directors’ fees for 2019-20 are as set out below:

Chairman fee
£85,000

Non-Executive
Director fee
£50,000

Chairman of the
Remuneration
Committee
£5,000

Member of the
Remuneration
Committee
£2,500

Chairman of the
Audit Committee
£5,000

Member of the
Audit Committee
£2,500

As noted in the single figure table on page 53, the Non-Executive Directors elected to take a 30% salary reduction between 1 April 2020 and 30 June
2020. This reduced the salary costs of the Group during this period and are not reflected in the table above.

Payments for Loss of Office Made During the Year
No payments for loss of office were made in the year to any Director of the Company.

Statement of Directors’ Shareholding and Share Interests
The interests of the Directors and their immediate families in the Company’s ordinary shares as at 27 June 2020 and 29 June 2019 were as follows:

Executive Directors
J G Duffy
S A Boyd

Non-Executive Directors
P Baker
R Beveridge
R P E Duignan
M J Millard
Z Morgan

27 June 2020

29 June 2019

2,443,679
1,095,543

96,817
14,000
-
9,366
70,028

The current personal shareholdings of J G Duffy and S A Boyd equate to circa 3.4 and 1.5 times salary respectively.

The interests of the Directors and their immediate families in the Company’s ordinary shares did not change between 27 June 2020 and the date
these accounts were signed on 18 September 2020.

The interests of each Executive Director of the Company as at 27 June 2020 and 29 June 2019 in the Company’s share schemes were as follows:

Executive Director
J G Duffy
J G Duffy
J G Duffy
J G Duffy
J G Duffy
J G Duffy
S A Boyd
S A Boyd
S A Boyd
S A Boyd
S A Boyd
S A Boyd

Date of grant
26/06/2015
04/12/2015
26/10/2017
26/10/2017
21/01/2019
28/10/2019
26/06/2015
04/12/2015
26/10/2017
26/10/2017
21/01/2019
28/10/2019

Number of options
29 June 2019
1,108,881
655,614
410,423
27,777
344,262
-
702,825
476,364
287,492
27,777
241,147
-

4,282,562

Granted
-
-
-
-
-
1,174,090
-
-
-
-
-
833,380

2,007,470

Exercised
(1,108,881)
-
-
-
-
-
(702,825)
-
-
-
-
-

(1,811,706)

Lapsed
-
-
(410,423)
(27,777)
-
-
-
-
(287,492)
(27,777)
-
-

(753,469)

Number of options
27 June 2020
-
655,614
-
-
344,262
1,174,090
-
476,364
-
-
241,147
833,380

3,724,857

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance
56

Directors’ Remuneration Report (unaudited)/Continued

Details of the LTIP awards granted on 28 October 2019 are given in the table below:

Number of shares*

Basis of award**

Performance/vesting period

Performance conditions

J G Duffy

625,310

J G Duffy

548,780

S A Boyd

438,015

S A Boyd

395,365

100% of salary
Nil cost option (PSP Award)

100% of salary
Nil cost option (RSA)

100% of salary
Nil cost option (PSP Award)

100% of salary
Nil cost option (RSA

3 financial years from
30 June 2019

50% subject to EPS growth and 50% subject to
relative TSR (further details below)

3 years from
28 October 2019

Subject to continued employment only

3 financial years from
30 June 2019

50% subject to EPS growth and 50% subject to
relative TSR (further details below)

3 years from
28 October 2019

Subject to continued employment only

The total number of shares awarded under the RSA includes 36,585 options granted under the Company Share Option Plan (CSOP Option) for
both J G Duffy and S A Boyd.

** The value of the shares subject to each PSP Award was calculated using the average price of the shares over the three business days immediately

prior to the end of the Company’s financial year ended 29 June 2019. The value of shares subject to each RSA (including the CSOP Option element)
was calculated using the closing price of the shares on the day prior to grant.

PSP awards will be subject to a further two-year holding period following the end of the performance period; there is no holding period for the RSA.

PSP vesting of 50% of the award will normally be based upon the amount of the adjusted diluted Earnings Per Share (EPS) delivered in the final
Financial Year of the three-year performance period beginning with the start of the Company’s 2020 Financial Year. Below the threshold vesting
target of 9.00p, none of this component of the award will vest. 25% of this component will vest if adjusted diluted EPS is 9.00p with 100% vesting
at 10.72p and vesting determined on a straight-line basis between these figures. This is subject to the Committee’s discretion to adjust vesting
levels and/or substitute such condition with EBITDA target ranges if it considers that such condition is no longer a fair and appropriate measure
of the Company’s financial performance during the performance period, taking into account factors such as the Company’s EBITDA performance
relative to the wider market.

PSP vesting of 50% of the award will be based upon Relative TSR against the FTSE Small Cap (excluding investment trusts) over the performance
period. At below median relative TSR ranking, none of this component of the award will vest. 25% of this component will vest at median ranking,
with 100% vesting at upper quartile or above ranking, and vesting determined on a straight-line basis between these points.

RSA vesting (including the CSOP Option element) is conditional on employment on the third anniversary of grant. The PSP awards are also subject to
a general performance underpin assessing factors, including ROCE and other financial indicators of performance over the performance period,
at the discretion of the Remuneration Committee.

Approval
This Report was approved by the Board on 18 September 2020 and signed on its behalf by:

Marnie Millard
Chair of the Remuneration Committee

Finsbury Food Group Annual Report and Accounts 2020Independent Auditors’ Report to the Members of Finsbury Food Group Plc

Report on the Audit of the Financial Statements

Opinion
In our opinion:

• Finsbury Food Group Plc’s Group Financial Statements and Company Financial Statements (the “Financial Statements”) give a true and fair

view of the state of the Group’s and of the Company’s affairs as at 27 June 2020 and of the Group’s profit and cash flows for the 52 week period
(the “period”) then ended;

• The Group Financial Statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted

by the European Union;

• The Company Financial Statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice

(United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and

• The Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the Financial Statements, included within the Annual Report and Consolidated Financial Statements (the “Annual Report”),
which comprise: the Consolidated Statement of Financial Position and Company Balance Sheet as at 27 June 2020; the Consolidated Statement
of Comprehensive Income, the Consolidated Cash Flow Statement and the Consolidated and Company Statements of Changes in Equity for the
52 weeks ended 27 June 2020; and the notes to the Financial Statements, which include a description of the significant accounting policies.

Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the Financial Statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the Financial Statements
in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.

Our Audit Approach

Overview
Materiality
• Overall Group materiality: £1.5 million (2019: £1.6 million), based on 0.5% of total revenues.
• Overall Company materiality: £1.5 million (2019: £1.2 million), based on 1% of total assets (restricted by Group materiality).

Audit Scope
• We performed full-scope audit procedures in respect of the Group’s five largest manufacturing locations as well as Finsbury Food Group Plc.
• Our audit procedures covered entities contributing 90% of the Group’s revenues for the 52 week period ended 27 June 2020.

Key Audit Matters
• Goodwill impairment assessment (Group).
• Recoverability of the Company investments in subsidiaries (Company).
• Impact of the outbreak of Covid-19 on the Financial Statements (Group and Company).

The Scope of our Audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the Financial Statements. In particular,
we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override
of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due
to fraud.

Key Audit Matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the Financial Statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the
context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. This is not a complete list of all risks identified by our audit.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance58

Independent Auditors’ Report to the Members of Finsbury Food Group Plc/Continued

Key audit matter

How our audit addressed the key audit matter

Goodwill impairment assessment (Group)
At 27 June 2020, the Consolidated Statement of Financial Position includes
£73.2 million of goodwill (2019: £80.7 million).

In accordance with the requirements of IFRS, management has
performed impairment reviews in relation to the goodwill held in the
Group’s cash generating units (CGUs). Management has prepared
value in use calculations for each of the CGUs using board approved
strategic plans. The impairment reviews include significant estimates
and judgements in respect of future growth rates and cash flows, and
the discount rate employed. The Ultrapharm business has developed
slower than expected and additional resource has been invested into
both the UK and Polish businesses. Commercial issues now exacerbated
by Covid-19 have adversely affected cash flows and as a result an
impairment charge of £7.5 million has been recognised.

Recoverability of the Company investments in subsidiaries (Company)
At 27 June 2020, the Company’s Statement of Financial Position
included £112.0 million of investments in subsidiaries (2019: £118.5m).

In accordance with the requirements of IFRS, management has
performed an analysis comparing the carrying amount of the
investments with the calculated value in use (noted above). As a result
of this an impairment of £6.5 million has been noted in relation to
investments in relation to Ultrapharm and Anthony Alan Foods of £3.5
million and £3.0 million respectively. The impairment reviews include
significant estimates and judgements in respect of future growth
rates and cash flows, and the discount rate employed. The Ultrapharm
business has developed slower than expected and additional resource
has been invested into both the UK and Polish businesses which has
resulted in an impairment charge of £3.0 million being recognised. For
Anthony Alan Foods there are no future cash flows to consider hence an
impairment charge of £3.0 million is recognised to write the balance of
this investment down to nil.

We obtained the relevant CGU cash flow forecasts supporting
management’s calculation of value in use and evaluated the
appropriateness of key assumptions. We assessed the methodology
used by management in performing the assessments and challenged key
inputs. Our procedures included:

• Verifying the accuracy of the underlying calculations in the model and
agreeing the cash flow forecasts to the plan approved by the Board;
• Evaluating the appropriateness of forecast cash flows by understanding

management’s process for forecasting, examining the support for
forecast cash flows and assessing CGU specific cash flow assumptions
such as testing the exclusion of cash flows to improve or enhance the
CGU’s performance;

• Evaluating the appropriateness of the projected revenue growth rates

used, both over the short-term to 2023 and over the longer-term, including
assessing the assumptions over the impact of Covid-19 on trading;

• Consideration of prior year and current performance in comparison to

projected results;

• Considering the impact of a range of sensitivities to assess the impact
of reasonably possible changes in key assumptions to those used by
management;

• Evaluating the appropriateness of discount rates used, which included
comparing the rate used to a range provided by our valuation experts;

• Evaluating other key inputs to the cash flows, including the forecast

margins and capital expenditure; and

• Reviewing management’s disclosures in the Financial Statements.

We believe that the assumptions in the value in model and therefore the
impairment recorded are reasonable. We also believe that the disclosures
in the Financial Statements in respect of sensitivities that would result in
further impairment are appropriate.

However, based upon this work, we concur with the assessment performed
and with the impairment charge recognised in respect of goodwill. We
consider that the carrying value of the remaining goodwill balance is
materially correct and we believe that the disclosures in the Financial
Statements are appropriate.

We obtained the relevant subsidiary’s cash flow forecasts supporting
management’s assessments and evaluated the appropriateness of
key assumptions. We assessed the methodology used by management
in performing the assessments and challenged and evaluated key
inputs including:

• Verifying the accuracy of the underlying calculations in the model and
agreeing the cash flow forecasts to the plan approved by the Board;

• Evaluating the appropriateness of forecast cash flows by

understanding management’s process for forecasting, examining
the support for forecast cash flows and assessing subsidiary or CGU
specific cash flow assumptions such as testing the exclusion of cash
flows to improve or enhance the subsidiary or CGU performance;
• Evaluating the appropriateness of the projected revenue growth rates

used, both over the short-term to 2023 and over the longer-term, including
assessing the assumptions over the impact of Covid-19 on trading;

• Consideration of prior year and current performance in comparison to

projected results;

• Considering the impact of a range of sensitivities to assess the impact
of reasonably possible changes in key assumptions to those used by
management;

• Evaluating the appropriateness of discount rates used, which included
comparing the rate used to a range provided by our valuation experts;

• Evaluating other key inputs to the cash flows, including the forecast

margins and capital expenditure; and

• Reviewing management’s disclosures in the Financial Statements.

Based on this work, we concur with the assessment performed and with
the impairment charge recognised. We consider the carrying value of
the investment balance to be materially correct.

Finsbury Food Group Annual Report and Accounts 2020Independent Auditors’ Report to the Members of Finsbury Food Group Plc/Continued

Key audit matter

How our audit addressed the key audit matter

Impact of the outbreak of Covid-19 on the Financial Statements
(Group and Company)
In March 2020 the global pandemic from the outbreak of Covid-19
became significant and is causing widespread disruption to financial
markets and normal patterns of business activity across the world,
including the UK.

Covid-19 has had a large impact on Finsbury Food Group Plc both
operationally and further in relation to the forecasted future demand
for product and consequential impact on funding and cash flow
management. It has impacted the results of the Group and Company
for the 2021 financial year to date and is expected to continue to
impact the Group and Company for the remainder of 2020/21, albeit
the severity of the impact is expected to reduce over time.

Disclosure of the risk to the Group and Company of Covid-19 and
management’s conclusions on going concern and have been included
within the relevant sections of the Annual Report.

We critically assessed management’s assessment of the impact of
Covid-19. We considered:

• The timing of the development of the outbreak across the world and in

the UK; and

• How the Financial Statements and business operations of the Group

and Company might be impacted by the disruption.

In forming our conclusions over going concern, we evaluated whether
management’s going concern assessment considered impacts arising
from Covid-19. Our procedures in respect of going concern included:

• We made enquiries of management to understand the potential

impact of Covid-19 on the Company’s financial performance, business
operations and financial position;

• We reviewed management’s going concern assessment, based upon
the bottom-up full year 2021 budget and strategic forecast to June
2023, to ensure the impacts of Covid-19 have been appropriately
reflected; and

• We have challenged the key assumptions in this assessment, including
the availability of sufficient cash resources and compliance with future
banking covenants.

Based on the work performed, we are satisfied that the matter has been
appropriately evaluated and reflected in the Financial Statements and
concur with management’s assessment that the impact of Covid-19 has
not had a significant impact on the going concern assessment.

We also assessed the adequacy of disclosures related to Covid-19 included
in the Financial Statements and assessed these to be appropriate.

How we Tailored the Audit Scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Financial Statements as a whole,
taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.

The Group has six main manufacturing sites across the UK, together with a distribution centre in France, operations in Poland, and a head office location
based in the UK. Each manufacturing site has its own accounting team and the financial reporting for Finsbury Food Group Plc is undertaken by a team
based at the head office.

Of the Group’s 8 reporting components, 5 are considered to be financially significant components of the Group, given the significant revenue
generated at these locations. All of these components were based in the UK and full scope audit procedures were led by the Group engagement
team. The Group engagement team also audited the Parent Company, which was scoped in accordance with the Company materiality and focused
on the investment carrying value and the revolving credit facility held by the Company.

Our audit addressed components making up 90% of the Group’s revenues for the period.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the Financial
Statements as a whole.

Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:

Overall materiality

How we determined it
Rationale for benchmark applied

Group Financial Statements

£1.5 million (2019: £1.6 million).

Company Financial Statements

£1.5 million (2019: £1.2 million).

0.5% of total revenues.
Revenue is a key metric used by management and
investors and given the relative volatility of profit
before tax in recent years, this was considered to be a
more consistent metric in line with prior year.

1% of total assets (restricted by Group materiality).
We determined our materiality based on total assets,
which is more applicable than a performance-related
measure as the Company is primarily an investment
holding Company for the Group. However, as this
materiality was greater than overall Group materiality,
we have restricted the entity materiality.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality
allocated across components was between £0.2 million and £1.5 million.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £72,000 (Group audit) (2019:
£79,000) and £72,000 (Company audit) (2019: £58,000) as well as misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance
60

Independent Auditors’ Report to the Members of Finsbury Food Group Plc/Continued

Conclusions Relating to Going Concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you where:

• The Directors use of the Going Concern basis of accounting in the preparation of the Financial Statements is not appropriate; or
• The Directors have not disclosed in the Financial Statements any identified material uncertainties that may cast significant doubt about

the Group’s and Company’s ability to continue to adopt the Going Concern basis of accounting for a period of at least twelve months from
the date when the Financial Statements are authorised for issue.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and Company’s ability to
continue as a going concern.

Reporting on Other Information
The other information comprises all of the information in the Annual Report other than the Financial Statements and our auditors’ report thereon.
The Directors are responsible for the other information. Our opinion on the Financial Statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the Financial Statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have
been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain opinions
and matters as described below.

Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
period ended 27 June 2020 is consistent with the Financial Statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify
any material misstatements in the Strategic Report and Directors’ Report.

Responsibilities for the Financial Statements and the Audit

Responsibilities of the Directors for the Financial Statements
As explained more fully in the Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements set out on
page 62, the Directors are responsible for the preparation of the Financial Statements in accordance with the applicable framework and for being
satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the
preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these Financial Statements.

A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors’ Report.

Use of this Report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Finsbury Food Group Annual Report and Accounts 2020Independent Auditors’ Report to the Members of Finsbury Food Group Plc/Continued

Other Required Reporting

Companies Act 2006 Exception Reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:

• We have not received all the information and explanations we require for our audit; or
• Adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches

not visited by us; or

• Certain disclosures of Directors’ remuneration specified by law are not made; or
• The Company Financial Statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Jason Clarke (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cardiff
18 September 2020

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance62

Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the Group and Company Financial Statements in accordance with applicable law
and regulations.

Company law requires the Directors to prepare Group and Company Financial Statements for each financial year. As required by the AIM Rules of
the London Stock Exchange, they are required to prepare the Group Financial Statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have elected to prepare the Company Financial
Statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101
Reduced Disclosure Framework.

