2
Annual Report & Accounts 2010  Highlights 1
Chairman’s Statement 2
Chief Executive’s Report 4
e Directors 6
A Range of Products 8
Business Review 10
Consolidated Statement of Comprehensive Income 24
Consolidated Statement of Financial Position 25
Consolidated Statement of Changes in Equity 26
Consolidated Cash Flow Statement 27
Notes to the Financial Statements 28
Company Balance Sheet 64
Company Reconciliation of Movements in Shareholders’ Funds 65
Notes to the Company Financial Statements 66
Directors’ Report 72
Statement of Directors’ Responsibilities in Respect of the Directors’ Report and the Financial Statements 75
Report of Corporate Governance 76
Audit Committee Report 77
Remuneration Committee Report 78
Independent Auditors’ Report to the Members of Finsbury Food Group Plc 80
Notice of Meeting 81
Advisers 83 1
• Adjusted* PBT up 7% to £5.4m (2009: £5.0m)
• Strong Bread & Free From absolute sales growth of 14%
to £43.7m (2009: £38.2m) including national roll out
of Genius brand fresh free from bread
• Improved integration and internal eﬃciencies with
administrative expenses reduced 6% to £36.1m
(2009: £38.3m)
• Adjusted* diluted earnings per share of 7.0p (2009: 6.9p)
• Capital investment of £3.5m to support growth
including £2.0m in new Free From production facility
• Strengthened Executive Board team with new Group
FD Stephen Boyd
• Total net bank debt reduced 11% from £41.0m to
£36.5m at the year end with established banking
facilities of £50.2m
• Successful rescheduling of £4.8m deferred
consideration previously due in the ﬁrst quarter
of the new ﬁnancial year
Highlights
Income/(Expenditure)
*ese ﬁgures have been adjusted to eliminate the impact of signiﬁcant non-recurring items (see Note 5)
and certain charges required by IFRS for the 52 weeks ended 3 July 2010 and the 53 weeks ended 4 July 2009:
2010 2009
£000 £000
Signiﬁcant non-recurring items (please refer to Note 5 for detail) 154 (1,069)
Share options charge (131) (220)
Diﬀerence between deﬁned beneﬁt pension scheme charges and cash cost 155 166
Movement in the fair value of interest rate swaps (1,097) (1,793)
Movement in the fair value of foreign exchange contracts 199 -
Movement in the fair value of deferred consideration 199 (357) My ﬁrst year as Chairman
has been unprecedented in
the history of our business.
It was a year in which we witnessed the
full impact of the recession that had been
widely forecast during the previous period
and one characterised by customers moving
away from the premium products that
have been our traditional area of strength.
Chairman’s Statement
2 I am extremely proud of the way our business has
responded. In an environment dominated by declining
turnover, we have delivered growth in key areas, increased
proﬁtability and restructured the business to achieve
operational eﬃciencies.
Ours is not a Group reliant on mechanised production
processes, what we do is about craft, tradition and
experience. It is precisely those qualities on which
the future of our business depends and will continue
to drive our thinking going forward.
A New Team in the Boardroom
During the course of the last year, we have brought in
a new senior team. John Duﬀy has taken over as Chief
Executive Oﬃcer and Stephen Boyd has come onboard
as Group Finance Director.
Both have signiﬁcant experience of the Food sector,
working in leveraged environments and delivering
operational change in complex businesses. Having built
their respective reputations in the world of Private Equity,
John and Stephen are highly accomplished at managing
relationships with banks and major customers in
a challenging environment.
e new board has been assembled with a view towards
the long term. Rather than focusing on acquisition-led
growth, this is a team capable of dealing with a very
diﬀerent macro environment but positioned to manage
an expanded business once growth returns. It is a team
fully equipped to provide the skills necessary for the
next phase in the evolution of our Company.
Business Performance
During the last 18 months, our focus has been on shaping
and improving performance across the organisation by
delivering eﬃciencies.
Although proﬁts are up, the reality is that sales are
down for the ﬁrst time in our history. Our largest market
in cakes has been heavily discounted, creating the need
to revise our own pricing structures. In addition to the
diﬃculty of implementing price rises under current
market conditions, we have also had to cope with
increased prices of raw materials in some areas.
Against such a testing backdrop, our strategy has
remained robust and resolute. By taking advantage
of growth opportunities and restructuring the Group
to deliver cost savings, we are navigating our way through
difficult trading conditions with the full support
of our bank. We have continued to ease our cash
requirements and remain committed to investing
in growth where practicable.
In a challenging market, there is quiet cause for
celebration. We remain market leaders in free from
bakery, Genius has become a £10 million brand and
our other licensed brands are delivering measurable value.
Behind the scenes, a regular stream of new products
is being launched. e economic tide will turn in
due course and we are continuing to do all the right
things to prepare ourselves for a more positive
trading environment.
In Conclusion
No one can be sure what is around the corner. While
organisations would clearly rather be trading with the
beneﬁt of a tailwind – rather than into a headwind
as at present – trading conditions are likely to remain
challenging in the short term.
is is a time for pragmatism, patience and hard work.
e task is to trade through the next period, stay within
bank covenants, retain shareholder value and position
ourselves for growth in an expanding marketplace.
I am delighted with the progress we have made. Our
smaller divisions have done a great job of managing
to grow while larger divisions pursue their quest for
efficiency. We are continuing to perform in line with
management expectations and I remain confident,
given our quality heritage and brand portfolio that
we will exit this recession in a position of strength.
Martin Lightbody
Non-Executive Chairman
3
“I remain confident, given our quality heritage
and brand portfolio that we will exit this recession
in a position of strength.” Business is never easy.
In times of plenty or famine, those
entrusted with responsibility for their
organisations, and the ﬁnancial welfare
of their employees and shareholders,
have a duty to establish foundations
capable of withstanding subsequent
reversals of commercial fortune.
Chief Executive’s Report
4 Timing, so they say, is everything. Stepping into the role
of Chief Executive Oﬃcer at the height of an economic
crisis may not have been ideal on a personal level.
However, looking back on a testing year, I feel comfortable
that the new board is delivering a restructuring process
that will create enduring beneﬁts for the business.
e results underline our progress to date. We have
responded to a diﬃcult trading climate by adapting
our range of products, developing strategies to meet
the modiﬁed purchasing habits of our customers while
stepping up the pace of internal change.
I feel extremely encouraged by the way our staﬀ have
responded to the challenges of the last 12 months. And
there will be no let-up. As we head into a new ﬁnancial
year, the pace of progress is being maintained and I feel
conﬁdent that our continued investment in people,
products and facilities will continue to serve us well
for many years to come.
Performance
Results for the full 52 week period ending 3 July 2010
are described in greater detail in the Business Review
Section but there are a number of key areas I would
like to take this opportunity to highlight:
• Strong performance of the bread & free from sales
division, registering like for like growth of 9%
• Improved Group margins despite volatility
of input pricing
• Integration of the Goswells bread acquisition
into Nicholas & Harris, providing a branded bread
platform with Vogels
• Sales of orntons branded cake up 5%
• Completion of £2m investment in new fresh free
from bread production facility
• National roll out of Genius fresh free from
branded bread
• New Scottish central cake distribution warehouse
and supply chain systems
• Creation of cake marketing and category
marketing teams
• Successful rescheduling of £4.8m deferred
consideration previously due in the ﬁrst quarter
of the new ﬁnancial year
Future Prospects
Without the beneﬁt of a crystal ball, it would be unwise
to anticipate any dramatic change in the economic climate.
Nonetheless, our position in the marketplace remains
both distinctive and healthy while our commitment to
product quality and innovation is second to none.
Among other recent initiatives, we have put a huge
amount of work and eﬀort into Category Management
– determining what goes where on a supermarket bakery
shelf. is recession will end eventually. When our
major customers decide it is time to lead consumers
into a new era, our job is to be there, working alongside
them to ensure our products are given the prominence
they deserve.
Our vision is clear. Success for this business depends
on trading through the present period, paying oﬀ
a proportion of our debt, remaining within ﬁnancial
covenants, building a ﬁnancial position that is less
leveraged and returning to growth in an expanding
marketplace.
It is upon these criteria that my colleagues and I are
happy to be judged. Looking back on our most diﬃcult
trading period to date, I am delighted by our response
to the challenges we faced. Further hurdles may yet
need to be overcome but I feel greatly encouraged
by the prospects for this business.
John Duﬀy
Chief Executive Oﬃcer
5
“Our position in the marketplace
remains both distinctive and
healthy while our commitment to
product quality and innovation
is second to none.” Martin Lightbody
Non-Executive Chairman
Martin Lightbody joined the Board in February 2007
with the purchase of the Lightbody Group. He was
previously Managing Director of this business and led
its growth from nowhere in 1995 to become the UK’s
leading supplier of celebration cakes 10 years later.
He is a trained baker and confectioner and is a
member of the British Confectioners’ Association.
John Duﬀy
Chief Executive Oﬃcer
Following an engineering degree and initial career
with Shell International, John Duﬀy completed a
full time MBA and has spent the subsequent 18 years
within the Food Manufacturing sector. Manufacturing
and Logistics Director roles at Mars Inc. were followed
by the role of Operations Director at Golden Wonder
in 2000 and Managing Director of WT Foods’ largest
chilled foods subsidiary, Noon Products, before and after
its sale to Kerry Foods in 2005 and he has non-executive
experience in the broader consumer goods industry.
He was appointed interim Chief Operating Oﬃcer
at Finsbury Foods from September 2008 for 12 months
and took over as Chief Executive Oﬃcer with eﬀect
from 30 September 2009.
Stephen Boyd
Group Finance Director
Steve was appointed Group Financial Director on
18 January 2010. Previously Steve was Group Finance
Director at Golden Wonder and subsequent to that as
Group Finance Director and Chief Operating Oﬃcer
at WT Foods Group Plc. Steve worked with John
Duﬀy at both Golden Wonder and WT Foods.
David Marshall
Non-Executive Director
David Marshall was educated in South Africa and
in England. He was appointed to the Board in 1979 and
was elected Chairman in March 2008, replacing Lord
Saatchi and following a six-year period as Deputy
Chairman. He is also Chairman of a number of listed
public companies, including London Finance &
Investment Group Plc, which is a substantial shareholder
in Finsbury Food Group Plc. In recent years he has taken
a leading role in the reorganisation and development of
a number of medium sized listed companies in the UK
and overseas.
6
e Directors
From left to right
• John Duﬀy
• Martin Lightbody
• David Marshall
• Stephen Boyd
• Ian Farnsworth
• Crawford Currie
• Paul Monk
• Edward Beale 7
Ian Farnsworth
Non-Executive
Ian Farnsworth has been a member of the Board since
1997. He joined National Westminster Bank in 1956
and retired in 1997 having held various senior positions
including Chief Executive and Deputy Chairman
of Coutts & Co. He is Chairman of both the
Remuneration and Audit Committees.
Crawford Currie
Finance Director of Lightbody Group Ltd
Crawford Currie was appointed to the Board in
February 2007 with the purchase of the Lightbody
Group. Before joining Lightbody in 1998, he gained
a wide range of experience in various accounting roles.
After training with Touche Ross, he took on senior
roles in divisions of Cookson Group Plc and Smith
Industries Plc.
Paul Monk
Deputy Chairman
Paul Monk was appointed to the Board on 9 December
2002 and elected as joint Deputy Chairman in February
2007. He has extensive experience in the food
manufacturing industry, was the Chief Executive of
Golden Wonder Ltd and his other experience includes
roles with Marks & Spencer and the Mars Corporation.
He also holds other non-executive roles within the
food industry.
Edward Beale
Non-Executive
Edward Beale was appointed a Director on 29 August
2002. He is a Chartered Accountant and the Chief
Executive of City Group Plc, the Group's Company
Secretaries. He is a member of the Accounting Standards
Board of the Financial Reporting Council and Chairman
of the QCA’s Corporate Governance Committee.
He sits on both the Audit Committee and
Remuneration Committee.
Lisa Morgan
Group Finance Director – Resigned
Lisa Morgan was appointed as Group Finance Director
on 1 October 2006 and resigned from her post with
eﬀect from 20 January 2010. A Range of Products
8
We see exciting
growth opportunities.
From top-selling cakes to niche products,
and speciality breads to free from options. 9 10
Our business strategy
is to generate returns
for shareholders.
By building a crafted bakery group
within the cake and bread & free from
markets which is focused on premium,
celebration and well being that delivers
for customers and consumers. We will
continue to develop our licensed brand
portfolio to complement our core retailer
brand relationships.
Business Review We are still a modest manufacturer in the total Bakery
markets in which we operate and see exciting organic
growth opportunities in all our businesses.
Whilst our short term focus is on integrating and growing
our existing businesses, we aim to take advantage of the
right bolt on acquisitions to drive longer term value
as opportunities, ﬁnancing and circumstance allow.
Our Markets
We operate in large markets with combined sales in
excess of £4 billion per annum. We continue to lead
our core areas within those markets, where there remains
signiﬁcant opportunity for growth by converting
consumers to our product range.
e total annual UK ambient cake market (including
pre-packed cake and in-store bakery) is valued at £1.5
billion. e past 12 months has seen value decline
accelerate to -2.6% (source: AC Nielsen) with a decline
in volume of 1.8%. We continue to be the second largest
supplier of cake to the UK’s multiple grocers, with a
20% share of the total pre-packed cake market and have
maintained our leading position in the niche areas on
which we focus.
Within the bread & free from segment, annual bread
sales are in excess of £3 billion (source: Mintel). We are
a smaller player in this market, with a focus on speciality
and organic bread products and we have continued to
beneﬁt from the growth in demand for our products,
despite the tough economic climate and a general decline
in organic bread sales. Moving to the free from part
of this segment, the total gluten free market is around
£180 million (source: AC Nielsen), with growth of
c1.6% in the last year. e area of this market in which
we operate i.e. bread, cake and other bakery products,
accounts for c£30 million of these sales, with growth of
48% year on year. e bakery sector growth signiﬁcantly
outstrips the total gluten free market growth due to the
introduction of Genius fresh bread and our strategy of
introducing ‘fresh’ bakery products through retailers’
own labels.
Our Business
e Group consists of businesses acquired over a number
of years that have been integrated to facilitate a focus
on operational cost eﬃciency. Over the year we have
signiﬁcantly reduced our costs to manufacture despite
substantial increases in most commodity prices. At the
same time our focus over the year has been to capitalise
on the growth opportunities arising from the acquisitions
of Goswells and from the launch of Genius gluten
free bread.
Lightbody of Hamilton Ltd (‘Lightbody’), based in
Hamilton, employs around 1,150 people and is the UK’s
largest supplier of celebration cake. It also produces a
range of small cakes, a number of which are under our
licensed brands including orntons, Nestlé and
WeightWatchers.
Memory Lane Cakes Ltd (‘Memory Lane’), based in
Cardiﬀ, employs around 950 people and is the leading
manufacturer of the UK retailers’ premium own label
cake ranges. It also produces under a number of brands
notably Nestlé, WeightWatchers and orntons. During
the year Memory Lane has suﬀered a market led sales
decline, and as a result has restructured its operations
whilst also improving factory fabric and product quality.
ese actions led to a strong second half of the year
which is continuing into the new ﬁnancial year.
Sales revenues within the integrated cake businesses
were down 9.7% compared with the prior year after
adjusting for its extra trading week. is is driven by
the decline in the overall cake market, our decision to
exit speciﬁc low margin business and our bias towards
premium and healthier products, which have particularly
been aﬀected by the decline.
United Central Bakeries Ltd (‘UCB’), based in
Bathgate near Edinburgh, employs around 180 people
and manufactures a range of gluten free bakery products
and morning goods. e year saw the successful national
roll out of the Genius free from fresh bread brand.
Livwell Ltd (‘Livwell’), based in Hull, employs around
100 people and is the UK’s leading supplier of gluten
free bread, cake and morning goods to the UK’s grocery
retailers. It continues to deliver new products into the
free from market, such as pain au chocolat and ciabatta.
is business operates under a combined commercial
team with UCB.
Nicholas & Harris Ltd (‘N&H’), based in Salisbury,
employs around 220 people and produces a range of
speciality bread products to the UK retailers. It has
maintained its leadership position in the supply of
‘clean-label’ breads. is position has been strengthened
following its acquisition of Goswell Enterprises Ltd
(‘Goswells’) in June 2009 and with it a number of
licensed brands including Vogels and Cranks.
11
20%
We continue to be the second largest
supplier of cake to the UK’s multiple
grocers, with a 20% share of the total
pre-packed cake market and have
maintained our leading position in
the niche areas on which we focus. Growth in sales revenues within the bread & free from
business has continued to accelerate with a combined
increase for the division of 9.3%, after adjusting for the
acquisitions and the additional week of trading in the
prior year.
Brands and Licences
e Group remains primarily a retailer branded business,
with sales of retailer own label products accounting for
around 65% of our total revenue compared to 70% a year
ago. is reﬂects the strength of the licensed brands
under our control and the fact that, in a number of cases,
they have outperformed the rest of the market.
W eightW atchers
WeightWatchers is one of the largest food brands
in the UK and we hold the licence to manufacture and
distribute low fat cake to the UK and Ireland’s multiple
grocers under this brand. Since the acquisition of
Anthony Alan in 2007, the brand has been developed
through utilisation of the broad production capability
within the Group and our skills in developing new
products that adhere to brand guidelines. WeightWatchers
now accounts for 69% of the low fat cake market in terms
of value. e brand continues to perform slightly better
than the category which declined by 13.4% in value
terms compared to 11.1% on the WeightWatchers brand.
orntons
e Group continues to develop its branded oﬀering
within the premium cake sector via its licensing
arrangement with the orntons confectionery business.
rough a combination of new product development,
additional listings of existing products and targeted
promotional activity, the orntons brand within cake
has seen growth of 15.2% retail sales year on year (source:
AC Nielsen).is represents signiﬁcant out-performance
of the rest of the premium cake market.
We have recently launched two new products under
the brand and we will continue to invest in the brand
to increase awareness and drive further proﬁtable
growth for both us and our customers.
Nestlé Confectionery
We continue to beneﬁt from the rights to manufacture
and distribute cake products under Nestlé confectionery
brands such as Smarties, Jelly Tots and Munchies.
e celebration cake range is showing strong year on
year growth which is being oﬀset by a below market
performance for the snacking range driven by lower
levels of promotion when compared to the competition.
Disney
Access to the full portfolio of Disney properties allows
us to maintain our position as the licensed celebration
cake market leader. Brands within the portfolio such as
Hannah Montana, High School Musical and Toy Story
3 celebration cake have been a success during the year
backed up by the continued growth of the Princess
property.e release of the second Cars movie in July 2011
will see us continue to drive our Disney business forward.
Other Celebration Cake Licences
ese four major brands are complemented by a range
of other licences which are particularly focused on driving
celebration cake sales. Properties such as Ben 10 and
Peppa Pig have their own target market and oﬀer
excellent additions to the range. Little Venice Cake
Company has also recently joined the Finsbury brand
roster. e ﬁrst cake under the brand led by Mich
Turner MBE will be launched for Christmas 2010
followed by an all year round range available in-store
from January 2011.
Bread & Free From Licences
We are pleased to have branded oﬀerings in our bread
& free from businesses. e Village Bakery is an organic
brand which N&H have been working with for a
number of years, generating sales of around £1 million
per annum. e range is based primarily around clean
label rye breads and lines are stocked by all our bread
customers. e Vogels brand covers a range of natural
sliced breads with added rye, grains and seeds to improve
the health attributes of the product. e rights to
manufacture products under this brand came along
with the acquisition of Goswells in June 2009 and
complements the mainly own label range of products
within N&H’s portfolio. is acquisition also brought
with it the Cranks licence to manufacture a range of
organic bread products.
We successfully completed a £2 million capital spend in
January 2010, increasing the capacity for fresh free from
bread. We introduced the Genius brand to the market
last year and within 12 months have grown the retail
sales to in excess of £10 million across the Retail and
Foodservice channels. Genius is now the biggest brand
in the free from Bakery market with a value market share
of around 25% (Source: Nielsen Scantrak) and is listed
in all major multiples, co-ops and many independent
and convenience stores. At the beginning of 2010 we
introduced new 600g sliced variants into the retail trade
and 800g sliced variants into the Foodservice sector,
where it is used by sandwich producers and stocked in
major chains such as Starbucks. We will be expanding
the range of fresh free from products beyond bread in
the next year.
Business Review
12
WeightWatchers now accounts for
69% of the low fat cake market in
terms of value.
69%
orntons brand within cake has
seen growth of 15.2% retail sales
year on year.
