Our people are part of the
natural ingredients we use
Annual Report and Accounts 2011 Highlights 1
Chairman’s Statement 2
Chief Executive’s Report 4
e Directors 6
Business Review 8
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 60
Company Reconciliation of Movements in Shareholders’ Funds 61
Notes to the Company Financial Statements 62
Directors’ Report 67
Statement of Directors’ Responsibilities in Respect of the Directors’ Report and the Financial Statements 70
Report of Corporate Governance 71
Audit Committee Report 72
Remuneration Committee Report 73
Independent Auditor’s Report to the Members of Finsbury Food Group Plc 75
Notice of Meeting 76
Advisers 78 1
Highlights
*ese ﬁgures have been adjusted to eliminate the impact of signiﬁcant non-recurring items (see Note 4)
and certain charges required by IFRS for the 52 weeks ended 2 July 2011 and ended 3 July 2010:
2011 2010
£000 £000
Signiﬁcant non-recurring items (refer to Note 4 for detail) (42) 154
Share options charge (73) (131)
Diﬀerence between deﬁned beneﬁt pension scheme charges and cash cost 233 155
Movement in the fair value of interest rate swaps 564 (1,097)
Movement in the fair value of foreign exchange contracts (316) 199
Movement in the fair value of deferred consideration (252) 199
Income/(Expenditure)
• Group revenue up 12.6% to £189.6 million (2010: £168.3m)
• Adjusted* proﬁt before tax up 8.3% to £5.8 million
(2010: £5.4m)
• Cake division returns to growth with sales increasing
by 12.1% to £139.6 million (2010: £124.6m)
• Bread & Free From sales growth of 14.2% to £50.0 million
(2010: £43.7m) from investment behind Vogels and ongoing
growth in the fresh Free From product range with Genius
and own label
• Adjusted* diluted earnings per share 7.1p (2010: 7.0p)
• Total net bank debt reduced by 10.4% to £32.7 million
at the year end (2010: £36.5m)
• Banking facilities with HSBC extended to 2017
• Discounted deferred consideration reduced by 28.3%
to £4.3 million at year end (2010: £6.0m)
• Strong organic growth across all divisions, despite the
exceptional impact of commodity and cost inflation
Operational Highlights:
• Licensed brand growth across all divisions
• Working with Genius Foods Limited to expand
the Free From product portfolio
• Re-launch of Vogel’s speciality bread brand
• Adding Disney small cakes to our licensed portfolio Chairman’s Statement
Toughness combined with appetite for
the challenge, commitment to hard work
and uncompromising dedication to
the task.
Tough times demand
a resilient mindset. All these qualities, and a good deal more, have been
widely in evidence at Finsbury Food Group over the
past year. Together, the combination has generated
a trading performance that provides quiet cause for
satisfaction and real grounds for encouragement
going forward.
I am delighted to report a 12.6% rise in Group revenues
over the current year and an 8% increase in underlying
profit before tax. In a value-focused recessionary
environment, growth has returned to our cake business.
Double-digit growth in our speciality bread & free
from businesses conﬁrm that even in a recessionary
period, consumers are prepared to pay for quality.
Investment in people has provided the lynchpin. Over
the last few years, Finsbury Food Group has invested
heavily in category management, new product development
personnel and marketing skills. That investment has
helped to create a far-reaching insight into our customers
and an increasingly compelling series of offers in the
marketplace.
It is our stated intention to help consumers through the
recession. Doing so demands continual focus on options
and choice, whether in the form of optional treats,
celebration birthday cakes or lower cost items for lunch
boxes. Innovation and adaptability are paramount.
Input price inﬂation is clearly a matter of concern,
particularly in such a low margin industry. Commodity
prices for sugar, ﬂour and butter have reached record
levels and have inevitably impacted on our operating
margins. Rising sales together with savings from
efficiency projects have largely offset the impact
of commodity price inﬂation but recouping costs
has become an imperative.
After a period of far-reaching change in the boardroom,
a stable year has enabled individuals to get on with the
jobs they were brought in to do. I ﬁrmly believe the results
we are seeing reﬂect not only that degree of stability but
also the completion of the integration programme that
has occupied so much time and resource over the last
three years.
Progress extends beyond statistical growth. I am also
pleased to report that we are continuing to pay down
debt, cash ﬂow remains healthy and EBITDA ﬁgures
bear out our operational durability.
e Group recently renegotiated our banking facilities
with HSBC. is enables us to adjust for growth and
provides cash to cover deferred consideration due
throughout the year. HSBC have eﬀectively broadened
their debt proﬁle with Finsbury Food Group, underlining
their continued confidence in the business. HSBC’s
support is greatly appreciated.
Further obstacles must be overcome. Consumer conﬁdence
remains fragile, disposable incomes are under threat,
public sector cuts have yet to be fully implemented –
all factors potentially suppressing demand still further.
e reality is that the next 12 months are likely to prove
testing but our track record in resisting recessionary
inﬂuences has been exemplary thus far.
I would like to take this opportunity to express my thanks
to my fellow Directors as well as members of staﬀ across
the Group. Our trading results bear witness to the
collective pride of performance and sense of ownership
that drives our business. Scale beneﬁts from the Group
we’ve constructed are founded upon a philosophy of
continuous improvement. Getting better in what we
do every single day is the focus of conversation.
Another challenging year lies ahead. However, Finsbury
Food Group has already demonstrated a level of resilience
greater than many would have anticipated. Our course
is set. We shall continue to strive to improve proﬁtability,
pay down debt, reinstate the dividend and nurture the
growth of our businesses.
When the time is right and economic circumstances
permit, your board will seek out the acquisitions aimed
at furthering the pace of growth. Until such times, we
will continue to pursue the growth and eﬃciency model
of recent years, building upon the foundations already
secured.
Martin Lightbody
Non-Executive Chairman
3
“Another challenging year lies ahead. However, Finsbury Food Group
has already demonstrated a level of resilience greater than many
would have anticipated.” Chief Executive’s Report
Even when the road ahead is still clearly
a long one, signiﬁers of success provide
not only fresh impetus but redouble the
efforts of all those involved. Finsbury
Foods is emerging from a complex and
exhaustive programme of reorganisation.
Light at the end of the
tunnel is always welcome. 5
“We are pleased to have returned
to organic growth, an important
milestone for the Group.”
Despite the macro economic factors continuing to
buﬀet the business and our customers, our structured
approach has clearly started to bear fruit.
We are pleased to have returned to organic growth,
an important milestone for the Group. Following an
encouraging performance in the ﬁrst half of the year,
I am delighted to report that the underlying trends
strengthened measurably during the second period.
Trading Performance
Results for the full 52-week period ending 2 July 2011
are detailed in full in the Business Review Section but
a number of highlights merit speciﬁc attention:
• Group revenue up 12.6% to £189.6 million
• Underlying proﬁt before tax up 8.3%
to £5.8 million
• Sales in the Cake division up 12.1% to
£139.6 million
• Sales in the Bread & Free From division
up 14.2% to £50.0 million
• Net debt down 10.4% to £32.7 million
• Strong organic growth across all divisions, despite the
exceptional impact of commodity and cost inﬂation
• Licensed brand growth across all divisions
• Working with Genius Foods Limited to expand
the Free From product portfolio
• Re-launch of Vogel’s speciality bread brand
• Adding Disney small cakes to our licensed portfolio
• Banking facilities with HSBC extended to 2017
Reﬂections
e source of cake growth is twofold. Approximately
50% was generated by our UK cake business with the
balance originating from Lightbody Europe (LBE),
a 50% owned subsidiary export operation. Domestic
growth was driven by a combination of own-branded
retailer oﬀerings and increases in promotional deals
and support. Opening fresh sales outlets and distribution
opportunities in France stimulated LBE’s expansion.
Other indicators are similarly encouraging. e current
year delivered strong growth in the fresh gluten free
market for our Genius brand and an equally favourable
outcome for our Vogels and Cranks brands in the
speciality bread sector.
e establishment of an agreement in January 2011
with Genius Foods Limited (“Genius”) is aimed
at expanding our fresh bakery free from portfolio
further still.
The difficulties we face should not be underestimated.
e global commodities bubble has exerted unprecedented
pressure on margins. Prices for butter, sugar and wheat
have soared over the past 18 months. I foresee no respite
in commodity or general cost inﬂation in the near term.
Pressure, if anything, is likely to increase the impact of
such factors, redoubling our efforts to alleviate price
rises by focussing on internal eﬃciencies and productivity
initiatives.
Keeping things affordable for consumers is essential.
Where circumstances permit, we will modify our product
range to meet the demands of a fragile marketplace,
working with our major customers to do so. Our interests
are mutual. ey want good suppliers and we want to
be a good supplier.
In the wake of a fresh egg dioxin scare, retailers brieﬂy
removed a small selection of Memory Lane branded
cakes from their shelves in January. At all times, the
products remained safe for consumption, no public
health risk was involved and the matter has now been
successfully resolved.
Looking ahead, the business environment is set to
remain diﬃcult for suppliers like ourselves contending
with a global inﬂationary commodity environment on
the one hand, and a concentrated customer base with
the ability to control the market through volume on
the other.