Under Company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of their profit or loss for that period. In preparing each of the Group and Company Financial Statements,
the Directors are required to:

• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable, relevant, reliable and prudent;
• For the Group Financial Statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• For the Company Financial Statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures

disclosed and explained in the Financial Statements;

• Assess the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• Use the Going Concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no

realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its Financial Statements comply
with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of Financial
Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report and a Directors’ Report that complies with
that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

On behalf of the Board
Stephen Boyd
Director
18 September 2020

Finsbury Food Group Annual Report and Accounts 2020Consolidated Statement of Comprehensive Income
for the 52 weeks ended 27 June 2020 and 52 weeks ended 29 June 2019

Revenue
Cost of sales
Gross profit
Administrative expenses
Administrative expenses – significant and non-recurring
Operating profit
Finance income
Finance cost
Net finance cost
Profit before tax
Taxation
Profit for the financial year

Other comprehensive (expense)/income
Items that will not be reclassified to profit and loss
Remeasurement on defined benefit pension scheme
Movement in deferred taxation on pension scheme liability
Other comprehensive expense for the financial year, net of tax
Total comprehensive income for the financial year

Profit attributable to:
Equity holders of the Parent
Non-controlling interest
Profit for the financial year

Total comprehensive income attributable to:
Equity holders of the Parent
Non-controlling interest
Total comprehensive (expense)/income for the financial year

Earnings per ordinary share
Basic
Diluted

The Notes on pages 67 to 99 form an integral part of these Financial Statements

Note

2020
£000

2019
£000

3
4

7
7

14
22

9
9

306,348
(210,881)
95,467
(80,401)
(10,331)
4,735
61
(1,928)
(1,867)
2,868
(2,761)
107

(3,806)
723
(3,083)
(2,976)

(759)
866
107

(3,842)
866
(2,976)

(0.6)
(0.6)

315,281
(219,849)
95,432
(78,939)
(1,200)
15,293
77
(1,794)
(1,717)
13,576
(3,283)
10,293

(332)
56
(276)
10,017

9,287
1,006
10,293

9,011
1,006
10,017

7.3
7.0

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Consolidated Statement of Financial Position
at 27 June 2020 and 29 June 2019

Non-current assets
Intangibles
Property, plant and equipment
Other financial assets
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Other financial assets – fair value of derivatives

Total assets

Current liabilities
Other interest-bearing loans and borrowings
Trade and other payables
Provisions
Other financial liabilities – fair value of derivatives
Deferred consideration
Current tax liabilities

Non-current liabilities
Other interest-bearing loans and borrowings
Provisions
Deferred consideration
Deferred tax liabilities
Pension fund liability

Total liabilities

Net assets

Equity attributable to equity holders of the Parent
Share capital
Share premium account
Capital redemption reserve
Employee share reserve
Retained earnings

Non-controlling interest
Total equity

Note

2020
£000

2019
£000

10
12
13
22

15
16
17
13

18
20
21
13
21

18
21
21
22
14

25
24
24
24
24

88,626
61,736
-
4,623
154,985

14,618
40,003
10,173
-
64,794
219,779

(3,191)
(48,861)
(471)
(501)
(481)
(1,375)
(54,880)

(45,113)
(550)
(1,357)
(2,117)
(15,174)
(64,311)
(119,191)

97,664
57,009
28
3,655
158,356

14,805
49,724
12,358
176
77,063
235,419

(335)
(55,543)
(2,640)
(218)
(1,000)
(306)
(60,042)

(47,390)
(3,434)
(1,824)
(1,800)
(11,312)
(65,760)
(125,802)

100,588

109,617

1,304
64,956
578
(3,378)
34,918
98,378
2,210
100,588

1,304
64,956
578
(3,616)
44,207
107,429
2,188
109,617

These Financial Statements were approved by the Board of Directors on 18 September 2020 and were signed on its behalf by:

Stephen Boyd
Director

Registered Number 00204368

The Notes on pages 67 to 99 form an integral part of these Financial Statements

Finsbury Food Group Annual Report and Accounts 2020

Consolidated Statement of Changes in Equity
for the 52 weeks ended 27 June 2020 and 29 June 2019

Share
capital
£000

Share
premium
£000

Note

Capital
redemption
reserve
£000

Employee
share
reserve
£000

Retained
earnings
£000

Non-
controlling
interest
£000

Total
equity
£000

Balance at 30 June 2018

1,304

64,956

578

(3,282)

38,954

2,072

104,582

Profit for the financial year

Other comprehensive (expense)/income:
Remeasurement on defined benefit pension
Deferred tax movement on pension scheme remeasurement
Total other comprehensive expense
Total comprehensive income for the period

Transactions with owners, recorded directly in equity:
Shares issued from EBT
Shares issued during the year
Impact of share based payments
Deferred tax on share options
Foreign exchange translation differences
Dividend paid
Balance at 29 June 2019

Balance at 29 June 2019

Profit for the financial year

Transactions with owners, recorded directly in equity:
Shares issued from EBT
Shares issued during the year
Impact of share-based payments
Deferred tax on share options
Foreign exchange translation differences
Dividend paid
Balance at 27 June 2020

14
22

25
25
25

14
22

25
25
25

-
-
-
-

-
-
-
-
-
-
1,304

-
-
-
-
-
-
64,956

-
-
-
-
-
-
578

(499)
165
-
-
-
-
(3,616)

9,287

1,006

10,293

(332)
56
(276)
9,011

-
(165)
696
(256)
250
(4,283)
44,207

-
-
-
1,006

-
-
-
-
-
(890)
2,188

(332)
56
(276)
10,017

(499)
-
696
(256)
250
(5,173)
109,617

1,304

64,956

578

(3,616)

44,207

2,188

109,617

-
-
-
-

-
-
-
-
-
-
1,304

-
-
-
-
-
-
64,956

-
-
-
-

-
-
-
-
-
-
578

-
-
-
-

1,207
(969)
-
-
-
-
(3,378)

(759)

866

107

(3,806)
723
(3,083)
(3,842)

(1,207)
-
(1,066)
(182)
(17)
(2,975)
34,918

-
-
-
866

-
-
-
-
-
(844)
2,210

(3,806)
723
(3,083)
(2,976)

-
(969)
(1,066)
(182)
(17)
(3,819)
100,588

The notes on pages 67 to 99 form an integral part of these Financial Statements.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Consolidated Cash Flow Statement
for the 52 weeks ended 27 June 2020 and 29 June 2019

Cash flows from operating activities
Profit for the financial year
Adjustments for:
Depreciation
Depreciation right of use assets
Significant non-recurring items
Net finance costs
Taxation
Amortisation of intangibles
Impairment of goodwill
Impairment of fixed assets
Change in fair value of foreign exchange contracts
Contributions by employer to pension scheme
Operating profit before changes in working capital

Changes in working capital:
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
Cash generated from operations before costs of disposals and acquisitions

Costs relating to closure of bakeries and acquisitions
Lease payments
Interest paid
Tax paid
Net cash generated from operating activities

Cash flows from investing/divesting activities
Purchase of property, plant and equipment and intangibles
Purchase of companies
Net cash used in investing activities

Cash flows from financing activities
(Repayment)/drawdown of revolving credit
(Repayment)/drawdown of asset finance liabilities
Purchase of shares by employee benefit trust
Dividend paid to non-controlling interest
Dividend paid to shareholders
Net cash generated from/(used in) financing activities

Net (decrease)/increase in cash and cash equivalents
Opening cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period

The Notes on pages 67 to 99 form an integral part of these Financial Statements.

Note

2020
£000

2019
£000

107

10,293

3
3
4
7
8
10
10
12
13
14

21, 29

19
19

26
26

7,656
1,919
1,594
1,867
2,761
1,734
7,500
1,237
73
(200)
26,248

210
9,949
(9,192)
27,215

(1,887)
(3,362)
(1,088)
(1,822)
19,056

(4,703)
(1,000)
(5,703)

(10,960)
-
(969)
(844)
(2,975)
(15,748)

(2,395)
12,358
210
10,173

7,366
-
1,200
1,717
3,283
1,328
-
-
178
162
25,527

(62)
(3,321)
(2,199)
19,945

(3,534)
-
(856)
(2,040)
13,515

(11,016)
(16,915)
(27,931)

22,144
828
(499)
(890)
(4,283)
17,300

2,884
9,363
111
12,358

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements
(forming part of the Financial Statements)

Presentation of Financial Statements

Basis of Preparation
These accounts cover the 52-week period ended 27 June 2020 (prior financial year is the 52-week period ended 29 June 2019). The Group Financial
Statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The Company is a public company which is
incorporated, domiciled and registered in England and Wales.

The Group Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards
as adopted by the EU (“Adopted IFRSs”), IFRS IC interpretations and the Companies Act 2006. The Company Financial Statements have been prepared
and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union (“Adopted IFRSs”),
IFRS IC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS; these are presented on pages 100 to 108.

Going Concern and Impact of Covid-19
In the current climate where there is uncertainty around the impact of Covid-19, relevant judgements and assumptions have to be made. This will
include the impact of Covid-19 on the economy, the extent and duration of social distancing measures on demand and the workforce. The health
and safety of our employees is a top priority and UK Government guidelines are being adhered to with regards to social distancing and working
remotely. The Group has a resilient supply chain and production network and is working closely with all its major customers to navigate through
the challenging trading environment. As a manufacturer of a wide range of baked goods the Covid-19 impact has varied considerably between
businesses, there have been significant growth in demand in some areas of retail, reduction of demand in foodservice and we have experienced
varying degrees of impact on demand across a range of product areas (in retail and foodservice). Demand recovery is anticipated across businesses
at different rates. When considering going concern, judgement has to be made as to the extent of disruption and the ongoing challenges. Forecasts
have been built on a bottom-up basis and stress tested to prepare an approved budget used as a basis for reviewing going concern. Having reviewed
the Group’s short- and medium-term plans and available financial facilities, the Board has reasonable expectations that the Group has adequate
resources to continue in operational existence for the next 12 months and the foreseeable future.

The Group meets its funding requirements through internal cash generation and bank credit facilities, which are committed until February 2023.
Committed banking facilities are £55.0 million of which £36.2 million was drawn at the year end with a further accordion available of £35.0 million.
The Group’s forecasts and projections, taking account of reasonable possible changes in trading performance, including the possible effect of the
UK’s decision to withdraw from the EU, show that the Group will be able to operate comfortably within its current bank facilities. The Group has a
relatively conservative level of debt to earnings.

The Board reviews the Group’s covenants on a regular basis to ensure that it has adequate facilities to cover its trading and banking requirements
with an appropriate level of headroom. The forecasts are based on management’s best estimates of future trading. There has been no breach of
covenants during the year and none expected during the next 12 months. All covenant tests were passed at the year end.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, the Board continues to adopt the Going Concern basis in preparing the Financial
Statements for both the Group and the Parent Company. The Financial Statements have been prepared under the historical cost convention, as
modified by the revaluation of derivative financial instruments and pension scheme assets.

Critical Accounting Estimates and Judgements

Judgements
In the course of preparing the Financial Statements, judgements which do not involve estimation have been applied. The key accounting judgements,
without estimation are as follows:

• Basis of Consolidation

Lightbody Stretz Limited, which is 50% owned by the Group is consolidated into the Group accounts as a subsidiary with a corresponding non-controlling
interest on the basis that the Group has the controlling interest. Control arises by virtue of the fact that Lightbody Group Limited, a wholly owned subsidiary
of Finsbury Food Group, has a majority of voting rights arising from an agreement between Lightbody Group Limited and Philippe Stretz, the owner of the
remaining 50%.

• Classification of Items as Significant Non-Recurring

The Group presents certain items as non-recurring and significant. These relate to items which, in management’s judgement, need to be disclosed
by virtue of their size or incidence in order to obtain a more meaningful understanding of the financial information. They reflect costs that will not
be repeated and therefore do not reflect ongoing trading of business which is more meaningful to users. Group management exercises judgement
in assessing each significant and non-recurring item and analysing whether the treatment of these items is consistent with accounting policies and
practice. The FRC has issued guidance specifically in light of the impact of Covid-19 on business performance; this guidance will be considered when
making a judgement on classifying material items that need separate disclosure. The main points to consider when identifying and disclosing non-
recurring and significant items are:

– Not to describe items as non-recurring if expected in the future;
– Not to disclose (sunk, stranded or excess) costs solely as a result of the elimination of revenue stream as a result of Covid-19; and
– Not to identify incremental costs without the associated incremental revenue.

No other significant judgements have been made in the process of applying the Group’s accounting policies, other than those involving estimations.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance
68

Notes to the Consolidated Financial Statements/Continued

Estimates
The Group is required to make estimates and assumptions concerning the future. These are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by
definition, seldom equal the related actual results, particularly in the challenging environment with the uncertainty around the impact of Covid-19,
the extent and duration of social distancing measures and the impact on the economy. Accounting estimates have been required for the production
of these Financial Statements. The following are those that are deemed to require the most complex assumptions about matters that have the most
significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

• Defined Benefit Pension Scheme Valuation

The Group has one legacy defined benefit pension scheme that was closed to future accrual in May 2010. The net deficit is the difference between
the plan assets and plan liabilities at the period end date. The valuation of the assets and liabilities is based on a number of assumptions. The
assets are based on market value at the period end date, the liabilities are based on actuarial assumptions such as discount, inflation and mortality
rates. The valuation is sensitive to changes in actuarial assumptions, whereby modest changes can have a material impact on the valuation.
The risks include economic risks (such as interest rate risk and inflation risk) and demographic risks (for example members living longer than
expected). The Group accounts for defined benefit pension based on advice provided by the Scheme’s actuary in accordance with IAS 19 (Revised)
‘Employee Benefits’, with independent actuaries being used to calculate the costs, assets and liabilities to be recognised in relation to the scheme.
The present value of the defined benefit obligation, the current service cost and past service costs are calculated by these actuaries using the
projected unit credit method; further detail can be found in Note 14. The valuation is prepared on a consistent basis and the assumptions are
compared to prior periods and market conditions. The assumptions are audited annually by a team of technical experts to assess whether the
assumptions used are within an acceptable range.

• Acquisition

A team of independent advisors are used throughout the acquisition process. External advisers are appointed to carry out specific extensive
financial modelling work, legal and tax due diligence. An extensive valuation model provided by professional advisers is used in the calculation of
the fair value of intangible assets. The assumptions are audited to assess whether the assumptions used are reasonable.

• Investments (Including Goodwill and Intangibles)

The Group holds goodwill and intangibles and the Parent Company holds investments in the respective balance sheets. The carrying values
are tested for impairment on an annual basis (more frequently if there are indications of impairment due to changes in market environment or
changes that may affect the carrying value). There is a risk that an impairment may not be correctly identified.

• Impairment

Detailed impairment models are prepared for each cash generating unit, detailed budgets and strategic forecasts are used as a basis for the
modelling. Budgets and forecasts are sense checked during various rounds of internal management reviews. Sensitivities are applied to the
discount rates used and the assumptions and results are reviewed by the Audit Committee and audited annually by external auditors. Impairment
testing involves significant judgement as to whether the carrying value of each asset can be supported by the net present value of estimated
future cash flows derived from such asset using cash flow projections which have been discounted at an appropriate rate. The key areas are:

– Discount rates;
– Future revenue and costs; and
– Long term growth rates.

The impact of the Covid-19 pandemic has added a further level of complication and challenge due to the uncertainty of economic recovery
and social distancing timeframes. Detailed bottom-up budgets have been prepared at business level and sensitivities applied; more complex
assumptions had to be made on recovery rates of demand, adding more uncertainty into modelling than previous years.

Further detail can be found under the significant accounting policy for intangible assets and goodwill and in Note 10.

• Provisions

The Group recognises provisions where an obligation exists at the period end date and a reliable estimate can be made. Provisions relating to the
exit of the Grain D’Or leased site relate to property costs. The marketing of the newly refurbished properties is ongoing. A smaller provision exists
for pension augmentation and relates to a contractual liability for pension augmentation that has been valued by the pension scheme actuaries.
There is no expectation of material bad debts resulting from the Covid-19 impact on the economy, we are in close contact with customers to
manage recoveries. See Note 21 for further details.

• Taxation

Significant judgement is exercised by management in determining the amounts to be provided for both current and deferred tax. The final tax
determination of certain transactions is often uncertain and may not be known for some time in the future. The appointment of external tax
advisers to calculate the provisions during the year end process will focus expertise in this area and provide an independent technical interface
with the auditors. The tax position is reviewed and assumptions are challenged by the external auditors and the actual tax charge is clearly
reconciled to the theoretical tax charge in the Annual Report disclosures to ensure that variances are visible and understood. A deferred tax
asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be
utilised. The deferred tax asset recognised for losses relates to acquired businesses. Based on current and forecast levels of profitability, the losses
are expected to be utilised within 3 years.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

1. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated Financial Statements, except as
explained in the basis of preparation, which addresses any changes in accounting policies resulting from new or revised standards.

Basis of Consolidation
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration
the potential voting rights. The acquisition date is the date on which control is transferred to the acquirer. The Financial Statements of subsidiaries are
included in the consolidated Financial Statements from the date that control commences until the date that control ceases. The accounting policies of
new subsidiaries are changed when necessary to align them with the policies adopted by the Group. Intra-group balances and transactions are eliminated
in preparing the consolidated Financial Statements.