(source: AC Nielsen)
15.2% 13
We successfully completed a £2 million capital spend in
January 2010, increasing the capacity for fresh free from
bread. We introduced the Genius brand to the market last
year and within 12 months have grown the retail sales to
in excess of £10 million across the Retail and Foodservice
channels. Genius is now the biggest brand in the free from
Bakery market with a value market share of around 25%.
25% 14
“As we head into a new ﬁnancial year,
the pace of progress is being maintained
and I feel conﬁdent that our continued
investment in people, products and facilities
will continue to serve us well for many
years to come.”
John Duﬀy
Chief Executive Oﬃcer 15
Principal Operating Risks
e Group operates in an environment which is
continually changing and as a result the risks it faces
will also change over time. e 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. e 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.
e Directors have identiﬁed the following principal
risks and uncertainties that could have the most
signiﬁcant impact on the Group’s value generation:
Competitive Environment and Customer Requirements
ere is strong competition between manufacturers in
the Bakery sector. e monitoring of key performance
indicators at customer level such as service levels and
customer complaints is part of the risk management
process associated with this speciﬁc risk. Strong customer
service, quality products, low costs and innovative new
product development are areas of focus to satisfy
customer needs and remain strong in a competitive
environment.
Continual monitoring of customer KPI’s and
production quality measures take place to ensure
customer requirements are being met and issues are
identiﬁed in a timely manner to limit their impact.
Product quality is a key strength of the Group and
failure to maintain a high standard of food quality
and safety would have a severe impact on service
levels and customer relationships.
e Group’s quality assurance procedures, managed at
site level, are reviewed continuously with improvements
made as appropriate. e Group has recruited a Group
Technical Director to help ensure continuous improvement
across all sites to meet the increasingly high expectations
of our customers. e operating subsidiaries are subject
to regular internal and independent food safety and
quality control audits including those carried out by,
or on behalf of, their customers. e Group maintains
product recall insurance cover to mitigate the potential
impact of such an occurrence.
Raw Materials – Prices and Supply
Increases in the price of raw materials can adversely
impact the core proﬁtability of the business and any
related shortage in supply will impact the business’
ability to maintain its service levels to customers –
another of its key performance indicators. e prices
of certain key commodities (e.g. sugar) are tied to the
Euro – the relative strength of sterling will, therefore,
have an impact on the cost of these commodities.
e Group will aim to pass on increased costs to its
customers as far as is reasonable in the circumstances
whilst maintaining its tight control of overhead costs
to mitigate the impact on consumers. e Group
maintains a high level of expertise in its buying team
and will consider long term contracts where appropriate
to reduce uncertainty in input prices. e team also
cultivates strong relationships with its major suppliers
to ensure continuity of supply at competitive prices.
Regular renovation and innovation in our product range
can help to manage margin pressures in an eﬀective
manner as far as the competitive environment allows.
e Group also purchases forward foreign currency in
order to minimise the ﬂuctuation of input costs linked
to future currency conversion rates.
Economic Environment
Whilst the price sensitivity of our products is relatively
low, there have been some particular trends in the
premium and health sectors of the cake market that
have impacted the demand for products within these
sectors. e recessionary environment has resulted in
demand from customers for increased levels of support
via promotional activity as they compete with each
other to oﬀer consumers greater value for money. e
Group will continue to focus on quality and value for
money in periods of reduced spending.
e Group has taken steps to improve the assessment
of this promotional support to ensure an acceptable
level of return on this expenditure. e strength of the
brands at our disposal has also helped to mitigate the
impact – this is reﬂected in the growth we have seen
in orntons in particular.
Interest Rates
Group funding is linked to either base rate or LIBOR,
any increase in interest rate will increase the funding
costs. e Group has interest rate swap arrangements
in place to hedge its risks associated with interest
rate ﬂuctuations.
Bank Covenants
ere is potential for the bank to withdraw funding
should there be a breach of covenants. Bank covenants
are reviewed monthly for actual and forecast. ere
is regular and open communications with the bank
to ensure they are fully aware of the Group’s position.
Strong customer service, quality products, low costs
and innovative new product development are areas
of focus to satisfy customer needs and remain strong
in a competitive environment.
Business Review 16
52 week period ended 3 July 2010
Fair value As per
of interest Consolidated
Non- Deﬁned rate swaps/ Movement in Statement of
recurring Share beneﬁt foreign the fair value Comp-
Operating signiﬁcant options pension exchange of deferred rehensive
performance items charge scheme contracts consideration Income
£000 £000 £000 £000 £000 £000 £000
Revenue 168,338 - - --- 168,338
Cost of sales (121,278) - - --- (121,278)
Gross proﬁt 47,060 - - --- 47,060
Other costs
excluding depreciation
& amortisation (36,089) (399) (131) (14) 199 - (36,434)
Other income - 553 - --- 553
EBITDA 10,971 154 (131) (14) 199 - 11,179
Depreciation
& amortisation (2,968) - - --- (2,968)
Results from
operating activities 8,003 154 (131) (14) 199 - 8,211
Financial income - -- 1,240 - 316 1,556
Financial expenses (2,612) -- (1,071) (1,097) (117) (4,897)
Proﬁt before tax 5,391 154 (131) 155 (898) 199 4,870
Taxation (1,376) (393) 37 (43) 251 (56) (1,580)
Proﬁt after tax 4,015 (239) (94) 112 (647) 143 3,290
Adjusted proﬁt before tax was £5.4 million (2009: £5.0 million). is was achieved after net interest payable
of £2.6 million (2009: £2.6 million).
e signiﬁcant non-recurring items in 2010 referred to above, totalling £0.2 million proﬁt before tax relate to:
• reorganisation costs (including redundancies) associated with the restructuring of the Group (£0.4 million)
• curtailment of deﬁned beneﬁt pension scheme liabilities shown in other income of £0.6 million
• within taxation on signiﬁcant non-recurring items is a potential prior year tax inquiry liability of (£0.3 million)
2010
Trading Results
Group revenue for the 52 week period to 3 July 2010
was £168.3 million (53 week period to 4 July 2009:
£178.9 million), a decrease of £10.6 million (5.9%) year
on year. Like for like sales from continuing operations
decreased by £10.0 million after excluding the full year
eﬀect of prior year acquisitions (namely Goswells)
and the extra 53rd week of trading in the prior year.
Gross margin for the ﬁnancial year was 28.0% representing
an increase of 0.8% year on year. Production improvement
initiatives, a decision to exit speciﬁc low margin business
coupled with a bias towards premium products have
assisted this increase.
Administrative expenses decreased by £2.2 million year
on year, utilities decreased by £0.7 million, the Group
has made good progress during the year in improving
internal eﬃciencies.
e following analysis is included to show what the
Directors consider to be the underlying performance
of the Group and eliminates the impact of signiﬁcant
non-recurring items and certain charges required
by IFRS
Business Review 53 week period ended 4 July 2009
As per
Consolidated
Non- Deﬁned Movement in Statement of
recurring Share beneﬁt Fair value the fair value Comp-
Operating signiﬁcant options pension of interest of deferred rehensive
performance items charge scheme rate swaps consideration Income
£000 £000 £000 £000 £000 £000 £000
Revenue 178,931 - - --- 178,931
Cost of sales (130,180) - - --- (130,180)
Gross proﬁt 48,751 - - --- 48,751
Other costs
excluding depreciation
& amortisation (38,324) (1,069) (220) (57) -- (39,670)
Other income - - - ----
EBITDA 10,427 (1,069) (220) (57) -- 9,081
Depreciation
& amortisation (2,790) - - --- (2,790)
Results from
operating activities 7,637 (1,069) (220) (57) -- 6,291
Financial income - -- 1,309 -- 1,309
Financial expenses (2,589) -- (1,086) (1,793) (357) (5,825)
Proﬁt before tax 5,048 (1,069) (220) 166 (1,793) (357) 1,775
Taxation (1,296) 299 62 (46) 502 99 (380)
Proﬁt after tax 3,752 (770) (158) 120 (1,291) (258) 1,395
e signiﬁcant non-recurring items in 2009 referred to above, totalling £1.1 million loss before tax, can be broken
down as follows:
• reorganisation costs (including redundancies) associated with the integration of our cake business (£0.3 million)
• exit costs relating to outgoing Chief Executive Oﬃcer (£0.5 million)
• provision for Company contributions to deﬁned beneﬁt scheme related to pension augmentation (£0.3 million)
17
2009
Business Review 18
Earnings per Share
EPS comparatives to the prior year can be distorted by signiﬁcant non-recurring items and IFRS adjustments.
e Board is focused on growing adjusted diluted EPS, which is calculated by eliminating the impact of the items
highlighted above and incorporates the dilutive eﬀect of share options. Adjusted diluted EPS is 7.0p for the
52 week period (53 week period 2009: 6.9p).
Basic earnings per share (EPS), calculated on the weighted average number of shares in issue during the year,
is 5.7p (2009: 2.3p). Adjusted basic EPS is calculated by eliminating the impact of the items shown above
and is 7.1p for the year (2009: 6.9p). e dilutive eﬀect of share options is negligible.
Financial Key Performance Indicators
KPI 2010 2009 2008 2007 2006
Revenue £168.3m £178.9m £165.1m £107.6m £72.0m
Adjusted EBITDA £11.0m £10.4m £13.3m £7.9m £4.3m
Adjusted diluted EPS 7.0p 6.9p 10.5p 9.5p 6.3p
Net debt £36.5m £41.0m £43.7m £29.0m £14.0m
EBITDA is calculated as earnings before interest, taxation, depreciation and amortisation
Net debt is calculated as overdrafts, bank loans, asset ﬁnance and mortgages less cash balances
Non-Financial Key Performance Indicators
A range of non-ﬁnancial key performance indicators are
monitored at site level covering, amongst others, customer
service, quality and health and safety. e Group Board
receives an overview of these on a regular basis.
Acquisitions
ere were no acquisitions in the period. In June 2009,
the Group (via N&H) acquired the entire issued share
capital of Goswell Enterprises Ltd for a total consideration
of £2.2 million (including costs), of which £1.7 million
is deferred and unconditional. Loan notes have been
issued in respect of the deferred consideration and these
loan notes are interest free. e initial consideration was
ﬁnanced by the Group’s existing cash ﬂow.
During the year deferred consideration of £810,000
was paid in respect of the acquisition of Yorkshire
Farm Bakeries and A&P Foods, acquired in April 2008.
At the year end there remained a further £2.4 million
deferred consideration in respect of this acquisition,
due to be paid over the next two years. is deferred
consideration attracts interest payments at 6%.
During the year deferred consideration of £40,000
was paid in respect of the acquisition of Anthony
Alan Foods Ltd acquired in October 2007. At the
year end there remained a further £2.3 million deferred
consideration in respect of the Anthony Alan Foods Ltd
acquisition, due to be paid over the next two years. is
deferred consideration attracts interest payments at 6%.
Cash Flow
e Group realised a net cash inﬂow from operating
activities of £8.8 million during the ﬁnancial year
(2009: £8.2 million) representing an increase of 7% on
the previous ﬁnancial year. ere was a reduction in our
working capital requirement of £1.2 million compared
to the last ﬁnancial year reﬂecting the impact of an
increased focus in this area over the past 12 months.
Corporation tax payments made in the ﬁnancial year
totalled £0.6 million (2009: £0.8 million), these payments
took account of the research and development tax relief
due to the Group and identiﬁed in the previous and
current ﬁnancial years. Capital expenditure in the year
amounted to £3.5 million (2009: £3.4 million). Included
in this spend was £2.0 million spent at UCB in advance
of the national roll out of the Genius gluten free bread.
Debt & Bank Facilities
e Group’s total net bank debt after deducting cash
balances and including guaranteed loan notes as at 3 July
2010 was £36.5 million (4 July 2009: £41.0 million).
Within this total net debt, £13.5 million is due within
one year, including cash at bank, invoice ﬁnance and
loan notes payable on demand (2009: £14.6 million).
Net bank debt excludes deferred consideration payable
in respect of acquisitions.
e Group’s debt facility with HSBC Bank Plc totals
£50.2 million, the key features of the facility are as follows:
• overdraft (£2.0m)
• conﬁdential invoice discounting facility (£16.0m ﬂexible)
• 2 term loans repayable over ﬁve years (£12.9m)
• 2 term loans repayable at the end of ﬁve years (£4.7m)
• mortgage facility (£8.2m)
• rolling asset ﬁnance facility (£6.4m)
Business Review 19
e Board is focused on growing adjusted
diluted EPS. Adjusted diluted EPS is 7.0p
for the year (2009: 6.9p). 20
“e results underline our progress to date.
We have responded to a diﬃcult trading
climate by adapting our range of products,
developing strategies to meet the modiﬁed
purchasing habits of our customers while
stepping up the pace of internal change.”
John Duﬀy
Chief Executive Oﬃcer 21
Discounted deferred consideration of £6.0 million is
outstanding at the year end and is payable over the next
three years (2009: £7.1 million). Of this £4.4m (2009: nil)
attracts an interest of 6% pa and £1.6m (2009: £7.1m) is
interest free. ere has been a change in the current year
in relation to the treatment of loan notes issued as deferred
consideration. Previously these had been shown in other
interest-bearing loans and borrowings; they have been
reclassiﬁed in the current year and for comparatives and
are shown separately on the face of the Consolidated
Statement of Financial Position as part of the deferred
consideration. is change is presentational and has no
impact on the reported result.
e Group is able to oﬀer strong asset backing to secure
its borrowings.e Group owns freehold sites at Memory
Lane in Cardiﬀ, at Lightbody, UCB and Campbells in
Scotland, and at Livwell in Hull. In addition, the Group
has a strong trade debtor book to support the invoice
discounting facility, made up primarily of the UK’s major
multiple retailers.is debtor book stood at £21.4 million
(2009: £21.9 million) at the period end date.
e Group recognises the inherent risk from interest
rate rises. To mitigate these risks, the Group has ﬁve
interest rate swaps in place with a total coverage of
£26.4 million (equivalent to 72% of total net debt) at
a weighted average rate of 4.9% and a forward starting
ﬁxed swap arrangement which was entered into in May
2010, this takes eﬀect in July 2011 and runs for ﬁve
years from that date.
e eﬀective interest rate for the Group at the year end,
taking account of the interest rate swaps in place and
deferred consideration with base rate at 0.5% and
LIBOR at 0.7%, was 6.11% (2009: 5.26%).
Financial Covenants
e Board reviews the Group’s cash ﬂow forecasts
and key 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.
e forecasts are based on management’s best estimates
of future trading. ere has been no breach of covenants
during the year.
Interest cover (based on adjusted EBITDA) for the
52 weeks to 3 July 2010 was 4.2 (2009: 4.0). Net debt
to EBITDA (based on adjusted EBITDA) for the year
to 3 July 2010 was 3.3 (2009: 3.9).
It should be noted that current liabilities exceed current
assets. Having reviewed the Group’s plans and available
ﬁnancial facilities, the Board has reasonable expectations
that the Group has adequate resources to continue in
operational existence for the foreseeable future. Existing
bank facilities total £50.2m and the Group has stayed
within these facilities during the year, meeting all existing
covenant requirements. In addition, the Group has
a strong asset backing and strong trade debtor book.
Accordingly, the Board continues to adopt the going
concern basis in preparing the Financial Statements
for both the Group and the parent company.
Taxation
e Group corporation tax charge for the year was
£1.6 million (2009: £0.4 million). is represents an
eﬀective rate of 32.4% (2009: 21.4%). e £1.6 million
includes a potential prior year tax inquiry charge, the
underlying eﬀective rate of tax after eliminating the
eﬀect of this is 25.3%.
ere has been a change in presentation during the year.
e net deferred asset (2009: liability) has been split
to show the gross asset and liability position separately
on the face of the Consolidated Statement of Financial
Position and the prior year comparatives have been
restated. is change is presentational and has had
no impact on net assets or reported results.
Further details on the tax charge can be found in
Note 9 to the Group’s Financial Statements.
Environmental Matters
e Group is active in reducing its environmental impact
either through investment in capital equipment or through
active management initiatives. Capital investment in
plant and machinery must include as part of its decision
criteria the objectives of reducing energy requirement
as well as reducing waste by-products. An example of
successful management initiatives is within the Cake
division where, with eﬀect from August, all food waste
will be sent for reprocessing into animal feed, rather
than being sent to landﬁll. Our aim is to send zero
waste of any kind to landﬁll and over the last 5 years
we have reduced our waste to landﬁll by over a half.
Signiﬁcant project work has been undertaken to reduce
the quantity of packaging used in our products and we
estimate that this will deliver a 25% saving by weight.
Employee Social and Community Issues
All manufacturing sites are active within their local
community supporting local community initiatives
provided they are economically viable considering the
diﬃcult trading conditions the Group has experienced
over the last year. e Group also supports local
and national government initiatives such as the
New Deal programme.
Our aim is to send zero waste of any kind to landﬁll
and over the last 5 years we have reduced our waste
to landﬁll by over a half.