Although consumer conﬁdence remains low and the
inﬂationary environment is diﬃcult to predict, I believe
that fresh growth opportunities will continue to emerge.
Our approach remains pragmatic. e cost-out phase
of internal activity is over; emphasis is on maximising
the beneﬁts of recent acquisitions to drive longer-term
value and grow our existing businesses.
I am delighted that we have succeeded in steering the
Group through another demanding year. e reality is
that testing times still lie in wait. However, our distinctive
range of products, commitment to value and robust
performance in a testing climate augur well for the
challenge ahead.
John Duﬀy
Chief Executive Oﬃcer e Directors
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. Steve has spent 16 years in the food
manufacturing sector and previously was Group Finance
Director at Golden Wonder, subsequent to that was
Group Finance Director and Chief Operating Oﬃcer
at WT Foods Group Plc. Steve worked with John
Duﬀy at both Golden Wonder and WT Foods.
David Marshall
Non-Executive Deputy Chairman
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. 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.
From left to right
• John Duﬀy
• Martin Lightbody
• David Marshall
• Stephen Boyd
6 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
Non-Executive 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 former Chairman and member of the QCA’s
Corporate Governance Committee. He sits on both
the Audit Committee and Remuneration Committee.
From left to right
• Ian Farnsworth
• Crawford Currie
• Paul Monk
• Edward Beale
7 Business Review
Building a brighter future
for our shareholders.
8
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.   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 £1.15
billion. e past 12 months has seen value growth of
1.1% (source: IRI/Kantar) due to price increases with
a decline in volume of -0.2%. We continue to be the
second largest supplier of cake to the UK’s multiple
grocers, with a 15.7% share of the total pre-packed cake
market up from 14.3% 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 £208
million (source: Kantar), with growth of c17% in the
last year. The area of this market in which we operate
i.e. bread, cake and other bakery products, accounts for
c£39 million of these sales, with growth of 21% year on
year. e bakery sector growth signiﬁcantly outstrips
the total gluten free market growth due to the continued
growth 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 enabling
us to offset 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 recent acquisitions of Goswells and from the
growth in the fresh free from sector through the Genius
brand and our own label fresh free from products.
Lightbody of Hamilton Ltd (‘Lightbody’), based in
Hamilton, employs around 1,050 people and is the UK’s
largest supplier of celebration cake with Disney and
orntons product within its portfolio. 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 900 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 Thorntons.
e last ﬁnancial year has been one of double digit
growth with the promotional support driving the
growth primarily in premium own label cake. Gross
margins were put under pressure by commodity price
inﬂation, this will be the main issue in the next year.
Management aims to recover cost inﬂation through
both price increases and eﬃciency improvements.
Sales revenues within the integrated cake businesses
were up 12.1% compared with the prior year.is growth
comes from a combination of own-branded retailer
oﬀerings in domestic markets and fresh sales outlets
and distribution opportunities in France through our
50% owned subsidiary Lightbody Europe.
United Central Bakeries Ltd (‘UCB’), based in Bathgate
near Edinburgh, employs around 200 people and
manufactures a range of gluten free bakery products and
morning goods. e year saw signiﬁcant growth out of
the Genius free from fresh bread brand including new
lines to enhance the range.
Livwell Ltd (‘Livwell’), based in Hull, employs around
110 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, focusing on fresh own label products
and has started to contribute to the Genius range. is
business operates under a combined commercial team
with UCB.
Nicholas & Harris Ltd (‘N&H’), based in Salisbury,
employs around 250 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. ese
were relaunched in October 2010 and sales on each
have grown in excess of 30%.
Growth in sales revenues within the Bread & Free
From business has continued to accelerate with a
combined increase for the division of 14.2%.
11
Business Review
12.1%
Sales revenues within the integrated
cake businesses were up 12.1%
compared with the prior year. Brands and Licences
e Group remains primarily a retailer branded business,
with sales of retailer own label products accounting for
around 56% of our total revenue compared to 65%
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.
WeightWatchers
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
72% of the low fat cake market in terms of value up
from 69%. The brand continues to perform slightly
better than the total Health category which declined
by -6.9% in value terms compared to -2.8% on the
WeightWatchers brand which is due to the Masterbrand
launch of ‘Pro-Points’ which has attracted new dieters
to 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 fantastic growth of 17.4% value sales year on
year (source: IRI/Kantar). This represents significant
out-performance of the rest of the premium cake market.
We have recently refreshed our celebration products and
will look to launch some new products in the new year
in order to 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, Toﬀee Crisp and
Munchies. e range shows steady year on year growth
of 2.2% (value sales IRI/Kantar) but the snacking
products in some customers are heavily promoted.
Disney
We now have the license to produce Disney Small
Cakes which gives us huge potential when adding
to our already successful Disney Celebration range.
Brands within the portfolio such as Toy Story, Disney
Princess, Cars, Winnie e Pooh and Pirates of the
Caribbean have been a success during the year. Sales
value is up 16% year on year for the total brand.
Other Celebration Cake Licences
ese four major brands are complemented by a range
of 25 other licences which are particularly focused on
driving celebration cake sales. Properties such as Ben 10,
Peppa Pig, Hello Kitty and Spiderman have their own
target market and oﬀer excellent additions to the range.
Little Venice Cake Company which joined the range
last year has performed well and we are now working
on how we can extend the range in this niche adult
premium celebration market.
Bread & Free From Licences
We are pleased to have branded oﬀerings in our Bread
& Free From businesses. The Village Bakery is an
organic brand which N&H have been working with for
a number of years, generating sales of around £800,000
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. The 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.
e Genius brand has grown the retail sales to in excess
of £15 million annually across the Retail and Foodservice
channels. Genius remains the biggest brand in the free
from Bakery market with a value market share of around
22% (Source: IRI) and is listed in all major multiples,
co-ops and many independent and convenience stores.
At the beginning of 2011 we introduced new 600g
sliced seeded variant and fruited teacakes into the retail
trade. We will continue to expand the range of fresh
free from products in the next year.
Business Review
12
56%
e Group remains primarily a retailer
branded business, with sales of retailer
own label products accounting for
around 56% of our total revenue
compared to 65% a year ago. 13 Business Review
“We operate in large markets
with combined sales in excess of
£4 billion per annum. W e continue
to lead our core areas within those
markets, where there remains
signiﬁcant opportunity for growth
by converting consumers to our
product range.” 15
Principal Operating Risks
The 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.
e Group has invested heavily in category management,
new product development and marketing skills. This
investment has helped create an insight into customers
and consumer demands.
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. The Group’s Technical Director
helps provide focus to ensure there is continuous
improvement across all sites to meet the increasingly
high expectations of our customers. The 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.
Aﬀordability for consumers is essential and the Group
will continue to focus on internal efficiencies and
productivity initiatives to lessen the rising commodity
price impact on consumers. The 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 value-focused 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. The Group will continue to focus on quality
and value for money in periods of reduced spending.
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 are
regular and open communications with the bank to
ensure they are fully aware of the Group’s position.
Business Review 16
52 week period ended 2 July 2011
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 189,575 - - --- 189,575
Cost of sales (138,478) - - --- (138,478)
Gross proﬁt 51,097 - - --- 51,097
Other costs
excluding depreciation
& amortisation (39,568) - (73) 11 (316) - (39,946)
Other income - - - ----
EBITDA 11,529 - (73) 11 (316) - 11,151
Depreciation
& amortisation (3,013) - - --- (3,013)
Results from
operating activities 8,516 - (73) 11 (316) - 8,138
Financial income - -- 1,356 564 - 1,920
Financial expenses (2,677) (42) - (1,134) - (252) (4,105)
Proﬁt before tax 5,839 (42) (73) 233 248 (252) 5,953
Taxation (1,465) 200 19 (133) (111) 73 (1,417)
Proﬁt after tax 4,374 158 (54) 100 137 (179) 4,536
e non-recurring signiﬁcant items in 2011 referred to above relate to £42,000 interest on a prior year tax inquiry
liability, £200,000 under taxation relates to the release of overprovision on the prior year tax inquiry.
e taxation on IFRS charges include an element of rate change on opening balances from 28% to 26%.
Trading Results
Group revenue for the 52 week period to 2 July 2011
was £189.6 million (52 week period to 3 July 2010:
£168.3 million), an increase of £21.3 million (12.6%)
year on year.
Gross margin for the ﬁnancial year was 27.0%
representing a decrease of 1.0% year on year. Commodity
prices for sugar, ﬂour and butter have reached record
levels and have inevitably impacted on operating margins.
Administrative expenses have increased year on year.
ere has been an ongoing investment in staﬀ particularly
across the cake and bread & free from sector. Wage
inﬂation, range and marketing support and new product
development has increased year on year. e Group has
invested heavily in category management, new product
development personnel and marketing skills.
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
2011 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
e non-recurring signiﬁcant items in 2010 referred to above, totalling £154,000 proﬁt before tax relate to:
• reorganisation costs of £399,000 (including redundancies) associated with the restructuring of the Group
• curtailment of deﬁned beneﬁt pension scheme liabilities shown in other income of £553,000
• within taxation on signiﬁcant non-recurring items is a potential prior year tax inquiry liability of £348,000
17
2010 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 7.1p for the
52 week period (2010: 7.0p).