Lightbody Stretz Limited which is 50% owned by the Group has been consolidated into the Group accounts as a subsidiary with a corresponding non-
controlling interest on the basis that the Group has the controlling interest. Control arises by virtue of the fact that Lightbody Group Limited, a wholly
owned subsidiary of Finsbury Food Group, has a majority of voting rights arising from an agreement between Lightbody Group Limited and Philippe
Stretz, the owner of the remaining 50%.

New and Upcoming Standards
The following new standards, new interpretations and amendments to standards and interpretations are applicable for the first time for the
financial year ended 27 June 2020.

• IFRS 16 “Leases” (effective 1 January 2019);
• Amendments to IFRS 9 – Financial Instruments on Prepayment Features with Negative Compensation (effective 1 January 2019);
• Amendment IAS 28 “Investments in associates” (effective 1 January 2019);
• Amendments to IAS 19, “Employee benefits’ (effective 1 January 2019); and
• Annual improvements to IFRS Standards 2015-2017 Cycle (effective 1 January 2019).

With the exception of IFRS 16 “Leases”, none of the amendments to the above standards had a material impact on the Financial Statements.

This is the first full year set of the Group’s Financial Statements in which IFRS 16 has been applied. The Group has adopted IFRS 16 from 30 June 2019
using the modified retrospective approach, comparatives have not been restated. The reclassifications and adjustments from the new leasing rules
are therefore recognised in the opening Consolidated Statement of Financial Position on 30 June 2019.

On transition the Group recognised a right of use lease asset of £16.3 million, being £15.0 million created from assets previously treated as
operating leases under IAS 17 and £1.3 million relating to amounts transferred into right of use asset category which were previously treated as a
finance lease under IAS 17. A lease liability of £15.8 million has been recognised on transition, being £15.0 million created from leases previously
treated as operating leases Under IAS 17 and £0.8 million relating to amounts transferred into right of use asset category which were previously
treated as a finance lease under IAS 17.

The impact on the Group’s full year results are detailed in note 11. The impact of first time adoption of IFRS 16 are summarised as follows:

Performance measures impacted by IFRS 16

EBITDA
Group operating profit
Group profit before taxation
Basic EPS
Net debt as at 27 June 2020
Assets

£m

+£1.8
+£0.1
(£0.1)
(£0.1)
+£11.8m
+£9.4m

There are a number of new standards, interpretations and amendments to existing standards that are not yet effective and have not been adopted
early by the Group. The future introduction of these standards is not expected to have a material impact on the Financial Statements of the Group.

• Amendments to IFRS 3 – Business Combinations (effective 1 January 2020);
• Amendments to IAS 1 – Presentation of Financial Statements on classification of liabilities (effective 1 January 2022);
• Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest rate benchmark reform (effective 1 January 2020); and
• IFRIC Interpretation 23 Uncertainty over Income Tax Treatments (effective 1 January 2019).

Work will continue in the new financial year to assess the impact of the new standards and interpretations on the Group’s Financial Statements.

Business Combinations
The acquisition method of accounting is used in accounting for the acquisition of businesses. In accordance with IFRS 3 Business Combinations,
the assets and liabilities of the acquired entity are measured at fair value. When the initial accounting for a business combination is determined
provisionally, any adjustments to the provisional values allocated are made within twelve months of the acquisition date and are affected from the
date of acquisition.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

1. Significant Accounting Policies/Continued

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.

Derivative Financial Instruments
The Group has derivative financial instruments in respect of interest rate swaps and foreign exchange hedges. The Group does not hold derivative
financial instruments for trading purposes. The existing interest rate swaps and foreign exchange hedges used by the Group while they function as
hedges, do not meet the criteria for hedge accounting set out by IFRS 9, and have thus been treated as financial assets and liabilities which are carried
at their fair value in the Consolidated Statement of Financial Position. 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.

Non-derivative Financial Instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents,
loans and borrowings, and trade and other payables.

Unless otherwise indicated, the carrying amounts of the Group’s financial assets and liabilities are a reasonable approximation of their fair values.

Trade and Other Receivables
The value of trade and other receivables is the amount that would be received if the receivable was paid on the period end date which is a close
approximation to amortised cost.

Trade and Other Payables
The value of trade and other payables is the value that would be payable to settle the liability at the period end date.

Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances. Bank overdrafts that are repayable on demand and which form an integral part of the Group’s
cash management are included as a component of cash and cash equivalents.

Interest-Bearing Borrowings
Interest-Bearing borrowings are stated at amortised cost using the effective interest method.

Property, Plant and Equipment
Recognition and Measurement
Items of property, plant and equipment are measured at cost or fair value at the date of acquisition, less accumulated depreciation and impairment
provisions. Costs include expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost
of materials and direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs
of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.

Depreciation
Depreciation is provided to write off the cost, less estimated residual value, of the property, plant and equipment by equal instalments over
their estimated useful economic lives to the Consolidated Statement of Comprehensive Income. When parts of an item of property, plant
and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
The depreciation rates used are as follows:

Freehold buildings
Leasehold property
Fixtures and fittings

2%-20%
Up to the remaining life of the lease
10%-33%

Plant and equipment
Assets under construction
Motor vehicles

10%-33%
nil
25%-33%

Impairment reviews of fixed assets are undertaken if there are indications that the carrying values may not be recoverable.

Finsbury Food Group Annual Report and Accounts 2020Notes to the Consolidated Financial Statements/Continued

1. Significant Accounting Policies/Continued

Leases
The Company leases various land and buildings, fork lift trucks and equipment. Rental contracts are typically made for fixed periods of between two
months and eighteen years but may have extension options.

Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and
non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the company is a lessee and for
which it has major leases, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose
any covenants other than the security interests in the leased assets that are held by the lessor.

Leased assets may not be used as security for borrowing purposes. Until the 2019 financial year, leases of property, plant and equipment were
classified as either finance leases or operating leases. From 30 January 2019, leases are recognised as a right of use asset and a corresponding
liability at the date at which the leased asset is available for use by the Company.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:

• Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
• Amounts expected to be payable by the company under residual value guarantees;
• The exercise price of a purchase option if the company is reasonably certain to exercise that option; and
• Payments of penalties for terminating the lease, if the lease term reflects the company exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease.

If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset
in a similar economic environment with similar terms, security and conditions.

The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease
liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and
adjusted against the right of use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability for each period.

Right of use assets are measured at cost comprising the following:

• The amount of the initial measurement of lease liability;
• Any lease payments made at or before the commencement date less any lease incentives received;
• Any initial direct costs; and
• Restoration costs.

Right of use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the company is
reasonably certain to exercise a purchase option, the right of use asset is depreciated over the underlying asset’s useful life.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as
an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

Low-value assets comprise small items of warehouse equipment and office equipment.

As explained in notes 1 and 11, the company has changed its accounting policy for leases where the company is the lessee to comply with IFRS 16.
The impact of the change is explained in Note 11.

IFRS 16 Leases sets out the principle for the recognition, measurement, presentation and disclosure of leases for both lessee and lessor.
It eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee accounting model where the
lessee is required to recognise assets and liabilities for all material leases that have a term greater than a year.

The Group has adopted IFRS 16 Leases using the modified retrospective approach. Therefore, the cumulative effect of adopting IFRS 16 Leases was
recognised as an adjustment to the opening balance of retained earnings at 29 June 2019 with no restatement of comparative information.

On adoption of IFRS 16 Leases, the Group recognised liabilities in relation to leases which had previously been classified as operating leases under
the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using
the Groups’ incremental borrowing rate as of 29 June 2019. The weighted average incremental borrowing rate applied is 2.21%.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance72

Notes to the Consolidated Financial Statements/Continued

1. Significant Accounting Policies/Continued
In applying IFRS 16 Leases for the first time, the Group has used the following practical expedients permitted by the standard:

• The use of a single discount rate for portfolios of leases with reasonably similar characteristics;
• Accounting for low value (less than $5,000) and certain leases with a remaining lease term of less than 12 months as at 29 June 2019 on

straight-line basis as an expense without recognising a right of use asset or a lease liability; and

• The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

Under IFRS 16 leases excluding low value and those with a remaining term of less than 12 months as at 29 June 2019 are recognised in the opening
Consolidated Statement of Financial Position on 30 June 2019. Under IFRS 16 the previous leases charge has been replaced by the depreciation on
the right of use asset and interest on the lease liability.

Prior to this change, leases of property, plant and equipment where the company, as lessee, had substantially all the risks and rewards of ownership
were classified as finance leases. Finance leases were capitalised at the lease’s inception at the fair value of the leased property or, if lower, the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, were included in creditors: amounts
falling due within 12 months and the long-term component was included in creditors: amounts falling due after more than one year.

Each lease payment was allocated between the liability and finance cost. The finance cost was charged to profit or loss over the lease period so as
to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired
under finance leases was depreciated over the asset’s useful life, or over the shorter of the asset’s useful life and the lease term if there was no
reasonable certainty that the company would obtain ownership at the end of the lease term.

Leases in which a significant portion of the risks and rewards of ownership were not transferred to the company as lessee were classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-
line basis over the period of the lease.

Intangible Assets and Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested
annually for impairment. Intangible assets are capitalised separately from goodwill as part of a business combination, only if the fair value can be
measured reliably on initial recognition and if the future economic benefits are expected to flow to the Group. All intangible assets recognised are
considered to have finite lives and are amortised on a straight-line basis over their estimated useful economic lives that range from 15 to 20 years.
Goodwill arises when the fair value of the consideration for the business exceeds the fair value of the net assets acquired. Where the excess is negative
(negative goodwill), the amount is taken to retained earnings. Goodwill is capitalised and subject to impairment reviews both annually and where there
are indications that the carrying value may not be recoverable.

Impairment
The carrying amounts of the Group’s intangible assets and goodwill are reviewed at each period end date to determine whether there is an indication of
impairment. Intangible assets and goodwill are considered to be impaired if objective evidence indicates that one or more events have had a negative
effect on the estimated future cash flows of that asset. If any such indication exists, the asset’s recoverable amount is estimated.

For goodwill and intangible assets that have an indefinite useful life, the recoverable amount is estimated at each period end date.

An impairment loss would be recognised whenever the carrying amount of an intangible asset, goodwill or its cash generating unit exceeds its
recoverable amount. Impairment losses are recognised in the Consolidated Statement of Comprehensive Income.

Calculation of Recoverable Amount
The recoverable amount is the greater of the asset’s fair value less costs to sell and its value in use. In assessing an assets’ value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset.

Inventories
Inventories are measured at the lower of cost and net realisable value. Cost is determined on the first-in first-out basis, and includes all direct costs incurred
and attributable production overheads. Net realisable value is based upon estimated selling price, allowing for all further costs of completion and disposal.
Specific provisions are made against old and obsolete stock taking the value to zero or an estimated reduced value based on the most likely route for
disposal of each particular item of stock.

Employee Benefits

Defined Benefit Plans
Memory Lane Cakes Ltd operates a defined benefit pension scheme and the pension costs are charged to the Consolidated Statement of Comprehensive
Income in accordance with IAS 19 (revised), with current and past service cost being recognised as an administrative expense, interest on assets and liabilities
is shown as finance income or a finance cost in the Consolidated Statement of Comprehensive Income. The remeasurements are recognised in full in Other
Comprehensive Income.

Defined Contribution Plans
The costs of contributing to defined contribution and personal pension schemes are charged to the Consolidated Statement of Comprehensive
Income as an administrative expense in the period to which they relate.

Finsbury Food Group Annual Report and Accounts 2020Notes to the Consolidated Financial Statements/Continued

1. Significant Accounting Policies/Continued

Share Based Payment Transactions
The value, as at the grant date, of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over
the period in which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using an option
valuation model, taking into account the terms and conditions upon which the options were granted.

Revenue
Revenue is measured at the fair value of consideration received or receivable excluding value added tax, trade discounts, transactions with or
between subsidiaries and less the cost of price promotions and sales related rebates known as over-riders. Revenue represents the amounts derived
from the sale of bakery products.

Revenue is recognised when the single performance obligation has been satisfied and this is when goods (bakery products) are transferred to the
customer which takes place upon delivery of agreed goods to the customer.

Delivery occurs when the goods have been despatched to an agreed specific location or have been directly receipted by the customer and removed
from an operational site by them. At this stage the risks of obsolescence and loss have been transferred to the customer, as it is deemed that the
customer has accepted the products in accordance with the specific sales agreement for those goods.

Price promotions, sales related rebates and returns are provided for as a reduction to revenue recognised based on management’s best estimate of
the amount required to meet claims by customers, taking into account contractual and legal obligations which are typically known, historical trends
and accumulated past experience.

A receivable is recognised on the delivery of goods as this is the point in time that the consideration is unconditional because only the passage of
time is required before the payment is due.

As the business evolves, the Group will continue to review transactions with customers to ensure compliance with IFRS 15: Revenue from Contracts
with Customers.

Segmental Reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Group’s other components. All segments’ operating results are reviewed
regularly by the Group’s Board of Directors. The Group’s Chief Operating Decision Maker is considered to be the Board.

Licence Fees
Payments made for licence fee charges are recognised under cost of sales in the Consolidated Statement of Comprehensive Income in the period to
which they relate. Any charges relating to future years are deferred and recognised in the Consolidated Statement of Comprehensive Income under
cost of sales over the life of the contract.

Finance Income and Cost
Finance costs comprise loan interest payable, interest payable and finance charges on lease liabilities recognised using the effective interest method,
unwinding of the discount on provisions and deferred consideration, interest on the net defined benefit pension plan position and adverse changes in
the fair value of interest rate swaps.

Finance income comprises interest receivable on funds invested and favourable changes in the fair value of interest rate swaps. Interest income is
recognised in Consolidated Statement of Comprehensive Income as it accrues, using the effective interest method.

Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the period end date,
and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The following temporary differences are not provided for:

• The initial recognition of goodwill;
• The initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and
• The differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the period end date. A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the temporary difference can be utilised.

Research and Development Expenditure
The expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is
recognised in the Consolidated Statement of Comprehensive Income as incurred.

Government Grants
Furlough grants claimed to cover employee costs who have been furloughed during the pandemic are recognised in the Consolidated
Statement of Comprehensive Income in the same period in which the related expense occurred. Related costs and income have been included
in administrative expenses.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance74

Notes to the Consolidated Financial Statements/Continued

2. Revenue and Segment Information
Operating segments are identified on the basis of the internal reporting and decision making. The Group’s Chief Operating Decision Maker is deemed to
be the Board as it is primarily responsible for the allocation of resources to segments and the assessment of performance by segment. The Board assesses
profit performance principally through adjusted profit measures consistent with those disclosed in the Annual Report and Accounts.

The UK Bakery segment manufactures and sells bakery products to UK grocery and food service sectors. It comprises six subsidiaries all of which
manufacture and supply food products through the channels described above. These subsidiaries have been aggregated into one reportable segment
as they share similar economic characteristics. The economic indicators considered are the nature of the products and production process, the type and
class of customer, the method of distribution and the regulatory environment.

The Overseas segment procures and sells bakery products to European grocery and food service sectors. It comprises Lightbody Europe and Ultraeuropa.
Ultraeuropa has manufacturing facilities in Poland where it manufactures and sells Free From bakery products into the European markets.

The Company acquired Ultrapharm on 3 September 2018, the prior year financial results include those relating to the acquired business in UK Bakery and
Overseas. For detail on the acquisition see Note 30.

Revenue

UK bakery

Overseas

Total Group

52 weeks to 27 June 2020 and 52 weeks to 29 June 2019

2020
£000

2019
£000

2020
£000

2019
£000

2020
£000

2019
£000

Total

271,414

278,533

34,934

36,748

306,348

315,281

Reportable Segments
Revenue UK bakery
Revenue Overseas
Total revenue

Adjusted operating profit UK bakery
Adjusted operating profit Overseas
Total adjusted operating profit
Significant non-recurring impairment
Significant non-recurring other
Defined benefit pension scheme
Fair value foreign exchange contracts
Operating profit
Finance income
Finance expense
Net finance cost
Profit before taxation
Taxation
Profit for the financial year

52 weeks to
27 June 2020
£000
271,414
34,934
306,348

52 weeks to
29 June 2019
£000
278,533
36,748
315,281

13,162
1,777
14,939
(8,737)
(1,594)
200
(73)
4,735
61
(1,928)
(1,867)
2,868
(2,761)
107

14,180
2,653
16,833
-
(1,200)
(162)
(178)
15,293
77
(1,794)
(1,717)
13,576
(3,283)
10,293

The Group has three customers (2019: three) which individually account for 10 per cent or more of the Group’s total revenue. These customers
individually account for 21 per cent, 12 per cent and 10 per cent. In the prior year these same three customers accounted for 20 per cent, 13 per cent
and 10 per cent of the revenue in the 52 weeks to 29 June 2019. In addition to the Europe sales disclosed in Reportable Segments, the Group also
made sales to European markets through UK-based organisations.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

3. Administrative Expenses and Auditors’ Remuneration
Included in profit are the following:

Amortisation of intangibles
Depreciation of owned tangible assets
Depreciation on right of use assets
Depreciation on assets under finance leases and hire purchase contracts
Impairment of fixed assets
Impairment of goodwill
Loss on foreign exchange
Variable lease payments
Expenses relating to short-term and low-value leases
Hire of plant and machinery – operating leases
Hire of other assets – operating leases
Movement on fair value of foreign exchange contracts
Research and development
Share option charges

2020
£000

2019
£000

1,734
7,656
1,919
-
1,237
7,500
213
193
164
-
-
73
2,244
145

1,328
7,072
-
294
-
-
166
-
-
765
806
178
1,987
697

Depreciation recognised on right of use assets in the year in relation to leases previously recognised as operating leases under IAS 17 upon adoption
of IFRS 16 is £1,734,000. The remainder of the deprecation on right of use assets relates to assets previously treated as finance leases under IAS 17.