Business Review 22
Financial
Statements 23
Consolidated Statement of Comprehensive Income 24
Consolidated Statement of Financial Position 25
Consolidated Statement of Changes in Equity 26
Consolidated Cash Flow Statement 27
Notes to the Financial Statements 28
Company Balance Sheet 64
Company Reconciliation of Movements in Shareholders’ Funds 65
Notes to the Company Financial Statements 66
Directors’ Report 72
Statement of Directors’ Responsibilities in Respect of the Directors’ Report and the Financial Statements 75
Report of Corporate Governance 76
Audit Committee Report 77
Remuneration Committee Report 78
Independent Auditors’ Report to the Members of Finsbury Food Group Plc 80
Notice of Meeting 81
Advisers 83 Consolidated Statement of Comprehensive Income
for the 52 weeks ended 3 July 2010 and 53 weeks ended 4 July 2009
2010 009
Signiﬁcant Signiﬁcant
Before non- Before non-
signiﬁcant recurring signiﬁcant recurring
items items Total items items Total
Note £000 £000 £000 £000 £000 £000
Revenue  168,338 - 168,338 78,93 - 78,93
Cost of sales (121,278) - (121,278) (30,80) - (30,80)
Gross proﬁt 47,060 - 47,060 8,75 - 8,75
Administrative expenses  (39,003) (399) (39,402) (,39) (,069) (,60)
Other income 5 - 553 553 ---
Results from operating activities 8,057 154 8,211 7,360 (,069) 6,9
Financial income 8 1,556 - 1,556 ,309 - ,309
Financial expenses 8 (4,897) - (4,897) (5,85) - (5,85)
Net ﬁnancing expense (3,341) - (3,341) (,56) - (,56)
Proﬁt before tax 4,716 154 4,870 ,8 (,069) ,775
Taxation 9 (1,187) (393) (1,580) (679) 99 (380)
Proﬁt from continuing operations 3,529 (239) 3,290 ,65 (770) ,395
Proﬁt for the ﬁnancial year 3,529 (239) 3,290 ,65 (770) ,395
Other comprehensive income
Actuarial losses on deﬁned
beneﬁt pension scheme 5 (3,046) - (3,046) (,63) - (,63)
Movement in deferred taxation
on pension scheme liability  853 - 853 58 - 58
Foreign exchange translation
diﬀerences (24) - (24) 33 - 33
Other comprehensive expense for
the ﬁnancial year, net of income tax (2,217) - (2,217) (,3) - (,3)
Total comprehensive income
for the ﬁnancial year 1,312 (239) 1,073 ,0 (770) 5
Proﬁt attributable to:
Equity holders of the parent 3,214 (239) 2,975 ,9 (770) ,7
Non-controlling interest 315 - 315 3 - 3
Proﬁt for the ﬁnancial year 3,529 (239) 3,290 ,65 (770) ,395
Total comprehensive income
attributable to:
Equity holders of the parent 997 (239) 758 799 (770) 9
Non-controlling interest 315 - 315 3 - 3
Total comprehensive income
for the ﬁnancial year: 1,312 (239) 1,073 ,0 (770) 5
Earnings per ordinary share (pence)
Basic 0 5.7 .3
Diluted 0 5.7 .3
 5
Consolidated Statement of Financial Position
at 3 July 2010 and 4 July 2009
Restated
2010 009
Note £000 £000
Non-current assets
Intangibles  62,057 6,
Property, plant and equipment 3 25,978 5,37
Other ﬁnancial assets – investments  25 5
Deferred tax assets  1,752 830
89,812 88,33
Current assets
Inventories 6 4,531 ,386
Trade and other receivables 7 23,881 ,868
Cash and cash equivalents 8 2,803 ,73
Other ﬁnancial assets – fair value of forward/foreign exchange contracts  199 -
31,414 30,57
Total assets 121,226 8,80
Current liabilities
Other interest-bearing loans and borrowings 9 (16,089) (5,663)
Trade and other payables  (27,600) (7,007)
Provisions  (424) (750)
Deferred purchase consideration 3 (2,418) (,9)
Contingent deferred purchase consideration 3 - (,85)
Other ﬁnancial liabilities – fair value of interest rate swaps/foreign exchange  (2,598) (,50)
Current tax liabilities (1,069) (37)
(50,198) (8,806)
Non-current liabilities
Other interest-bearing loans and borrowings 9 (22,454) (5,63)
Provisions and other liabilities  (553) (08)
Deferred purchase consideration 3 (3,611) (3,56)
Deferred tax liabilities  (1,676) (,338)
Pension fund liability 5 (3,629) (,9)
(31,923) (3,3)
Total liabilities (82,121) (8,038)
Net assets 39,105 37,80
Equity attributable to equity holders of the parent
Share capital 7 527 5
Share premium account 6 26,918 6,680
Capital redemption reserve 6 578 578
Retained earnings 6 10,590 9,70
38,613 37,73
Non-controlling interest 6 492 39
Total equity 6 39,105 37,80
These Financial Statements were approved by the Board of Directors on 9 September 00 and were signed on
its behalf by:
Stephen Boyd
Director
Registered Number 0368 Consolidated Statement of Changes in Equity
for the 52 weeks ended 3 July 2010 and 53 weeks ended 4 July 2009
Capital Non-
Share Share redemption Retained controlling Total
Capital premium reserve earnings interest equity
Note £000 £000 £000 £000 £000 £000
Balance at 9 June 008 5 6,680 578 0,58 85 38,5
Proﬁt for the year --- ,7 3 ,395
Other comprehensive income/(expense):
Actuarial loss on deﬁned beneﬁt
pension plan 5 --- (,63) - (,63)
Deferred tax movement on pension
scheme actuarial loss  --- 58 - 58
Foreign exchange translation diﬀerences --- 33 - 33
Total other comprehensive expense --- (1,143) - (1,143)
Total comprehensive income for the period --- 29 223 252
Transactions with owners, recorded directly in equity:
Impact of share based payments --- 0 - 0
Dividend paid 8 --- (,3) (79) (,)
Balance at 4 July 2009 5 6,680 578 9,70 39 37,80
Balance at 5 July 009 5 6,680 578 9,70 39 37,80
Proﬁt for year --- ,975 35 3,90
Other comprehensive income/(expense):
Actuarial loss on deﬁned beneﬁt
pension plan 5 --- (3,06) - (3,06)
Deferred tax movement on
pension scheme actuarial loss  --- 853 - 853
Foreign exchange translation
diﬀerences --- () - ()
Total other comprehensive expense --- (2,217) - (2,217)
Total comprehensive income for the period --- 758 315 1,073
Transactions with owners, recorded directly in equity:
Shares granted during the year 3 38 - -- 5
Impact of share based payments - -- 3 - 3
Dividend paid 8 ---- (5) (5)
Balance at 3 July 2010 527 26,918 578 10,590 492 39,105
6 Consolidated Cash Flow Statement
for the 52 weeks ended 3 July 2010 and 53 weeks ended 4 July 2009
2010 009
Note £000 £000
Cash ﬂows from operating activities
Proﬁt for the year 3,290 ,395
Adjustments for:
Taxation 1,580 380
Net ﬁnance expenses 3,341 ,56
Depreciation 2,804 ,753
Amortisation of intangibles 164 -
Loss on disposal of plant, equipment and trademark - 5
Share options charge 131 0
Current service cost element of pension scheme 286 07
Contributions by employer to pension scheme (272) (350)
Curtailment of deﬁned beneﬁt pension scheme liabilities (553) -
Fair value charge for foreign exchange contracts (199) -
Operating proﬁt before changes in working capital 10,572 9,336
Changes in working capital:
(Increase)/decrease in inventories (145) 73
Decrease in trade and other receivables 987 356
Increase in trade and other payables 382 ,596
Cash generated from operations 11,796 ,0
Interest paid (2,365) (3,0)
Tax paid (614) (75)
Net cash from operating activities 8,817 8,36
Cash ﬂows from investing activities
Purchase of property, plant and equipment (3,546) (3,393)
Proceeds from disposal property, plant and equipment - 30
Purchase of subsidiary companies  (850) (,05)
Net cash used in investing activities (4,396) (,388)
Cash ﬂows from ﬁnancing activities
(Repayment)/drawdown of invoice discounting (1,065) ,5
Repayment of bank loans (2,366) (6,039)
Repayment of former bank facility - (,737)
Repayment of loan notes (49) (50)
Drawdown of asset ﬁnance facilities 1,653 ,77
Repayment of asset ﬁnance liabilities (1,139) (,337)
Issue of ordinary share capital 251 -
Equity dividend paid 8 - (,3)
Non-controlling interest dividend paid 8 (152) (79)
Net cash (used)/generated by ﬁnancing activities (2,867) 3,357
Net increase in cash and cash equivalents 1,554 7,05
Opening cash and cash equivalents 1,273 (5,965)
Eﬀect of exchange rate ﬂuctuations on cash held (24) 33
Cash and cash equivalents at end of period 8 2,803 ,73
7 Notes to the Financial Statements
(forming part of the Financial Statements)
1 Accounting Policies
Finsbury Food Group Plc is a company incorporated and domiciled in the UK and its registered oﬃce is Maes-y-coed Road, Cardiﬀ, CF XR.
e principal activity of the Group is to manufacture and supply premium, celebration, health and well being products in the bakery sector, primarily
to UK multiple grocers.
Basis of preparation
ese accounts cover the 5 week period ended 3 July 00 (prior ﬁnancial year is the 53 week period ended  July 009). e Group Financial Statements
consolidate those of the Company and its subsidiaries (together referred to as the “Group”).
e 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”). ese standards have been adopted with eﬀect from  July 006 as required under AIM rules. e Company has
elected to prepare its parent company Financial Statements in accordance with UK GAAP; these are presented on pages 6 to 7.
It should be noted that current liabilities exceed current assets. Having reviewed the Group’s plans and available ﬁnancial facilities, the Board has
reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. Existing bank facilities total
£50.m and the Group has stayed within these facilities during the year, meeting all existing covenant requirements. In addition, the Group has a strong
asset backing and strong trade debtor book. Accordingly, the Board continues to adopt the going concern basis in preparing the Financial Statements for
both the Group and the parent company.
In these Financial Statements the following Adopted IFRSs, which are eﬀective for the ﬁrst time in the current ﬁnancial year and have been adopted by the Group:
• Amendment to IFRS  Share-based Payment: Vesting Conditions and Cancellations. e main impact on the Group will be on the treatment of
employees who cease to save under SAYE schemes, which will be treated as cancellations. e amount of expense that would have been recognised
over the remaining vesting period is recognised immediately as an expense.
• IFRS 3 (revised) Business Combinations, which impacts the treatment of acquisition costs on any future acquisitions and would impact only in the
event of a future acquisition.
• Amendments to IFRS 7 Financial Instrument: Disclosures – Improving Disclosures about Financial Instruments, which enhances disclosures about
fair value measurements of ﬁnancial instruments and over liquidity risk. is only impacts disclosures and additional items have been added in
conformity with this standard.
• IFRS 8 Operating Segments replaces IAS  Segment Reporting and sets out requirements for disclosure of information about an entity's operating
segments and also about the entity's products and services, the geographical areas in which it operates and its major customers. e Group determines
and presents operating segments based on the information that internally is provided to the CEO (and the Board of Directors), who is the Group’s
Chief Operating Decision Maker. Comparative segment information for prior years is re-presented in conformity with the transitional requirements
of the standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.
• e Group applies IAS  Presentation of Financial Statements (revised 007), which became eﬀective  January 009. As a result, the Financial
Statements include the presentation of statements of ﬁnancial position, comprehensive income, changes in equity, cash ﬂows and related notes.
Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy
only impacts presentation aspects, there is no impact on earnings per share.
A number of new standards, amendments to standard and interpretations are eﬀective for annual periods beginning after  January 00 and have not
been applied in preparing these consolidated Financial Statements. None of these is expected to have a signiﬁcant eﬀect on the consolidated Financial
Statements of the Group, except for IFRS 9 Financial Instruments, which becomes mandatory for the Group’s 03 consolidated Financial Statements
and could change the classiﬁcation and measurement of ﬁnancial assets. e Group does not plan to adopt this standard early and the extent of the
impact has not been determined.
Critical Accounting Estimates and Judgements
e Group may be required to make estimates and assumptions concerning the future. ese estimates and judgements are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances. e resulting accounting estimates
will, by deﬁnition, seldom equal the related actual results.
Accounting estimates and judgements have been required for the production of these Financial Statements. e following are those that are deemed to
require the most complex judgements about matters that have the most signiﬁcant eﬀect on the amounts recognised in the Financial Statements.
•Intangibles assets acquired as part of an acquisition of a business are recognised separately from goodwill if those assets are separable and their fair value
can be measured reliably. In making its judgement, the Directors have considered the recognition criteria for intangible assets set out in IFRS 3 and IAS 38.
8 • Impairment of goodwill can signiﬁcantly impact the Group’s Income Statement for the year. e Group estimates the recoverable amounts based
on historical experience of margin, volumes and cost structure and expectations of future events. e Group’s weighted average cost of capital has been
inﬂated to take account of the current market conditions and this has been applied as a discount factor to obtain a current value. e weighted average
cost of capital is impacted by estimates of interest rates, equity returns and market speciﬁc risks. Refer to Note  for further details.
• e Group has one deﬁned beneﬁt pension scheme. e net deﬁcit or surplus is the diﬀerence between the plan assets and plan liabilities at the period
end date. e valuation of the assets and liabilities is based on a number of judgements. e 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. e Scheme closed to future accrual on 3 May 00
and this resulted in a curtailment of the pension scheme liabilities. e assumptions applied are based on advice provided by the Scheme’s actuary,
further detail can be found in Note 5.
• e Group recognises provisions where an obligation exists at the period end date and a reliable estimate can be made. Provisions for an onerous lease,
reorganisation and employee claims have been recognised in these Financial Statements. e onerous lease extends to April 0 and has been provided
for on the assumption that no tenant will be found until the termination date. Reorganisation costs are provided for on the basis of best estimates of
future costs. Estimates for employee claims are made based on the number of reported accidents and incidents and the number of expected claims yet
to be reported based on historical evidence, all accrued up to the maximum self insured amount of £0,000 per claim. See Note  for further detail.
• e Group has an invoice-discounting facility which enables the Group to draw down on eligible trade receivable balances. e Group retains all the
risks and rewards of the underlying trade debt, and continues to recognise the gross debtor balance net of speciﬁc provisions. e cash received under
the invoice discounting facility is shown as a current liability. Speciﬁc provisions are made against doubtful debts taking the value to zero or an
estimated reduced value based on the most likely amount to be received.
• Group policy is to provide in full against all receivable balances that are signiﬁcantly overdue. A speciﬁc provision is made against all other receivable
balances that are considered, in the opinion of management, to be unrecoverable. e provision is netted oﬀ the gross receivable.
• At the inception of the interest rate swaps, the management made an assessment as to whether or not they would qualify for hedge accounting as set
out by IAS 39 and determined that they did not.
Signiﬁcant Accounting Policies
e 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. Control exists when the Group has the power, directly or indirectly, to govern the ﬁnancial and operating
policies of an entity so as to obtain beneﬁts from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are
taken into account. e Financial Statements of subsidiaries are included in the consolidated Financial Statements from the date that control commences
until the date that control ceases. e accounting policies of subsidiaries have been 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, 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.
Financial Instruments
Financial Instruments are carried at fair value. e diﬀerent levels of valuation are deﬁned in IFRS 7 ‘Financial Instruments: Disclosures’ as follows:
- Level : Quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level : Inputs other than quoted prices included within level  that are observable for the asset or liability either directly (i.e. as prices) or indirectly
(i.e. derived from prices);
- Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Investments have been classiﬁed as a level 3.
Foreign exchange contracts and interest rate swaps have been classed as level .
Foreign currency
Transactions in foreign currencies are translated to the functional currency of Group entities 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 the functional currency 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 income statement in the period in which they arise.
9 1 Accounting Policies (continued)
e assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group’s
presentational currency, Sterling, at foreign exchange rates ruling at the period end date. e 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. is revaluation is recognised
through the Consolidated Statement of Recognised Income and Expenses.
e Group uses a number of forward foreign exchange contracts to reduce its foreign exchange exposure.
Foreign exchange contracts and interest rate swaps have been classiﬁed as a level  as deﬁned in IFRS 7 ‘Financial Instruments: Disclosures’.
Derivative Financial Instruments
e Group has derivative ﬁnancial instruments in respect of interest rate swaps and foreign exchange hedges. e Group does not hold derivative ﬁnancial
instruments for trading purposes. e existing interest rate swaps and foreign exchange hedges used by the Group do not meet the criteria for hedge
accounting set out by IAS 39 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 determined based on mark-to-market valuations 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 ﬁnancial
income or expense. 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.
Trade and other Receivables
Trade and other receivables are recorded at fair value. is value is deemed to be the amount that would be received if the debt was cleared on the period
end date.
Trade and other Payables
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost. is value is deemed to be 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 recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost using the eﬀective interest method, less any impairment losses.
Investments in Debt and Equity Securities
Unlisted investments are stated at amortised cost less impairment.
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. e 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 income statement. 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.
e depreciation rates used are as follows:
Freehold buildings %-0% Plant and equipment 6%-33%
Leasehold property Up to the remaining life of the lease Assets under construction Nil
Fixtures and ﬁttings 0%-33% Motor vehicles 5%-33%
30 Impairment reviews of ﬁxed assets are undertaken if there are indications that the carrying values may not be recoverable or that the carrying values may
be less than the asset’s recoverable amount.
Leased Assets
Leases under the terms of which the Group assumes substantially all the risks and rewards of ownership are classiﬁed as ﬁnance leases. Upon initial
recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent
to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Assets acquired by ﬁnance lease and hire purchase are depreciated over the lease term or their useful lives. In accordance with IAS7, the economic
ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset.
Finance leases are those where substantially all of the beneﬁts and risks of ownership are assumed by the company.
Obligations under ﬁnance leases are included in liabilities net of the ﬁnance charge allocated to future periods. e ﬁnance element of the rental payment
is charged to the income statement as ﬁnance expense so as to produce a constant periodic rate of charge on the net obligations outstanding in each period.
Other leases are operating leases and the leased assets are not recognised on the Group’s Consolidated Statement of Financial Position.
Operating Lease Payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.
Finance Lease Payments
Minimum lease payments are apportioned between the ﬁnance charge and the reduction of the outstanding liability. e ﬁnance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
As part of the transition to IFRSs, the Group elected to restate only those business combinations that occurred on or after  July 006. In respect of
acquisitions prior to  July 006, goodwill represents the amount recognised under the Group’s previous accounting framework, UK GAAP . Assets and liabilities
are recognised at the date of transition if they would be recognised under IFRS, and are measured using their UK GAAP carrying amount as the deemed
cost under IFRS and subject to annual impairment reviews. Where the excess is negative (negative goodwill), the amount is taken to retained earnings.
Identiﬁcation of Intangible Assets
For all acquisitions from the IFRS transition date of  July 006 onwards, the Group carries out a review of the acquired businesses to determine if there
are any items which are identiﬁable (i.e. separable or arising from contractual or other legal rights), non-monetary and controlled by the entity and expected
to provide future economic beneﬁts to the entity. ese items would be classed as intangible assets and the carrying value of such an asset acquired in
a business combination is its fair value. ere may be instances where an intangible asset can be identiﬁed but the asset is deemed to be intrinsically linked
to the business of which it is part and it is, therefore, not possible to reliably determine its fair value. In such instances, where it is not possible to separate
its value from that of the business as a whole, it will remain as part of total goodwill and subject to annual impairment reviews.
Impairment
e 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 is 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 income statement.
Impairment losses recognised in respect of cash generating units are allocated ﬁrst to reduce the carrying amount of any goodwill allocated to cash
generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash generating unit is the smallest identiﬁable
group of assets that generates cash inﬂows that are largely independent of the cash inﬂows from other assets or groups of assets.
Calculation of Recoverable Amount
e recoverable amount is the greater of their fair values less costs to sell and value in use. In assessing 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.
Reversals of Impairment
An impairment loss in respect of goodwill is not reversed.
3 1 Accounting Policies (continued)
Deferred Consideration
e provision for deferred consideration is initially stated at the net present value of the expected future payment and the discount is accrued by increasing
the amount of the provision up to the expected payment date. e charge relating to the unwinding of the discount is recorded within ﬁnance costs.
ere has been a change in the current year in relation to the treatment of loan notes issued as deferred consideration. Previously these had been shown
in other interest-bearing loans and borrowings; they have been reclassiﬁed in the current year and for comparatives and are shown separately on the face
of the Consolidated Statement of Financial Position as part of the deferred consideration. is change has no impact on the reported result.
Contingent Deferred Consideration
Contingent deferred consideration arising on business combinations is estimated by the Directors based on the expected outcome of performance related
criteria. e provision is initially stated at the net present value of the expected future payment and the discount is accrued by increasing the amount of
the provision up to the expected payment date. e charge relating to the unwinding of the discount is recorded within ﬁnance costs.
e deferred consideration relating to Anthony Alan Foods Ltd in the previous year’s accounts was contingent on the renewal of the WeightWatchers
licence. is licence has been renewed during the year therefore the deferred consideration is no longer considered contingent.
Government Grants
Government grants relating to property, plant and equipment are treated as deferred income and released to the income statement over the expected
useful lives of the assets concerned. Other grants are credited to the income statement as the related expenditure is incurred.
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.
Inventories acquired as part of a business combination are valued at their net realisable value which is deemed to be the fair value. e fair value adjustment
arising as a result of the valuation exercise is reduced over the period of the inventory turn of the acquired company. e resulting charge is taken to the
income statement.
Employee Beneﬁts
Deﬁned Beneﬁt Plans
Our wholly owned subsidiary 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9, with current and past service cost being recognised as an administrative expense, expected
return on deﬁned beneﬁt pension plan assets as ﬁnancial income and interest on deﬁned beneﬁt pension plan liabilities as a ﬁnancial expense in the
Consolidated Statement of Comprehensive Income. e actuarial gains or losses are recognised in full in the Consolidated Statement of Financial Position.
On 3 May 00 the scheme was closed for future accrual, this has resulted in a curtailment of pension scheme liabilities, this curtailment has been shown
as other income in the Consolidated Statement of Comprehensive Income. Further details on the deﬁned beneﬁt pension scheme are given in Note 5 to
the ﬁnancial statements.
Deﬁned Contribution Plans
e costs of contributing to deﬁned contribution and personal pension schemes are charged to the income statement as an administration cost in the
period to which they relate.
Share-Based Payment Transactions
e 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. e 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.
e amount recognised as an expense is adjusted to reﬂect the actual number of awards for which the related service and non-market vesting conditions
are expected to be met, such that the amount ultimately recognised as an expense is based on the number of shares awarded as a result of meeting the
related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date
fair value of the share-based payment is measured to reﬂect such conditions and there is no adjustment for diﬀerences between expected and actual
outcomes. e amount recognised as an expense is adjusted to reﬂect the actual number of share options that vest.
e Company has used the QCA-IRS option valuer
TM
(based on the Black-Scholes-Merton based option pricing model) to calculate the fair value
of the outstanding options. is model was developed by e QCA partnered with Independent Remuneration Solutions (IRS) and City Group Plc.
e development was led by Mr Edward Beale, a Director of the Group and Chief Executive of City Group Plc.
3 Provisions
A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or constructive obligation as a result
of a past event, that can be reliably measured and it is probable that an outﬂow of economic beneﬁts will be required to settle the obligation.
Revenue
Revenue represents the amounts derived from the sale of bakery products. Revenue is the fair value of consideration received or receivable excluding value
added tax, trade discounts, transactions with or between subsidiaries and deduction of price promotions and sales over-riders.
Revenue is recognised when the signiﬁcant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the
associated costs and probable return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of
revenue can be reliably measured. In practice this is upon despatch.
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 operating segments’ operating results are reviewed regularly
by the Group’s CEO and Board of Directors to make decisions about resources to be allocated to each segment and assess its performance, and for which
discrete ﬁnancial information is available.