2011 2010
Basic EPS 7.6p 5.7p
Adjusted* basic EPS 7.3p 7.1p
Diluted** basic EPS 7.4p 5.7p
Adjusted* diluted** EPS 7.1p 7.0p
*Adjusted EPS measures are calculated by eliminating the impact of signiﬁcant non-recurring items and IFRS
adjustments. Further details can be found in Note 9.
**Diluted EPS incorporates the dilution eﬀect of share options.
Financial Key Performance Indicators
KPI 2011 2010 2009 2008 2007
Revenue £189.6m £168.3m £178.9m £165.1m £107.6m
Adjusted EBITDA £11.5m £11.0m £10.4m £13.3m £7.9m
Adjusted diluted EPS 7.1p 7.0p 6.9p 10.5p 9.5p
Net bank debt £32.7m £36.5m £41.0m £43.7m £29.0m
Net debt including deferred consideration £37.1m £42.6m £48.1m £49.6m £38.4m
EBITDA is calculated as earnings before interest, taxation, depreciation and amortisation
Net bank 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.
During the year deferred consideration of £500,000 was
paid in respect of the acquisition of Goswell Enterprises
Ltd acquired in June 2009. At the year end there remained
a further £1.2 million deferred consideration in respect
of this acquisition, due to be paid over the next two years.
During the year deferred consideration of £840,000
was paid in respect of the acquisition of Y orkshire Farm
Bakeries and A&P Foods, acquired in April 2008.
At the year end there remained a further £1.6 million
deferred consideration in respect of this acquisition, due
to be paid over the next year. is deferred consideration
attracts interest payments at 6%.
During the year deferred consideration of £620,000 was
paid in respect of the acquisition of Anthony Alan Foods
Ltd acquired in October 2007. At the year end there
remained a further £1.6 million deferred consideration
in respect of the Anthony Alan Foods Ltd acquisition,
due to be paid over the next year. This deferred
consideration attracts interest payments at 6%.
Cash Flow
e Group realised a net cash inﬂow from operating
activities of £8.1 million during the financial year
(2010: £8.8 million) representing a decrease of 8% on
the previous ﬁnancial year. ere was an increase in our
working capital requirement of £1.1 million compared
to the last ﬁnancial year reﬂecting the organic growth
over the past 12 months. Corporation tax payments
made in the ﬁnancial year totalled £1.0 million (2010:
£0.6 million), these payments took account of the
research and development tax relief due to the Group
and identiﬁed in the previous ﬁnancial year. Capital
expenditure in the year amounted to £2.2 million
(2010: £3.5 million).
Debt & Bank Facilities
The Group’s total net bank debt after deducting cash
balances and including guaranteed loan notes as at
2 July 2011 was £32.7 million (3 July 2010: £36.5
million). Within this total net debt, £11.3 million
is due within one year, including cash at bank, invoice
ﬁnance and loan notes payable on demand (2010: £13.5
million). Net bank debt excludes deferred consideration
payable in respect of acquisitions.
e Group’s debt facility with HSBC Bank Plc totals
£47.1m, the key features of the facility are as follows:
• overdraft (£2.75m)
• conﬁdential invoice discounting facility
(£17.5m ﬂexible)
• term loan repayable over six years (£14.2m)
• mortgage facility (£8.2m)
• rolling asset ﬁnance facility (£4.4m)
Refer to Note 18 for details of the drawn amounts
and maturity dates.
Business Review
“Group revenue for the year to 2 July 2011
was £189.6 million, an increase of
£21.3 million (12.6%) year on year. ”   21
e Group renegotiated its bank facility during the year,
the renegotiated facility is a continuation of the old debt
with a consolidation of four term loans into one term
loan and an extension of the term loan from 2014 to
2017 with a smoothing of the repayments over this
extended period.
Discounted deferred consideration of £4.3m is outstanding
at the year end and is payable over the next two years
(2010: £6.0m). Of this £3.1m (2010: £4.4m) attracts
an interest of 6% pa and £1.2m (2010: £1.6m) is
interest free.
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 £25.5
million (2010: £21.4 million) at the period end date.
e Group recognises the inherent risk from interest
rate rises. To mitigate these risks, the Group has four
interest rate swaps in place with a total coverage
of £24.3 million (equivalent to 74% of total net debt)
at a weighted average rate of 4.9%.
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 0.8%, was 5.61% (2010: 6.11%).
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. e Group renegotiated its bank facility
during the year extending the term loan facility to 2017,
there was no covenant test date at the year end.
Interest cover (based on adjusted EBITDA) for the
52 weeks to 2 July 2011 was 4.3 (2010: 4.2). Net debt
to EBITDA (based on adjusted EBITDA) for the year
to 2 July 2011 was 2.8 (2010: 3.3).
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.e Group
has stayed within its banking facilities during the year,
meeting covenant requirements. The Group has the
continued support from its bank with renegotiated
facilities of £47.1m extending term loans to 2017.
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 taxation charge for the year was £1.4 million
(2010: £1.6 million). is represents an eﬀective rate
of 23.8% (2010: 32.4%), 27.2% after eliminating the
prior year tax inquiry credit in 2011, charge in 2010
(2010: 25.3%).
Further details on the tax charge can be found in Note
8 to the Group’s Financial Statements.
Environmental Matters
As a result of signiﬁcant capital investment and packaging
innovation over the past year the Group has had major
successes in reducing the amount of packaging used and
have exceeded the previous target of 25% reduction.
As an example the Cake Category transit packaging has
reduced by 37% in some areas and projects are in place
to reduce it further. Work in this area has been held up
as best practice by several of our key customers and
is now seen as the benchmark in the cake sector.
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 Work
programme.
e Cake Category in particular have been working
closely with local universities’ business projects and
placements and plan to continue this partnership
work further in several areas of training, development
and project work.
Technical Matters
e company continues to drive technical and quality
standards across the business. All sites have achieved
British Retail Consortium A grade standard. Key
technical processes are being standardised across the
business to ensure a consistent approach to working
practices. e Group have plans in place to work with
key industry partners to drive innovation in the areas
of quality and healthy eating.
Business Review
“The Group renegotiated its bank facility
during the year, the renegotiated facility is a
continuation of the old debt with a consolidation
of four term loans into one term loan and an
extension of the term loan from 2014 to 2017
with a smoothing of the repayments over this
extended period.”  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 60
Company Reconciliation of Movements in Shareholders’ Funds 61
Notes to the Company Financial Statements 62
Directors’ Report 67
Statement of Directors’ Responsibilities in Respect of the Directors’ Report and the Financial Statements 70
Report of Corporate Governance 71
Audit Committee Report 72
Remuneration Committee Report 73
Independent Auditor’s Report to the Members of Finsbury Food Group Plc 75
Notice of Meeting 76
Advisers 78
Financial
Statements Consolidated Statement of Comprehensive Income
for the 52 weeks ended 2 July 2011 and 53 weeks ended 3 July 2010
2011 00
Signiﬁcant Signiﬁcant
Before non- Before non-
signiﬁcant recurring signiﬁcant recurring
items items Total items items Total
Note £000 £000 £000 £000 £000 £000
Revenue  189,575 - 189,575 68,338 - 68,338
Cost of sales (138,478) - (138,478) (,78) - (,78)
Gross proﬁt 51,097 - 51,097 7,060 - 7,060
Administrative expenses 3 (42,959) - (42,959) (39,003) (399) (39,0)
Other income  --- - 553 553
Results from operating activities 8,138 - 8,138 8,057 5 8,
Financial income 7 1,920 - 1,920 ,556 - ,556
Financial expenses 7 (4,063) (42) (4,105) (,897) - (,897)
Net ﬁnancing expense (2,143) (42) (2,185) (3,3) - (3,3)
Proﬁt before tax 5,995 (42) 5,953 ,76 5 ,870
Taxation 8 (1,617) 200 (1,417) (,87) (393) (,580)
Proﬁt for the ﬁnancial year 4,378 158 4,536 3,59 (39) 3,90
Other comprehensive income
Actuarial gains/(losses) on deﬁned
beneﬁt pension scheme  2,224 - 2,224 (3,06) - (3,06)
Movement in deferred taxation
on pension scheme liability 3 (578) - (578) 853 - 853
Foreign exchange translation
diﬀerences 207 - 207 () - ( )
Other comprehensive income/(expense)
for the ﬁnancial year, net of income tax 1,853 - 1,853 (,7) - (,7)
Total comprehensive income
for the ﬁnancial year 6,231 158 6,389 ,3 (39) ,073
Proﬁt attributable to:
Equity holders of the parent 3,843 158 4,001 3, (39) ,975
Non-controlling interest 535 - 535 35 - 35
Proﬁt for the ﬁnancial year 4,378 158 4,536 3,59 (39) 3,90
Total comprehensive income
attributable to:
Equity holders of the parent 5,696 158 5,854 997 (39) 758
Non-controlling interest 535 - 535 35 - 35
Total comprehensive income
for the ﬁnancial year: 6,231 158 6,389 ,3 (39) ,073
Earnings per ordinary share (pence)
Basic 9 7.6 5.7
Diluted 9 7. 5.7
 5
Consolidated Statement of Financial Position
at 2 July 2011 and 3 July 2010
2011 00
Note £000 £000
Non-current assets
Intangibles  61,892 6,057
Property, plant and equipment  25,349 5,978