Auditors’ remuneration:

Audit of these Financial Statements
Audit of the Financial Statements of subsidiaries of the Company
Other services

Other services relate to assistance with non-UK VAT registrations.

2020
£000

50
118
20

2019
£000

60
133
-

4. Significant Non-recurring Items
The Group presents certain items as significant and non-recurring. These relate to items which, in management’s judgement, need to be disclosed
by virtue of their size or incidence in order to obtain a more meaningful understanding of the financial information. They reflect costs that will not be
repeated and therefore do not reflect ongoing trading of business which is most meaningful to users.

Included within significant non-recurring items shown in the table on page 36 of the Financial Review section are the following costs:

Commissioning costs
Impairment of goodwill (Refer to Note 10)
Impairment of fixed assets (Refer to Note 12)
Other reorganisation people costs
Site closures – property, leases and contract costs
Acquisition related costs

2020
£000

257
7,500
1,237
1,337
-
-
10,331

2019
£000

-
-
-
823
(152)
529
1,200

Commissioning costs relate to the associated commissioning costs of a new bakery in Poland and have been classed as significant non-recurring
due to their nature. Reorganisation costs relate to the strategic reorganisation of the Group following the varying degrees of the impact of the
pandemic on the businesses within the Group.

There has been an impairment of the goodwill relating to the Ultrapharm acquisition, which based on current performance was deemed to be
overvalued, note 10 provides further detail.

There has been a fixed asset impairment of assets held at the Cardiff site; this reflects the specific writing down of an asset where there were no firm
plans to utilise the asset given the outlook of no sales and a market recovering from a global pandemic.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

5. Staff Numbers and Costs
The monthly average number of persons employed by the Group including Directors and excluding agency staff during the year, analysed by category,
was as follows:

Production
Selling and distribution
Administration, technical, new product development

The aggregate payroll costs of these persons were as follows:

Wages and salaries
Share option charges
Social security costs
Charge in respect of defined benefit plans
Charge in respect of defined contribution pension plans

6. Remuneration of Directors

Fees
Executive salaries

Number of employees

2020

2019

2,654
117
406
3,177

2,541
145
376
3,062

2020
£000

2019
£000

77,913
145
6,987
200
2,099
87,344

2020
£000

234
690
924

72,937
697
6,828
200
1,681
82,343

2019
£000

310
738
1,048

The aggregate of emoluments and amounts receivable under long-term incentive schemes of the highest paid Director was £404,000 (2019: £432,000),
there were no Company pension contributions made to a defined contribution scheme during the current or prior year. No bonuses were paid in the current
or prior year.

There were 1,108,881 share options exercised in the period by the highest paid director.

There were no retirement benefits accruing to directors during the current or previous year.

The emoluments paid to Directors were as follows:

P Baker
R Beveridge
S A Boyd - paid
J G Duffy – paid
R P E Duignan
M J Millard
Z Morgan

Fees
£000

79
51
-
-
53
51
-
234

Salary
£000

-
-
276
394
-
-
-
670

Benefits
£000

Annual bonus
£000

Year ended
27 June 2020

£000

Year ended
29 June 2019
£000

-
-
10
10
-
-
-
20

-
-
-
-
-
-
-
-

79
51
286
404
53
51
-
924

85
56
306
432
57
53
59
1,048

During the year 602,819 shares were issued to J G Duffy (2019: nil) and 382,075 shares were issued to S A Boyd (2019: nil) in settlement of the
exercise of share options. During the year awards over 2,007,470 shares under the long-term incentive plan (LTIP) were granted to Directors in
the form of nil cost options (2019: 585,409). The vesting of the 1,063,325 awards is conditional upon performance conditions over a
three-year period commencing 30 June 2019 and are subject to a further two-year holding period. The vesting of 944,145 awards is conditional
on employment with no holding period.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

6. Remuneration of Directors/Continued
Directors’ rights to subscribe for shares in the Company are listed below:

S A Boyd
S A Boyd
S A Boyd
S A Boyd
S A Boyd
S A Boyd
J G Duffy
J G Duffy
J G Duffy
J G Duffy
J G Duffy
J G Duffy

Number of
options at
27 June 2020

Number of
options at
29 June 2019

Exercise
price

Earliest
exercise
date

Exercise
expiry
date

-
476,364
-
241,147
395,365
438,015
-
655,614
-
344,262
548,780
625,310
3,724,857

702,825
476,364
315,269
241,147
-
-
1,108,881
655,614
438,200
344,262
-
-
4,282,562

nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil

01/07/2019
01/07/2020
02/07/2022
07/07/2023
28/10/2022
30/06/2024
01/07/2019
01/07/2020
30/06/2021
07/07/2023
28/10/2022
30/06/2024

26/06/2025
04/12/2025
26/10/2027
21/01/2029
28/10/2029
28/10/2029
26/06/2025
04/12/2025
29/09/2026
21/01/2029
28/10/2029
28/10/2029

The mid-market price of the ordinary shares on 27 June 2020 was 59.3p (2019: 67.0p) and the range during the 52-week period to 27 June 2020 was
53.0p to 104.0p (2019: 60.0p to 127.0p).

7. Finance Income and Cost

Recognised in the Consolidated Statement of Comprehensive Income

Finance income
Interest on interest rate swap agreements
Bank interest receivable
Total finance income

Finance cost
Interest on net pension position
Change in fair value of interest rate swaps
Bank interest payable
Unwinding of discount on deferred consideration
Lease liabilities
Total finance cost

2020
£000

44
17
61

(256)
(386)
(999)
(14)
(273)
(1,928)

2019
£000

60
17
77

(282)
(382)
(991)
(139)
-
(1,794)

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

8. Taxation

Recognised in the Consolidated Statement of Comprehensive Income

Current tax
Current year
Adjustments for prior years
Total current tax

Deferred tax
Origination and reversal of temporary differences
Rate change
Adjustments for prior years
Total deferred tax
Total tax expense

2020
£000

2,762
6
2,768

130
(222)
85
(7)
2,761

2019
£000

2,969
194
3,163

136
-
(16)
120
3,283

Reconciliation of Effective Tax Rate
The weighted average hybrid rate of UK, Polish and French tax is 22.6% (2019: 21.4%). The tax assessed for the period is higher (2019: higher) than
the hybrid rate of UK and French tax. The UK corporation tax rate for the period is 19.0% (2019: 19.0 %). The differences are explained below:

Profit before taxation
Non-deductible intangible impairment

Tax using the UK corporation tax rate of 19.00%, (2019: 19.00%)

Overseas profits charged at different taxation rate
Non-deductible expenses and timing differences
Restatement of opening net deferred tax due to rate change and differences in rates
R&D uplift current year
Adjustments to tax charge in respect of prior periods
Total tax expense

2020
£000
2,868
7,500
10,368

1,970

439
479
(218)
-
91
2,761

2019
£000
13,576
-
13,576

2,579

481
195
(60)
(90)
178
3,283

The UK corporation tax rate reductions from 20% to 19% from 1 April 2017 and 18% from 1 April 2020 were substantively enacted on 26 October 2015.
An additional reduction to 17% from 1 April 2020 was substantively enacted on 6 September 2016. This was reversed in March 2020 with the UK
corporation tax remaining at 19%. The deferred tax assets and liabilities at 27 June 2020 have been calculated based on a rate of 19%.

The adjustment of £91,000 for prior year includes ineligible capital spends offset and disallowable expenses being different to the assumed levels at the
time of preparation of the Annual Report.

The Company has an unrecognised deferred tax asset of £182,000 (2019: £163,000) relating to capital losses carried forward. This asset has not been
recognised in the Financial Statements as it is not expected that suitable gains will arise in the future in order to utilise the underlying capital losses.

9. Earnings Per Ordinary Share
Basic earnings per share for the period is calculated on the basis of profit for the year after tax, divided by the weighted average number of shares in
issue being 127,128,000 (2019: 127,511,000).

Basic diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of all
potential dilutive ordinary shares. At 27 June 2020, the diluted weighted average number of shares in issue was 130,820,000, (2019: 131,889,000).

An adjusted earnings per share has been calculated to show the trading performance of the Group. These adjusted earnings per share exclude:

• Reorganisation and other significant non-recurring items;
• IFRS 9 ‘Financial Instruments: Recognition and Measurement’ fair value adjustment relating to the Group’s interest rate swaps and foreign

exchange contracts;

• IAS 19 (revised) ‘Accounting for retirement benefits’ relating to net income;
• The taxation effect at the appropriate rate on adjustments ; and
• Amortisation of intangible assets.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

9. Earnings Per Ordinary Share/Continued

Profit
(Loss)/profit attributable to equity holders of Company (basic)
Significant non-recurring and other items
Intangible amortisation net of deferred tax
Numerator for adjusted earnings per share calculation (adjusted basic)

Shares
Weighted average number of ordinary shares in issue during the period
Dilutive effect of share options

Earnings per share (pence per share)
Basic and diluted
Adjusted basic and adjusted diluted

52 weeks to
27 June 2020

£000

(759)
10,223
574
10,038

Diluted
‘000

127,128
3,692
130,820

Basic
‘000

127,128
-
127,128

Basic
pence

Diluted
pence

(0.6)
7.9

(0.6)
7.7

Basic
‘000

127,511
-
127,511

Basic
pence

7.3
9.3

52 weeks to
29 June 2019

£000

9,287
2,021
564
11,872

Diluted
‘000

127,511
4,378
131,889

Diluted
pence

7.0
9.0

Significant non-recurring and other items net of taxation are tabled in the Strategic Report on page 36 and comprise: impairment of goodwill and
fixed assets £8,502,000, (2019: nil), significant non-recurring charges £1,291,000 (2019: £1,072,000), defined benefit pension scheme charge
£45,000 (2019: charge £369,000), fair value of interest rate swaps, foreign exchange contracts charge £372,000 (2019: £465,000 charge) and the
unwinding of deferred consideration discounting charge £13,000 (2019: charge £115,000).

10. Intangibles
Intangible assets comprise customer relationships, brands and goodwill.

Cost at 30 June 2018
Acquired
Additions
Cost at 29 June 2019
Additions
Cost at 27 June 2020

Accumulated amortisation at 30 June 2018
Charge for the year
Accumulated amortisation at 29 June 2019
Charge for the year
Impairment
Accumulated amortisation at 27 June 2020

Net book value at 30 June 2018
Net book value at 29 June 2019
Net book value at 27 June 2020

Goodwill
£000

73,458
11,546
-
85,004
-
85,004

(4,290)
-
(4,290)
-
(7,500)
(11,790)

69,168
80,714
73,214

Business
systems
£000

Brands and
licences
£000

Customer
relationships
£000

7,569
-
2,412
9,981
196
10,177

(178)
(648)
(826)
(1,025)
-
(1,851)

7,391
9,155
8,326

3,683
-
-
3,683
-
3,683

(1,359)
(143)
(1,502)
(143)
-
(1,645)

2,324
2,181
2,038

5,909
1,721
-
7,630
-
7,630

(1,479)
(537)
(2,016)
(566)
-
(2,582)

4,430
5,614
5,048

Total
£000

90,619
13,267
2,412
106,298
196
106,494

(7,306)
(1,328)
(8,634)
(1,734)
(7,500)
(17,868)

83,313
97,664
88,626

The customer relationships recognised in the opening costs were purchased as part of the Ultrapharm acquisition in September 2018 and the
acquisition of Fletchers Group of Bakeries in October 2014. They are considered to have finite useful lives and are amortised on a straight-line basis
over their estimated useful lives of twenty years for brands and between ten and fifteen years for customer relationships. The intangibles were
valued using an income approach, using Multi-Period Excess Earnings Method for customer relationships and Relief from Royalty Method for brand
valuation. The amortisation of intangibles has been charged to administrative expenses in the Consolidated Statement of Comprehensive Income.
The business systems are considered to have finite useful lives and are amortised on a straight-line basis over their estimated useful lives of ten years.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

10. Intangibles/Continued
Goodwill has arisen on acquisitions and reflects the future economic benefits arising from assets that are not capable of being identified individually
and recognised as separate assets. The goodwill reflects the anticipated profitability and synergistic benefits arising from the enlarged Group
structure. The goodwill is the balance of the total consideration less fair value of assets acquired and identified. The carrying value of the goodwill is
reviewed annually for impairment. The carrying value of all goodwill has been assessed during the year.

The Group tests goodwill for impairment on an annual basis, or more frequently if there are indications that the goodwill may be impaired. The
recoverable amounts of the cash-generating units are determined from value in use calculations. The key assumptions for the value in use
calculations are the discount and growth rates used for future cash flows and the anticipated future changes in revenue, direct costs and indirect
costs. The assumptions used reflect the past experience of management and future expectations.

There have been major disruptions to markets since March 2020 as a result of the impact of the Covid-19 pandemic. Post Covid-19 consumer
spending behaviour and lifestyle choices are an unknown. With knowledge and experience since lockdown a bottom-up full-year 2021 budget and
strategic forecast to June 2023 has been compiled.

The forecasts have taken in consideration the following key factors:

1. Covid-19 has had an impact on markets, focus is on a rebuild of the business to a ‘new normal’ with difficulty in predicting timescale for recovery

and the impact of recessionary pressures;

2. Latest market forecast and market research data has been considered when making commercial judgements;
3. Detailed SWOT analysis of all businesses with strategic plan to respond to challenges;
4. Plans to combat inflationary pressures particularly labour costs in UK and Europe;
5. There are ingredient challenges during the lockdown environment, these have been factored into the forecasts;
6. Operating Brilliance Programme will support improved efficiencies and help drive recipe value engineering, plausible improvements have been

built in; and

7. Leadership teams strengthened to help realise a step change in growth particularly in the Free From area.

The forecasts covering a three-year period are based on the detailed financial forecasts challenged and approved by management for the next
three years. The cashflows beyond this forecast are extrapolated to perpetuity using a 1.1% (2019: 0.5%) growth rate for all of the CGUs.
The starting position has been impacted by Covid-19 and growth we believe is relatively prudent when compared to long-term UK GDP, basis, to
reflect the uncertainties of forecasting further than three years. Changes in revenue and direct costs in the detailed three-year plan are based on
past experience and expectations of future changes in the market to the extent that can be anticipated.

The strategic forecast process commenced in November 2019 to review consumer and competitor insight to prepare the foundations for the
financial forecasts; this groundwork was completely overtaken by events surrounding the worldwide pandemic. The recent strategic forecasts were
prepared as late as possible in the financial year to allow further insights into the post lockdown environment and the journey to recovery. We have
been encouraged by the recovery in the final quarter of the year to 27 June 2020 with revenue trends improving, with April 24% down year on year,
May, 19% down and June 14% down.

The revenue growth rate in the strategic forecast combines volume, mix and price of products. An inflation factor has been applied to costs of sales,
variable costs and indirect costs and takes into consideration the general rate of inflation, movements in commodities, improvement in efficiencies
from capital investment and operations and purchasing initiatives. External market data and trends are considered when predicting growth rates.
Compound annual growth rates for revenues for the three-year forecast period range from 3.7% to 14.0%, reflecting the recovery from the lower
base year and budget year that have been impacted by the Covid-19 pandemic.

A pre-tax discount rate of 9% (2019: 11%) has been used in these calculations. The discount rate uses weighted average cost of capital which
reflects the returns on government bonds and an equity risk premium adjusted specifically for Finsbury plus further risk premiums that consider
cash generating unit risk. The Group has considered the economic environment and higher level of return expected by equity holders due to the
perceived risk in equity markets when selecting the discount rate. The discount rate has decreased by 2% to take account of the removal of a small
company risk premium that had been included in the prior year; the spread of investors and liquidity supports the exclusion of this risk premium.
The discount rate used for each cash generating unit has been kept constant as the market risk is deemed not to be materially different between
the different segments of the bakery sector, nor over time. When considering the Ultrapharm discount rate a further 0.5% has been added for the
overseas risk element.

Finsbury Food Group Annual Report and Accounts 2020Notes to the Consolidated Financial Statements/Continued

10. Intangibles/Continued
The table below shows the carrying values of goodwill allocated to cash generating units or groups of cash generating units. When calculating the
discount rate that would need to be applied for there to be zero headroom, the discounted cashflows were compared against the carrying amount of
goodwill, plant property and equipment and the first-time recognition under IFRS 16 of right of use assets for leases which were previously treated
as operating leases under IAS 17. The discount rates are shown in the table below:

Lightbody of Hamilton
Fletchers Bakery
Ultrapharm*
Nicholas & Harris
Johnstone’s Food Service

* 9.5% with £7.5 million impairment taken.