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 Expenses
Finance expenses comprise interest payable and ﬁnance charges on ﬁnance leases recognised in the Consolidated Statement of Comprehensive Income using
the eﬀective interest method, unwinding of the discount on provisions and deferred consideration and interest on deﬁned beneﬁt pension plan obligations.
Finance income comprises expected return on deﬁned beneﬁt pension plan obligation and interest receivable on funds invested.
Interest income and interest payable 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 income statement 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. e 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.
e 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.
ere has been a change in presentation during the year. e net deferred asset (009: liability) has been split to show the gross asset and liability position
separately on the face of the Consolidated Statement of Financial Position; prior year comparatives have been restated. is change has had no impact on
net assets nor reported results.
Equity
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.
• retained earnings represent retained proﬁts.
33 3
1 Accounting Policies (continued)
Research and Development Expenditure
Expenditure on research activities, undertaken with the prospect of gaining new scientiﬁc or technical knowledge and understanding, is recognised in
Consolidated Statement of Comprehensive Income as incurred. Development activities involve a plan or design for the production of new or substantially
improved products and processes. Development expenditure is capitalised and recognised as an intangible only if all of the following conditions are met:
• an asset is created that can be identiﬁed.
• it is probable that the asset created will generate future economic beneﬁt; and
• the development cost of the asset can be reliably measured.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses. Other development
expenditure is recognised in Consolidated Statement of Comprehensive Income as incurred.
e nature of the research and development expenditure within the Group does not generally lead to the generation of an intangible asset.
2 Revenue and Segment Information
IFRS 8 ‘Operating Segments’ requires that operating segments be identiﬁed on the basis of internal reporting and decision making. e Group’s Chief
Operating Decision Maker is considered to be the CEO and the Board of Directors as they are primarily responsible for the allocation of resources to
segments and the assessment of performance by segment.
e Board uses operating proﬁt, reviewed on a regular basis, as the key measure of the segments’ performance. Operating proﬁt in this instance is deﬁned
as proﬁt before the following:
• net ﬁnancing expense
• share option charges
• non-recurring signiﬁcant items
• fair value adjustments relating to acquisitions
• pension charges or credits in relation to the diﬀerence between the expected return on pension assets and interest cost on pension liabilities and
• revaluation of interest rate swaps and forward foreign currency contracts.
e Group’s operating segment was originally deﬁned as one operation involving the sale of celebration, health and indulgent products in the bakery sector
and was reported as one segment. is segment has now been split into two segments “cake” and “bread & free from”. e primary driver of this segmental
structure is the commonality of the product categories operated in.
e Cake segment sells ambient cakes to the UK’s multiple grocers. is segment primarily comprises the operations of Memory Lane Cakes Ltd,
Lightbody Group Ltd and Campbells Cake Company Ltd, and also includes Yum Yum’s which are produced at United Central Bakeries.
e bread & free from segment sells speciality bread & morning goods into the bakery sectors of the UK’s multiple grocers. is segment is primarily made
up of the operations of United Central Bakeries Ltd, Livwell Ltd and Nicholas & Harris Ltd. In addition to these operations, the ‘In Store Bakery’ range
manufactured at Lightbody of Hamilton and Memory Lane Cakes is also included in the bread & free from segment as the nature of the product and their
location in the multiple grocers product range is similar.
Group operation costs plus a 0% premium have been allocated across the segments on the basis of their operating proﬁt. e premium has been charged
to reﬂect the synergies achieved from obtaining resources centrally giving beneﬁts across the operating segments. Operating proﬁt levels have been chosen
as the basis, as this reﬂects the underlying performance of the segment and is also the return the Group expects from those segments.
A purchasing premium of % is charged from Group operations, (% charge in the previous year and the ﬁrst half of the current ﬁnancial year) and is
calculated on materials and packaging spend at segmental level. is charge is based on the rationale that Group operations, through its Group buyers,
optimises the Group’s procurement spend through leveraging its purchasing power.
is has resulted in a proﬁt of £.m (009: £.0m) being presented within Group operations segment.
e Group’s ﬁnance income and expenses cannot be meaningfully allocated to the individual operating segments. 35
5 week period ended 3 July 00
Bread & Free Group
Cake From Operations Total Group
£000 £000 £000 £000
Revenue
External 124,600 43,738 - 168,338
Underlying operating proﬁt 3,897 2,697 1,409 8,003
Non-recurring signiﬁcant items 5
Fair value foreign exchange contracts 99
Share options charge (3)
Deﬁned beneﬁt pension scheme ()
Results from operating activities 8,211
Financial income ,556
Financial expenses (,897)
Proﬁt before taxation 4,870
Taxation (,580)
Proﬁt after taxation 3,290
Segment assets 86,435 30,986 52 117,473
Unallocated assets 3,753
Consolidated total assets 121,226
Segment liabilities (30,009) (10,267) (541) (40,817)
Unallocated liabilities (,30)
Consolidated total liabilities (82,121)
Other segment information
Capital expenditure ,06 ,50 - 3,56
Depreciation included in segment proﬁt ,87 977 - ,80
Amortisation - 6 - 6
Analysis of unallocated assets and liabilities:
Assets Liabilities
£’000 £’000
Investments 5 Loans and borrowings (38,53)
Financial instruments 99 Financial instruments (,598)
Cash and cash equivalents ,803 Cash and cash equivalents -
Taxation balances 76 Taxation balances (63)
Unallocated assets 3,753 Unallocated liabilities (,30)
There are no inter-segmental sales. Certain operating costs have been incurred centrally, these costs have been allocated to the reporting segments
on an appropriate basis.
Four customers with sales of £37m, £36m, £6m and £8m account for 70% of revenue, which is attributable to the cake and bread & free from
segments above.
Group Operations profit comprises the central costs premium and a purchasing premium charged to the manufacturing operations. 2 Revenue and Segment Information (continued)
53 week period ended  July 009
Bread & Free Group
Cake From Operations Total Group
£000 £000 £000 £000
Revenue
External 140,684 38,247 - 178,931
Underlying operating proﬁt 5,530 1,113 994 7,637
Non-recurring signiﬁcant items (,069)
Fair value foreign exchange contracts -
Share options charge (0)
Deﬁned beneﬁt pension scheme (57)
Results from operating activities 6,291
Financial income ,309
Financial expenses (5,85)
Proﬁt before taxation 1,775
Taxation (380)
Proﬁt after taxation 1,395
Segment assets 88,675 28,222 224 117,121
Unallocated assets ,79
Consolidated total assets 118,840
Segment liabilities (27,311) (10,261) (616) (38,188)
Unallocated liabilities (,850)
Consolidated total liabilities (81,038)
Other segment information
Capital expenditure ,06 ,37 - 3,393
Depreciation included in segment proﬁt ,99 8 - ,753
Amortisation ----
Analysis of unallocated assets and liabilities:
Assets Liabilities
£’000 £’000
Investments 5 Loans and borrowings (,9)
Cash and cash equivalents ,73 Financial instruments (,50)
Taxation balances  Taxation balances (55)
Unallocated assets ,79 Unallocated liabilities (,850)
There are no inter-segmental sales. Certain operating costs have been incurred centrally, these costs have been allocated to the reporting segments
on an appropriate basis.
Four customers with sales of £m, £m, £30m and £m account for 76% of revenue, which is attributable to the cake and bread & free from
segments above.
Group Operations profit comprises the central costs premium and a purchasing premium charged to the manufacturing operations.
36 An analysis by geographical segment is shown below:
Geographical split of turnover by destination 2010 009
£000 £000
United Kingdom 156,280 67,367
Europe 11,585 0,9
Rest of World 473 60
Total 168,338 78,93
Net asset and margin geographical split would not provide meaningful information owing to the necessity to allocate costs, assets and liabilities.
Capital expenditure on segment assets, on a cash basis, in the year is in relation to the UK segment and is detailed in Note 3.
Geographical split of turnover by country of domicile
United Kingdom Europe Total
£000 £000 £000
2010
Turnover 59,89 9,9 68,338
Gross Proﬁt ,80 ,580 7,060
Total assets 8,37 ,85 ,6
Total liabilities (79,8) (,97) (8,)
Net assets 38,58 557 39,05
United Kingdom Europe Total
£000 £000 £000
2009
Turnover 69,55 9,380 78,93
Gross Proﬁt 5,909 ,8 8,75
Total assets 6,80 ,000 8,80
Total liabilities (79,85) (,753) (8,038)
Net assets 37,555 7 37,80
3 Cost of Sales, Gross Proﬁt and Other Operating Expenses
5 weeks ended 3 July 00 and 53 weeks ended  July 009 2010 009
£000 £000
Revenue 168,338 78,93
Cost of sales (121,278) (30,80)
Gross proﬁt 47,060 8,75
Administration (39,003) (,39)
Results from operating activities before signiﬁcant non-recurring items 8,057 7,360
Signiﬁcant non-recurring items 154 (,069)
Results from operating activities after signiﬁcant non-recurring items 8,211 6,9
37 4 Expenses and Auditors’ Remuneration
Included in proﬁt are the following:
2010 009
£000 £000
Depreciation of owned tangible assets 2,282 ,38
Depreciation on assets under ﬁnance leases and hire purchase contracts 522 65
Diﬀerence on foreign exchange 356 388
Hire of plant and machinery – operating leases 285 33
Hire of other assets – operating leases 432 57
Share option charges 131 0
Movement on fair value of interest rate swaps 1,097 ,793
Research and development 1,497 ,87
Amortisation of intangibles 164 -
In addition to the above, an amount of £nil (009: £60,000) relating to corporate ﬁnance fees has been capitalised during the year. ese costs relate to
acquisitions made during the year.
Amortisation of intangibles for the year was £6,000 (009: £nil) relating to the Goswell Enterprises Ltd acquisition during June 009.
Auditors’ remuneration:
2010 009
£000 £000
Audit of these ﬁnancial statements 93 93
Amounts receivable by auditors and their associates in respect of:
Other services 11 -
Other services in relation to taxation 15 83
e auditor’s remuneration is in respect of KPMG Audit Plc. e fee for other services relate to advisory work carried out during the year on reporting
matters, other services in relation to taxation in 00 and 009 includes tax inquiry work and tax planning.
5 Signiﬁcant Non-Recurring Items
e Group presents certain items as signiﬁcant and non-recurring. ese 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.
2010 009
£000 £000
Reorganisation costs (399) (789)
Administrative expenses - (80)
Deﬁned beneﬁt pension scheme liability curtailment 553 -
154 (,069)
a) Reorganisation Costs
e reorganisation costs relate to the following:
2010 009
£000 £000
Reorganisation costs (including redundancies) associated with the restructuring of the cake business (253) (55)
Exit costs relating to outgoing senior personnel (146) (33)
(399) (789)
b) Administrative expenses
In the prior year £80,000 relates to the provision for future company contributions as a result of a contractual liability for staﬀ pension augmentation,
relating to deﬁned beneﬁt scheme.
c) Deﬁned Beneﬁt Pension Scheme Liability Curtailment
Following a consultation period, the Memory Lane Cakes deﬁned beneﬁt scheme closed to future accrual on 3 May 00. is closure has resulted in
a curtailment of pension scheme liabilities, this credit of £553,000 has been treated as a signiﬁcant non-recurring item and is shown as other income on
the face of the Consolidated Statement of Comprehensive Income.
38 39
6 Staﬀ Numbers and Costs
e average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:
Number of employees
2010 009
Production 2,357 ,6
Selling and distribution 185 85
Administration, technical, NPD 151 
2,693 ,790
e aggregate payroll costs of these persons were as follows:
£000 £000
Wages and salaries 44,503 7,058
Share option charges 131 0
Social security costs 4,099 ,7
Charge in respect of deﬁned beneﬁt plans 286 07
Charge in respect of deﬁned contribution plans 276 
49,295 5,05
7 Remuneration of Directors
2010 009
£000 £000
Fees 184 9
Company contributions to money purchase pension plans 32 7
Executive salaries and beneﬁts 555 0
Bonuses 36 -
Compensation for loss of oﬃce 96 33
903 990
e aggregate of emoluments and amounts receivable under long term incentive schemes of the highest paid Director was £58,000 (009: £69,000
including exit costs of £33,000) and Company pension contributions of £,000 (009: £,000) that were made to a money purchase scheme on
their behalf.
Number of Directors
2010 009
Retirement beneﬁts were accruing in the year to the following number of Directors under:
Money purchase schemes 4  7 Remuneration of Directors (continued)
No Directors exercised share options during the current or previous year.
e emoluments of the Directors were as follows:
Year Year
ended ended
Fees Salary Beneﬁts Other Pension 3 July 2010  July 009
£000 £000 £000 £000 £000 £000 £000
D G Brooks ------ 89
L M W Morgan * - 68 8 96  176 05
D C Currie - 75 --  77 77
M Lightbody - 00 --- 100 00
D C Marshall 0 ---- 20 0
E J Beale 5 ---- 25 5
I R Farnsworth 30 ---- 30 30
P J Monk 09 ---- 109 
J G Duﬀy -  8 36  279 -
S A Boyd - 76 6- 5 87 -
8 533  3 3 903 990
* L M W Morgan stepped down as Group Finance Director on 0 January 00. Other costs of £96,000 relate to her exit fees.
Other costs of £36,000 paid to J G Duﬀy relate to a bonus payment.
Options retained at the period end date relating to a previous Director are listed below:
Number of Number of
options at options at Earliest Exercise
3 July 00  July 009 Exercise price Exercise date Expiry date
L M W Morgan 65,000 65,000 85.6p 9/09/009 0/0/00
L M W Morgan 35,000 35,000 85.6p 9/09/009 0/0/00
L M W Morgan 5,000 5,000 88.0p 0/0/00 0/0/00
L M W Morgan ,500 ,500 06.0p 0/0/00 0/0/00
L M W Morgan - ,377 67.5p 0/03/0 0/09/0
67,500 78,877
,377 share options held at  July 009 relate to the SAYE scheme and these options were forfeited on exit. e remaining options became exercisable
on exit and lapse on  October 00.
Directors’ rights to subscribe for shares in or debentures of the Company and its subsidiaries are listed below:
Number of Number of
options at options at Earliest Exercise
3 July 00  July 009 Exercise price Exercise date Expiry date
D C Currie 7,000 7,000 .0p 8/0/00 8/0/07
D C Currie 73,000 73,000 00.0p 8/0/00 8/0/07
D C Currie ,500 ,500 06.0p 05/0/00 05/0/07
D C Currie ,377 ,377 67.5p 0/03/0 0/09/0
M W Lightbody ,377 ,377 67.5p 0/03/0 0/09/0
J G Duﬀy 0,000 - 0.0p 30/09/0 30/09/0
J G Duﬀy 0,000 - 0.0p 30/09/03 30/09/03
J G Duﬀy 309,000 - 0.0p 3/03/0 3/03/0
J G Duﬀy ,000 - 7.0p 3/03/0 3/03/0
,55,5 65,5
,60,000 options (009: nil) were granted to Directors during the year.
Options have been granted to Directors, whose performances and potential contribution were judged to be important to the operations of the Group,
as incentives to maximise their performance and contribution.
e mid-market price of the ordinary shares on 3 July 00 was 5p and the range during the 5 week period to 3 July 00 was 5p to 33p.
ere were no options exercised during the year.
0 
8 Finance Income and Expense
Recognised in the income statement
2010 009
£000 £000
Finance income
Expected return on deﬁned beneﬁt pension plan obligation 1,240 ,309
Reduction in value of deferred consideration – Yorkshire Farm Bakeries and A&P Foods 153 -
Reduction in value of deferred consideration – Anthony Alan Foods Ltd 163 -
Total ﬁnance income 1,556 ,309
Finance expense
Interest on deﬁned beneﬁt pension plan obligations (1,071) (,086)
Bank interest payable (1,752) (,38)
Interest on interest rate swap agreements (860) (35)
Change in fair value of interest rate swaps (1,097) (,793)
Unwinding of discount on deferred consideration – Goswell Enterprises Ltd (58) ()
Unwinding of discount on deferred consideration – Yorkshire Farm Bakeries and A&P Foods (45) (73)
Unwinding of discount on deferred consideration – Anthony Alan Foods Ltd (14) (8)
Total ﬁnance expense (4,897) (5,85)
9 Taxation
Recognised in the income statement
2010 009
£000 £000
Current tax expense
Current year 1,301 ,06
Adjustments for prior years 10 (8)
Current tax expense 1,311 ,0
Deferred tax expense
Origination and reversal of timing diﬀerences 52 (660)
Retirement beneﬁt deferred tax charge 198 6
Adjustments for prior years 19 (8)
Deferred tax expense/(credit) 269 (6)
Tax expense in income statement 1,580 380
Reconciliation of eﬀective tax rate
e tax assessed for the period is higher (009: lower) than the standard rate of corporation tax in the UK of 8%. e diﬀerences are explained below:
2010 009
£000 £000
Proﬁt per accounts before taxation 4,870 ,775
)
Tax using the UK corporation tax rate of 8%, (009: 8%) 1,364 97
Non-deductible expenses 22 6
Amortisation of intangible asset 46 -
Timing diﬀerences on share options 25 8
Unrelieved tax losses 2 5
Utilisation of tax losses - (63)
Recognition of tax losses - (8)
Diﬀerences on depreciation on IBA’s and allowances claimed 76 -
Adjustments to tax charge in respect of prior periods 29 ()
Overseas proﬁts charged at diﬀerent taxation rate 22 3
Subsidiaries proﬁts charged at diﬀerent tax rates (6) 
Total tax expense 1,580 380
e parent company has a deferred tax asset of £67,05 (009: £67,05 restated at 8%). is asset has not been recognised in these Financial Statements
as suitable proﬁts are not expected to arise in the future. 10 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
5,378,66 (009: 5,8,66).
Basic diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potential
dilutive ordinary shares. For 3 July 00 the weighted average number is 5,578,967 shares, ( 009: 5,73,50).
An adjusted earnings per share and a diluted adjusted earnings per share have also been calculated as in the opinion of the Board this will allow shareholders
to gain a clearer understanding of the trading performance of the Group. ese adjusted earnings per share exclude:
• reorganisation and other signiﬁcant non-recurring costs,
• IAS 39 ‘Financial Instruments: Recognition and Measurement’ fair value adjustment relating to the Group’s interest rate swaps and foreign
exchange contracts.
• IAS 9 ‘Accounting for retirement beneﬁts’ relating to the net income.
• IFRS 3 ‘Business Combinations’ discount charge relating to the deferred consideration payable for Anthony Alan Foods Limited, Yorkshire Farm
Bakery and A&P Foods and Goswell Enterprises Limited acquisitions.
• e taxation eﬀect at the appropriate rate on the adjustments and potential prior year taxation inquiry charge.
Year ending Year ending
3 July 2010  July 009
Weighted Weighted
average average
number of Per share number of Per share
Earnings shares amount Earnings shares amount
£000 000’s Pence £000 000’s Pence
Basic earnings per share
Basic earnings 2,975 52,378 5.7 ,7 5,9 .3
Share option charge 131 0.3 0 0.
Movement in the fair value of interest rate swaps/foreign exchange contracts 898 1.7 ,793 3.5
Deﬁned beneﬁt pension scheme (155) (0.3) (66) (0.3)
Fair value adjustments relating to acquisitions (199) (0.4) 357 0.7
Signiﬁcant non-recurring items (154) (0.3) ,069 .
Prior year tax inquiry 348 0.7--
Taxation on adjustments (144) (0.3) (96) (.8)
Adjusted earnings per share 3,700 52,378 7.1 3,59 5,9 6.9
Dilutive eﬀect of options 201 86
Basic diluted earnings per share
Basic earnings 2,975 52,579 5.7 ,7 5,735 .3
Adjusted earnings per share 3,700 52,579 7.0 3,59 5,735 6.9
e dilutive eﬀect of share options is negligible.
 11 Acquisition of Subsidiaries
e total cash outﬂow during the current year shown as ‘purchase of subsidiary companies’ on the face of the cash ﬂow statement relates to:
£000
Deferred consideration paid in respect of Yorkshire Farm Bakeries and A&P Foods acquisition 80
Deferred consideration paid in respect of Anthony Alan Foods Ltd acquisition 0
850
On 7 June 009 the Group acquired Goswell Enterprises Ltd. e cash outﬂow during 009 shown as ‘purchase of subsidiary companies’ on the face
of the cash ﬂow statement related to the following:-
£000
Initial consideration and costs in respect of the Goswell Enterprises Ltd acquisition 3
Deferred consideration paid in respect of Yorkshire Farm Bakeries and A&P Foods acquisition 58
,05
a) Goswell Enterprises Ltd
On 7 June 009 the Group, via its subsidiary Nicholas & Harris Ltd, acquired 00% of the ordinary shares in Goswell Enterprises Limited for £.m
(before the discounting of the loan notes). e company supplies a range of speciality breads to a number of supermarkets. During the year of acquisition
the Company contributed £3,000 of proﬁt before tax to the consolidated results.