Other ﬁnancial assets – investments 3 28 5
Deferred tax assets 3 874 ,75
88,143 89,8
Current assets
Inventories 5 5,844 ,53
Trade and other receivables 6 29,929 3,88
Cash and cash equivalents 7 4,545 ,803
Other ﬁnancial assets – fair value of forward/foreign exchange contracts 3 - 99
40,318 3,
Total assets 128,461 ,6
Current liabilities
Other interest-bearing loans and borrowings 8 (15,627) (6,089)
Trade and other payables 0 (35,163) (7,600)
Provisions  (532) ()
Deferred purchase consideration  (4,117) (,8)
Other ﬁnancial liabilities – fair value of interest rate swaps/foreign exchange contracts 3 (2,151) (,598)
Current tax liabilities (1,287) (,069)
(58,877) (50,98)
Non-current liabilities
Other interest-bearing loans and borrowings 8 (21,064) (,5)
Provisions and other liabilities  (242) (553)
Deferred purchase consideration  (204) (3,6)
Deferred tax liabilities 3 (1,550) (,676)
Pension fund liability  (1,172) (3,69)
(24,232) (3,93)
Total liabilities (83,109) (8,)
Net assets 45,352 39,05
Equity attributable to equity holders of the parent
Share capital 6 528 57
Share premium account 5 26,918 6,98
Capital redemption reserve 5 578 578
Retained earnings 5 16,517 0,590
44,541 38,63
Non-controlling interest 5 811 9
Total equity 5 45,352 39,05
These Financial Statements were approved by the Board of Directors on 3 September 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 2 July 2011 and 3 July 2010
Capital Non-
Share Share redemption Retained controlling Total
capital premium reserve earnings interest equity
Note £000 £000 £000 £000 £000 £000
Balance at 5 July 009 5 6,680 578 9,70 39 37,80
Proﬁt for the ﬁnancial year --- ,975 35 3,90
Other comprehensive income/(expense):
Actuarial loss on deﬁned beneﬁt
pension plan  --- (3,06) - (3,06)
Deferred tax movement on pension
scheme actuarial loss 3 --- 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 issued during the year 3 38 --- 5
Impact of share based payments --- 3 - 3
Dividend paid 7 ---- (5) (5)
Balance at 3 July 2010 527 26,918 578 10,590 492 39,105
Balance at  July 00 57 6,98 578 0,590 9 39,05
Proﬁt for the ﬁnancial year --- ,00 535 ,536
Other comprehensive income/(expense):
Actuarial gain on deﬁned beneﬁt
pension plan  --- , - ,
Deferred tax movement on
pension scheme actuarial gain 3 --- (578) - (578)
Foreign exchange translation
diﬀerences --- 07 - 07
Total other comprehensive expense --- 1,853 - 1,853
Total comprehensive income for the period --- 5,854 535 6,389
Transactions with owners, recorded directly in equity:
Shares granted during the year - - -- 
Impact of share based payments - -- 73 - 73
Dividend paid 7 ---- (6) (6)
Balance at 2 July 2011 528 26,918 578 16,517 811 45,352
6 Consolidated Cash Flow Statement
for the 52 weeks ended 2 July 2011 and 3 July 2010
2011 00
Note £000 £000
Cash ﬂows from operating activities
Proﬁt for the ﬁnancial year 4,536 3,90
Adjustments for:
Taxation 1,417 ,580
Net ﬁnance expenses 2,185 3,3
Depreciation 2,848 ,80
Amortisation of intangibles 165 6
Loss on disposal of plant and equipment 8 -
Share options charge 73 3
Current service cost element of pension scheme - 86
Contributions by employer to pension scheme (11) (7)
Curtailment of deﬁned beneﬁt pension scheme liabilities - (553)
Fair value charge/(credit) for foreign exchange contracts 316 (99)
Operating proﬁt before changes in working capital 11,537 0,57
Changes in working capital:
Increase in inventories (1,232) (5)
(Increase)/decrease in trade and other receivables (5,648) 987
Increase in trade and other payables 7,030 38
Cash generated from operations 11,687 ,796
Interest paid (2,505) (,365)
Tax paid (1,043) (6)
Net cash from operating activities 8,139 8,87
Cash ﬂows from investing activities
Purchase of property, plant and equipment (2,224) (3,56)
Purchase of subsidiary companies 0 (1,960) (850)
Increase in investment (3) -
Net cash used in investing activities (4,187) (,396)
Cash ﬂows from ﬁnancing activities
Drawdown/(repayment) of invoice discounting 1,490 (,065)
Repayment of bank loans (3,065) (,366)
Repayment of loan notes (33) (9)
Drawdown of asset ﬁnance facilities 882 ,653
Repayment of asset ﬁnance liabilities (1,341) (,39)
Issue of ordinary share capital 1 5
Non-controlling interest dividend paid 7 (216) (5)
Net cash used in ﬁnancing activities (2,282) (,867)
Net increase in cash and cash equivalents 1,670 ,55
Opening cash and cash equivalents 2,803 ,73
Eﬀect of exchange rate ﬂuctuations on cash held 72 ()
Cash and cash equivalents at end of period 7 4,545 ,803
7 Notes to the Financial Statements
(forming part of the Financial Statements)
Presentation of Financial Statements
Basis of Preparation
ese accounts cover the 5 week period ended  July 0 (prior ﬁnancial year is the 5 week period ended 3 July 00). 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”). e Company has elected to prepare its parent company Financial Statements in accordance with UK GAAP;
these are presented on pages 60 to 66.
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. e Group has stayed within
its banking facilities during the year, meeting covenant requirements. e Group has the continued support from its bank with renegotiated facilities of
£7.m extending term loans to 07. 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.
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. ere was no covenant test date at the year end.
e following accounting standards and interpretations, issued by the International Accounting Standards Board (“IASB”) or International Financial
Reporting Interpretation Committee (“IFRIC”), as endorsed by the EU, are eﬀective for the ﬁrst time in the current ﬁnancial year and have been adopted,
where applicable, by the Group:
IAS  (Revised) – First Time Adoption of IFRS
IFRS  (Amendment) – Additional Exemptions
IFRS /IAS 7 (Amendment) – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
IFRS  (Amendment) – Share-based Payments – Group Cash-Settled Share-based Payment Transactions
IFRS 3 (Revised) – Business Combinations
IAS 7 (Revised) – Consolidated and Separate Financial Statements
IAS 39 (Amendment) – Financial Instruments: Recognition and Measurement on Eligible Hedged Items
IFRIC 6 – Hedges of a Net Investment in a Foreign Operation
IFRIC 7 – Distributions of Non-Cash Assets to Owners
IFRIC 8 – Transfers of Assets from Customers
IFRS  (Amendment) – First time Adoption of Financial Instrument Disclosures
IAS 3 (Amendment) – Financial Instruments: Presentation on Classiﬁcation of Rights Issues
IFRIC 9 – Extinguishing ﬁnancial liabilities with equity instruments
e application of the standards and interpretations has not had a material eﬀect on the net assets, results and disclosures of the Group.
New Standards and Interpretations not Applied
e IASB and the IFRIC have also issued the following standards and interpretations with an eﬀective date (as endorsed by the EU) for annual periods
beginning on or after  January 0, which is after the date of these Financial Statements:
IAS  (Revised) – Related Party Disclosures
IAS 3 (Amendment) – Financial Instruments: Presentation on Classiﬁcation of Rights Issues
IFRIC  (Amendment) – Prepayments of a minimum funding requirement
ese standards will be adopted by the Group in future accounting periods. e Directors do not anticipate that the adoption of any of these standards
and interpretations will have a material impact on the Group’s Financial Statements.
e following standards and amendments to published standards (and their eﬀective dates) have not been endorsed by the EU:
IFRS  (Amendment) – First time adoption on Hyperinﬂation and ﬁxed dates ( July 0)
IFRS 7 (Amendment) – Financial Instruments: Disclosures ( July 0)
IAS  (Amendment) – Deferred tax: Recovery of Underlying Assets ( January 0)
IAS  (Amendment) – Presentation of items of Other Comprehensive Income ( July 0)
IFRS 9 – Financial Instruments: Classiﬁcation and Measurement ( January 03)
IFRS 0 – Consolidated Financial Statements ( January 03)
IFRS  – Joint Arrangements ( January 03)
IFRS  – Disclosure of Interests in Other Entities ( January 03)
IFRS 3 – Fair Value Measurement ( January 03)
IAS 9 (Amendment) – Deﬁned Beneﬁt Plans ( January 03)
8 Critical Accounting Estimates and Judgements
e Group is 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.
• Impairment of goodwill can signiﬁcantly impact the Group’s Consolidated Statement of Comprehensive Income 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 pre-tax 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 .
• 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,
employee claims and pension augmentation 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. 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. e pension provision relates to a contractual liability for pension augmentation that has been valued by the
pension scheme actuaries. See Note  for further detail.
• e Group has an invoice-discounting facility which enables the Group to draw down against 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.
• ere is not a set Group policy on how much of amounts disputed by customers should be provided for as it is considered on a case by case basis.
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.
1 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.
9 1 Signiﬁcant Accounting Policies (continued)
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 Statement of Comprehensive Income in the period in which they arise.