Carrying value of goodwill
2019
2020
£000
£000

Discount rate at which headroom is nil
2019
%

2020
%

45,698
20,118
4,046
2,980
372
73,214

45,698
20,118
11,546
2,980
372
80,714

20.8
12.4
*9.5
51.3
92.3

18.8
15.0
-
45.9
83.5

Impairment
An impairment charge has been booked against the Ultrapharm cash generating units. The business has proven more immature than expected
and additional resource has been invested into both the UK and Polish businesses. We face commercial issues (in part relating to a small warranty
claim) now exacerbated by Covid-19 which have adversely affected cashflows and hence valuation. We believe that the Gluten Free sector remains
attractive and that performance will meet our expectations over time. The conclusion is that, based on current performance, the business is
overvalued. The strategic forecast revenues and profits have been sensitised and a downside forecast has been considered giving reduced cashflow
assumptions, which, when compared to the carrying value of assets, has indicated an impairment is necessary. A non-cash impairment of £7.5
million has been recognised in the current year’s financial results. The downside forecast has been used as a basis for calculating the impairment
charge. Revenue in this forecast is expected to grow over the next three years at an annual growth rate of 10%. Each 1% reduction in the annual
growth rate over the three year period, compared to forecast, would have an impact of £260,000 on the impairment charge.

The discount rate at which the headroom is nil for Fletchers Bakery is 12.4%. There are key strategies in place in order to improve the performance
of Fletchers. New opportunities are in the later stages of customer negotiations for new products into existing customers. An uplift is expected at
Easter which was severely disrupted in 2020 by the pandemic. There are also further opportunities in the new product development pipeline that are
expected to be realised in the short term. Sensitivities have been carried out to exclude any growth, which, after returning to pre- Covid-19 level of
sales, demonstrates that headroom still exists. It has been concluded that no impairment was necessary on the carrying value of goodwill relating to
the Fletchers Bakery at 27 June 2020.

Sensitivity analyses have been carried out by the Directors on the carrying value of all remaining goodwill using pre-tax discount rates up to 12.5%
which would not result in an impairment of any cash generating units.

Further sensitivity analysis has been carried out using a range of factors such as growth rate and cost increases. These include:

• If future growth rate assumption of 1.0% was replaced with zero growth rate;
• If future growth rate assumption of 1.0% was replaced with a decline of 1.0%.

There are many uncertainties surrounding the recovery, consumer response, retailer dynamics and inflationary impact. Immediate response
has been a series of cost-saving initiatives and the acceleration of operational improvement plans, the strategic responses have been around
restructuring capacity, development of supply chain systems to accelerate leveraging group scale and driving growth agenda with customers.
Where we have identified market and product challenges that will lead to unacceptable recovery timescales, we have taken the decision to
recognise a non-cash impairment.

In addition to the Covid-19 priorities, the Group has a cross-functional team which has prepared a number of strategies to minimise the impact of
Brexit. We buy some commodities from Europe. Any tariffs on trade will therefore have a bearing on the Group. We have contingency planning in
place, looking at alternative UK sources of products. Higher logistics and administration costs may result from border delays and could necessitate
higher stock levels. We are developing labour strategies to retain and develop existing workers, attract and hire new workers and reduce labour,
while boosting productivity with our capital investment programme. We believe we have strategies that would minimise the impact and the
directors are satisfied with the carrying value of the remaining cash generating units.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

11. Leases
This is the first full-year set of the Group’s Financial Statements in which IFRS 16 has been applied. The Group has adopted IFRS 16 from 30 June
2019 using the modified retrospective approach, comparatives have not been restated. The reclassifications and adjustments from the new leasing
rules are therefore recognised in the opening Consolidated Statement of Financial Position on 30 June 2019. Under IFRS 16 the previous operating
leases charge has been replaced by the depreciation on the right of use asset and interest on the lease liability. The Group leases many assets
including land and buildings, vehicles, machinery and equipment.

The impact on the Consolidated Statement of Financial Position as at 27 June 2020 and the Consolidated Statement of Comprehensive Income for
the 52 weeks to 27 June 2020 are shown in the tables below:

(i) Amounts recognised in the Consolidated Statement of Financial Position:
Property plant and equipment comprises owned and leased assets that do not meet the definition of investment property.

Property plant and equipment owned
Right of use assets

Note

13
13

27 June 2020
£000

52,302
9,434
61,736

Included within right of use assets in the table above are assets with a net book value of £1,373,000 previously recognised as a Finance lease under IAS 17.

Right of use assets

Adjustment on transition to IFRS 16
Assets previously recognised as a finance lease under IAS 17
Assets previously recognised as an operating lease under IAS 17
Onerous lease transferred as a proxy for impairment on transition (Note 21)
Total adjustments on transition to IFRS 16
Lease modifications – Note 21
Reversal of impairment
Depreciation charge for the year
Balance at 27 June 2020

Property
£000

Plant, equipment
and vehicles
£000

-
14,031
(3,804)
10,227
(454)
454
(1,368)
8,859

1,373
941
-
2,314
-
-
(551)
1,763

Total
£000

1,373
14,972
(3,804)
12,541
(454)
454
(1,919)
10,622

Right of use assets recognised upon adoption of IFRS 16 previously recognised as operating leases under IAS 17 on 30 June 2019 were £11,168,000
(cost £14,972,000 net of impairment of £3,804,000) and £1,373,000 previously recognised as a finance Lease under IAS 17. There were no additions
to right of use assets during the year.

Depreciation for the period to 27 June 2020 on right of use assets for leases previously treated as operating leases under IAS 17 is £1,734,000 and a
net book value at 27 June 2020 of £9,434,000.

Lease liabilities

Contracted undiscounted minimum lease payments
Not later than one year
Later than one year and not later than five years
Later than five years
Total gross payments
Discounted using the Group’s weighted average incremental borrowing rate
Less low-value leases not recognised as a liability
Less short-term and low-value leases recognised as an expense on a straight-line basis
Add/less adjustments as a result of a different treatment of termination options
Lease liability recognised
Current lease liability
Non-current lease liability

At 27 June 2020
£000

At 30 June 2019
£000

3,369
6,658
3,859
13,886
12,495
(22)
(164)
(14)
12,295
3,191
9,104

3,587
7,606
5,321
16,514
15,709
(31)
(234)
356
15,800
3,105
12,695

Lease liabilities recognised on adoption of IFRS 16 on 30 June 2019 for assets previously treated as operating leases under IAS 17 were £14,972,000
these had a closing value of £11,823,000 at 27 June 2020.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

11. Leases/Continued

(ii) Amounts recognised in the Consolidated Statement of Comprehensive Income

Interest on lease liabilities
Variable lease payments not included in the measurement of lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets

Consolidated Statement of Comprehensive Income Impact of IFRS 16 in comparison to when IAS 17 applied*

Reduction in lease rentals
Depreciation on right of use assets
Impact on the operating profit
Lease related interest costs
Overall impact on Group profit before tax of IFRS 16

52 weeks ended
27 June 2020
£000

(273)
(193)
(164)
(16)

52 weeks ended
27 June 2020
£000

1,840
(1,734)
106
(247)
(141)

* The table above does not include impact of leases previously recognised as finance leases under IAS 17 as there is no change in accounting treatment of

these leases under IFRS 16.

(iii) Amounts recognised in the Consolidated Cash Flow Statement

Cash flow impact

Total cash outflow for lease rentals

52 weeks ended
27 June 2020
£000

3,362

Impact on earnings per share
The impact on earnings per share for the 52 weeks to 27 June 2020 as a result of first time adoption of IFRS 16 is a reduction of (0.1) pence per share.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

12. Property, Plant and Equipment

Cost
Balance at 30 June 2018
Exchange adjustments
Additions
Acquisitions
Transfers
Disposals
Balance at 29 June 2019

Balance at 29 June 2019
Adjustment on transition to IFRS 16
Balance at 30 June 2019
Exchange adjustments
Additions
Acquisitions
Disposals
Lease modifications under IFRS 16

Balance at 27 June 2020

Accumulated depreciation and impairment
Balance at 30 June 2018
Exchange adjustments
Depreciation charge for the financial period
Transfers
Disposals
Balance at 29 June 2019

Balance at 29 June 2019
Adjustments on transition to IFRS16 – Note 21
Balance at 30 June 2019
Exchange adjustments
Depreciation charge for the financial period
Impairment (Note 4)
Disposals
Lease modifications under IFRS 16
Balance at 27 June 2020

Net book value
At 30 June 2018
At 29 June 2019
At 27 June 2020

Land and
buildings
£000

Plant and
equipment
£000

Fixtures and
fittings
£000

Assets under
construction
£000

Total
£000

19,326
-
122
3,289
-
(157)
22,580

22,580
14,030
36,610
-
753
-
(58)
(454)

36,851

(5,570)
-
(782)
-
157
(6,195)

(6,195)
(3,804)
(9,999)
-
(2,149)
-
58
454
(11,636)

13,756
16,385
25,215

73,867
-
6,056
2,188
264
(30)
82,345

82,345
941
83,286
(155)
5,122
-
(332)
-

87,921

(39,720)
-
(6,120)
-
190
(45,650)

(45,650)
-
(45,650)
-
(7,061)
(1,237)
325
-
(53,623)

34,147
36,695
34,298

5,063
(23)
225
289
73
(96)
5,531

5,531
-
5,531
-
158
-
-
-

5,689

(3,739)
(42)
(464)
-
84
(4,161)

(4,161)
-
(4,161)
4
(365)
-
-
-
(4,522)

1,324
1,370
1,167

695
-
2,201
-
(337)
-
2,559

2,559
-
2,559
-
(1,503)
-
-
-

1,056

-
-
-
-
-
-

-
-
-
-
-
-
-
-
-

695
2,559
1,056

98,951
(23)
8,604
5,766
-
(283)
113,015

113,015
14,971
127,986
(155)
4,530
-
(390)
(454)

131,517

(49,029)
(42)
(7,366)
-
431
(56,006)

(56,006)
(3,804)
(59,810)
4
(9,575)
(1,237)
383
454
(69,781)

49,922
57,009
61,736

Property, plant and equipment includes right of use assets recognised for leases previously recognised as operating leases under IAS 17 upon
adoption of IFRS 16 of £11,168,000 (cost £14,971,000 net of impairment of £3,804,000 see Note 21) and £1,373,000 previously recognised as a
Finance lease under IAS 17 (see Note 11).

There were no additions to right of use assets during the year.

There has been a non-cash impairment of assets at the Cardiff site, this reflects the specific writing down of an asset where there were no firm plans
to utilise the asset.

Security
HSBC Bank Plc, HSBC Asset Finance (UK) Ltd, HSBC Equipment Finance (UK) Ltd and HSBC Corporate Trustee Company (UK) Limited have debentures
incorporating fixed and floating charges over the undertaking and all property and assets including goodwill, book debts, uncalled capital, buildings,
fixtures, fixed plant and machinery. Hire purchase obligations are secured on the underlying assets.

The lease obligations are secured on leased equipment (see Note 18).

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

13. Other Financial Assets and Liabilities

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

176
176

-
(218)
(218)

2020
£000

-
-

(210)
(291)
(501)

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.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

14. Pension Schemes/Continued
The full actuarial valuation differs from the financial year-end valuation deficit of £15,174,000 (2019: £11,312,000). No allowance is made in the
financial year-end valuation for any outperformance expected from the Scheme’s actual asset holding over and above high-quality corporate bonds.

Fair value of plan assets
Present value of defined benefit obligations
Deficit recognised

The fair value of plan assets and the return on those assets were as follows:

Multi-asset growth fund
Liability-hedging portfolio (gilts/swaps)
Other
Property
Cash
Fair value of plan assets
Actual return on plan assets

2020
£000

19,607
(34,781)
(15,174)

2020
£000

12,617
2,856
1,704
717
1,713
19,607
959

2019
£000

19,238
(30,550)
(11,312)

2019
£000

14,405
2,256
1,580
753
244
19,238
886

None of the fair values of the assets shown on the previous page includes any of the Company’s own financial instruments or any property occupied
by, or any other assets used by, the Company.

Movements in present value of defined benefit obligation
At beginning of financial year
Past service costs
Interest on plan obligations
Benefits paid
Remeasurement – experience gain on liabilities
Remeasurement – (loss)/gain from changes to financial assumptions
Remeasurement – gain from changes to demographic assumptions
At end of financial year

Movements in fair value of plan assets
At beginning of financial year
Interest on plan assets
Return on plan assets less interest
Benefits paid
Contributions by employer
At end of financial year

2020
£000

2019
£000

(30,550)
-
(687)
790
-
(4,334)
-
(34,781)

19,238
431
528
(790)
200
19,607

(29,370)
(362)
(784)
682
1,614
(2,631)
301
(30,550)

18,834
502
384
(682)
200
19,238

Remeasurement gains and losses arise due to changes in the key assumptions such as inflation, mortality rates, demographic rates and discount
rates as well as experience gains and losses.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

14. Pension Schemes/Continued

Expense recognised in the Consolidated Statement of Comprehensive Income
Past service costs
Interest on plan assets/finance income
Interest on plan obligations/finance expense
Total expense

Remeasurement gains and losses recognised directly in equity in the Statement of Comprehensive Income
and Expense since 1 July 2006, the transition date to Adopted IFRS

Cumulative amount at beginning of financial year
Recognised in the financial year – return on plan assets less interest
Recognised in the financial year – experience gains on liabilities
Recognised in the financial year – (loss)/gain from changes to financial assumptions
Recognised in the financial year – gains from changes to demographic assumptions
Cumulative amount at end of financial year

Principal long-term actuarial assumptions at the year end
CPI price inflation assumption
Increases to pensions in payment
Discount rate for liabilities
Rate of return for plan assets

2019
£000

(362)
502
(784)
(644)

(12,803)
384
1,614
(2,631)
301
(13,135)

2019
%

2.40
2.40
2.30
2.30

2020
£000

-
431
(687)
(256)

(13,135)
528
-
(4,334)
-
(16,941)

2020
%

2.35
2.35
1.50
1.50

The differential between the assumed rate of inflation and the discount rate for liabilities is 0.85% (2019: 0.10%).
Salary inflation assumptions are as determined by the Board with regard to price inflation. The salary inflation from 31 May 2010 when the Scheme
closed to future accrual was assumed to be in line with inflation.

The financial assumptions are based on market conditions as at the review date of 27 June 2020 with discount rates based on the yields on long-
dated high-quality corporate bonds. The discount rate is lower than the discount rate used last year reflecting the change in bond yields over this
period. The rate of return for plan assets is the long-term rate that reflects the yield on high-quality corporate bonds as required under changes
to IAS 19. The rate of return is effectively based on the discount rate with no allowance made for any outperformance expected from the Scheme’s
actual asset holding. The actual return on the Scheme’s assets, net of expenses, over the year to the review date was around 5% (2019: 5%).
The actual return has been impacted by the worldwide Covid-19 pandemic that has had a profound impact on the economy as countries went into
lockdown; uncertainty and volatility remain a feature of the current equity markets.

Changing the year end 2020 assumptions to those of 2019 year end listed above, the deficit would have been £10,840,000 compared to the
reported deficit of £15,174,000.

Post-retirement
mortality assumption

2020
S3NA tables with CMI 2017 (core parameters) projections and
1.25% pa long-term rate of improvement

2019
S3NA year of birth tables with CMI 2017 projections and
1.25% pa long-term rate of improvement

Under the mortality tables adopted, the assumed future life expectancy at age 65 is as follows:

Male currently at age 45
Female currently at age 45
Male currently at age 65
Female currently at age 65
Allowance for GMP equalisation (increase liabilities at the review date by):

2020

24.1
26.4
22.7
25.0
1.2%

2019

24.0
26.3
22.6
24.9
1.2%

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

14. Pension Schemes/Continued

Sensitivity Analysis
The calculation of the defined benefit obligation is sensitive to the assumptions set out above. The following table summarises changes in these
assumptions and their approximate (decrease)/increase in liabilities.

Discount rate plus 0.5%
Discount rate minus 0.5%
Inflation plus 0.5%
Inflation minus 0.5%
Life expectancy plus 1.0 years
Life expectancy minus 1.0 years

2020

(£3.00 million)
£3.43 million
£3.22 million
(£3.18 million)
£1.46 million
(£1.49 million)

The above sensitivities are approximate and only show the likely effect of an assumption being adjusted whilst all other assumptions remain the same.

The weighted average duration of the defined benefit obligation is around 27 years.

Risk Mitigation Strategies
During the previous year, the Trustees changed the investment advisory role to a fiduciary investment management role; this brought about a change
with the introduction of hedging strategies to its investment portfolio. River and Mercantile were appointed as fiduciary investment manager in
December 2018 and a new Statement of Investment Principles (SIP) 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 took place during 2019 aligning to the new SIP.

Effect of the Scheme on the Company’s Future Cash Flows
The Company is required to agree a Schedule of Contributions with the Trustees of the Scheme following a valuation which must be carried out at least
once every three years. The next valuation of the Scheme will be prepared as at 31 December 2021. In the event that the valuation reveals a larger deficit
than expected the Company may be required to increase contributions above those set out in the existing Schedule of Contributions. Conversely, if the
position is better than expected contributions may be reduced. The total cash cost to the Company for the current financial year is £435,000 (2019:
£402,000). This includes deficit recovery contributions, pension protection fund levy fees and cost of advisors. The Company expects to pay deficit
recovery contributions of £500,000 in the year to 26 June 2021. The projected net interest charge to the Consolidated Statement of Comprehensive
Income for the year to 26 June 2021 is £224,000. This projection assumes cashflows to and from the Scheme are broadly unchanged from the current
year figures and that there will be no events that would give rise to a settlement/curtailment/past service cost.