Proﬁts and turnover ﬁgures as if acquired on  July 008 have not been provided as the operational environment, commercial structure and Group synergies
means that the information would not be meaningful.
£.7m of this consideration was issued in the form of interest free loan notes and will become due in instalments over the next four years.
e phasing of the payments is as follows:
£0.5m payable during July 00
£0.5m payable during June 0
£0.5m payable during June 0
£0.m payable during June 03
Eﬀect of acquisitions
e acquisitions had the following eﬀect on the Group’s assets and liabilities:
Pre-acquisition Recognised
carrying Fair value values on
amount adjustments acquisition
£000 £000 £000
Acquiree’s net assets at the acquisition date:
Trade and other receivables 190 - 190
Net identiﬁable assets 190 - 190
Intangible assets: Brands -
Intangible assets: Licensing arrangements 822
Goodwill on acquisition 1,054
2,066
Satisﬁed by:
Cash 285
Loan notes (discounted) 1,623
Acquisition costs 158
2,066
Cash consideration paid 285
Cash (acquired) -
Net cash outﬂow 285
3 11 Acquisition of subsidiaries continued
Intangible assets comprise:
• the Brand ‘Caribbean Cuisine’ which is a range of Caribbean style breads.
• exclusive licensing agreements for Cranks, Vogels and Doves Farm breads.
e value of the brand is measured by reference to the additional cash ﬂow it is expected to generate over unbranded sales. e value of the brand in this
instance is nil.
e value of the licensing agreements is calculated by reference to the additional cash ﬂow they are expected to generate over unbranded sales. e period
over which the value is amortised varies between licences depending on their remaining life.
In accordance with industry practice, no long term contracts with Goswell’s customers are in place. Short term ‘contracts’ reﬂect daily or weekly orders
for deliveries, which can cease with immediate eﬀect. Goswell’s customer base at acquisition merely reﬂected Finsbury’s existing customer base, which
is reﬂective of the industry’s relationships with the multiple retailers. e Directors determined that no value should be attributed to these relationships.
Goodwill has arisen on the acquisition and reﬂects the future economic beneﬁts arising from assets that are not capable of being identiﬁed individually
and recognised as separate assets. e goodwill reﬂects the anticipated proﬁtability and synergistic beneﬁts arising from the utilisation of the Group’s
existing distribution channels and customer relationships in the bread & free from sector. e goodwill is the balance of the total consideration less fair
value of assets acquired and identiﬁed. e carrying value of the goodwill will be reviewed annually for impairment.
12 Intangibles
a) Brands and Licences
Total
£000
Cost at 9 June 008 -
Additions 8
Cost at 4 July 2009 and 3 July 2010 8
Amortisation at 9 June 008 and  July 009 -
Charge for the year (6)
Amortisation at 3 July 2010 (6)
NBV at 9 June 008 -
NBV at  July 009 8
NBV 3 July 2010 658
e licenses recognised were purchased as part of the Goswell Enterprises acquisition. e period over which the value is amortised is dependent on the
remaining life of the license which is ﬁve years.
 b) Goodwill
Total
£000
Balance at 9 June 008 60,38
Acquisitions through business combinations ,05
Adjustments to previously acquired goodwill (37)
Balance at 4 July 2009 and 3 July 2010 6,399
e adjustment to previously acquired goodwill arises from the reassessment of the provisional fair values as assessed at the date of acquisition. An element
of the fair value relating to stocks and other debtors adjusted at acquisition date has subsequently been reimbursed via a reduction in the payment of
deferred consideration.
e carrying amount of goodwill has been allocated to cash generating units or groups of cash generating units as follows:
2010 009
£000 £000
Nicholas & Harris 1,926 ,96
Campbells Cake Company 681 68
United Central Bakeries 2,139 ,39
Lightbody of Hamilton 47,793 7,793
Memory Lane Cakes 1,514 ,5
Livwell 6,292 6,9
Goswells 1,054 ,05
61,399 6,399
e Group tests goodwill for impairment on an annual basis, or more frequently if there are indications that the goodwill may be impaired. e recoverable
amounts of the cash generating units are determined from value in use calculations. e key assumptions for the value in use calculations are the discount
rate used for future cash ﬂows and the anticipated future changes in revenue, direct costs and indirect costs. e assumptions used reﬂect the past experience
of management and future expectations.
A discount rate of 0% (009: 0%) has been used in these calculations. e Group has considered the impact of the deterioration in the economic climate
and higher level of return expected by equity holders due to the perceived risk in equity markets. e Group’s actual weighted average cost of capital is
signiﬁcantly less than this at the period end date.
e Group prepares cash ﬂow forecasts based on the most recent ﬁnancial budgets approved by management and extrapolates these forward for the next
ﬁve years with a residual value at the end of the ﬁve years. Changes in revenue and direct costs are based on past experience and expectations of future
changes in the market.
e revenue growth rate used for impairment tests at 3 July 00 was 3% (009: 5%) for Nicholas & Harris, United Central Bakeries, Livwell and
Goswells. is growth rate was applied to the 0 budget for the following 5 years, indirect costs are inﬂated over the same period by 3% (009: 3%),
a residual value was then taken after this date.
e revenue growth rate and indirect cost increase used in Campbells, Memory Lane and Lightbody of Hamilton was nil (009: nil) from the budget 0
position. is growth rate has been taken as a prudent approach. Gross margins and distribution cost as a percentage of revenue are forecast to be in line
with budget 0. e ﬁve year cashﬂow is taken along with a residual value at the end of the ﬁve year period.
Growth rates do not reﬂect the ambitions of the Group and have been prepared in a conservative manner.
e discount rate used for each cash generating unit (CGU) 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.
Sensitivities have been carried out by the Directors and they are comfortable that at reasonable discount levels there are no indications of impairment.
5 13 Property, Plant and Equipment
Land and Plant and Fixtures & Assets under
buildings equipment ﬁttings Vehicles construction Total
£000 £000 £000 £000 £000 £000
Cost
Balance at 9 June 008 3,57 6,50 ,73 69 3 ,5
Exchange adjustments -- -- 
Additions 363 ,37 33 - ,570 3,393
Transfers 537 ,76 50 - (,863) -
Disposals - (57) (6) (6) - ()
Balance at  July 009 ,7 9,08 ,9 8 30 5,55
Balance at 5 July 009 ,7 9,08 ,9 8 30 5,55
Exchange adjustments -- (3) -- (3)
Additions 56 ,598 0 - 790 3,56
Transfers  7 7 - (770) -
Disposals ------
Balance at 3 July 2010 14,504 32,368 2,038 8 150 49,068
Depreciation and impairment
Balance at 9 June 008 (,798) (3,97) (880) (5) - (7,60)
Exchange adjustments -- () -- ()
Depreciation charge for the ﬁnancial period (35) (,90) (30) (8) - (,753)
Disposals - 5  3 - 77
Balance at  July 009 (3,3) (6,055) (,0) -- (0,88)
Balance at 5 July 009 (3,3) (6,055) (,0) -- (0,88)
Exchange adjustments -- -- 
Depreciation charge for the ﬁnancial period (339) (,36) (6) (3) - (,80)
Disposals ------
Balance at 3 July 2010 (3,462) (18,291) (1,334) (3) - (23,090)
Net book value
At 8 June 008 0,79 ,585 85 5 3 ,6
At  July 009 ,30 ,993 80 8 30 5,37
At 3 July 2010 11,042 14,077 704 5 150 25,978
Leased plant and machinery
e net book value of assets held under ﬁnance lease or hire purchase contracts included above are as follows:
2010 009
£000 £000
Plant and equipment 3,97 5,05
e lease obligations are secured on leased equipment. (see Note 9).
Security
HSBC Bank Plc, HSBC Asset Finance (UK) Ltd and HSBC Equipment Finance (UK) Ltd 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. A breakdown of
the ﬁnancial liabilities is shown in Note 9.
Hire purchase obligations are secured on the underlying assets.
6 14 Other Financial Assets and Liabilities
2010 009
£000 £000
Non-current
Investments 25 5
Current assets
Fair value of foreign exchange contracts 199 -
Current liabilities
Fair value of interest rate swaps (2,598) (,50)
Investments
e unlisted investments acquired as part of the Lightbody acquisition on 3 February 007 and held at 3 July 00 consist of preference shares in Murray
Traders Limited (0.5% of the issued capital of that company). ere is no active market in these shares, therefore the fair value cannot be determined and
the investments are held at cost.
Interest rate swaps at fair value
e Group has entered into ﬁve interest rate swap arrangements and one forward starting swap arrangement to hedge its risks associated with interest
rate ﬂuctuations:
£5.0m for ﬁve years from 8 November 005 (ﬁxed) at .7%
£5.0m over ﬁve years from 8 November 005 (reducing to nil over 5 years) at .8%
£.0m over ﬁve years from 3 February 007 (reducing to £3.5m over 5 years) at 5.8%
£5.0m for ﬁve years from  May 008 (ﬁxed) at 5.5%
£0.0m for four years from  June 00 (ﬁxed) at .9%
£5.0m for ﬁve years from  July 0 (ﬁxed) at 3.6%
ese arrangements do not meet the conditions necessary for hedge accounting to be applied and, therefore, changes in their fair value are recognised
immediately in the income statement resulting in a charge of £,097,000 as indicated above. is charge represents a movement of .6% in the weighted
average market rate payable for similar contracts from .8% at  July 009 to .% at 3 July 00.
ey are shown as liabilities as a result of the current levels of base and LIBOR interest rates.
Forward foreign exchange contracts at fair value
e Group has entered into a number of forward foreign exchange contracts to minimise the impact of ﬂuctuations in exchange rates, changes in their
fair value are recognised immediately in the Consolidated Statement of Comprehensive Income.
7 15 Pension Schemes
A number of companies within the Group operate deﬁned contribution pension schemes with one business also operating a deﬁned beneﬁt scheme.
e Group made contributions in respect of its deﬁned contribution pension arrangements of £,000 (009: £,000).
e deﬁned beneﬁt scheme was closed to future accrual on 3 May 00, this has resulted in a curtailment of the pension scheme liabilities of £553,000.
is is shown as other income in the signiﬁcant non-recurring items in the Consolidated Statement of Comprehensive Income.
e Group made contributions in respect of the deﬁned beneﬁt scheme of £7,000 (009: £350,000). e charge included in results from operating
activities, is £86,000 (009: £07,000). e assets of the schemes are held separately from those of the Company.
e amounts in the Financial Statements for the 5 weeks ended 3 July 00 relating to deﬁned beneﬁt pension are based on a full actuarial valuation
dated 3 December 007, which was updated at the end of the ﬁnancial year 00.
e Group’s funded deﬁned beneﬁt scheme is the Memory Lane Cakes Pension Scheme, which is a separately administered plan. e scheme is closed to
future accrual with eﬀect from 3 May 00. At the ﬁnancial year end 00, the scheme had no active members accruing beneﬁts (009: 6), 9 deferred
pensioner members (009: 75) and  pensioner members (009: 33).
Memory Lane Cakes contribution paid during the ﬁnancial year 00 was £7,000 (009: £350,000). e agreed employer’s contribution rate increased
from 6.% to 0% of pensionable pay from  July 008. e employees’ contribution remained at 6% of pensionable pay until the scheme closed to future
accrual on 3 May 00. e Group’s contribution to its deﬁned beneﬁt pension scheme in the next ﬁnancial year will depend on the outcome of the full
valuation based on the assets at 3 May 00, the results of this valuation are expected during November 00. A new contribution schedule is likely to
be implemented in the ﬁnancial year to  July 0.
e full actuarial valuation of the Scheme carried out as at 3 December 007 on an equity/bond basis and projected unit method, showed that there
was a surplus of £99,000 equivalent to a 6% surplus of assets over liabilities. e valuation was conducted by a qualiﬁed independent actuary.
2010 009
£000 £000
Fair value of plan assets 17,658 5,67
Present value of deﬁned beneﬁt obligations (21,287) (6,963)
Deﬁcit recognised (3,629) (,9)
e fair value of plan assets and the return on those assets were as follows:
2010 009
£000 £000
Equities/target return fund 16,080 ,3
Property 1,362 ,
Cash 216 9
Fair value of plan assets 17,658 5,67
Actual return on plan assets 1,922 (,055)
None of the fair values of the assets shown above includes any of the Company’s own ﬁnancial instruments or any property occupied by, or any other
assets used by, the Company.
8 Movements in present value of deﬁned beneﬁt obligation
2010 009
£000 £000
At beginning of ﬁnancial year (16,963) (6,339)
Current service cost (286) (07)
Interest cost (1,071) (,086)
Employee contributions (165) (8)
Beneﬁts paid 373 357
Actuarial (losses)/gains (3,728) 730
Curtailment 553 -
At end of ﬁnancial year (21,287) (6,963)
Movements in fair value of plan assets
2010 009
£000 £000
At beginning of ﬁnancial year 15,672 6,56
Expected return on plan assets 1,240 ,309
Employee contributions 165 8
Beneﬁts paid (373) (357)
Actuarial gains/(losses) 682 (,36)
Contributions by employer 272 350
At end of ﬁnancial year 17,658 5,67
Actuarial gains and losses arise due to changes in the key assumptions such as inﬂation, mortality rates and discount rates as well as experience gains and losses.
Income/(expense) recognised in the Consolidated Statement of Comprehensive Income
2010 009
£000 £000
Current service cost (286) (07)
Curtailment 553 -
Expected return on deﬁned beneﬁt pension plan assets 1,240 ,309
Interest on deﬁned beneﬁt pension plan obligation (1,071) (,086)
Total income/(expense) 436 (8)
e above income/(expenses) are recognised in the following line items in the Consolidated Statement of Comprehensive Income:
2010 009
£000 £000
Administrative expenses (286) (07)
Other income 553 -
Finance income 1,240 ,309
Finance expense (1,071) (,086)
436 (8)
Actuarial gains and losses recognised directly in equity in the statement of recognised income and expense since  July 006, the transition date
to adopted IFRSs:
2010 009
£000 £000
Cumulative amount at beginning of ﬁnancial year (1,404) 30
Recognised in the ﬁnancial year (3,046) (,63)
Cumulative amount at end of ﬁnancial year (4,450) (,0)
9 15 Pension Schemes (continued)
Principal long term actuarial assumptions at the year end were as follows:
2010 009
Inﬂation assumption 3.2% 3.%
Rate of pensionable salary increases 3.7% 3.7%
Increases to pensions in payment 3.2% 3.%
Discount rate for liabilities 5.4% 6.3%
Expected rate of return for plan assets 7.8% 7.9%
e ﬁnancial assumptions are based on market conditions as at the review date of 3 July 00 with discount rates based on the yields on long-dated high
quality corporate bonds. e discount rate is lower than the discount rate used last year reﬂecting the decrease in bond yields over this period.
Salary inﬂation assumptions are as determined by the Board with regard to price inﬂation. e salary inﬂation from 3 May 00 when the Scheme closed
to future accrual was assumed to be in line with inﬂation.
e expected rate of return takes into consideration the fact that over 90% of the plan assets are held in a target return fund which targets RPI + 5%.
is expected return rate dropped slightly from 7.9% to 7.8% between 009 and 00 reﬂecting a lower rate of return on cash balances held. e
expected rate is based on the current Bank of England base rate rather than long term deposit rates.
Pre-retirement mortality assumption
P[M/F]A92 P[M/F]A9
medium cohort medium cohort
year of birth year of birth
Post-retirement mortality assumption
P[M/F]A92 P[M/F]A9
medium cohort medium cohort
year of birth year of birth
Under the mortality tables adopted, the assumed future life expectancy at age 65 is as follows:
Male currently at age 5 23.1 3.
Female currently at age 5 25.9 5.9
Male currently at age 65 22.0 .0
Female currently at age 65 24.8 .8
Inﬂation is assumed to be at 3.% per annum. e diﬀerential between the assumed rate of inﬂation and the discount rate for liabilities is .% (009: 3.%).
Changing the year end 00 assumptions to those of 009 year end listed above, the deﬁcit would have been £,000 compared to the reported deﬁcit
of £3,69,000.
e history of the plans for the current and prior periods is as follows:
Consolidated Statement of Financial Position
2010 009 008 007 006
£000 £000 £000 £000 £000
Fair value of plan assets 17,658 5,67 6,56 6,066 5,033
Present value of the deﬁned beneﬁt obligation (21,287) (6,963) (6,339) (3,5) (,50)
(Deﬁcit)/surplus (3,629) (,9) 77 ,5 783
2010 009 008 007 006
£000/% £000/% £000/% £000/% £000/%
Experience adjustments on plan assets 682 (,36) (980) (8) ,8
as a percentage of plan assets 3.9% (5.%) (5.9%) (.%) 9.6%
Experience adjustments on plan liabilities (-) (38) (556) (-) (6)
as a percentage of plan liabilities 0.0% .% 3.% 0.0% 0.%
Total actuarial (loss)/gain (3,046) (,63) (,68) ,55 ,36
as a percentage of plan liabilities 14.3% 9.6% 6.% .5% 9.6%
50 Sensitivities
A number of sensitivities have been carried out on the assumptions, the impact of each on the deﬁcit is shown below.
Expected
Life return on
expectancy Inﬂation investments Discount rate
Assumptions Assumptions increased by increased by decreased by increased by
2010 2009 one year 1% 1% 1%
Discount rate for liabilities 5.0% pa 6.30% pa 5.0% pa 5.0% pa 5.0% pa 6.0%
Price inﬂation 3.0% pa 3.0% pa 3.0% pa .0% pa 3.0% pa 3.0% pa
Salary increases 3.70% pa 3.70% pa 3.70% pa .70% pa 3.70% pa 3.70% pa
Limited price index (LPI) pension increases 3.0% pa 3.0% pa 3.0% pa .0% pa 3.0% pa 3.0% pa
Mortality after retirement PA9 medium PA9 medium PA9 medium PA9 medium PA9 medium PA9 medium
cohort year of cohort year of cohort year of cohort year of cohort year of cohort year of
birth tables birth tables birth tables birth tables birth tables birth tables
with a minus
one year age
rating
Expected return on assets overall 7.80% pa 7.90% pa 7.80% pa 8.80% pa 6.80% pa 7.80% pa
Net liability as at 3 July 2010 (£3,629,000) (£1,000) (£4,215,000) (£8,816,000) (£3,629,000) £352,000
Projected pension expense 2010/2011 (£236,000) (£279,000) (£197,000) (£109,000) (£54,000) (£272,000)
16 Inventories
2010 009
£000 £000
Raw materials and consumables 2,833 ,88
Finished goods 1,698 ,50
4,531 ,386
e above numbers are net of provision as this provision is deemed not to be signiﬁcant enough to show separately.
Inventories recognised as an expense
2010 009
£000 £000
Opening inventories 4,386 5,0
Purchases 75,927 79,76
(Decrease)/increase in stock provisions (151) 6
Closing inventories (4,531) (,386)
Expensed during the period 75,631 80,5
5 17 Trade and Other Receivables
2010 009
£000 £000
Trade receivables due from third parties 21,377 ,9
Other debtors 779 99
Prepayments and accrued income 1,725 ,995
23,881 ,868
Within prepayments above is an amount for £700,000 (009: £900,000) relating to contract renewal fees which are not due within one year and also prepaid
pension costs of £39,000 (009: £6,000). e carrying amount of trade and other receivables is the amount that would be received if the debt was cleared
on the period end date. Speciﬁc provisions are made against doubtful debts taking the value to zero or an estimated reduced value based on the most likely
outcome.
Cash received under the invoice discounting facility, amounting to £,389,000 (009: £,5,000) shown within current liabilities, is secured on trade
receivables above. All the risks and rewards of the trade debtors lie with the Group.
18 Cash and Cash Equivalents
2010 009
£000 £000
Bank balances 2,803 ,73
19 Other Interest-Bearing Loans and Borrowings
is note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost,
using the eﬀective interest rate method.
ere has been a change in the current year in relation to the treatment of loan notes issued as deferred consideration. Previously these had been shown
in other interest-bearing loans and borrowings; they have been reclassiﬁed in the current year and for comparatives and are shown separately on the face
of the Consolidated Statement of Financial Position as part of the deferred consideration. is change has no impact on the reported result.