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.
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 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
e value of trade and other receivables is deemed to be the amount that would be received if the debt was cleared on the period end date.
Trade and other Payables
e value of trade and other payables 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 stated at amortised cost using the eﬀective interest method, less any impairment losses.
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 Consolidated Statement of Comprehensive Income. When parts of an item of property, plant and equipment have diﬀerent
useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
e depreciation rates used are as follows:
Freehold buildings % – 0% Plant and equipment 0% – 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 1 Signiﬁcant Accounting Policies (continued)
Impairment reviews of ﬁxed assets are undertaken if there are indications that the carrying values may not be recoverable.
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. e 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.
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 Consolidated Statement of Comprehensive Income 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 Consolidated Statement of Comprehensive Income 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
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.
Goodwill arises when the fair value of the consideration for the business exceeds the fair value of the net assets acquired. Where the excess is negative
(negative goodwill), the amount is taken to retained earnings. Goodwill is capitalised and subject to impairment reviews both annually and where there
are indications that the carrying value may not be recoverable.
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. e value of intangible assets that are
identiﬁable and have a ﬁnite life are amortised on a straight line basis over their estimated useful economic lives.
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 Consolidated Statement of Comprehensive Income.
Calculation of Recoverable Amount
e recoverable amount is the greater of the assets’ 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.
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.
3 1 Signiﬁcant Accounting Policies (continued)
Inventories
Inventories are measured at the lower of cost and net realisable value. Cost is determined on the ﬁrst-in ﬁrst-out basis, and includes all direct costs incurred
and attributable production overheads. Net realisable value is based upon estimated selling price allowing for all further costs of completion and disposal.
Speciﬁc provisions are made against old and obsolete stock taking the value to zero or an estimated reduced value based on the most likely route for
disposal of each particular item of stock.
Employee Beneﬁts
Deﬁned Beneﬁt Plans
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 Comprehensive
Income. On 3 May 00 the scheme was closed for future accrual, this has resulted in a curtailment of pension scheme liabilities in the previous year’s
Financial Statements, this curtailment has been shown as other income in the prior year Consolidated Statement of Comprehensive Income. Further
details on the deﬁned beneﬁt pension scheme are given in Note  to the Financial Statements.
Deﬁned Contribution Plans
e costs of contributing to deﬁned contribution and personal pension schemes are charged to the Consolidated Statement of Comprehensive Income
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.
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 invoiced value of consideration received or receivable excluding
value added tax, trade discounts, transactions with or between subsidiaries and deduction of the cost 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 loan interest payable and 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.
3 1 Signiﬁcant Accounting Policies (continued)
Taxation
Tax on the proﬁt or loss for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the period end date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary diﬀerences between the carrying amounts of assets and liabilities for ﬁnancial reporting purposes and the amounts
used for taxation purposes. 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.
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.
2 Revenue and Segment Information
Operating segments are 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 segments are “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 and 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 Ltd 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.
Costs of Group operations 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, 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 £.9m (00: £.m) being presented within the Group operations segment.
e Group’s ﬁnance income and expenses cannot be meaningfully allocated to the individual operating segments.
33 3
2 Revenue and Segment Information (continued)
Bread & Free Group
Cake From Operations Total Group
£000 £000 £000 £000
5 week period ended  July 0
Revenue
External 139,620 49,955 - 189,575
Underlying operating proﬁt 4,278 2,384 1,854 8,516
Non-recurring signiﬁcant items -
Fair value foreign exchange contracts (36)
Share options charge (73)
Deﬁned beneﬁt pension scheme 
Results from operating activities 8,138
Financial income ,90
Financial expenses (,05)
Proﬁt before taxation 5,953
Taxation (,7)
Proﬁt after taxation 4,536
At  July 0
Segment assets 91,500 31,707 121 123,328
Unallocated assets 5,33
Consolidated total assets 128,461
Segment liabilities (33,383) (9,656) (1,228) (44,267)
Unallocated liabilities (38,8)
Consolidated total liabilities (83,109)
Other segment information
Capital expenditure ,59 705 - ,
Depreciation included in segment proﬁt ,79 ,057 - ,88
Amortisation - 65 - 65
Analysis of unallocated assets and liabilities:
Assets Liabilities
£’000 £’000
Investments 8 Loans and borrowings (36,69)
Financial instruments - Financial instruments (,5)
Cash and cash equivalents ,55 Cash and cash equivalents -
Taxation balances 560 Taxation balances -
Unallocated assets 5,33 Unallocated liabilities (38,8)
ere 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.
Five customers with sales of £3m, £m, £5m, £0m and £0m account for 79% 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. 35
2 Revenue and Segment Information (continued)
Bread & Free Group
Cake From Operations Total Group
£000 £000 £000 £000
5 week period ended 3 July 00
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
At 3 July 00
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)
ere 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)
An analysis by geographical segment is shown below:
Geographical split of turnover by destination 2011 00
£000 £000
United Kingdom 170,149 56,80
Europe 19,036 ,585
Rest of World 390 73
Total 189,575 68,338
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 .
Geographical split of turnover by country of origin
United Kingdom Europe Total
£000 £000 £000
2011
Turnover 7,837 6,738 89,575
Gross Proﬁt 7,390 3,707 5,097
Total assets ,803 6,658 8,6
Total liabilities (78,09) (,900) (83,09)
Net assets 3,59 ,758 5,35
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
3 Expenses and Auditors’ Remuneration
Included in proﬁt are the following:
2011 00
£000 £000
Depreciation of owned tangible assets 2,174 ,8
Depreciation on assets under ﬁnance leases and hire purchase contracts 674 5
Diﬀerence on foreign exchange 207 356
Hire of plant and machinery – operating leases 419 85
Hire of other assets – operating leases 527 3
Share option charges 73 3
Movement on fair value of interest rate swaps (564) ,097
Movement on fair value of foreign exchange contracts 316 (99)
Research and development 2,022 ,97
Amortisation of intangibles 165 6
Amortisation of intangibles for the year was £65,000 (00: £6,000) relating to the Goswell Enterprises Ltd acquisition during June 009.
36 3 Expenses and Auditors’ Remuneration (continued)
Auditors’ remuneration:
2011 00
£000 £000
Audit of these ﬁnancial statements 99 93
Amounts receivable by auditors and their associates in respect of:
Other services 21 
Other services in relation to taxation 12 5
e auditor’s remuneration is in respect of KPMG Audit Plc. e fee for other services relate to pension advisory services in 0 and in 00 for other
services relating to advisory work on reporting matters.
4 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.
a) Reorganisation Costs
e reorganisation costs in the year ended 3 July 00 comprise £53,000 reorganisation costs associated with the restructuring of the cake business and
£6,000 exit costs relating to outgoing senior personnel.
b) 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 resulted in a
curtailment of pension scheme liabilities in the comparative period, the credit of £553,000 being treated as a signiﬁcant non-recurring item and is shown
as other income on the face of the Consolidated Statement of Comprehensive Income.
c) Financial Expenses
Within ﬁnancial expenses is an amount of £,000 relating to interest charged on a prior year tax inquiry which has been agreed and settled since the
year end.
5 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
2011 00
Production 2,243 ,357
Selling and distribution 173 85
Administration, technical, new product development 160 5
2,576 ,693
e aggregate payroll costs of these persons were as follows:
£000 £000
Wages and salaries 46,137 ,503
Share option charges 73 3
Social security costs 4,506 ,099
Charge in respect of deﬁned beneﬁt plans 11 86
Charge in respect of deﬁned contribution plans 352 76
51,079 9,95
37 6 Remuneration of Directors
2011 00
£000 £000
Fees 153 8
Company contributions to deﬁned contribution pension plans 45 3
Executive salaries and beneﬁts 643 555
Bonuses 225 36
Compensation for loss of oﬃce - 96
1,066 903
e aggregate of emoluments and amounts receivable under long-term incentive schemes of the highest paid Director was £37,000 (00: £79,000)
including Company pension contributions of £8,000 (00: £,000) that were made to a deﬁned contribution scheme on their behalf.
Number of Directors
2011 00
Retirement beneﬁts were accruing in the year to the following number of Directors under:
Money purchase schemes 3 
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 2 July 2011 3 July 00
£000 £000 £000 £000 £000 £000 £000
E J Beale 5 ---- 25 5
S A Boyd - 65 3 3  223 87
D C Currie - 75 - 3 3 110 77
J G Duﬀy - 80 0 9 8 437 79
I R Farnsworth 30 ---- 30 30
M Lightbody - 00 - 3 - 143 00
D C Marshall 0 ---- 20 0
P J Monk 78 ---- 78 09
L M W Morgan ----- - 76
53 60 3 5 5 1,066 903
Options are 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. No options (00: ,60,000) were granted to Directors during the year.