Consolidated Statement of Financial Position

Fair value of plan assets
Present value of the defined benefit obligation
Deficit

Experience adjustments on plan assets
as a percentage of plan assets
Experience adjustments on plan liabilities
as a percentage of plan liabilities
Total remeasurement (losses)/gains
as a percentage of plan liabilities

2020
£000

2019
£000

2018
£000

2017
£000

19,607
(34,781)
(15,174)

528
2.7%
-
0.0%
(3,806)
10.9%

19,238
(30,550)
(11,312)

384
2.0%
1,614
5.3%
(332)
1.1%

18,834
(29,370)
(10,536)

(779)
(4.1%)
-
0.0%
(172)
0.6%

19,985
(30,483)
(10,498)

712
3.6%
-
0.0%
(4,031)
13.2%

2016
£000

19,287
(25,750)
(6,463)

(1,451)
(7.5%)
236
0.9%
(2,595)
10.1%

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

15. Inventories

Raw materials and consumables
Finished goods

Inventories Recognised as an Expense

Opening inventories
Acquired
Purchases
Increase/(decrease) in stock provisions
Closing inventories
Expensed during the period

Inventories are stated after provisions for impairment of £1,097,000 (2019: £755,000).

16. Trade and Other Receivables

Trade receivables due from third parties
Other debtors
Prepayments and accrued income

Trade receivables due from third parties are stated after provisions for impairment of £795,000 (2019: £760,000).

17. Cash and Cash Equivalents Including Bank Overdrafts

Cash at bank and on hand
Bank overdraft

2019
£000

6,302
8,503
14,805

2019
£000

13,456
1,200
135,153
292
(14,805)
135,296

2019
£000

45,207
2,577
1,940
49,724

2019
£000

29,462
(17,104)
12,358

2020
£000

6,311
8,307
14,618

2020
£000

14,805
-
138,180
321
(14,618)
138,688

2020
£000

36,007
2,356
1,640
40,003

2020
£000

24,181
(14,008)
10,173

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

18. Other Interest-Bearing Loans and Borrowings
This note provides information about the contractual terms and repayment terms of the Group’s interest-bearing loans and borrowings, which are
measured at amortised cost, using the effective interest rate method.

2020 Statutory

Margin

Frequency of
repayments

Year of
maturity

Facility
£000

Drawn
£000

Current
£000

Non-current
£000

Revolving credit
Leases*
Unamortised transaction costs

1.50%/LIBOR
Various

Varies
Monthly

2023
Various

55,000

36,184
12,295
(175)
48,304

-
3,191
-
3,191

36,184
9,104
(175)
45,113

Leases* include all leases recognised as lease liabilities under IFRS 16 (see Note 11). Lease liabilities are shown separately in the table below to show total
bank debt as defined by our banking facility agreement, which only recognises leases as defined as finance leases under IAS 17 as part of bank debt.

2020
Revolving credit
Finance Lease (under IAS 17)
Unamortised transaction costs
Total bank debt
Operating leases (under IAS 17)
Total debt

2019
Revolving credit
Finance Lease (under IAS 17)
Unamortised transaction costs
Total bank debt at 29 June 2019
Operating leases (under IAS 17) at
30 June 2019 on transition to IFRS 16
Total debt at 30 June 2019 on
transition to IFRS 16

Margin
1.50%/LIBOR
Various

Frequency of
repayments
Varies
Monthly

Year of
maturity
2023
2023

Facility
£000
55,000

2.2%

Varies

Margin
1.50%/LIBOR
Various

Frequency of
repayments
Varies
Monthly

Year of
maturity
2023
2023

Facility
£000
55,000
828

2.2%

Varies

Drawn
£000
36,184
472
(175)
36,481
11,823
48,304

Drawn
£000
47,144
828
(247)
47,725

14,972

Current
£000
-
247
-
247
2,944
3,191

Current
£000
-
335
-
335

2,770

Non-current
£000
36,184
225
(175)
36,234
8,879
45,113

Non-current
£000
47,144
493
(247)
47,390

12,202

62,697

3,105

59,592

All of the above loans are denoted in pounds Sterling, with various interest rates and maturity dates. The main purpose of the above facilities is to
finance the Group’s operations. For more information about the Group’s exposure to interest rate risk, see Note 23.

As part of the bank borrowing facility the Group needs to meet certain covenants every six months. There were no breaches of covenants during the
year. The covenant tests required are net bank debt: EBITDA, interest cover, debt service cover and capital expenditure.

The revolving credit bank facility available for drawdown is £55.0 million plus a further £35.0 million accordion facility (2019: £35.0 million plus a
further £55.0 million accordion). At the period end date, the facility utilised was £36.2 million (2019: £47.1 million), giving £18.8 million (2019: £7.9
million) headroom plus a further £35.0 million (2019: £35.0 million) accordion.

19. Analysis of Net Bank Debt

Cash and cash equivalents
Debt due after one year
Hire purchase obligations* due within one year
Hire purchase obligations* due after one year

Unamortised transaction costs
Debt net of unamortised costs

At year ended
29 June 2019
£000

Adjustment on
transition to IFRS 16
as at 30 June 2019
£000

12,358
(47,144)
(335)
(493)
(35,614)
247
(35,367)

-
-
335
493
828
-
828

Cash flow
£000

(2,185)
10,960
-
-
8,775
(72)
8,703

At year ended
27 June
2020
£000

10,173
(36,184)
-
-
(26,011)
175
(25,836)

In the previous year, the company only recognised lease assets and lease liabilities in relation to leases that were classified as ‘finance leases’ under
IAS 17 Leases. The assets were presented in property, plant and equipment and the liabilities as part of the Company’s borrowings. Hire purchase
obligations* previously recognised as finances Leases under IAS 17 are recognised as lease liabilities under IFRS 16 (see Note 11).

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

19. Analysis of Net Debt/Continued

The table below is presented to demonstrate total debt as defined by our banking facility agreement. This excludes the lease liabilities created on
transition to IFRS 16 for leases treated as operating leases under IAS 17.

Cash and cash equivalents
Debt due after one year
Hire purchase obligations due within one year
Hire purchase obligations due after one year
Total net bank debt

20. Trade and Other Payables

Current
Trade creditors
Other creditors including taxes and social security
Accruals and deferred income

21. Provisions and Deferred Consideration

Provisions

Balance at the beginning of the financial year
Adjustment on transition to IFRS 16*
Utilised during the financial year
Balance at the end of the financial year
Current provisions
Non-current provisions

At year ended
29 June 2019
£000
12,358
(47,144)
(335)
(493)
(35,614)

Cash flow
£000
(2,185)
10,960
88
268
9,131

At year ended
27 June
2020
£000
10,173
(36,184)
(247)
(225)
(26,483)

2020
£000

2019
£000

30,512
2,046
16,303
48,861

Site closure
£000

Pension
£000

5,875
(3,804)
(1,228)
843
450
393

199
-
(21)
178
21
157

37,162
3,781
14,600
55,543

Total
£000

6,074
(3,804)
(1,249)
1,021
471
550

* On adoption of IFRS 16 £3,804,000 of the site closure provision was transferred to impairment of property, plant and machinery (see note 12).

The site closure provision relates to the closure of the Grain D’Or site in October 2017, the provision is based on best estimates of the outcome of
negotiations and currently have commitments to June 2023 for service charges, security and insurance costs on a number of leased production units.

The pension provision relates to a contractual liability for pension augmentation, the amount utilised during the year represents payments in
relation to the augmentations which are being paid over 13 years.

Deferred Consideration
The deferred consideration relates to the acquisition of Ultrapharm Limited (Ultrapharm) for £16.9 million plus up to £3.0 million, £2.0 million of
which is outstanding at the 27 June 2020 and payable in quarterly instalments to October 2022. Discounted amounts payable within one year of
the Consolidated Statement of Financial Position date is £481,000 and amounts due beyond one year is £1,357,000. Amounts charged to finance
expenses during the year for the unwinding of the discounting is £14,000 (2019: 139,000).

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

22. Deferred Tax Assets and Liabilities

Recognised Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:

Intangibles
Property, plant and equipment
Foreign exchange contracts
Short-term temporary differences
Interest rate swaps
Discounting of deferred consideration
Pension scheme charges
Employee share scheme charges
Losses acquired
Tax assets/(liabilities)
Net tax assets/(liabilities)

Assets

Liabilities

2020
£000

-
-
55
38
40
-
2,883
391
1,216
4,623
2,506

2019
£000

-
-
37
40
-
-
1,923
574
1,081
3,655
1,855

2020
£000

2019
£000

(1,346)
(740)
-
-
-
(31)
-
-
-
(2,117)
-

(1,325)
(415)
-
-
(30)
(30)
-
-
-
(1,800)
-

Short-term temporary differences relate to general provisions which will be allowed when utilised. The deferred tax asset recognised for losses
relate to acquired businesses, based on current and forecast levels of profitability, the losses are expected to be utilised within 3 years.

Movement in Deferred Tax during the Year

Intangibles
Property, plant and equipment
Foreign exchange contracts
Short-term temporary differences
Interest rate swaps
Discounting of deferred consideration
Pension Scheme
Employee share Scheme
Losses acquired

29 June
2019
£000

(1,325)
(415)
37
40
(30)
(30)
1,923
574
1,081
1,855

30 June
2018
£000

(1,148)
111
7
(10)
(95)
-
1,791
711
1,280
2,647

Acquired
£000

Recognised
in income
£000

Recognised
in equity
£000

-
103
-
-
-
-
-
-
-
103

(21)
(428)
18
(2)
70
(1)
237
(1)
135
7

-
-
-
-
-
-
723
(182)
-
541

Acquired
£000

Recognised
in income
£000

Recognised
in equity
£000

(291)
(127)
-
-
-
(54)
-
-
-
(472)

114
(399)
30
50
65
24
76
119
(199)
(120)

-
-
-
-
-
-
56
(256)
-
(200)

27 June
2020
£000

(1,346)
(740)
55
38
40
(31)
2,883
391
1,216
2,506

29 June
2019
£000

(1,325)
(415)
37
40
(30)
(30)
1,923
574
1,081
1,855

The deferred tax liability in respect of intangible assets will unwind in line with the amortisation of intangible assets.

Finsbury Food Group Annual Report and Accounts 2020

Short-term temporary differences relate to general provisions which will be allowed when utilised. The deferred tax asset recognised for losses

relate to acquired businesses, based on current and forecast levels of profitability, the losses are expected to be utilised within 3 years.

Movement in Deferred Tax during the Year

Acquired

£000

Recognised

in income

£000

Recognised

in equity

£000

22. Deferred Tax Assets and Liabilities

Recognised Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are attributable to the following:

Intangibles

Property, plant and equipment

Foreign exchange contracts

Short-term temporary differences

Interest rate swaps

Discounting of deferred consideration

Pension scheme charges

Employee share scheme charges

Losses acquired

Tax assets/(liabilities)

Net tax assets/(liabilities)

Intangibles

Property, plant and equipment

Foreign exchange contracts

Short-term temporary differences

Interest rate swaps

Discounting of deferred consideration

Pension Scheme

Employee share Scheme

Losses acquired

Intangibles

Property, plant and equipment

Foreign exchange contracts

Short-term temporary differences

Interest rate swaps

Discounting of deferred consideration

Pension scheme

Employee share scheme

Losses acquired

Assets

Liabilities

2020

£000

2019

£000

2020

£000

2019

£000

(1,346)

(740)

(1,325)

(415)

2,883

391

1,216

4,623

2,506

1,923

574

1,081

3,655

1,855

(31)

(2,117)

29 June

2019

£000

(1,325)

(415)

(30)

1,923

574

1,081

1,855

30 June

2018

£000

(1,148)

111

(10)

(95)

1,791

711

1,280

2,647

103

Acquired

£000

(291)

(127)

(54)

(472)

Recognised

in income

£000

Recognised

in equity

£000

(21)

(428)

(2)

(1)

237

(1)

135

114

(399)

119

(199)

(120)

723

(182)

541

(256)

(200)

(30)

(1,800)

27 June

2020

£000

(1,346)

(740)

(31)

2,883

391

1,216

2,506

29 June

2019

£000

(1,325)

(415)

(30)

1,923

574

1,081

1,855

The deferred tax liability in respect of intangible assets will unwind in line with the amortisation of intangible assets.

Notes to the Consolidated Financial Statements/Continued

23. Financial Risk Management
The main purpose of the Group’s financial instruments is to finance the Group’s operations. The financial instruments comprise a revolving credit
facility, hire purchase, finance leases, interest rate swaps, foreign currency forwards, cash and liquid resources and various items arising directly
from its operations, such as trade receivables and trade payables. The main risks arising from the Group’s financial instruments are interest rate risk
and liquidity risk. The Group’s policies on the management of liquidity, credit, interest rate and foreign currency risks are set out below and the main
risks are also referred to in the Strategic Report on pages 30 to 33.

a) Fair Values of Financial Instruments
All financial assets and liabilities are held at amortised cost apart from forward exchange contracts and interest rate swaps, which are held at fair
value, with changes going through the Consolidated Statement of Comprehensive Income. The Group has not disclosed the fair values for financial
instruments such as short-term trade receivables and payables, because their carrying amounts are a reasonable approximation of fair values.

The fair values of forward exchange contracts and interest rate swaps are determined using a market comparison valuation technique.
The fair values are based on broker quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in
similar instruments. The fair values relating to these instruments represent level 2 in the fair value hierarchy which relates to the extent the fair value
can be determined by reference to comparable market values. The classifications range from level 1 where instruments are quoted on an active
market through to level 3 where the assumptions used to arrive at fair value do not have comparable market data.

b) Liquidity
The Group’s policy is to ensure that it has sufficient facilities to cover its future funding requirements. Short-term flexibility is available through
the existing bank facilities and the netting off of surplus funds. The carrying amounts are the amounts due if settled at the period end date.
The contractual undiscounted cash flows include estimated interest payments over the life of these facilities. The estimated interest payments are
based on interest rates prevailing at 27 June 2020.

At year ended 27 June 2020

Carrying amount
£000

Total
£000

1 year or less
£000

1 to 2 years
£000

2 to 5 years
£000

5 years and over
£000

Contractual cash flows including estimated interest

Non-derivative financial liabilities
Revolving credit
Trade creditors
Lease liabilities
Other lease liabilities

(36,184)
(30,512)
(12,295)
-
(78,991)

(36,238)
(30,512)
(13,650)
(200)
(80,600)

-
(30,512)
(3,218)
(192)
(33,922)

-
-
(2,563)
(8)
(2,571)

(36,238)
-
(4,010)
-
(40,248)

-
-
(3,859)
-
(3,859)

At year ended 29 June 2019

Carrying amount
£000

Total
£000

1 year or less
£000

1 to 2 years
£000

2 to 5 years
£000

5 years and over
£000

Contractual cash flows including estimated interest

Non-derivative financial liabilities
Revolving credit
Finance lease liabilities
Trade creditors

Lease liabilities recognised as operating leases
(under IAS 17) at 30 June 2019 on transition to IFRS 16

(47,144)
(828)
(37,162)
(85,134)

(47,394)
(928)
(37,162)
(85,484)

-
(380)
(37,162)
(37,542)

-
(272)
-
(272)

(47,394)
(276)
-
(47,670)

-
-
-
-

(14,972)

(15,586)

(3,207)

(3,218)

(4,116)

(5,045)

The information relating to the interest rate swaps shown in the tables above indicate the cash flows associated with these instruments.
This also reflects the expected effect on the future profit. These amounts will change as interest rates change.

Short-term flexibility is available through existing bank facilities and the netting off of surplus funds.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

23. Financial Risk Management/Continued

c) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
and arises principally from the Group’s receivables from customers. These trading exposures are controlled by assessing the credit quality of the
customer, taking into account its financial position, past experience and other factors and are monitored and managed at operating level and are
also monitored at Group level. Whilst there is a concentration of credit risk arising from the profile of five customers accounting for more than 50%
of total revenue, the Group deems this to be low risk due to the nature of these customers. The carrying amount of the financial assets represents
the maximum credit exposure. Therefore, the maximum exposure to credit risk for the trade receivables at the period end date was £45.2 million
(2019: £40.0 million) and the ageing of trade receivables at the period end date was:

Not past due
Past due 0-30 days
Past due 31-120 days
Past due more than 120 days

2020
£000

32,668
2,157
890
292
36,007

2019
£000

39,666
4,407
626
508
45,207

The above numbers are net of impairment provisions. The Group provides for impairment of financial assets including receivables from customers
based on known events, and some collective provisions are made for losses yet to be identified, based on historical data. The majority of the
provision comprises of specific amounts.

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there may be no reasonable expectation of
recovery may include the failure of the debtor to engage in a payment plan negotiations, and failure to make contractual payments significantly
after due date.

The Group’s strategy is to focus on supplying UK multiple grocers and foodservice distributors; the nature of these customers is such that there is
a relatively low risk of them failing to meet their contractual obligations. There is no impairment necessary to the value of trade receivables at the
period end date over and above the specific credit note provision and bad debt provision held at the year end. The balance of £1.2 million past due by
more than 30 days is equivalent to less than 2 days sales (2019: £1.1 million, equivalent to less than 2 days). We have worked with our customers during
the pandemic and the significant disruption that it has brought to the economic environment to ensure cash is preserved and we trade successfully
through these unprecedented challenges with fluctuations in demand, changes to consumer behaviour and sales channel closures.