2010 009
£000 £000
Current liabilities
Current portion of secured bank loans 3,384 ,50
Current portion of ﬁnance lease liabilities 1,280 97
Cash advanced under the invoice discounting facility 11,389 ,5
Loan notes 36 85
16,089 5,663
Non-current liabilities
Secured bank loans 19,934 3,39
Finance lease liabilities 2,520 ,3
22,454 5,63
Non-current secured bank loans are repayable as follows:
2010 009
£000 £000
Bank loans and mortgages:
Between one and two years 3,140 3,386
Between two and ﬁve years 12,545 5,07
Between ﬁve and ten years 3,108 3,
Between ten and ﬁfteen years 1,141 ,735
19,934 3,39
5 Finance lease liabilities are payable as follows:
Minimum Minimum
lease lease
payments Interest Principal payments Interest Principal
2010 2010 2010 009 009 009
£000 £000 £000 £000 £000 £000
Less than one year 1,387 107 1,280 ,03 9 97
Between one and ﬁve years 2,618 98 2,520 ,367 55 ,3
4,005 205 3,800 3,390 0 3,86
Terms and debt repayment schedule
2010 2010 2009
Margin/above Frequency of Year of Facility Drawn Drawn
(below) Repayments Maturity £000 £000 £000
Mortgage .750%/base Monthly 0 7,430 6,667 7,38
Mortgage .750%/base Monthly 03 769 691 75
Term Loan A 3.500%/LIBOR Quarterly 0 9,400 8,161 9,5
Term Loan B (i) 3.500%/LIBOR Quarterly 0 1,500 1,289 ,58
Term Loan B (i) 3.966%/LIBOR Bullet 0 2,000 2,000 ,000
Term Loan C .000%/LIBOR Bullet 0 1,600 1,600 ,600
Term Loan D .000%/LIBOR Bullet 0 3,100 3,100 3,00
Invoice Discounting .870%/base On demand Revolving* 16,000 11,389 ,5
Loan secured on assets .75%/base Quarterly 00 150 50
Loan secured on assets .70%/base Monthly 03 466 77
Finance lease liabilities .75%/base Monthly 0 6,375 1,404 ,
Finance lease liabilities .75%/base Monthly 03 33 5
Finance lease liabilities .75%/base Monthly 0 876 ,9
Finance lease liabilities .750%/base Monthly 05 1,487 8
Loan notes % /(base) On demand 0 - 36 
Overdraft .50%/base On demand - 2,000 - -
50,174 39,349 ,35
Amounts falling due within one year 16,304 5,878
Amounts falling due after more than one year 23,045 6,37
39,349 ,35
Unamortised transaction costs (806) (,0)
38,543 ,9
*Revolving above relates to payment terms on the invoice discounting which is up to 60 days from date of invoice.
e facility has increased by £m on ﬁnance lease during the year taking the total facility to £50,7,000 at the period end.
e carrying amounts are shown on the Consolidated Statement of Financial Position at amortised cost using the eﬀective interest rate method.
Using this method the transaction costs are netted oﬀ against the gross value of the debt.
53 19 Other Interest-Bearing Loans and Borrowings (continued)
Group’s Borrowing Facilities
All of the above loans are denoted in pounds sterling, with various interest rates and maturity dates. e 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 5.
HSBC Bank Plc, HSBC Asset Finance (UK) Ltd and HSBC Equipment Finance (UK) Ltd 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.
As part of the bank borrowing facility the Group needs to meet certain covenants every six months. ere were no breaches of covenants during the year.
e covenant tests required are as follows:-
Net Debt: EBITDA
Interest cover
Debt service cover
e net debt: EBITDA and interest cover covenants are covered in the Business Review.
e HSBC facilities (excluding overdraft) available for drawdown are £8.m (009: £7.m). At the period end date the facility utilised was £39.3m
(009: £.3m), giving £8.9m (009: £.9m) headroom.
20 Analysis of Net Debt
As at As at
year ended year ended
 July 3 July
009 Cash ﬂow 2010
£000 £000 £000
Cash at bank ,73 ,530 2,803
Loan notes (85) 9 (36)
Debt ,88 ,579 2,767
Debt due within one year (,365) (,3) (3,599)
Debt due after one year (,5) 3,600 (20,525)
Invoice discounting due within one year (,5) ,065 (11,389)
Hire purchase obligations due within one year (97) (306) (1,280)
Hire purchase obligations due after one year (,3) (08) (2,520)
Total net debt (,0) ,96 (36,546)
Debt as per note 9 (,9) (38,543)
Cash at bank ,73 2,803
Unamortised transaction costs (,0) (806)
Total net debt (,0) (36,546)
Net debt as detailed above excludes discounted deferred consideration of £.m (009: £5.5m) and loan notes with a discounted value of £.6m which
were issued as part of the consideration of the purchase of the entire share capital of Goswell Enterprises Ltd. ese are repayable over the next three
years with the ﬁnal payment due in June 03.
5 21 Trade and Other Payables
2010 009
£000 £000
Current
Trade creditors 17,601 8,5
Other creditors including taxes and social security 1,071 ,0
Accruals and deferred income 8,928 7,366
27,600 7,007
Trade payables and accruals comprise amounts outstanding for trade purchases and ongoing costs. e carrying amount of trade payables is calculated as the
amount that would be payable to settle the liability at the period end date.
22 Provisions
Onerous Employee
lease Reorganisation claims Pension Total
£000 £000 £000 £000 £000
Balance at beginning of ﬁnancial year 55 57 96 80 ,58
Made during the ﬁnancial year -- 63 - 63
Utilised during the ﬁnancial year (5) (57) (53) (9) (3)
Released during the ﬁnancial year - ----
Balance at end of ﬁnancial year 400 - 306 271 977
Current provisions 05 - 306 3 
Non-current provisions 95 -- 58 553
e onerous lease provision relates to a warehouse at the California Cake Company site which has a lease commitment extending to April 0.
is provision is based on the assumption that no tenant will be found until the termination date. e amount utilised during the year comprises
lease payments of £7,000 and dilapidation costs of £8,000.
e employee claims provision is based on number of reported accidents and incidents and the number of expected claims yet to be reported based on
historical evidence, all accrued up to the maximum self insured amount of £0,000 per claim.
e pension provision made during the previous year 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 0 years.
23 Other Financial Liabilities – Deferred Consideration
Yorkshire Farm Goswel Total
Bakeries and Anthony Alan Enterprises deferred
A&P Foods Foods Ltd Ltd consideration
£000 £000 £000 £000
Balance at beginning of ﬁnancial year 3,05 ,85 ,588 7,078
Payment during the ﬁnancial year (80) (0) - (850)
Unwinding of discount 5  58 7
Discounting of rescheduled payments (53) (63) - (36)
Balance at end of ﬁnancial year 2,287 2,096 1,646 6,029
Current discounted deferred consideration 85 60 983 ,8
Non-current discounted deferred consideration ,6 ,86 663 3,6
e deferred consideration relating to Anthony Alan Foods Ltd in the previous year’s accounts was contingent on the renewal of the WeightWatchers
licence. is licence has been renewed during the year therefore the deferred consideration is no longer considered contingent.
See Note  for the timing of the undiscounted deferred consideration payment relating to Goswell Enterprise Ltd.
e repayments for both Yorkshire Farm Bakeries and A&P Foods and Anthony Alan Foods Ltd have been rescheduled over the next two years
and attract an interest charge of 6%.
55 24 Deferred Tax Assets and Liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities
2010 009 2010 009
£000 £000 £000 £000
Property, plant and equipment - - (1,402) (,8)
Short term timing diﬀerences - 3 (109) -
Employee share scheme charges 9 6 --
Pension scheme charges 1,016 36 --
Interest rate swaps 727 0 --
Foreign exchange contracts - - (56) -
IFRS fair value adjustments on deferred consideration - - (109) (5)
Tax assets/(liabilities) 1,752 830 (1,676) (,338)
Net tax asset/(liabilities) 76 (508)
Short term timing diﬀerences relate to general provisions which will be allowed when utilised.
Movement in deferred tax during the year
Recognised Recognised
5 July 2009 in income in equity 3 July 2010
£000 £000 £000 £000
Property, plant and equipment (,8) (8) - (,0)
Short term timing diﬀerences 3 () - (09)
Employee share scheme 6 (7) -9
Pension scheme 36 (99) 853 ,06
Interest rate swaps 0 307 - 77
Foreign exchange contracts - (56) - (56)
IFRS fair value adjustments deferred consideration (5) (55) - (09)
(508) (69) 853 76
Movement in deferred tax during the prior year
Recognised
Recognised Recognised in business
29 June 2008 in income in equity combination 4 July 2009
£000 £000 £000 £000 £000
Property, plant and equipment (,369) 85 -- (,8)
Short term timing diﬀerences 9 3 -- 3
Employee share scheme 38 () -- 6
Pension scheme (50) (6) 58 - 36
Interest rate swaps (8) 50 -- 0
IFRS fair value adjustments on deferred consideration (7) 00 - (37) (5)
(,57) 6 58 (37) (508)
56 57
25 Financial Risk Management
e main purpose of the Group’s ﬁnancial instruments which comprise of bank term loans, invoice discounting 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, is to ﬁnance the Group’s operations.e main risk arising from the Group’s ﬁnancial instruments are interest rate risk and liquidity risk.e Group’s
policies on the management of liquidity, credit, interest rate and foreign currency risks are set out below and also referred to in the Business Review.
a) Liquidity
e 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. e carrying amounts are the amounts due if settled at the period end date. e contractual undiscounted
cash ﬂows include estimated interest payments over the life of these facilities. e estimated interest payments are based on interest rates prevailing at the
3 July 00.
At year ended 3 July 00
Contractual
Carrying cash ﬂows  year  to   to 5 5 years
amount Total or less years years and over
£000 £000 £000 £000 £000 £000
Non-derivative ﬁnancial liabilities
Secured bank loans (23,318) (6,736) (,37) (,066) (3,998) (,35)
Finance lease liabilities (3,800) (,005) (,387) (,) (,0) -
Invoice discounting (11,389) (,389) (,389) ---
Deferred consideration (6,029) (6,7) (,568) (3,956) (0) -
(44,536) (8,87) (9,78) (9,36) (5,6) (,35)
Trade creditors (17,601) (7,60) (7,60) ---
Derivative ﬁnancial assets/(liabilities)
Interest rate swaps liabilities (2,598) (3,88) (986) (97) (,0) (5)
At year ended  July 009
Contractual
Carrying cash ﬂows  year  to   to 5 5 years
amount Total or less years years and over
£000 £000 £000 £000 £000 £000
Non-derivative ﬁnancial liabilities
Secured bank loans (25,469) (9,068) (3,7) (,9) (6,76) (,938)
Finance lease liabilities (3,286) (3,390) (,03) (95) (,3) -
Invoice discounting (12,454) (,5) (,5) ---
Deferred consideration (7,078) (7,70) (3,550) (3,70) --
(48,287) (5,8) (0,) (8,93) (8,77) (,938)
Trade creditors (18,521) (8,5) (8,5) ---
Derivative ﬁnancial assets/(liabilities)
Interest rate swaps liabilities (1,501) (3,599) (785) (975) (,839) -
e information relating to the interest rate swaps shown in the tables above indicate the cash ﬂows associated with these instruments.
is also reﬂects the expected eﬀect on the proﬁt. ese amounts will change as interest rates change.
Short term ﬂexibility is available through existing bank facilities and the netting oﬀ of surplus funds. 25 Financial Risk Management (continued)
b) Credit
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. ese trading exposures are monitored and managed at operating level and are
also monitored at Group level. At the period end date there were no signiﬁcant concentrations of credit risk. e carrying amount of the ﬁnancial assets
represents the maximum credit exposure. erefore, the maximum exposure to credit risk for the trade receivables at the period end date was £.m
(009: £.9m) and the ageing of trade receivables at the period end date was:
2010 009
£000 £000
Not past due 19,000 8,53
Past due 0-30 days 1,774 ,633
Past due 3-0 days 509 598
Past due more than 0 days 94 0
21,377 ,9
e above numbers are net of bad debt provision as this provision is deemed not to be signiﬁcant enough to show separately. Group policy is to provide in
full against all receivable balances that are signiﬁcantly overdue. A speciﬁc provision is made against all other receivable balances that are considered to be
unrecoverable. e provision is netted oﬀ the gross receivable.
e Group’s strategy is to focus on supplying UK multiple grocers, the nature of these customers is such that there is relatively low risk of them failing
to meet their contractual obligations. ere 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. e balance of £0.6 million past due by more than 30 days is equivalent to  day sales
(009: £0.8m, equivalent to  days).
c ) Market Risk
i) Interest rate risk
e Group’s interest rate risk exposure is primarily to changes in variable interest rates. e Group has entered into ﬁve interest rate swap arrangements
in order to hedge its risks associated with any ﬂuctuations and a forward starting swap which starts July 0. Details of swaps are given in Note .
e proﬁle of the Group’s interest-bearing loans and overdraft at the period end date were split as follows:
2010 009
£000 £000
Fixed rate liabilities 4,384 -
Variable rate liabilities 39,349 ,35
43,733 ,35
e increase in ﬁxed rate liabilities during the year is as a result of rescheduling deferred consideration payments which were due in quarter one of the
new ﬁnancial period over a period extending two years. e rescheduled deferred consideration attracts a ﬁxed rate of interest of 6%.
Sensitivity
A % 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.
2010 009
£000 £000
Proﬁt decrease 156 3
Decrease in net assets 156 3
A % decrease in the base rate or LIBOR would have an equal and opposite impact to those listed above.
e above movement is not equal to % 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.e 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. e 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 Business Review.
58 iii) Foreign exchange risk
e Group currently supplies UK manufactured products to Lightbody Stretz Ltd its 50% selling and distribution business trading primarily in Europe via
Lightbody Europe.e consequence of this trading relationship is that the Group is exposed to movement in the Euro. Forward foreign exchanges contracts
are used to manage the foreign exchange exposure.
d) Debt and Capital Management
e 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. e Directors do not recommend paying a dividend as with
limited funding currently available they believe that it is more appropriate to invest to grow the business. ey remain conﬁdent about the future prospects
and intend to re-establish the dividend as soon as cash ﬂow and debt levels allow.
e 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 bank every 6 months. ere have been no breaches of covenant tests during the year and the gearing ratio has fallen during the year to
.07 (009: .5).
e Group considers its capital to include share capital, share premium and capital redemption reserve.
e Group does not have any externally imposed capital requirements.
26 Capital and Reserves
e reconciliation of movement in capital and reserves is shown as a primary statement Consolidated Statement of Changes in Equity. Within retained
earnings is the net exchange diﬀerence balance at the year end of £6,000 (009: £,000). ese have not been shown as a separate component of equity
as the Directors have deemed them not to be material.
27 Share Capital
2010 009
£000 £000
On issue at beginning of the ﬁnancial year 51,448 5,8
Shares issued 1,240 -
In issue at end of the ﬁnancial year – fully paid 52,688 5,8
Allotted, called up and fully paid
Ordinary shares of p each 527 5
e 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.
No warrants remained outstanding at 3 July 00.
Share-Based Payments
e Group operates both approved and unapproved share option schemes. Following the adoption of IFRS ‘Share-based payments,’ charges have been
made to the Income Statement to reﬂect the calculated fair value of employee share options vesting since  July 006.
e fair value is calculated at the grant date and ultimately expensed in the income statement 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.
59 27 Share Capital (continued)
ere have been a number of options granted during the course of the ﬁnancial year to 3 July 00 with further details given below.
Date of grant Amount
Number of options Exercise expensed in year Period of
granted price Fair value to 3 July 2010 expense
0 Dec 009 55,5 0.0p £58,000 £0,000 3 years
 Oct 009 0,000 0.0p £58,000 £,000  year
 Oct 009 0,000 0.0p £6,000 £3,000  years
 Oct 009 309,000 0.0p £9,000 £,000 3 years
 Oct 009 ,000 7.0p £6,000 £,000 3 years
Charge relating to options granted in the current year £93,000
Charge relating to options granted in the previous year £38,000
Charge included in Administration expenses £3,000
ere were a number of options granted during the course of the ﬁnancial year to  July 009 with further details given below.
Date of grant Amount
Number of options Exercise expensed in year Period of
granted price Fair value to 4 July 2009 expense
5 Mar 009 76,00 .0p £,000 £,000 3 years
5 Nov 008 36,680 3.0p £50,000 £0,000 3 years
Charge relating to options granted in the current year £,000
Charge relating to options granted in the previous year £09,000
Charge included in administration expenses £0,000
60 6
Details of share options outstanding at 3 July 00 and movements during the year by exercise price is shown below:
First Last
Exercise Exercise Exercise At  July At 3 July
price date date 009 Granted Forfeited Cancelled 2010
.0p Apr 00 Apr 07 8,000 - (7,000) - 54,000
06.0p Apr 0 Oct 09 97,500 - (85,000) - 212,500
06.0p Apr 00 Oct 00 ,500 -- - 42,500
00.0p Apr 00 Apr 07 59,000 - (73,000) - 346,000
88.0p Sep 0 Sep 03 07,500 - (0,000) - 67,500
88.0p Apr 00 Oct 00 5,000 -- - 25,000
85.6p Apr 00 Oct 00 35,000 -- - 35,000
85.6p Apr 00 Oct 00 65,000 -- - 165,000
67.5p Nov 008 Nov 05 39,000 - (39,000) - 100,000
67.5p Jan 0 Jul 0 63,53 - (8,80) - 374,733
63.0p Nov 008 Nov 05 7,000 - (7,000) - -
63.0p Nov 008 Nov 0 ,000 - (,000) - -
5.5p Jul 00 July 05 5,000 - (50,000) - 65,000
3.0p Oct 009 Oct 0 05,696 - (5,88) - 52,848
3.0p Nov 0 May 0 36,680 - (6,0) - 310,440
9.0p Dec 005 Dec 0 500,000 -- - 500,000
7.0p Mar 0 Mar 0 - ,000 -- 111,000
0.0p Dec 0 Jul 03 - 55,5 (5,93) - 480,052
0.0p Sep 0 Sep 0 - 0,000 -- 420,000
0.0p Sep 03 Sep 03 - 0,000 -- 420,000
0.0p Mar 0 Mar 0 - 309,000 -- 309,000
.0p Mar 0 Mar 09 76,00 -- - 764,100
.0p Nov 00 Nov 0 00,000 -- - 100,000
.0p Apr 00 Apr 07 00,000 - (00,000) - -
,37,59 ,785,5 (,8,09) - 4,954,673
A summary of share options outstanding and movements for the year to  July 009 is shown below:
At 8 June
008 Granted Forfeited Cancelled At 4 July 2009
Number of options ,77,836 ,00,780 (,00,97) (650,900) 4,317,519
ere were ,30,38 (009: 800,000) options exercisable at the period end date.
ere were no options exercised during the year or the previous year.
e options outstanding at the year end have weighted average exercise price of 0.6p (009: 55.3p) and a weighted average contractual life of 6.3 years
(009: 5. years).
e inputs into the Black-Scholes-Merton based option pricing model to calculate the charge for share options granted in the ﬁnancial year were as follows:
2010 009
Expected life of option 2.9-4.4 years 3 years
Volatility of share price 78.3%-79.2% 5.0%-5.9%
Dividend yield 0%-0% 5.5%-.3%
Risk-free interest rate 1.91%-1.95% 3.5%-.36%
Share price at date of grant 25.0p-27.0p .p-39.5p
Exercise price 20.0p-27.0p .0p-3.0p
Bid price discount 10% 0%
Estimated conversion rate 100% 00%
Fair value per option 12.0p-16.0p .8p-.p
Volatility is calculated on a consistent basis for each grant of options and is based on the historic annualised standard deviation of continuously
compounded rates of return. 28 Dividends
e following dividends were paid during the period:
2010 009
£000 £000
Nil (008: .p) per qualifying ordinary share - ,3
During the year a dividend of £5,000 (009: £79,000) was paid to the non-controlling interest, being the other shareholder in Lightbody Stretz Ltd.
29 Operating Leases
e Group had annual commitments under non-cancellable operating leases relating primarily to land and buildings, fork lift trucks and oﬃce equipment.
Land and buildings have been considered separately for lease classiﬁcation. Land and buildings amounts relate to leasehold properties at the Nicholas & Harris
site, part of the Lightbody of Hamilton site and the California Cake Company site.
During the year £77,000 was recognised as an expense in the income statement in respect of operating leases (009: £89,000).