Options retained at the period end relating to previous Directors:
Number of Number of
options at options at Earliest Exercise
 July 0 3 July 00 Exercise price Exercise date Expiry date
D G Brooks 500,000 500,000 9.0p 9//005 3/03/0
D G Brooks 5,88 5,88 3.0p 06/0/00 3/03/0
D G Brooks 0,000 0,000 5.5p 3/03/009 3/03/0
D G Brooks 7,500 7,500 88.0p 3/03/009 3/03/0
D G Brooks ,500 ,500 06.0p 3/03/009 3/03/0
L M W Morgan - 65,000 85.6p 9/09/009 0/0/00
L M W Morgan - 35,000 85.6p 9/09/009 0/0/00
L M W Morgan - 5,000 88.0p 0/0/00 0/0/00
L M W Morgan - ,500 06.0p 0/0/00 0/0/00
65,88 90,38
38 39
6 Remuneration of Directors (continued)
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
 July 0 3 July 00 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 67.5p 0/03/0 0/09/0
M W Lightbody - ,377 67.5p 0/03/0 0/09/0
J G Duﬀy 0,000 0,000 0.0p 30/09/0 30/09/0
J G Duﬀy 0,000 0,000 0.0p 30/09/03 30/09/03
J G Duﬀy 309,000 309,000 0.0p 3/03/0 3/03/0
J G Duﬀy ,000 ,000 7.0p 3/03/0 3/03/0
,50,500 ,55,5
Since the year end the board has granted 6,7,9 options in terms of the Finsbury Food Group Long-Term 006 Plan at an exercise price of 0.5p
per share to the following Directors; J G Duﬀy ,500,000, S A Boyd ,900,000 and D C Currie ,07,9.
e mid-market price of the ordinary shares on  July 0 was p and the range during the 5 week period to  July 0 was p to 6p.
7 Finance Income and Expense
Recognised in the Consolidated Statement of Comprehensive Income
2011 00
£000 £000
Finance income
Expected return on deﬁned beneﬁt pension plan obligation 1,356 ,0
Reduction in NPV of deferred consideration – Yorkshire Farm Bakeries and A&P Foods - 53
Reduction in NPV of deferred consideration – Anthony Alan Foods Ltd - 63
Change in fair value of interest rate swaps 564 -
Total ﬁnance income 1,920 ,556
Finance expense
Interest on deﬁned beneﬁt pension plan obligations (1,134) (,07)
Bank interest payable (1,653) (,75)
Interest on tax inquiry settlement (42) -
Interest on interest rate swap agreements (1,024) (860)
Change in fair value of interest rate swaps - (,097)
Unwinding of discount on deferred consideration – Goswell Enterprises Ltd (40) (58)
Unwinding of discount on deferred consideration – Yorkshire Farm Bakeries and A&P Foods (112) (5)
Unwinding of discount on deferred consideration – Anthony Alan Foods Ltd (100) ()
Total ﬁnance expense (4,105) (,897) 8 Taxation
Recognised in the Consolidated Statement of Comprehensive Income
2011 00
£000 £000
Current tax expense
Current year 1,766 ,30
Adjustments for prior years (523) 0
Current tax expense 1,243 ,3
Deferred tax expense
Origination and reversal of timing diﬀerences (28) 5
Retirement beneﬁt deferred tax charge 133 98
Adjustments for prior years 69 9
Deferred tax expense 174 69
Tax expense in consolidated statement of comprehensive income 1,417 ,580
Reconciliation of eﬀective tax rate
e tax assessed for the period is lower (00: higher) than the standard rate of corporation tax in the UK of 8% (6% from 6 April 0).
e diﬀerences are explained below:
2011 00
£000 £000
Proﬁt per accounts before taxation 5,953 ,870
Tax using the UK corporation tax rate of 7.5%, (00: 8%) 1,637 ,36
Non-deductible expenses 12 
Amortisation of intangible asset 45 6
Timing diﬀerences on share options 26 5
Unrelieved tax losses - 
Adjustment to restate opening deferred tax at 6% 4 -
Diﬀerences on depreciation on IBA’s and allowances claimed 47 76
Adjustments to tax charge in respect of prior periods (454) 9
Overseas proﬁts charged at diﬀerent taxation rate 100 
Subsidiaries proﬁts charged at diﬀerent tax rates - (6)
Total tax expense 1,417 ,580
e parent company has a deferred tax asset of £8,690 (00: £67,05). is asset has not been recognised in these Financial Statements as suitable
proﬁts are not expected to arise in the future.
e impact of the reduction in tax rate from 8% to 6% from April 0 amounts to £30,000 lower charge in the ﬁnancial year to  July 0.
e adjustment in respect of prior year relates to the release of accrual of £00,000 for a prior year tax inquiry which has been shown as a signiﬁcant
non-recurring item in the Consolidated Statement of Comprehensive Income and £5,000 relates to additional tax relief on qualifying R&D expenditure
for the ﬁnancial year to 3 July 00 and to  July 009. Claim for tax relief on qualifying R&D expenditure is deemed to be a recurring item.
0 
9 Earnings Per Ordinary Share
Basic earnings per share for the period is calculated on the basis of proﬁt for the year after tax, divided by the weighted average number of shares in issue
5,76,000 (00: 5,378,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; which for  July 0 the diluted weighted average number is 5,83,86 shares, (00: 5,578,967).
An adjusted earnings per share and an adjusted diluted 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 acquisition and Goswell Enterprises Ltd
• e taxation eﬀect at the appropriate rate on the adjustments and potential prior year taxation inquiry charge.
Year ending Year ending
2 July 2011 3 July 00
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 4,001 52,746 7.6 ,975 5,378 5.7
Share option charge 73 0.1 3 0.3
Movement in the fair value of interest rate swaps/foreign exchange contracts (248) (0.5) 898 .7
Deﬁned beneﬁt pension scheme (233) (0.4) (55) (0.3)
Fair value adjustments relating to acquisitions 252 0.5 (99) (0.)
Signiﬁcant non-recurring items 42 0.1 (5) (0.3)
Prior year tax inquiry (200) (0.4) 38 0.7
Taxation on adjustments 152 0.3 () (0.3)
Adjusted earnings per share 3,839 52,746 7.3 3,700 5,378 7.
Dilutive eﬀect of options 1,538 0
Basic diluted earnings per share
Basic earnings 4,001 54,284 7.4 ,975 5,579 5.7
Adjusted diluted earnings per share 3,839 54,284 7.1 3,700 5,579 7.0
e dilutive eﬀect of share options has increased during the year as a result of the issue of ,7,700 replacement Long-Term Incentive Plan options.
10 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:
2011 00
£000 £000
Deferred consideration paid in respect of Yorkshire Farm Bakeries and A&P Foods acquisition 840 80
Deferred consideration paid in respect of Anthony Alan Foods Ltd acquisition 620 0
Deferred consideration paid in respect of Goswell Enterprises Ltd acquisition 500 -
1,960 850 11 Intangibles
Intangible assets comprise licences and goodwill.
a) Licences
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.
e licenses recognised were purchased as part of the acquisition of Goswell Enterprises Ltd in June 009 and relate to the exclusive licensing agreements
for Cranks, Doves Farm breads and Vogels. e period over which the value is amortised is the life of the license which is ﬁve years.
Total
£000
Cost at 4 July 2009, 3 July 2010 and 2 July 2011 8
Amortisation at  July 009 -
Amortisation at 3 July 00 (6)
Charge for the year  July 0 (65)
Amortisation at 2 July 2011 (39)
NBV at  July 009 8
NBV at 3 July 00 658
NBV at 2 July 2011 493
b) Goodwill
Goodwill has arisen on acquisitions and reﬂects the future economic beneﬁts arising from assets that are not capable of being identiﬁed individually and
recognised as separate assets. 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 cake and bread & free from sectors. 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.
Total
£000
Balance at 4 July 2009, 3 July 2010 and 2 July 2011 6,399
e carrying amount of goodwill has been allocated to cash generating units or groups of cash generating units as follows:
2011 00
£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 pre-tax discount rate of 0% (00: 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.
 11 Intangibles (continued)
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  July 0 was 3% (00: 3%) 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% (00: 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 (00: 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.
12 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 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) -
Balance at 3 July 00 ,50 3,368 ,038 8 50 9,068
Balance at  July 00 ,50 3,368 ,038 8 50 9,068
Exchange adjustments -- 7-- 7
Additions  ,5 77 - 63 ,
Transfers 70 500  - (7) -
Disposals (3) (8,303) (99) -- (8,636)
Balance at 2 July 2011 14,441 26,077 2,065 8 72 42,663
Depreciation and impairment
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)
Balance at 3 July 00 (3,6) (8,9) (,33) (3) - (3,090)
Balance at  July 00 (3,6) (8,9) (,33) (3) - (3,090)
Exchange adjustments -- () -- ()
Depreciation charge for the ﬁnancial period (35) (,330) (9) () - (,88)
Disposals 3 8,98 96 -- 8,68
Balance at 2 July 2011 (3,553) (12,323) (1,433) (5) - (17,314)
Net book value
At  July 009 ,30 ,993 80 8 30 5,37
At 3 July 00 ,0 ,077 70 5 50 5,978
At 2 July 2011 10,888 13,754 632 3 72 25,349
Leased Plant and Machinery
e net book value of assets held under ﬁnance lease or hire purchase contracts included above are as follows:
2011 00
£000 £000
Plant and equipment 4,113 3,97
3 12 Property, Plant and Equipment (continued)
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 8.
Hire purchase obligations are secured on the underlying assets.
e lease obligations are secured on leased equipment. (see Note 8).