Based on the above and analysis performed there is no deemed impact of applying Expected credit loss (ECL) methodology under IFRS 9 as in the
prior year.

Gross trade receivables are assessed regularly by each subsidiary entity locally with reference to appropriate considerations such as the current
position of the relationship with the customer, days past due and the geographical location of each customer. Expected losses are determined
based on the historical experience of write-offs compared to the level of trade receivables. The nature of the Group’s customer base has meant
historic write-offs are trivial, hence no material impact of applying IFRS 9 ECL methodologies. If this impact was deemed significant the historical
loss expectations would be amended for current and forward-looking information such as national economic outlooks accordingly to form the basis
of any provision.

Details of the Company’s credit risk are not disclosed because the Financial Statements of the Group disclose such details on a consolidated basis.

d) Market Risk
The Covid-19 pandemic has resulted in significant changes to the Retail and Foodservice sectors. Consumers have changed their shopping
behaviour within Retail with both positive and negative implications for Finsbury’s products. Foodservice channels were closed almost overnight,
recovery is slow with Foodservice volumes at less than half pre-outbreak levels and this suppressed demand is to continue to remain suppressed
until a solution for Covid-19 is found. The pandemic has impacted significantly on commercial, operational and financial performance.

An internal crisis team formed and met daily to oversee the impact of the pandemic. The priority is and was to ensure the safety of all employees
and to make rapid changes to the way the business operates by establishing safe ways of working based on social distancing and home working.
Financially the business moved to manage cash while ensuring no adverse consequential impact to our customer and supplier base.

i) Interest Rate Risk
The Group’s interest rate risk exposure is primarily to changes in variable interest rates. The Group has entered into two interest rate swap
arrangements in order to hedge its risks associated with any fluctuations. Details of swaps are given in Note 13.

The profile of the Group’s loans and overdraft at the period end date were split as follows:

Variable rate liabilities

2020
£000

2019
£009

(36,656)

(47,972)

Swaps amounting to £25.0 million (2019: £25.0 million) limit the risk associated with the variable rate liabilities. The interest rates for the forward
dated swaps are fixed at 0.455% for £20.0 million and 1.002% for £5.0 million.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

Sensitivity
A 1% increase in the base rate or LIBOR would have the following impact on interest charges and associated net assets for the Group, this sensitivity
relates to interest-bearing bank borrowings and interest rate swaps only and excludes possible changes in pension financing costs.

Profit decrease
Decrease in net assets

2020
£000

300
112

2019
£000

589
388

A 1% decrease in the base rate or LIBOR would have an equal and opposite impact to those listed above.

The above movement is not equal to 1% of interest-bearing loans because of interest rate swap cover that is in place.

ii) Commodity Prices
Any rises in commodity prices can adversely impact the core profitability of the business. The Group will aim to pass on its increased costs to its
customers as far as is reasonable in the circumstances whilst maintaining its tight control over overhead costs to mitigate the impact on consumers.
The Group maintains a high expertise in its buying team and will consider long-term contracts where appropriate to reduce uncertainty in
commodity prices. Further information on input prices and risks is contained in the Strategic Report.

iii) Foreign Exchange Risk
We acquired manufacturing facilities in Poland through the Ultrapharm acquisition. The sites supply to mainland Europe with income in Euros
and local costs denominated in Polish złoty. We supply UK-manufactured products to Lightbody Stretz Ltd, our 50%-owned selling and distribution
business which trades in mainland Europe. We also buy a small number of commodities and capital equipment in foreign currency.
As a consequence, we are exposed to fluctuations in foreign currency rates. We manage this risk by continually monitoring our exposure to foreign
currency transactions. We use forward currency contracts when required and our procurement team works hard to ensure we get the
best prices for commodities and equipment giving special consideration to the benefits of contracts denominated in foreign currency.

e) Debt and Capital Management
The Group’s objective is to maximise the return on net invested capital while maintaining its ongoing ability to operate and guaranteeing adequate
returns for shareholders and benefits for other stakeholders within a sustainable financial structure.

The Coronavirus crisis has had a profound impact on the economy and heightened uncertainty around future economic recovery, therefore the
Board took the decision as announced on 29 March 2020, to withdraw its proposed interim dividend. While the Board remains committed to the
payment of dividends, it believes it is prudent to conserve the Group’s cash at this time of heightened instability. The Board will assess the Group’s
cash position and the outlook for the business at time of the full year results, and will adjust its approach to the final dividend accordingly. It is the
Company’s intention to pay dividends at an affordable rate so that the Company can continue to invest in the business in order to grow profits.

The Group manages its capital by monitoring its gearing ratio on a regular basis, there are also covenant tests which are monitored regularly and
presented to the Group’s banks every six months. There have been no breaches of covenant tests during the year and the gearing ratio stands at 0.4
(2019: 0.4). The gearing ratio is calculated taking the total net debt including deferred consideration over net assets.

The Group considers its capital to include share capital, share premium and capital redemption reserve.

The Group does not have any externally imposed capital requirements.

24. Capital and Reserves
The reconciliation of movement in capital and reserves is shown as a primary statement: Consolidated Statement of Changes in Equity on page 65.

Equity comprises the following:

• Share capital representing the nominal value of equity shares;
• Share premium representing the excess of the fair value of consideration received for the equity shares; (net of expenses of the share issue) over

nominal value of the equity shares;

• Capital redemption reserve representing the buyback and cancellation of shares at nominal value;
• Employee share reserve representing ordinary shares held in an employee benefit trust (EBT) to satisfy awards made to employees; and
• Retained earnings representing retained profits.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

25. Share Capital

In issue at beginning of the financial year
Shares issued
In issue at end of the financial year – fully paid

Allotted, called up and fully paid
Ordinary shares of 1p each

2020
000’s

2019
000’s

130,383
-
130,383

£000

1,304

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings
of the Company. Shares are held in an Employee Benefit Trust (EBT), which is intended to be used to satisfy awards made to employees (3,247,383
shares were held at the year end). All shares are the same class with equal rights. During the year the EBT purchased 984,894 ordinary shares of 1p
each in the capital of the Company (“Ordinary Shares”) at a price of £0.9835 per Ordinary Share.

At the 2019 Annual General Meeting held on 20 November 2019 the Directors were authorised to allot shares up to an aggregate nominal amount
of £869,222, the authority shall expire 15 months from the date of Annual General Meeting or, if earlier, at the conclusion of the Annual General
Meeting of the Company on 19 November 2020.

Share Based Payments
The Group operates both approved and unapproved share option schemes.

The fair value is calculated at the grant date and ultimately expensed in the Consolidated Statement of Comprehensive Income over the vesting
period, based on the best available estimate of the number of share options expected to vest, with a corresponding credit to reserves.
Upon exercise of the share options the proceeds received net of attributable transaction costs are credited to share capital and where
appropriate share premium.

There were a number of options granted during the course of the financial year to 27 June 2020 with further details given below.

Date of grant

28 October 2019
28 October 2019
Charge relating to options granted in the current year
(Credit) relating to options granted in prior years
Charge included in Administrative expenses

Number of
options granted

Number of
options expected
to vest

Exercise
price

Fair value
£000

3,833,219
1,063,325

nil
nil

2,207
560

Amount
expensed in
year to
27 June 2019
£000

488
124
612
(467)
145

There were a number of options granted during the course of the financial year to 29 June 2019 with further details given below:

Date of grant

Number of
options granted

Number of
options expected
to vest

Exercise
price

Fair value
£000

21 January 2019
21 January 2019
Charge relating to options granted in the current year
Charge relating to options granted in prior years
Charge included in Administrative expenses

596,757
585,409

nil
nil

211
241

Amount
expensed in
year to
29 June 2019
£000

34
39
73
623
696

Period of
expense

3.0 years
3.0 years

Period of
expense

2.4 years
4.4 years

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

25. Share Capital/Continued
Details of share options outstanding at 27 June 2020 and movements during the year by exercise price is shown below:

Exercise
price

First
exercise
date

Last
exercise
date

At 29 June
2019

Granted

Forfeited

Cancelled/
lapsed

Exercised

At 27 June
2020

nil
nil
nil
nil
nil
nil
nil
nil
nil

Sep 2018
Jul 2019
Jul 2020
Jul 2022
Sep 2020
Jul 2023
Sep 2021
Sep 2022
Jul 2024

Dec 2025
Jun 2025
Dec 2025
Oct 2027
Oct 2027
Jan 2029
Jan 2029
Oct 2029
Oct 2029

77,743
1,811,706
1,131,978
753,469
825,724
585,409
596,757
-
-
5,782,786

-
-
-
-
-
-
-
3,833,219
1,063,325
4,896,544

-
-
-
-
(39,965)
-
(29,695)
-
-
(69,660)

-
-
-
(753,469)
(785,759)
-
-
-
-
(1,539,228)

(27,439)
(1,811,706)
-
-
-
-
-
-
-
(1,839,145)

50,304
-
1,131,978
-
-
585,409
567,062
3,833,219
1,063,325
7,231,297

A summary of share options outstanding and movements for the year to 29 June 2019 is shown below:

At 30 June
2018

Granted

Forfeited

Cancelled/
lapsed

Exercised

At 29 June
2019

Number of options

6,382,904

1,182,166

(52,036)

(1,450,713)

(279,535)

5,782,786

There were 1,182,282 options exercisable at the period end date (2019: 77,743). There were 1,839,145 options exercised during the year (2019:
279,535). There were 1,539,228 options that lapsed during the year where performance conditions have not been met in full. The average share
price at dates of exercise was 98 pence per share (2019: 68 pence per share).

The options outstanding at the year end have weighted average exercise price of Nil (2019: nil) and a weighted average remaining contractual life of
2.2 years (2019: 1.4 years).

The Company uses a Monte Carlo model for the valuation of the award subject to relative performance to the TSR of AIM listed companies.
An external consultant assists with the valuation of the awards.

The key inputs into the Monte Carlo model are as follows:

Expected life of option
Volatility of share price
Dividend yield
Risk free discount rate
Share price at grant date
Exercise price

2020

2019

3.0 years
29%
4.3%
0.5%
82.0p
nil

3.0 years
23%
4.0%
0.8%
82.5p
nil

26. Dividends
The Coronavirus crisis has had a profound impact on the economy and heightened uncertainty around future economic recovery; the Board took
the decision as announced on 29 March 2020, to withdraw its proposed interim dividend. While the Board remains committed to the payment of
dividends, it believes it is prudent to conserve the Group’s cash at this time of heightened instability. The Board will assess the Group’s cash position
and the outlook for the business at time of the full year results, and will adjust its approach to the final dividend accordingly.

During the year a dividend of £844,000 (2019: £890,000) was paid to the holders of the non-controlling interest in Lightbody Stretz Ltd.

27. Commitments
At the financial year ended 27 June 2020, the Group had capital expenditure commitments of £108,000 (2019: £105,000).

Since the 27 June 2020 the Group is in the final stages to provide a guarantee to the Memory Lane defined benefit pension scheme for the Scheme’s
s.179 deficit at 31 December 2018 which is circa £13,780,000. The guarantee is capped at the lower of £13,780,000 and the s.179 deficit calculated
at the latest triennial valuation. The guarantee will persist until the Scheme is fully funded on a s.179 basis. Any additional contributions made by
the sponsoring employer will reduce the guarantee cap. The employer will look to review the terms of the guarantee as part of the Scheme’s 2021
valuation, but there is no legal obligation to change it. This is disclosed as at the date these Financial Statements are signed, it is deemed that it is
reasonably certain this guarantee will be provided.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

Notes to the Consolidated Financial Statements/Continued

28. Non-cancellable Leases
The Group has annual commitments under non-cancellable leases expiring within two months to eighteen years. The leases have varying terms,
escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. The leases relate to land and buildings, fork lift trucks
and equipment. Land and buildings have been considered separately for lease classification. Land and buildings amounts relate to leasehold
properties at the Nicholas & Harris site, Fletchers’ sites in London and Manchester, Johnstone’s site in East Kilbride and Ultraeuropa in Poland.

This is the first set of the Group’s Financial Statements in which IFRS 16 has been applied. The Group has adopted IFRS 16 from 30 June 2019 using
the modified retrospective approach, comparatives have not been restated. The reclassifications and adjustments from the new leasing rules are
therefore recognised in the opening Consolidated Statement of Financial Position on 30 June 2019. Under IFRS 16 the previous operating leases
charge has been replaced by the depreciation on the right of use asset and interest on the lease liability. The impact on the Consolidated Statement
of Financial Position as at 27 June 2019 and the Consolidated Statement of Comprehensive Income for the 52 weeks to 27 June 2020 are shown in
Note 11.

During the previous year £1,571,000 was recognised as an expense in the Consolidated Statement of Comprehensive Income in respect of
operating leases under IAS 17.

Commitments for minimum lease payments not in scope of IFRS 16 for 2020 and for 2019 in relation to non-cancellable operating leases
(under IAS 17) are as follows:

On leases which expire in:
Less than one year
Between one and five years
More than five years

29. Related Parties

Land and Buildings

Other

2020
£000

2019
£000

-
-
-
-

2,531
6,741
5,045
14,317

2020
£000

192
8
-
200

2019
£000

676
593
-
1,269

Related Party Transactions and Directors’ Material Interests in Transactions
A 50% owned subsidiary, Lightbody Stretz Ltd, paid SCI Coysevox £68,500 (2019: £67,000) in respect of rent for offices. No balances were outstanding
at either year end. Lightbody Europe received £12,654 for accountancy and administration services (2019: £16,000) from FoodHub and an additional
£6,295 for royalties (2019: £11,000). Mr P Stretz, the Managing Director of Lightbody Stretz Ltd, being the related party.

The Group paid £nil (2019: £nil) for the supply of finished products from and received £nil (2019: £27,000) for the sale of finished products to
FoodHub, a company 50% owned by Mr P Stretz. The amount payable and receivable at the year end was £nil (2019: £nil) and £1,000 (2019: £3,000)
respectively.

Transactions with the Memory Lane Pension Scheme are detailed in Note 14.

Transactions with Key Management Personnel
Directors of the Company and their immediate relatives control 3% (2019: 3%) of the voting shares of the Company.

The aggregate compensation of key management personnel (Main Board Executive Directors, Divisional MDs, and Executive Committee) is as follows:

Company contributions to money purchase pension schemes
Executive salaries and benefits

2020
£000

47
1,816
1,863

2019
£000

56
1,708
1,764

Share options held by Group Directors are set out in Note 6. Details of share options outstanding at 27 June 2020 for other key management
personnel by exercise price is shown in the table below.

Exercise price

nil
nil
nil
nil
nil

Number of
options at
27 June 2020

Number of
options at
29 June 2019

Earliest
exercise date

Exercise
expiry date

1,286,925
259,929
-
-
34,298
1,581,152

-
259,929
304,068
-
61,737
625,734

28/10/2022
30/09/2021
02/07/2020
30/09/2019
30/09/2018

28/10/2029
21/01/2029
26/10/2027
29/09/2026
04/12/2025

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Consolidated Financial Statements/Continued

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:

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:

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

£000

14,869
2,792
(746)
16,915
(60)
2,737
19,592

Fair value and
book value
£000

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.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

100

Company Balance Sheet
at 27 June 2020 and 29 June 2019

Non-current assets
Investments
Deferred taxation

Current assets
Debtors
Other financial assets – fair value contracts
Cash and cash equivalents

Current liabilities
Other interest-bearing loans and borrowings
Trade and other payables

Net current assets

Total assets less current liabilities

Non-current liabilities
Other interest-bearing loans and borrowings
Other payables

Net assets

Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Employee share reserve
Profit and loss account
Shareholders’ funds

Note

40
41

42
43, 44

44
44

45
46

47
47
47

2020
£000

2019
£000

112,002
438
112,440

52,756
-
11,052
63,808

118,529
579
119,108

45,893
176
18,075
64,144

(1,099)
(6,351)
(7,450)

-
(6,404)
(6,404)

56,358

57,740

168,798

176,848

(37,158)
(1,989)
(39,147)

(46,896)
(1,884)
(48,780)

129,651

128,068

1,304
64,956
578
(3,378)
66,191
129,651

1,304
64,956
578
(3,616)
64,846
128,068

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Company statement of profit and
loss. The loss for the Company for the financial year was £4,281,000 (2019: £646,000).

These Financial Statements were approved by the Board of Directors on 18 September 2020 and were signed on its behalf by:

Stephen Boyd
Director

Registration number: 00204368

The Notes on pages 102 to 108 form an integral part of these Financial Statements.