Future minimum lease repayments under non-cancellable operating leases at the end of the ﬁnancial periods are as follows:
Land and Buildings Other
2010 009 2010 009
£000 £000 £000 £000
On leases which expire in:
Less than one year - - 95 63
Between one and ﬁve years 1,241 7 1,372 979
More than ﬁve years 5,813 5,6 31 -
7,054 5,700 1,498 ,0
30 Capital Commitments
At the ﬁnancial year ended 3 July 00, the Group had capital expenditure commitments of £9,000 (009: £,658,000). e previous year’s commitments
included £,390,000 relating to the development of the UCB’s site manufacturing facility.
31 Related Parties
Related Party Transactions and Directors’ Material Interests in Transactions
e Group paid £83,097 (009: £8,5) in the year for the provision of company secretarial and oﬃce services to City Group Plc, a subsidiary of London
Finance and Investment Group Plc, which is a substantial shareholder in Finsbury Food Group Plc.
Mr D C Marshall and Mr E J Beale are Directors of City Group Plc, and received Directors’ fees for the year of £5,000 (009: £5,000) and £33,670
(009: £9,5) respectively. In 009, £0,000 was also paid to City Group Plc for speciﬁc acquisition review and advice. At 3 July 00, £,335
(009: £0,633) was due to City Group Plc. e services of Mr Marshall are supplied by an overseas company in which none of the Directors has
an interest. Directors’ fees for Mr Beale are surrendered to his primary employer.
A Group subsidiary paid Mr M W Lightbody, a Group Director, £76,000 (009: £7,000) in respect of rent of a property at the Lightbody of Hamilton
site. No balances were outstanding at either year end.
A 50% owned subsidiary, Lightbody Stretz Ltd, paid Mr P Stretz, the Managing Director of Lightbody Stretz Ltd, £5,000 (009: £,000) in respect
of rent for oﬃces. No balances were outstanding at either year end.
In 009, £30,000 was paid to a family member of Mr A Cunningham, Managing Director of United Central Bakeries Ltd, for provision of engineering
services. No balances were outstanding at either year end.
Transactions with the Memory Lane pension scheme are detailed in Note 5.
6 63
Transactions with Key Management Personnel
Directors of the Company and their immediate relatives control 9% (009: 8%) of the voting shares of the Company.
e compensation of key management personnel (i.e. Group Directors, Group Commercial Director, Brand Director and Operating Subsidiary Managing
Directors) is as follows:
2010 009
£000 £000
Fees 263 75
Company contributions to money purchase pension schemes 159 67
Executive salaries and beneﬁts 1,294 ,3
Executive bonuses 48 87
1,764 ,7
Details of share options outstanding at 3 July 00 for key personnel by exercise price is shown in the table below. Share options held by Group Directors
are set out in Note 7.
Number of Number of
options at options at Earliest Exercise
3 July  July Exercise exercise expiry
2010 009 price date date
P Batchelor* - 00,000 .0p 8/0/00 8/0/07
- 5,88 3.0p 06/0/009 06/0/0
- 50,000 5.5p /07/00 /07/05
- ,000 63.0p //008 //0
- 7,000 63.0p //008 //05
- 39,000 67.5p //008 //05
- 0,000 88.0p 8/09/0 8/09/03
M Bruce* - 73,000 00.0p 8/0/00 8/0/07
- ,500 06.0p 05/0/0 05/0/07
- 7,000 .0p 8/0/00 8/0/07
I Chree 28,300 - .0p 5/05/0 5/05/09
A Cunningham 100,000 00,000 67.5p //008 //05
25,000 5,000 88.0p 8/09/0 8/09/03
42,500 ,500 06.0p 05/0/0 05/0/07
D Scott* - 73,000 00.0p 8/0/00 8/0/07
- 7,000 .0p 8/0/00 8/0/07
S Staddon 100,000 00,000 .0p 5//00 5//0
25,000 5,000 5.5p /07/00 /07/05
25,000 5,000 88.0p 8/09/0 8/09/03
42,500 ,500 06.0p 05/0/0 05/0/07
388,300 ,5,38
* e above individuals were not employed in the Group at 3 July 00, therefore do not form part of the key personnel.
32 Post Consolidated Statement of Financial Position Events
Since the period end date there have been no signiﬁcant events.
33 Comparative Information
Certain prior year balances have been reclassiﬁed within the Consolidated Statement of Financial Position to conform to current presentation. Loan notes
issued as deferred consideration had previously been shown in other interest-bearing loans and borrowings; they have been reclassiﬁed in the current year
and for comparatives and are shown separately on the face of the Consolidated Statement of Financial Position as part of the total deferred consideration.
is has had no impact on the proﬁt for the period or net assets.
34 Ultimate Parent Company
Finsbury Food Group Plc is the ultimate parent company. Company Balance Sheet
at 3 July 2010 and 4 July 2009
2010 009
Note £000 £000
Fixed assets
Investments  64,728 6,695
64,728 6,695
Current assets
Debtors 3 12,712 0,7
12,712 0,7
Creditors: amounts falling due within one year  (22,630) (6,8)
Net current liabilities (9,918) (6,57)
Total assets less current liabilities 54,810 58,
Creditors: amounts falling due after more than one year 5 (22,533) (5,89)
Net assets 32,277 3,30
Capital and reserves
Called up share capital 7 527 5
Share premium account 8 26,918 6,680
Capital redemption reserve 8 578 578
Proﬁt and loss account 8 4,254 ,530
Shareholders’ funds 8 32,277 3,30
ese Financial Statements were approved by the Board of Directors on 9 September 00 and were signed on its behalf by:
Stephen Boyd
Director
6 65
Company Reconciliation of Movements in Shareholders’ Funds
for the 52 weeks ended 3 July 2010 and 53 weeks ended 4 July 200
2010 009
£000 £000
Loss for the ﬁnancial year (407) (,090)
Dividends paid to shareholders - (,3)
Retained loss (407) (3,)
Impact of share based payments 131 0
New share capital subscribed (net of issue costs) 251 -
Net reduction to shareholders’ funds (25) (3,00)
Opening shareholders’ funds 32,302 35,30
Closing shareholders’ funds 32,277 3,30 66
Notes to the Company Financial Statements
(forming part of the Financial Statements)
35 Accounting Policies
e following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Financial Statements.
Basis of Preparation
e ﬁnancial year was the 5 weeks ended 3 July 00 (prior ﬁnancial year 53 weeks ended  July 009). e Financial Statements for the Company have
been prepared in accordance with applicable accounting standards, and under the historical cost accounting rules and in accordance with applicable United
Kingdom Generally Accepted Accounting Principles (UK GAAP) and law.
Under section 08 of the Companies Act 006 the Company is exempt from the requirement to present its own Proﬁt and Loss Account. e proﬁt or loss
for the year is set out in the Reconciliation of Movements in Shareholders Funds.
Under Financial Reporting Standard  the Company is exempt from the requirement to prepare a cash ﬂow statement on the grounds that it is included
within the consolidated accounts.
e accounting policies of the Company are the same as for the Group except for the following:
Investments
Investments are stated at cost less provision for any permanent diminution in value.
Taxation
e credit for taxation is based on the loss for the year and takes into account taxation deferred because of timing diﬀerences between the treatment
of certain items for taxation and accounting purposes.
Deferred tax is recognised, without discounting, in respect of all timing diﬀerences between the treatment of certain items for taxation and accounting
purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 9.
36 Remuneration of Directors
Details of Directors’ remuneration are set out in Note 7 of the Group’s Financial Statements.
37 Staﬀ Numbers and Costs
e average number of persons employed by the Company (including directors) during the year, analysed by category, was as follows:
Number of employees
2010 009
Directors and administrative staﬀ 27 9
e aggregate payroll costs of these persons were as follows:
2010 009
Wages and salaries 2,021 ,030
Social security costs 224 
Other pension costs 96 3
2,341 ,97
38 Employee Share Schemes
Under the ShareSave scheme, options over 55,5 shares were granted to Group employees on 0 December 009 at an option price of 0.0p
(009: 36,680 shares were granted to Group employees on  November 008 at an option price of 3.0p). Also during the year ,60,000 share options
were granted to a Director of the Company, ,9,000 at an option price of 0p and ,000 at an option price of 7p. Details of Directors share options
are set out in Note 7 of the Group’s Financial Statements.
39 Share Based Payments
As set out in Note 7 to the Group Financial Statements, ,309,368 (009: 67,900) of the total ,785,5 (009: ,00,780) share options granted during
the year were issued to employees of the Company resulting in a charge to the income statement of £98,000 (£70,000). e remaining options were granted
to employees of the subsidiary companies with corresponding charges to the relevant proﬁt and loss accounts.ese charges totalled £33,000 (009: £50,000)
and have resulted in an addition to the total cost of investments in the Company balance sheet. 67
40 Dividends
e following dividends were paid during the period:
2010 009
£000 £000
nil (008: .p) per qualifying ordinary share - ,3
e Directors do not recommend paying a dividend as with limited funding currently available they believe that it is more appropriate to invest to
grow the business. ey remain conﬁdent about the future prospects and intend to re-establish the dividend as soon as cash ﬂow and debt levels allow.
41 Investment in Subsidiaries
Set out below are the signiﬁcant subsidiary undertakings of the Company whose results are included in the consolidated Financial Statements for the
period ended 3 July 00.
Direct/Indirect Country of Class of Ownership Ownership
Ownership Incorporation shares held 2010 009
Anthony Alan Foods Ltd Direct England and Wales Ordinary £ 100% 00%
California Cake Company Ltd Indirect Scotland Ordinary £ 100% 00%
Campbells Cake Company Ltd Indirect Scotland Ordinary £ 100% 00%
Goswell Enterprises Ltd Indirect England and Wales Ordinary £ 100% 00%
Lightbody Group Ltd Indirect Scotland Ordinary £ 100% 00%
Livwell Ltd Direct England and Wales Ordinary £ 100% 00%
Memory Lane Cakes Ltd Direct England and Wales Ordinary p 100% 00%
Nicholas & Harris Ltd Direct England and Wales Ordinary £ 100% 00%
United Central Bakeries Ltd Indirect Scotland Ordinary £ 100% 00%
Lightbody-Stretz Ltd Indirect Scotland Ordinary £ 50% 50%
Lightbody-Stretz Ltd which is 50% owned by the Group has been consolidated into the Group accounts as a subsidiary with a corresponding minority
interest on the basis that the Group has the controlling interest. Control arises by virtue of the fact that Lightbody Group Ltd which is ultimately a wholly
owned subsidiary of Finsbury Food Group has a majority of voting rights arising from an agreement between Lightbody Group Ltd and Philippe Stretz.
42 Fixed Asset Investments
£000
Cost
At beginning of ﬁnancial year 6,695
Additions 33
At end of ﬁnancial year 6,78
Net book value
At 3 July 2010 64,728
At  July 009 6,695
e additions to investments during the year relate to the share option costs of £33,000 passed down to individual subsidiaries.
43 Debtors
2010 009
£000 £000
Amounts owed by Group undertakings 12,661 0,0
Other taxation 10 
Deferred taxation 10 8
Other debtors - 6
Prepayments and accrued income 31 89
12,712 0,7 68
44 Creditors: Amounts Falling Due Within One Year
2010 009
£000 £000
Loan notes 36 85
Bank overdraft 13,741 8,78
Bank loan 3,334 ,50
Trade creditors 28 36
Deferred purchase consideration 1,460 3,050
Amounts due to Group undertakings 3,526 ,66
Other taxes and social security 71 
Accruals and deferred income 434 53
22,630 6,8
e deferred consideration relates to Anthony Alan Foods Limited of £60,000 and to Yorkshire Farm Bakery and A&P Foods acquisition of £80,000,
both payable by instalments over the next ﬁnancial year.
45 Creditors: Amounts Falling Due After More an One Year
2010 009
£000 £000
Bank loans and mortgages
Between one and two years 3,090 3,386
Between two and ﬁve years 12,393 5,07
Between ﬁve and ten years 2,857 3,
Between ten and ﬁfteen years 953 ,735
Total bank loans and mortgages 19,293 3,39
Deferred consideration 3,240 ,500
22,533 5,89
HSBC Bank Plc, HSBC Asset Finance (UK) Ltd and HSBC Equipment Finance (UK) Ltd 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.
e deferred consideration is payable by instalments and relates to Anthony Alan Foods Limited of £,60,000 and to the Yorkshire Farm Bakery
and A&P Foods acquisition of £,600,000. 69
46 Interest-Bearing Loans and Borrowings
is note provides information about the contractual terms 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 5.
2010 009
£000 £000
Current liabilities
Current portion of secured bank loans 3,334 ,50
Loan notes 36 85
3,370 ,35
Non-current liabilities
Secured bank loans 19,293 3,39
22,663 5,55
Terms and debt repayment schedule
Frequency of Year of 2010
Currency Margin Above repayments maturity £000
Mortgage GBP .750% Base Monthly 0 6,667
Term loan GBP 3.500% LIBOR Quarterly 0 8,161
Term loan GBP 3.769% LIBOR Quarterly 0 3,289
Term loan GBP .000% LIBOR Quarterly 0 1,600
Term loan GBP .000% LIBOR Quarterly 0 3,100
Loan secured on assets GBP .75% Base Quarterly 00 150
Loan secured on assets GBP .70% Base Monthly 03 466
Loan notes GBP % below Base On demand 0 36
23,469
Amounts falling due within one year 3,585
Amounts falling due after more than one year 19,884
23,469
Unamortised transaction costs (806)
22,663
e carrying amounts are shown on the balance sheet at amortised cost using the eﬀective interest rate method. Using this method the transaction costs are
netted oﬀ against the gross value of the debt. 70
46 Interest-Bearing Loans and Borrowings (continued)
Frequency of Year of 2009
Currency Margin Above repayments maturity £000
Mortgage GBP .750% Base Monthly 0 7,38
Mortgage GBP .750% Base Monthly 03 75
Term loan GBP 3.500% LIBOR Quarterly 0 9,5
Term loan GBP 3.769% LIBOR Quarterly 0 3,58
Term loan GBP .000% LIBOR Quarterly 0 ,600
Term loan GBP .000% LIBOR Quarterly 0 3,00
Loan secured on assets GBP .75% Base Quarterly 00 50
Loan secured on assets GBP .70% Base Monthly 03 77
Loan notes GBP % below Base On demand 0 8
Loan notes GBP 0.000% Base On demand 0 
6,575
Amounts falling due within one year ,50
Amounts falling due after more than one year ,5
6,575
Unamortised transaction costs (,0)
5,55
e carrying amounts are shown on the balance sheet at amortised cost using the eﬀective interest rate method. Using this method the transaction costs
are netted oﬀ against the gross value of the debt.
e base rate at the balance sheet date was 0.5% (009: 0.5%) and LIBOR rate 0.7% (009: 0.9%).
47 Called Up Share Capital
Please refer to Note 7 in the Group Financial Statements for details of called up share capital. 7
48 Capital and Reserves
Reconciliation of movement in capital and reserves
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
£000 £000 £000 £000 £000
Balance at 9 June 008 5 6,680 578 7,53 35,30
Impact of share based payments --- 0 0
Retained loss for the ﬁnancial year --- (,090) (,090)
Dividend paid --- (,3) (,3)
Balance at 4 July 2009 514 26,680 578 4,530 32,302
Balance at  July 009 5 6,680 578 ,530 3,30
Shares issued 3 38 -- 5
Impact of share based payments --- 3 3
Retained loss for the ﬁnancial year --- (07) (07)
Dividend paid -----
Balance at 3 July 2010 527 26,918 578 4,254 32,277
49 Contingent Liabilities
e Company has guaranteed the overdrafts of its subsidiaries; there was a net cash position at the year end of £,803,000 (009: £,73,000).
50 Related Party Disclosures
Please refer to Note 3 in the Group’s Financial Statements for details of related party disclosures.
51 Financial Risk Management
e 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 5 in the Group’s
Financial Statements and also referred to in the Business Review. 7
Directors’ Report
Background
e Group operates in the cake, bread & free from markets which is focused on premium, celebration and well being. ese products are supplied
predominantly under the retailers’ own brands but also through a number of licensed brands to which the Group has access.
A review of the activities and prospects of the Group is given in the Chairman’s Statement, Chief Executive’s Report and the Business Review on pages  to .
Dividend
e Directors do not recommend paying a dividend as with limited funding currently available we believe that it is more appropriate to invest to grow
our business. We remain conﬁdent about our future prospects and intend to re-establish the dividend as soon as cash ﬂow and debt levels allow.
Directors and their Interests in the Company
e present Directors and brief biographies are detailed on pages 6 to 7.
In accordance with the Articles of Association M W Lightbody and I R Farnsworth retire by rotation and being eligible oﬀer themselves for re-election.
S A Boyd was appointed Group Finance Director on 8 January 00 and is standing for election at the next AGM.
e beneﬁcial interests of the Directors on 3 July 00 and  July 009 are set out below:
Ordinary Shares
3 July 2010 4 July 2009
E J Beale 40,000 0,000
S A Boyd Nil Nil
D C Currie Nil Nil
J G Duﬀy 1,240,000 Nil
I R Farnsworth 83,866 83,866
M W Lightbody 13,700,000 3,700,000
D C Marshall Nil Nil
P J Monk 362,600 36,600
L M W Morgan (resigned 3 March 00) Nil Nil
Mr D C Marshall is deemed to be interested in 8,000,000 (009: 8,000,000) ordinary shares by virtue of his directorship and shareholding in London
Finance & Investment Group Plc.
ere have been no other changes in the share interests of the Directors between 3 July 00 and the date of signing these statements.
Details of Directors' share options are set out in Note 7 to the Financial Statements.
Details of the emoluments of the Directors are given in Note 7 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 7 to the accounts. 73
Substantial Interests
e following substantial interests (3 per cent or more) in the Company’s issued share capital have been notiﬁed to the Company as at 0 September 00:
Ordinary Shares
Number % of Issued
of shares share capital
Mr Martin Lightbody 3,700,000 6.0%
London Finance & Investment Group PLC 8,000,000 5.%
Aviva Investors ,98,879 3.8%
Mr Trevor David Wild ,630,000 3.%
Lord Saatchi ,599,59 3.0%
Research and Development
Research and development expenditure is written oﬀ in the year in which it is incurred.
Payment of Suppliers
e Group does not follow any code or statement on payment practice but the policy of the Group is to abide by such payment terms as are agreed with
suppliers within the terms of supply. At the period end date there were 59 days’ purchases outstanding (009: 53) calculated on the ratio of trade creditors
to total purchases.
Legal Indemnity
e Company maintains a Directors and Oﬃcers liability insurance policy.
Financial Instruments
e Group’s ﬁnancial instruments comprise two mortgages, four bank term loans, asset ﬁnance facilities, a conﬁdential invoicing facility, loan notes, cash
and liquid resources, and various items arising directly from its operations, such as trade creditors. e main purpose of these ﬁnancial instruments is to
ﬁnance the Group’s acquisitions and operations. It is, and has been throughout the year under review, the Group’s policy that no trading in ﬁnancial
instruments shall be undertaken.
e main risks arising from the Group’s ﬁnancial instruments are interest rate risk and liquidity risk. e Board reviews and agrees policies for managing
these risks, which have remained substantially unchanged for the year under review. e policies are summarised below:
Interest Rate Risk
e Group ﬁnances its operations by retained proﬁts and bank borrowings. A suite of borrowing facilities totalling £50.m is available. is includes an
overdraft facility of £.0m, undrawn invoice discounting facility of £.6m and unused asset ﬁnance of £.0m. e interest rate risk is managed through ﬁve
interest rate swap transactions, of which three are ﬁxed, two are amortising. e total balance of these swaps was £6.m at the period end date. ere is a
£5.0m ﬁxed swap that is forward starting in July 0. e counterparty to these transactions is HSBC Bank Plc.
Liquidity Risk
Short term ﬂexibility is available through existing bank facilities and the netting oﬀ of surplus funds. Full details of the Group ﬁnancial assets and liabilities
are given in Note 5.
Employee Involvement
e Group aims to improve the performance of the organisation through the development of its employees. eir involvement is encouraged by means of
team working, team brieﬁngs, consultative committees and working parties.
Disabled Employees
e Group is committed to equality of employment and its policies reﬂect a disregard of factors such as disability in the selection and development of
employees.
Political and Charitable Contributions
During the year charitable donations amounting to £,08 (009: £9,998) were made, primarily to local charities.
Going Concern
On the basis of current ﬁnancial projections and available funds and facilities, the Directors are satisﬁed 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. 7
Auditors
In accordance with Section 89 of the Companies Act 006, a resolution for the re-appointment of KPMG Audit Plc as auditors is to be proposed
at the forthcoming Annual General Meeting.