13 Other Financial Assets and Liabilities
2011 00
£000 £000
Non-current
Investments 28 5
Current assets
Fair value of foreign exchange contracts - 99
Current liabilities
Fair value of interest rate swaps (2,034) (,598)
Fair value of foreign exchange contracts (117) -
(2,151) (,598)
Investments
e unlisted investments acquired as part of the Lightbody acquisition on 3 February 007 and held at  July 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.
On 3 April 0 Lightbody Stretz Limited purchased .7% of the ordinary shares in Plate Forme d’Ingenierie Cuisine for 3,000 Euros. e company
is a culinary engineering laboratory conducting tests and test recipes. e investment is held at cost.
Interest Rate Swaps at Fair Value
e Group has entered into four interest rate swap arrangements to hedge its risks associated with interest rate ﬂuctuations:
£.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%
In addition two interest swaps matured during the year:
£5.0m for ﬁve years from 8 November 005 (ﬁxed) at .7% matured November 00
£5.0m over ﬁve years from 8 November 005 (reducing to nil over 5 years) at .8% matured November 00
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 Consolidated Statement of Comprehensive Income resulting in a credit of £56,000 as indicated above.
ey are shown as liabilities as a result of the current low 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 Consolidated Income.
 14 Pension Schemes
A number of companies within the Group operate deﬁned contribution pension schemes with one business also operating a deﬁned beneﬁt scheme.
Deﬁned Contribution Scheme
e Group made contributions in respect of its deﬁned contribution pension arrangements of £38,000 (00: £,000).
Deﬁned Beneﬁt Scheme
e deﬁned beneﬁt scheme was closed to future accrual on 3 May 00, this resulted in a curtailment of the pension scheme liabilities of £553,000
in previous years Financial Statements, which was shown as other income in the signiﬁcant non-recurring items in the Consolidated Statement of
Comprehensive Income.
ere is no charge included in results from operating activities, (00: £86,000). e assets of the schemes are held separately from those of the company.
e agreed employer’s contribution rate was 0%, the employees’ contribution remained at 6% of pensionable pay until the scheme closed to future accrual
on 3 May 00.
e amounts in the Financial Statements for the 5 weeks ended  July 0 relating to deﬁned beneﬁt pension are based on a full actuarial valuation
dated 3 May 00, which was updated at the end of the ﬁnancial year 0.
e Group’s funded deﬁned beneﬁt scheme is the Memory Lane Cakes Pension Scheme, which is a separately administered plan. At the ﬁnancial year
end 0, the scheme had no active members accruing beneﬁts (00: nil), 75 deferred pensioner members (00: 9) and 58 pensioner members
(00: ).
ere was £,000 contribution paid during the ﬁnancial year 0 from Memory Lane Cakes (00: £7,000). e Group’s contribution has been agreed
based on the outcome of the full actuarial valuation dated 3 May 00. e valuation of the Scheme on an equity/bond basis and projected unit method,
showed that there was a deﬁcit of £70,000 equivalent to a % deﬁcit of liabilities over assets. e valuation was conducted by a qualiﬁed independent
actuary. is deﬁcit is payable over a three year period at a rate of £65,000 pa. e full actuarial valuation diﬀers from the ﬁnancial year end valuation deﬁcit
of £,7,000.
2011 00
£000 £000
Fair value of plan assets 19,102 7,658
Present value of deﬁned beneﬁt obligations (20,274) (,87)
Deﬁcit recognised (1,172) (3,69)
e fair value of plan assets and the return on those assets were as follows:
2011 00
£000 £000
Equities/target return fund 17,627 6,080
Property 1,465 ,36
Cash 10 6
Fair value of plan assets 19,102 7,658
Actual return on plan assets 2,000 ,9
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.
Movements in present value of deﬁned beneﬁt obligation
2011 00
£000 £000
At beginning of ﬁnancial year (21,287) (6,963)
Current service cost - (86)
Interest cost (1,134) (,07)
Employee contributions - (65)
Beneﬁts paid 567 373
Actuarial gains/(losses) 1,580 (3,78)
Curtailment - 553
At end of ﬁnancial year (20,274) (,87)
5 14 Pension Schemes (continued)
Movements in fair value of plan assets
2011 00
£000 £000
At beginning of ﬁnancial year 17,658 5,67
Expected return on plan assets 1,356 ,0
Employee contributions - 65
Beneﬁts paid (567) (373)
Actuarial gains 644 68
Contributions by employer 11 7
At end of ﬁnancial year 19,102 7,658
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. e actuarial gain for the period includes the impact of the change in the inﬂationary measure from RPI to CPI which has acted to reduce
the liabilities of the Scheme by around £,630,000 at the review date.
Income/(expense) recognised in the Consolidated Statement of Comprehensive Income
2011 00
£000 £000
Current service cost - (86)
Curtailment - 553
Expected return on deﬁned beneﬁt pension plan assets 1,356 ,0
Interest on deﬁned beneﬁt pension plan obligation (1,134) (,07)
Total income 222 36
e above income/(expenses) are recognised in the following line items in the Consolidated Statement of Comprehensive Income:
2011 00
£000 £000
Administrative expenses - (86)
Other income - 553
Finance income 1,356 ,0
Finance expense (1,134) (,07)
222 36
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:
2011 00
£000 £000
Cumulative amount at beginning of ﬁnancial year (4,450) (,0)
Recognised in the ﬁnancial year 2,224 (3,06)
Cumulative amount at end of ﬁnancial year (2,226) (,50)
Principal long-term actuarial assumptions at the year end were as follows:
2011 00
RPI Price inﬂation assumption 3.6% 3.%
CPI Price inﬂation assumption 2.9% N/A
Increases to pensions in payment 2.9% 3.%
Discount rate for liabilities 5.5% 5.%
Expected rate of return for plan assets 7.9% 7.8%
6 14 Pension Schemes (continued)
e ﬁnancial assumptions are based on market conditions as at the review date of  July 0 with discount rates based on the yields on long-dated
high quality corporate bonds. e discount rate is higher than the discount rate used last year reﬂecting the increase 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 three month
LIBOR +3% pa (which is assumed to be broadly equivalent to RPI +5%). is expected return rate has increased by 0.% since year end 00 reﬂecting
lower cash balances. e expected return on cash is based on the current Bank of England base rate rather than long-term deposit rates.
2011 00
Pre-retirement mortality assumption
S1N[M/F]A92 medium cohort P[M/F]A9
year of birth tables with 1.5% pa medium cohort
minimum improvements year of birth
Post-retirement mortality assumption
S1N[M/F]A92 medium cohort P[M/F]A9
year of birth tables with 1.5% pa medium cohort
minimum improvements year of birth
Under the mortality tables adopted, the assumed future life expectancy at age 65 is as follows:
Male currently at age 5 24.8 3.
Female currently at age 5 27.8 5.9
Male currently at age 65 21.9 .0
Female currently at age 65 24.9 .8
Inﬂation is assumed to be at 3.6% per annum. e diﬀerential between the assumed rate of inﬂation and the discount rate for liabilities is .9% (00: .%).
Changing the year end 0 assumptions to those of 00 year end listed above, the deﬁcit would have been £,9,000 compared to the reported deﬁcit
of £,7,000.
e history of the plans for the current and prior periods is as follows:
Consolidated Statement of Financial Position
2011 00 009 008 007
£000 £000 £000 £000 £000
Fair value of plan assets 19,102 7,658 5,67 6,56 6,066
Present value of the deﬁned beneﬁt obligation (20,274) (,87) (6,963) (6,339) (3,5)
(Deﬁcit)/surplus (1,172) (3,69) (,9) 77 ,5
2011 00 009 008 007
£000/% £000/% £000/% £000/% £000/%
Experience adjustments on plan assets 644 68 (,36) (980) (8)
as a percentage of plan assets 3.4% 3.9% (5.%) (5.9%) (.%)
Experience adjustments on plan liabilities (561) (-) (-) (556) (-)
as a percentage of plan liabilities 2.8% 0.0% 0.0% 3.% 0.0%
Total actuarial gains/(losses) 2,224 (3,06) (,63) (,68) ,55
as a percentage of plan liabilities 11.0% .3% 9.6% 6.% .5%
7 14 Pension Schemes (continued)
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
2011 2010 one year 1% 1% 1%
Discount rate for liabilities 5.50% pa 5.0% pa 5.50% pa 5.50% pa 5.50% pa 6.50% pa
Retail Price inﬂation N/A 3.0% pa N/A N/A N/A N/A
Consumer Price inﬂation .90% pa N/A .90% pa 3.90% pa .90% pa .90% pa
Limited price index (LPI) pension increases .90% pa 3.0% pa .90% pa 3.90% pa .90% pa .90% pa
Mortality after retirement SN[M /F]A9 P[M/F]A9 SN[M/ F]A9 SN[ M/F]A9 SN[ M/F]A9 SN[M /F]A9
medium cohort medium cohort medium cohort medium cohort medium cohort medium cohort
year of birth year of birth year of birth year of birth year of birth year of birth
tables with tables tables with tables with tables with tables with
 .5%pa  .5%pa .5%p a .5%p a .5%pa
minimum minimum minimum minimum minimum
improvements improvements improvements improvements improvements
and a minus one
year age rating
Expected return on assets overall 7.90% pa 7.80% pa 7.90% pa 8.90% pa 6.90% pa 7.90% pa
Net liability as at 2 July 2011 (£1,172,000) (£2,191,000) (£1,653,000) (£5,170,000) (£1,172,000) £2,502,000
Projected pension expense 2011/2012 (£390,000) (£335,000) (£363,000) (£340,000) (£202,000) (£428,000)
15 Inventories
2011 00
£000 £000
Raw materials and consumables 3,210 ,833
Finished goods 2,634 ,698
5,844 ,53
Inventories recognised as an expense
2011 00
£000 £000
Opening inventories 4,531 ,386
Purchases 90,214 75,97
Increase/(decrease) in stock provisions 681 (5)
Closing inventories (5,844) (,53)
Expensed during the period 89,582 75,63
8 16 Trade and Other Receivables
2011 00
£000 £000
Trade receivables due from third parties 25,531 ,377
Other debtors 1,705 779
Prepayments and accrued income 2,693 ,75
29,929 3,88
Within prepayments above is an amount for £500,000 (00: £700,000) relating to contract renewal fees, £300,000 (00: £500,000) of which are not
due within one year and also prepaid pension costs of £7,000 (00: £39,000). Speciﬁc provisions are made against doubtful debts taking the value to
an estimated value based on the most likely outcome.