Finsbury Food Group Annual Report and Accounts 2020

Company Statement of Changes in Equity
for the 52 weeks ended 27 June 2020 and 52 weeks ended 29 June 2019

101

Balance at 30 June 2018
Profit/(Loss) for the financial year
Total comprehensive income for the period

Transactions with owners, recorded directly in equity:
Own shares acquired
Shares issued from EBT
Impact of share-based payments charge to subsidiaries
Impact of share-based payments
Deferred tax on share options
Dividend received
Dividend paid
Balance at 29 June 2019

Balance at 29 June 2019
Profit/(loss) for the financial year
Total comprehensive loss for the period

Transactions with owners, recorded directly in equity:
Shares issued from EBT
Shares issued during the year
Impact of share-based payments charge to subsidiaries
Impact of share-based payments
Deferred tax on share options
Dividend received
Dividend paid
Balance at 27 June 2020

Share
capital
£000

Share
premium
£000

Capital
redemption
reserve
£000

Employee
share
reserve
£000

Retained
earnings
£000

Total
equity
£000

Note

1,304
-
-

-
-
-
-
-
-
-
1,304

1,304
-
-

-
-
-
-
-
-
-
1,304

64,956
-
-

-
-
-
-
-
-
-
64,956

64,956
-
-

-
-
-
-
-
-
-
64,956

578
-
-

-
-
-
-
-
-
-
578

578
-
-

-
-
-
-
-
-
-
578

(3,282)
-
-

58,508
(1,566)
(1,556)

122,064
(1,566)
(1,556)

(499)
165
-
-
-
-
-
(3,616)

(3,616)
-
-

1,207
(969)
-
-
-
-
-
(3,378)

-
(165)
(177)
696
(256)
12,980
(5,174)
64,846

(499)
-
(177)
696
(256)
12,980
(5,174)
128,068

64,846
(4,281)
(4,281)

128,068
(4,281)
(4,281)

(1,207)
-
105
(1,066)
(182)
11,795
(3,819)
66,191

-
(969)
105
(1,066)
(182)
11,795
(3,819)
129,651

The Notes on pages 102 to 108 form an integral part of these Financial Statements.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

102

Notes to the Company’s Financial Statements
(forming part of the Financial Statements)

33. 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 27 June 2020 (prior financial year 52 weeks ended 29 June 2019).

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 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; and
• 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; and
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures.

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.

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 IFRS 9, 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.

Finsbury Food Group Annual Report and Accounts 2020Notes to the Company’s Financial Statements/Continued

103

33. Accounting Policies/Continued

Unless otherwise indicated, the carrying amounts of the Group’s financial assets and liabilities are a reasonable approximation of their fair values.

Trade and Other Payables
The value of trade and other payables is the value that would be payable to settle the liability at the period end date.

Interest-bearing Borrowings
Interest-bearing borrowings are stated at amortised cost using the effective interest method.

Taxation
The credit for taxation is based on the loss for the year and takes into account taxation deferred because of temporary differences between the
treatment of certain items for taxation and accounting purposes.

Deferred tax is recognised, without discounting, in respect of all temporary differences between the treatment of certain items for taxation and
accounting purposes which have arisen but not reversed by the balance sheet date.

Going Concern
There have been major disruptions to markets since March 2020 as a result of the impact of the Covid-19 pandemic. Post Covid-19 consumer
spending behaviour and lifestyle choices are an unknown. Since the start the Company has been guided by clear priorities to protect employees,
safeguard supply, respond to new patterns of consumer demand and to preserve cash. The response by the Company to mitigate cash outflows
was swift and proportionate with prioritisation and limitation of capital expenditure, salary reductions across senior executives, use of the furlough
scheme and cancellation of interim dividend. We have continued with our close working relationship with our banking partners and have full
support with a reset of debt:EBITDA covenant tests at 26 December 2020 and 26 June 2021. Net bank debt levels had decreased over the year by
£9.1 million to £26.5 million with a net bank debt to adjusted EBITDA measure of 1.1x down from 1.4x at 29 June 2019.

With knowledge and experience since lockdown a bottom-up full-year 2021 budget and strategic forecast to June 2023 has been compiled.
Our supply chain and manufacturing have been robust when faced with unprecedented fluctuation in demand. Revenue trends have improved
over the final quarter, with April 24% down year on year, May, 19% down and June 14% down. The Group has a debt facility to February 2023 of
£55.0 million with scope for the facility to be increased by up to a further £35.0 million, providing increased capacity for the Group to explore future
growth opportunities and support its long-term investment strategy and the Group has a relatively conservative level of debt to earnings.

Having due consideration of the financial projections, the level of debt, and available facilities, it is the opinion of the Directors that the Group has
adequate resources to continue in operation for the foreseeable future and, therefore, consider it appropriate to prepare the Financial Statements
on the Going Concern basis. Further details are set out in the basis of preparation.

Shares held by Employee Share Trusts
Shares held to satisfy options are accounted for in accordance with IAS 32 ‘Financial Instruments. All differences between the purchase price of the
shares held to satisfy options granted and the proceeds received for the shares, whether on exercise or lapse, are charged to reserves.

34. Remuneration of Directors
Details of Directors’ remuneration are set out in Note 6 of the Group’s Financial Statements.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance104

Notes to the Company’s Financial Statements/Continued

35. Staff Numbers and Costs
The average number of persons employed by the Company (including Directors) during the year, analysed by category, was as follows:

Directors and administrative staff

The aggregate payroll costs of these persons were as follows:

Wages and salaries
Social security costs
Other pension costs

Number of employees

2020

2020
£000

7,971
978
460
9,409

2019

2019
£000

4,467
500
306
5,273

36. Share Based Payments
Details of Directors’ share options are set out in Note 6 of the Group’s Financial Statements and details of all share options issued are set out in Note 25 to
the Group Financial Statements. During the year 3,537,222 (2019: 887,208) of the total 4,896,544 (2019: 1,182,166) share options granted were issued to
employees of the Company. The remaining options were granted to employees of the subsidiary companies with corresponding charges to the relevant
profit and loss accounts. The total charge in the financial year to the Company for all share options relating to current and prior years was £145,000 (2019:
£545,000). Credits relating to options exercised, cancelled or lapsed after vesting have also been passed to the subsidiaries during the year. The charge
totalled £105,000 (2019: credit £26,000) and has resulted in a decrease (2019: decrease) in the total cost of investments in the Company balance sheet.
Details of Directors’ share options are set out in Note 6 of the Group’s Financial Statements.

37. Finance Income and Cost
Recognised in the Company Statement of Comprehensive Income

Finance income
Inter-group recharge
Bank interest receivable
Income from interest rate swap agreements
Total finance income

Finance cost
Change in fair value of interest rate swaps
Bank interest payable
Inter-group recharge
Unwinding of discount on deferred consideration
Total finance cost
Net finance cost

2020
£000

-
17
44
61

(386)
(946)
(127)
(14)
(1,473)
(1,412)

2019
£000

426
16
60
502

(382)
(965)
-
(139)
(1,486)
(984)

38. Dividends
On 23 December 2019, a final dividend of 2.34p per share was paid to shareholders on the register at the close of business on 22 November 2019, the
amount paid was £2,974,642.

The Coronavirus crisis and the associated lockdown effective from 23 March 2020 has had a profound impact on the economy and heightened
uncertainty around future economic recovery; the Board took the decision, as announced on 29 March 2020, to withdraw its proposed interim
dividend. While the Board remains committed to the payment of dividends, it believes it is prudent to conserve the Group’s cash at this time of
heightened instability. The Board will assess the Group’s cash position and the outlook for the business at time of the full year results, and will adjust
its approach to the final dividend accordingly.

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Company’s Financial Statements/Continued

105

39. Investment in Subsidiaries
Set out below are all undertakings of the Company whose results are included in the Consolidated Financial Statements for the period ended
27 June 2020.

Subsidiary

Registered address

Direct/
Indirect
ownership

Country of
incorporation

Class of
shares held

2020

2019

Anthony Alan Foods Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Direct

England and
Wales

Ordinary £1 100% 100%

California Cake Company Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

California Cake Company (Holdings) Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Direct

Scotland

Ordinary £1 100% 100%

Campbells Cake Company Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

Campbells Cake (Holdings) Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Fennel Acquisition Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Direct

Fletchers Bakeries Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Indirect

Fletchers Bakeries Investment Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Indirect

Goswell Enterprises Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Indirect

Goswell Marketing Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Indirect

Scotland

Ordinary £1 100% 100%

England and
Wales

Ordinary £1 100% 100%

Johnstone’s Foodservice Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

Lifestyle Healthcare Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Direct

Lifestyle Healthcare Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Indirect

England and
Wales

Ordinary £1

50% 50%

Ordinary £1

50% 50%

Johnstone’s Foodservice Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

Lightbody Celebration Cakes Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

Lightbody Group Ltd

Lightbody Holdings Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Direct

Scotland

Ordinary £1 100% 100%

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

Lightbody of Hamilton Ltd

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

Lightbody-Stretz Ltd

Lightbody Europe SAS

73 Bothwell Rd, Hamilton, ML3 0DW

Indirect

Scotland

Ordinary £1 100% 100%

14 Allée Coysevox, CS 56939, 35069
Rennes Cedex France

Indirect

France

Ordinary £1

50% 50%

Memory Lane Cakes Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Direct

Nicholas & Harris Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Indirect

Storesurvey Ltd

Ultrapharm Ltd

Maes-y-coed Rd, Cardiff, CF14 4XR

Direct

Maes-y-coed Rd, Cardiff, CF14 4XR

Direct

England and
Wales

Ordinary

1p 100% 100%

Ordinary £1 100% 100%

Ultraeuropa SP. z o.o.

Maes-y-coed Rd, Cardiff, CF14 4XR

Indirect

Poland

Ordinary £1 100% 100%

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance106

Notes to the Company’s Financial Statements/Continued

40. Investments

Cost
At beginning of financial year
Impairment
At end of financial year

Net book value
At 27 June 2020
At 29 June 2019

£000

118,529
(6,527)
112,002

112,002
118,529

Impairment
The reassessment of carrying values of the Company’s investment in subsidiaries which resulted in a reduction to the valuation of Ultrapharm
at the year end, were carried out on the investments held in the Company. The value in use at a discount rate of 9.5% is £14.0 million, the cost of
investment is £17.5 million, therefore an impairment of £3.5 million has been recognised. A further impairment has been taken on Anthony Alan
Foods of £3.0 million that had previously been impaired. Note 10 details the considerations supporting an impairment of Ultrapharm goodwill.

41. Deferred Tax

Recognised deferred tax assets and liabilities:

Employee share Scheme charges
Interest rate swaps
Discounting of deferred consideration
Short-term temporary differences
Tax assets/(liabilities)
Net tax assets

Assets

Liabilities

2020
£000

390
40
-
8
438
407

2019
£000

574
-
-
5
579
519

2020
£000

-
-
(31)
-
(31)
-

The deferred tax asset at 27 June 2020 has been calculated based on the rate of 19% substantively enacted at the balance sheet date.

Movement in Deferred Tax during the Year

Employee share scheme
Interest rate swaps
Discounting of deferred consideration
Short-term timing differences

Movement in Deferred Tax during the Prior Year

Employee share scheme
Interest rate swaps
Discounting of deferred consideration
Foreign exchange contracts

29 June
2019
£000

574
(30)
(30)
5
519

30 June
2018
£000

712
(95)
-
-
617

Acquired
£000

Recognised
in income
£000

Recognised
in equity
£000

-
-
-
-
-

(2)
70
(1)
3
70

(182)
-
-
-
(182)

Acquired
£000

Recognised
in income
£000

Recognised
in equity
£000

-
-
(54)
-
(54)

118
65
24
5
212

(256)
-
-
-
(256)

2019
£000

-
(30)
(30)
-
(60)
-

27 June
2020
£000

390
40
(31)
8
407

29 June
2019
£000

574
(30)
(30)
5
519

Finsbury Food Group Annual Report and Accounts 2020

Notes to the Company’s Financial Statements/Continued

42. Debtors

Amounts owed by Group undertakings
Other taxation
Prepayments and accrued income

107

2019
£000

45,533
95
265
45,893

2020
£000

52,277
101
378
52,756

Amounts due from Group undertakings are classified as current as they are repayable on demand.

43. Forward Foreign Exchange Contracts at Fair Value
There were no forward currency contracts in place in the Company at the year end. At the year ended 29 June 2019 the Company had entered into
a number of forward foreign exchange contracts to minimise the impact of fluctuations in exchange rates. There was no charge to current year or
previous year relating to the movement in the fair value of contracts.

44. Creditors: Amounts Falling Due Within One Year

Trade creditors
Amounts due to Group undertakings
Corporation tax
Other taxes and social security
Accruals and deferred income
Deferred consideration*
Provisions closure of Grain D’Or site

2020
£000

78
20
62
196
5,064
481
450
6,351

2019
£000

146
20
62
156
5,020
1,000
-
6,404

Amounts due to Group undertakings are classified as current as they are repayable on demand. Provision for closure of Grain D’Or site has been
passed to the Company from a Group undertaking to ensure that it is managed centrally.

Deferred consideration* is the consideration payable for the Ultrapharm acquisition payable in quarterly instalments to 1 October 2022.

Other Financial Liabilities – Fair Value Interest Rate Swaps
The Company has two interest rate swaps. A five-year swap from 3 July 2017 with a coverage of £20.0 million fixed at a rate of 0.455% and a three-year
swap from 28 March 2019 with a coverage of £5.0 million fixed at a rate of 1.002%. There was 94% coverage at year end (2019: 53%).

A charge of £386,000 (2019: £382,000 charge) is shown in finance expenses (2019: expense) for the year reflecting changes in the fair values of interest
rate swaps. The fair values are liabilities as a result of the current low levels of base and LIBOR interest rates.

Finsbury Food Group Annual Report and Accounts 2020Financial StatementsStrategic ReportCorporate Governance

108

Notes to the Company’s Financial Statements/Continued

45. Interest-Bearing Loans and Borrowings
This note provides information about the contractual terms and repayment schedule of the Company’s interest-bearing loans and borrowings,
which are measured at amortised cost. For more information about the Group’s exposure to interest rate risk, see Note 23.

2020

Currency

Margin

Frequency of
repayments

Year of
maturity

Facility
£000

Total
£000

Current
£000

Non-current
£000

Revolving credit
Unamortised transaction costs

Leases*
Total debt including leases

GBP 1.5%/LIBOR

Varies

2023

£55,000

GBP

2.2%

Quarterly

Varies

36,184
(175)
36,009
2,248
38,257

-
-
-
1,099
1,099

36,184
(175)
36,009
1,149
37,158

2019

Currency

Margin

Frequency of
repayments

Year of
maturity

Facility
£000

Total
£000

Current
£000

Non-current
£000

Revolving credit
Unamortised transaction costs

Operating leases (under IAS 17) at
30 June 2019 on transition to IFRS 16
Total debt at 30 June 2019
on transition to IFRS 16

GBP 1.5%/LIBOR

Varies

2023

£55,000

47,144
(248)
46,896

-
-
-

47,144
(248)
46,896

GBP

2.2%

Quarterly

Varies

3,803

1,252

2,551

50,699

1,252

49,447

Leases* include all leases recognised as lease liabilities under IFRS 16 (see Note 11).

HSBC Bank Plc, HSBC Asset Finance (UK) Ltd, HSBC Equipment Finance (UK) Ltd and HSBC Corporate Trustee Company (UK) Limited have
debentures incorporating fixed and floating charges over the undertaking and all property and assets including goodwill, book debts, uncalled
capital, buildings, fixtures, fixed plant and machinery.

46. Creditors: Amounts Falling Due After More Than One Year

Deferred consideration
Provisions closure of Grain D’Or site
Fair value derivatives
Deferred tax liability

2020
£000

1,357
392
210
30
1,989

2019
£000

1,824
-
-
60
1,884

Deferred consideration is the consideration payable for the Ultrapharm acquisition payable in quarterly instalments to 1 October 2022.

47. Called Up Share Capital
Note 25 in the Group Financial Statements gives details of called up share capital.

48. Capital and Reserves
The reconciliation of the movement in capital and reserves is shown as a primary statement in the Company’s Financial Statements:
Company Statement of Changes in Equity on page 101 with definition details in Note 24 to the Consolidated Financial Statements.

49. Contingent Liabilities
The Company has guaranteed the overdrafts of its subsidiaries; there was a net cash position at the year end of £10,173,000 (2019: £12,358,000).

50. Related Party Disclosures
Note 29 in the Group’s Financial Statements gives details of related party transactions.

51. Financial Risk Management
The Company’s policies on the management of liquidity, credit and interest rate risks are managed at a Group level and are set out in Note 23 in the
Group’s Financial Statements and also referred to in the Strategic Report.

Finsbury Food Group Annual Report and Accounts 2020

Strategic Report

Corporate Governance

Financial Statements

Annual Report and Accounts 2020 109

Finsbury Food Group

Advisers

Registered Office
Maes-Y-Coed Road
Cardiff
CF14 4XR
Tel: 029 20 357 500

Registrars
Capita Registrars
34 Beckenham Road
Beckenham
Kent
BR3 4TU

Company Secretary
ONE Advisory Limited
201 Temple Chambers
3-7 Temple Avenue
London
EC4Y 0DT
Tel: 020 7583 8304

Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants
One Kingsway
Cardiff
CF10 3PW

Nominated Adviser and Broker
Cenkos Securities Plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS

Solicitors
CMS Cameron McKenna LLP
Cannon Place
78 Cannon Street
London
EC4N 6AF

Remuneration Committee Adviser
Deloitte LLP
Four Brindleyplace
Birmingham
B1 2HZ

Registered Number
00204368

Designed and Produced by www.rare-breed.co.uk
Photography by David Hares, Simon Jarratt and Paul Hampton

Products with a Mixed Sources label support the development of responsible forest management
worldwide. The wood comes from FSC certified well managed forests, company controlled sources
and/or recycled material. Company controlled sources are controlled, in accordance with FSC
standards, to exclude illegally harvested timber, forests where high conservation values are
threatened, genetically modified organisms, violation of people’s civil and traditional rights
and wood from forests harvested for the purpose of converting the land to plantations
or other non-forest use.

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