• So far as the Directors are aware, there is no relevant audit information of which the company’s auditors are unaware; and
• ey have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information
and to establish that the company’s auditors are aware of that information.
Special Business at the Annual General Meeting
In addition to the ordinary business to be transacted at the Annual General Meeting of the Company, referred to in Resolutions  to 6 of the Notice
of Meeting, the Directors propose certain special business as set out in Resolutions 7 to 9 for the purposes summarised below:
Authority to Allot Shares – Ordinary Resolution
Resolution 7 will renew the powers of the Board to allot, pursuant to section 55 of the Companies Act 006, the unissued ordinary shares of the
Company. e authority sought by this resolution will replace the existing powers of the Directors which expire on the date of the Annual General
Meeting and will provide the Directors with the ﬂexibility to issue further ordinary shares if they deem it appropriate to do so.
Pre-Emption Rights – Special Resolution
Resolution 8 will, if passed, dis-apply shareholders’ pre-emption rights and grant authority to the Directors, without the need for further speciﬁc shareholder
approval, to make allotments of equity securities for cash by way of bonus, rights or similar issues. e Directors consider it desirable for shareholders to
approve this disapplication until the next Annual General Meeting, in order to permit the allotment of shares for cash in limited circumstances to persons
other than shareholders. is limited disapplication will be in respect of 0,537,693 shares equal to 0% of the issued share capital of the Company.
e Directors have no present intention of issuing any part of the unissued share capital and no issue will be made which would eﬀectively alter the
control of the Company without the approval of the shareholders in general meeting.
Purchase of Own Shares – Special Resolution
Resolution 9, if passed, will renew the current authority for the Directors to make limited market purchases of the Company’s ordinary shares, subject to
the constraints set out in the resolution. e Directors believe that in certain circumstances it may be in the interests of shareholders as a whole to buy in
shares if the discount between the share price and net asset value is suﬃciently large. Any shares purchased may be held in Treasury and may be resold at
any time. 75
e Directors are responsible for preparing the Annual Report and the Group and parent company Financial Statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group and parent 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 IFRSs as adopted by the EU and
applicable law and have elected to prepare the parent company Financial Statements in accordance with UK Accounting Standards and applicable law
(UK Generally Accepted Accounting Practice).
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 parent company and of their proﬁt or loss for that period. In preparing each of the Group and parent company Financial
Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• for the Group Financial Statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• for the parent company Financial Statements, state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the Financial Statements; and
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company
will continue in business.
e Directors are responsible for keeping adequate accounting records that are suﬃcient to show and explain the parent company’s transactions and
disclose with reasonable accuracy at any time the ﬁnancial position of the parent company and enable them to ensure that its Financial Statements comply
with the Companies Act 006. ey 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.
e 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.
By Order of the Board
City Group Plc
Secretaries
30 City Road
London ECY AG
9 September 00
Statement of Directors’ Responsibilities
in Respect of the Directors’ Report and the Financial Statements 76
Although not formally required to do so, the Directors have sought to embrace the principles contained in the Combined Code (006), applicable to fully
listed companies, in formulating and applying the Group’s corporate governance policies. ese policies are monitored to ensure that they are appropriate
to the Company’s circumstances and comply as far as possible with the provisions of the Code given the size of the Company.
e Board operates as an eﬀective board in directing the activities of the Group. e Board meets at least six times during the year and all the Directors
make every eﬀort to attend these meetings. e Board maintains a schedule of matters which are reserved to it for decision, including acquisition policy,
approval of major capital expenditure and approval of annual budgets.
e Board consists of the Non-Executive Chairman (Martin Lightbody), two full time Executive Directors ( John Duﬀy and Stephen Boyd), a part time
Executive Director (Crawford Currie) and four Non-Executive Directors (Paul Monk, David Marshall, Ian Farnsworth and Edward Beale of whom the
last three are independent).
e role of the Chairman and the Chief Executive Oﬃcer are separate. e Chairman is responsible for running the Board and he meets regularly and
separately with the Chief Executive and the other Non-Executive Directors to discuss matters for the Board.
Edward Beale is the Chief Executive of City Group and David Marshall is a Director of City Group. City Group is a subsidiary of London Finance
and Investment Group Plc, a substantial shareholder in the Company. City Group provides a full set of company secretarial services to the Board on
an outsourced basis and its fees are set out in the related party note, Note 3. e Company is not yet large enough to justify the employment of a full
time Company Secretary. e Board considers all Non-Executive Directors to be independent because there are no circumstances that would impair
their independence.
Board Committees
e Board has separate Remuneration and Audit Committees which meet on a timely basis.
e Audit Committee is chaired by Ian Farnsworth with Edward Beale as the other member. Edward Beale is a chartered accountant and a member
of the Accounting Standards Board of the Financial Reporting Council.
Further details are given in the Audit Committee Report on page 77.
e Remuneration Committee is chaired by Ian Farnsworth with Edward Beale as the other member.
Further details are given in the Remuneration Committee Report on pages 78 to 79.
Internal Controls
e Board is responsible for maintaining a sound system of internal controls to safeguard shareholders’ investment and the Group’s assets, as well as
reviewing its eﬀectiveness. e system of internal controls is designed to manage rather than eliminate the risks of failure to achieve the Group’s objectives
and can only provide reasonable, rather than absolute, assurance against material loss and mis-statement.
Dialogue with Shareholders
e Board maintains a general policy of keeping all interested parties informed by regular announcements and update statements.
In implementing this policy the Board keeps in mind the distribution of shareholders between direct, nominee and institutional shareholders.
Communications are then distributed between these groups accordingly.
Speciﬁc methods of communication are:
• Annual general and extraordinary meetings with shareholders
• Broker brieﬁngs
• Broker and analysts visits to operating sites
• Letters to shareholders when appropriate
• Corporate web-site (www.ﬁnsburyfoods.co.uk)
• One to one meetings with investors
Care is taken to ensure that information is made available to all shareholders at the same time.
Report of Corporate Governance 77
Responsibilities
e Audit Committee has delegated responsibility from the Board to monitor and review areas such as risk management, internal controls and ﬁnancial
reporting. e Audit Committee is also responsible for maintaining an objective and professional relationship with the Group’s auditors, monitoring their
eﬀectiveness and agreeing their fees. It receives reports on these issues from the relevant Executive Directors and external advisers and reports back to the
Board on the action points within those reports and any recommendations arising. As part of these responsibilities it considers the requirement for an
internal audit function.
e terms of reference of the Audit Committee can be found on the Company’s web-site www.ﬁnsburyfoods.co.uk.
Membership
e Audit Committee is chaired by me, Ian Farnsworth. Edward Beale, a Non-Executive Director, is the other member. Both of us are considered to be
independent Directors. Edward Beale is a member of the Accounting Standards Board of the Financial Reporting Council and is able to provide technical
input to Committee discussions.
Procedures
e Audit Committee has met four times in the year. e Group Finance Director is invited to attend Committee meetings and the external auditors
are invited to attend any meetings involving Financial Statements. Time is set aside during at least one meeting each year for the Committee to hold
discussions in private with the external auditors in the absence of management and Executive Directors. e Company Secretary attends Committee
meetings and prepares and circulates minutes of the meetings.
Risks and Controls
Group management prepare an annual report for the Audit Committee, identifying the risks to which the Group is exposed, the procedures in place to
mitigate the risks and the potential impact on the Group. e Audit Committee reviews this report and any concerns that it has over the adequacy of the
controls in place, or the level of risk accepted by the Group, are reported to the Board. e principal operating risks to which the Group is exposed are set
out in the Business Review on page 0.
e Committee reviews the need for an internal audit function on an annual basis. At present, due to the limited size of the Group and lack of complexity
in the business model, the Committee does not believe that a dedicated internal audit function is warranted.
External Reporting
e Board delegates primary responsibility for the preparation of complete, balanced and accurate Financial Statements and disclosures, in accordance
with Financial Reporting Standards and regulations, to the Group Finance Director. e responsibility of the Audit Committee is to consider signiﬁcant
accounting policies, any changes in policies and signiﬁcant estimates and judgements, taking into account the external auditors’ view, and to report back
to the Board any concerns that it might have. e Audit Committee reviews and comments on the clarity and completeness of disclosures within the
Financial Statements. Ultimate responsibility for reviewing and approving the annual report and accounts and half yearly reports remains with the Board.
e Audit Committee also reviews and comments on related information presented with the Financial Statements, in particular the Business Review
and the Report on Corporate Governance.
Key Agenda Items
During the year, the Committee discussed issues concerning the introduction of Segmental Reporting and taxation policy. It was involved with the
appointment of Stephen Boyd as Finance Director and consequent changes in accounting resources within the Group. It was also involved in a review
of assumptions underlying the calculation of pension liabilities.
Certain tax advice has been received from the auditors and the use of auditors was approved in advance. is advice was of limited nature and we do
not believe it compromises the auditors’ independence.
If any readers of these accounts have suggestions for improvement in the content or the presentation of the Financial Statements, please can they let
me know by writing to info@ﬁnsburyfoods.co.uk.
Ian Farnsworth
Chairman of the Audit Committee
Audit Committee Report 78
Responsibilities
e Remuneration Committee is constituted to provide advice and recommendations to the Board on the policy for remuneration of the Executive
Directors of the Company and other Senior Managers, to agree within that policy the salary and beneﬁts packages for Executive Directors and Managing
Directors of subsidiaries, to agree business unit cash bonus schemes and equity related remuneration and incentive schemes. e Remuneration Committee
is also responsible for consideration of succession planning and when necessary for agreeing any termination beneﬁts.
e full terms of reference of the Remuneration Committee are reviewed periodically by the Board and updated as necessary. A copy can be found on the
Company’s web-site at www.ﬁnsburyfoods.co.uk.
Membership
e Remuneration Committee is chaired by me, Ian Farnsworth, the other member being Edward Beale, a Non-Executive Director. Both of us are
considered to be independent Directors.
Procedures
e Remuneration Committee met twice in the year. e Group Chief Executive is invited to attend Committee meetings.
Papers for Committee meetings are collated by the Company Secretary and circulated to Committee members in advance of each meeting.
e Company Secretary attends Committee meetings and prepares and circulates minutes of those meetings.
Executive Directors
e remuneration packages for full time Executive Directors are structured to attract, motivate and retain Directors with the experience, capabilities
and ambition required to achieve the Group’s strategic aims.
e main elements of their remuneration packages are:
• basic annual salary
• annual cash bonus payments
• pension contributions
• share related incentives
e salaries of Executive Directors are set by the Committee and reviewed annually, taking into account the performance of the Group, the individual
and salary increases given to other Group employees.
Annual bonuses are paid to Executive Directors dependent upon Group proﬁtability targets being achieved and individual objectives, as agreed with
the Committee, being met. Executive Directors have the option of taking any bonus payments in cash or as increased Company contributions to a pension
scheme. Bonus payments for the year to 3 July 00 are disclosed in Note 7 to the Accounts.
Pension contributions for full time Executive Directors are set at up to 0% of basic annual salary excluding additional amounts arising from bonuses
or salary sacriﬁce.
No Director has a service contract incorporating a notice period of more than  months.
Chairman and other Non-Executive Directors
Corporate Governance best practice is that Non-Executive Directors should not be rewarded with share options and so the Group’s share related
incentive plans are restricted to Executive Directors and Senior Managers of the Group. Non-Executive Directors receive a basic fee plus additional
amounts relating to time spent on Committee meetings and in providing advice and support to Executive Directors and Senior Group Management.
e remuneration of the Chairman is determined by the Board and the remuneration of Non-Executive Directors is determined by the Chairman
and the Group Chief Executive.
Remuneration Committee Report 79
Annual Cash Bonus Schemes
e Remuneration Committee reviews and approves proposed annual cash bonus schemes within the Group. e main characteristics of these schemes
are that payments to individuals depend on the proﬁtability of the business unit relative to its budget and the achievement of relevant personal or departmental
performance conditions. Maximum payments under these schemes are set at levels that are meaningful, but not excessive, relative to individuals’ salaries.
Long Term Incentive Scheme
e Company has introduced a new Long Term Incentive Plan for Executive Directors. e principle of the plan is to reward Executives if stretching
targets for EBITDA increases are achieved. e plan is wholly based on the actual EBITDA for the three years from the date of grant. Options totalling
,60,000 have been awarded to date to J G Duﬀy. Details of the options are disclosed in Note 7 to the Accounts. As part of his remuneration package
J G Duﬀy purchased ,038,96 shares at the market price on the day of purchase and 0,039 shares were granted free of charge.
Group SAYE Scheme
e Group SAYE ShareSave Scheme was introduced in January 008, and a third tranche of options was granted following an invitation to qualifying
employees in November 009. Demand for the options was higher than could be met and grants were scaled back to 50% of the application. 55,5
options were granted under this Scheme to 66 employees with an exercise price of 0.0p per share, giving rise to a charge in the year of £0,000 and
an annual charge of £9,000 to November 0. Annual awards under this Scheme are limited to approximately % of the shares in issue.
Ian Farnsworth
Chairman of the Remuneration Committee 80
We have audited the Financial Statements of Finsbury Food Group Plc for the 5 weeks ended 3 July 00 set out on pages  to 7. e ﬁnancial
reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the EU. e ﬁnancial reporting framework that has been applied in the preparation of the parent company Financial
Statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).
is report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 6 of the Companies Act 006. Our audit work
has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditors
As explained more fully in the Directors' Responsibilities Statement set out on page 75, the Directors are responsible for the preparation of the Financial
Statements and for being satisﬁed that they give a true and fair view. Our responsibility is to audit the Financial Statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). ose standards require us to comply with the Auditing Practices Board's (APB's) Ethical
Standards for Auditors.
Scope of the Audit of the Financial Statements
A description of the scope of an audit of Financial Statements is provided on the APB’s web-site at www.frc.org.uk/apb/scope/UKNP .
Opinion on Financial Statements
In our opinion:
• the Financial Statements give a true and fair view of the state of the Group’s and of the parent company’s aﬀairs as at 3 July 00 and of the Group’s
proﬁt for the ﬁnancial year then ended;
• the Group Financial Statements have been properly prepared in accordance with IFRSs as adopted by the EU;
• the parent company Financial Statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice;
• the Financial Statements have been prepared in accordance with the requirements of the Companies Act 006.
Opinion on Other Matter Prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the ﬁnancial year for which the ﬁnancial statements are prepared is consistent with
the Financial Statements.
Matters on which we are Required to Report by Exception
We have nothing to report in respect of the following matters where the Companies Act 006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
• the parent company Financial Statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors' remuneration speciﬁed by law are not made; or
• we have not received all the information and explanations we require for our audit.
Virginia Stevens
Senior Statutory Auditor
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
3 Assembly Square
Britannia Quay
Cardiﬀ Bay
CF0 AX
9 September 00
Independent Auditors’ Report
to the Members of Finsbury Food Group Plc 8
Notice is hereby given that the 86th Annual General Meeting of Finsbury Food Group Plc will be held at the oﬃces of Panmure Gordon (Broking)
Limited, Moorgate Hall, 55 Moorgate, London ECM 6XB commencing at 9:30 a.m. on Tuesday 30 November 00 for the following purposes:-
Ordinary Business
. To receive the Directors’ Report and Financial Statements for the year ended 3 July 00.
. To elect as a Director Mr Stephen Boyd who retires in accordance with of the Company’s Articles of Association having been appointed since
the 009 Annual General Meeting of the Company.
3. To re-elect as a Director Mr. Martin Lightbody who retires in accordance with the Company’s Articles of Association and being eligible oﬀers
himself for re-election.
. To re-elect as a Director Mr Ian Farnsworth who retires in accordance with the Company’s Articles of Association and being eligible oﬀers
himself for re-election.
5. To re-appoint KPMG Audit Plc as auditors of the Company from the conclusion of this Annual General Meeting until the conclusion
of the next Annual General Meeting at which the accounts are laid before the Company.
6. To permit the Directors to determine the fees payable to KPMG Audit Plc.
Special Business
7. To consider the following Ordinary Resolution:
THAT the Board be and is hereby generally and unconditionally authorised, pursuant to Section 55 of the Companies Act 006 to exercise
all powers of the Company to allot, make oﬀers or agreements to allot or grant rights to subscribe for or convert other securities into, relevant securities
of the Act, provided that:
(i) such authority shall be limited to an aggregate nominal amount of £73,5;
(ii) this authority shall expire at the sooner of the close of the following Annual General Meeting or the expiry of 5 months from the date
of the passing of this resolution; and
(iii) the Company may before such expiry date make an oﬀer or agreement which would or might require relevant securities to be allotted after
such expiry.
8. To consider the following Special Resolution:
THAT the Directors be and are hereby generally empowered (in substitution for any speciﬁc authority conferred upon the Directors pursuant to
Section 570 of the Act) to allot equity securities pursuant to Section 570 of the Act wholly for cash pursuant to the authority referred to in resolution
7 as if Section 563 of the Act did not apply to any such allotment provided that such power shall be limited to the allotment of equity securities:
(i) in connection with a bonus, rights or similar issue;
(ii) the allotment of Ordinary Shares in the capital of the Company pursuant to the Company's existing Long-Term Incentive Plan 006,
Enterprise Management Incentive Contracts and the Finsbury Food Group Save As You Earn Scheme; and
(iii) to the allotment (otherwise than pursuant to sub-paragraphs (i) and (ii) above) of equity securities up to an aggregate nominal amount
of £05,377 representing 0 per cent of the issued share capital; and
(iv) such authority shall expire on the earlier of the conclusion of the next Annual General Meeting of the Company or the date falling
5 months after the date of the passing of this resolution.
9. To consider the following Special Resolution:
at subject to the Company’s Articles of Association and Section 70 of the Companies Act 006, the Company be and is hereby generally
and unconditionally authorised to make one or more market purchases of its own Ordinary shares on such terms and in such manner as the
Directors of the Company shall determine, provided that:
(i) the maximum aggregate number of Ordinary shares hereby authorised to be acquired is 0,537,693 0% of the present issued share capital
of the Company;
(ii) the maximum price which may be paid for each Ordinary Share is no more than 5% above the average of the price of the Ordinary Shares
of the Company (derived from the London Stock Exchange Daily Oﬃcial List) for the ﬁve business days prior to the date of purchase
and the minimum price per Ordinary Share is the nominal value thereof in each case exclusive of any expenses payable by the Company;
(iii) the authority hereby given shall expire at the conclusion of the next Annual General Meeting of the Company save that the Company may
make a purchase of Ordinary shares after expiry of such authority in execution of a contract of purchase that was made under and before the
expiry of such authority; and
(iv) any shares purchased may be held in treasury and may be resold at any time.
By Order of the Board Maes-y-coed Road
CITY GROUP P .L.C. Cardiﬀ CF XR
Secretaries 9 September 00
Notice of Meeting 8
Notes:
A member entitled to attend and vote at the meeting may appoint one or more proxies to attend and, on a poll, to vote instead of such member.
A proxy need not be a member of the Company.
A form of proxy is enclosed. To be valid, forms of proxy must be lodged with the Company’s registrars, Capita Registrars not less than 8 hours before
the time ﬁxed for the meeting. Completion of a form of proxy does not preclude a member from subsequently attending and voting in person.
e Register of Directors’ shareholdings and copies of all service and management contracts and the Share Save Scheme will be available for inspection
by members at the registered oﬃce of the Company during usual business hours on any weekday (Saturdays excepted) from the date of this notice until
the date of the Annual General Meeting and at the place of the meeting from 9.5 a.m. until the conclusion thereof.
Pursuant to Regulation  of the Uncertiﬁcated Securities Regulations 00, the Company speciﬁes that only those members registered in the Register
of Members at 9.30am on Sunday 8 November 00 or, if the Meeting is adjourned, no later than 8 hours before the time of the adjourned Meeting,
shall be entitled to attend and/or vote at the Meeting.
Members are requested to advise the registrars of any change of address. Secretaries
City Group Plc
30 City Road
London
ECY AG
Tel: 00 78 8950
Nominated Advisor & Broker
Panmure Gordon (Broking) Ltd
Moorgate Hall
55 Moorgate
London
ECM 6XB
Registered Oﬃce
Maes-y-coed Road
Cardiﬀ
CF XR
Registrars
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersﬁeld
HD8 0LA
Auditors
KPMG Audit Plc
Chartered Accountants
3 Assembly Square
Britannia Quay
Cardiﬀ Bay
CF0 AX
Registered Number
0368
Advisers
83 Designed and Produced by Rare Breed
Board Photography by David Hares
Products with a Mixed Sources label support the development of responsible
forest management worldwide. e 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. 2 ﬁnsburyfoods.co.uk