Cash received under the invoice discounting facility, amounting to £,879,000 (00: £,389,000) is shown within current liabilities and is secured
on trade receivables above. All the risks and rewards of the trade debtors lie with the Group.
17 Cash and Cash Equivalents including Bank Overdrafts
2011 00
£000 £000
Cash at bank and on hand 26,205 9,66
Bank overdraft (21,660) (6,83)
4,545 ,803
18 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.
2011 00
£000 £000
Current liabilities
Current portion of secured bank loans 1,410 3,38
Current portion of ﬁnance lease liabilities 1,335 ,80
Cash advanced under the invoice discounting facility 12,879 ,389
Loan notes 3 36
15,627 6,089
Non-current liabilities
Secured bank loans 19,058 9,93
Finance lease liabilities 2,006 ,50
21,064 ,5
Non-current secured bank loans are repayable as follows:
2011 00
£000 £000
Bank loans and mortgages:
Between one and two years 2,345 3,0
Between two and ﬁve years 8,770 ,55
Between ﬁve and ten years 7,379 3,08
Between ten and ﬁfteen years 564 ,
19,058 9,93
9 18 Other Interest-Bearing Loans and Borrowings (continued)
Finance lease liabilities are payable as follows:
Minimum Minimum
lease lease
payments Interest Principal payments Interest Principal
2011 2011 2011 00 00 00
£000 £000 £000 £000 £000 £000
Less than one year 1,423 88 1,335 ,387 07 ,80
Between one and ﬁve years 2,076 70 2,006 ,68 98 ,50
3,499 158 3,341 ,005 05 3,800
Terms and debt repayment schedule
2011 2011 00 00
Margin/above Frequency of Year of Facility Drawn Facility Drawn
(below) Repayments Maturity £000 £000 £000 £000
Mortgage .750%/base Monthly 03 7,430 6,095 7,30 6,667
Mortgage .750%/base Monthly 0 769 638 769 69
Term Loan  3.70% LIBOR Quarterly 07 14,238 14,139 --
Term Loan A 3.500%/LIBOR Quarterly 0 -- 9,00 8,6
Term Loan B (i) 3.500%/LIBOR Quarterly 0 -- ,500 ,89
Term Loan B (i) 3.966%/LIBOR Bullet 0 -- ,000 ,000
Term Loan C .000%/LIBOR Bullet 0 -- ,600 ,600
Term Loan D .000%/LIBOR Bullet 0 -- 3,00 3,00
Invoice Discounting .870%/base On demand Revolving* 17,500 12,879 6,000 ,389
Loan secured on assets .75%/base Quarterly 00 - 50
Loan secured on assets .70%/base Monthly 03 187 66
Finance lease liabilities .75%/base Monthly 0 4,375 3,341 6,375 ,0
Finance lease liabilities .75%/base Monthly 03 - 33
Finance lease liabilities .75%/base Monthly 0 - 876
Finance lease liabilities .750%/base Monthly 05 - ,87
Loan notes %/(base) On demand 0 -3 - 36
Overdraft .50%/base On demand - 2,750 - ,000 -
47,062 37,282 50,7 39,39
Amounts falling due within one year 15,842 6,30
Unamortised transaction costs within one year (215) (5)
15,627 6,089
Amounts falling due after more than one year 21,440 3,05
Unamortised transaction costs more than one year (376) (59)
21,064 ,5
Total amounts falling due 37,282 39,39
Total unamortised bank fees (591) (806)
36,691 38,53
*Revolving above relates to payment terms on the invoice discounting which is up to 90 days from date of invoice, the facility has increased during the year
by £.5m to £7.5m.
Overdraft facility varies between £m – £.75m. e facility has decreased by £m on ﬁnance lease during the year. e loan facility has decreased by £3.m
to reﬂect the lower balances outstanding at the renegotiation date.
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 .
50 18 Other Interest-Bearing Loans and Borrowings (continued)
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.
ere was no test date at the year end. e covenant tests required are as follows:-
Net Debt: EBITDA
Interest Cover
Debt Service Cover
e HSBC facilities (excluding overdraft) available for drawdown are £.3m (00: £8.m). At the period end date the facility utilised was £37.3m
(00: £39.3m), giving £7.0m (00: £8.9m) headroom.
19 Analysis of Net Bank Debt
As at As at
year ended year ended
3 July 2 July
00 Cash ﬂow 2011
£000 £000 £000
Cash at bank ,803 ,7 4,545
Loan notes (36) 33 (3)
,767 ,775 4,542
Debt due within one year (3,599) ,97 (1,625)
Debt due after one year (0,55) ,09 (19,434)
Invoice discounting due within one year (,389) (,90) (12,879)
Hire purchase obligations due within one year (,80) (55) (1,335)
Hire purchase obligations due after one year (,50) 5 (2,006)
Total net bank debt (36,56) 3,809 (32,737)
Debt as per Note 8 (38,53) (36,691)
Cash at bank ,803 4,545
Unamortised transaction costs (806) (591)
Total net bank debt (36,56) (32,737)
Net debt as detailed above excludes discounted deferred consideration of £3. million (00: £. million) relating to the Anthony Alan Foods Ltd and
Yorkshire Farm and A&P Trading acquisitions payable within one year and loan notes with a discounted value of £.m (00: £.6m). e loan notes 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 two years with
the ﬁnal payment due in June 03.
20 Trade and Other Payables
2011 00
£000 £000
Current
Trade creditors 24,206 7,60
Other creditors including taxes and social security 1,449 ,07
Accruals and deferred income 9,508 8,98
35,163 7,600
5 21 Provisions
Onerous Employee
lease claims Pension Total
£000 £000 £000 £000
Balance at beginning of ﬁnancial year 00 306 7 977
Made during the ﬁnancial year - 3 - 3
Utilised during the ﬁnancial year (37) (75) () (6)
Balance at end of ﬁnancial year 263 254 257 774
Current provisions 63 5 5 53
Non-current provisions --  
e onerous lease provision relates to a warehouse at the former 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 £0,000.
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 at amounts up to the maximum self insured amount of £0,000 per claim.
e pension provision relates to a contractual liability for pension augmentation, the amount utilised during the year represents payments in relation
to the augmentations which are being paid over 8 years.
22 Other Financial Liabilities – Deferred Consideration
Yorkshire Farm Goswel T otal
Bakeries and Anthony Alan Enterprises deferred
A&P Foods Foods Ltd Ltd consideration
£000 £000 £000 £000
Balance at beginning of ﬁnancial year ,87 ,096 ,66 6,09
Payment during the ﬁnancial year (80) (60) (500) (,960)
Unwinding of discount  00 0 5
Balance at end of ﬁnancial year 1,559 1,576 1,186 4,321
Current discounted deferred consideration ,559 ,576 98 ,7
Non-current discounted deferred consideration -- 0 0
e repayments for both Yorkshire Farm Bakeries and A&P Foods and Anthony Alan Foods Ltd are payable during the next ﬁnancial year and attract an
interest charge of 6%. e repayments for Goswell Enterprises Ltd are payable over the next two years.
23 Deferred Tax Assets and Liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities
2011 00 2011 00
£000 £000 £000 £000
Property, plant and equipment - - (1,234) (,0)
Short-term timing diﬀerences - - (280) (09)
Employee share scheme charges 9 9 - -
Pension scheme charges 305 ,06 - -
Interest rate swaps 529 77 - -
Foreign exchange contracts 31 - - (56)
IFRS fair value adjustments on deferred consideration - - (36) (09)
Tax assets/(liabilities) 874 ,75 (1550) (,676)
Net tax (liability)/asset 76 (676)
Short-term timing diﬀerences relate to general provisions which will be allowed when utilised.
5 23 Deferred Tax Assets and Liabilities (continued)
Movement in deferred tax during the year
Recognised Recognised
4 July 2010 in income in equity 2 July 2011
£000 £000 £000 £000
Property, plant and equipment (,0) 68 - (1,234)
Short-term timing diﬀerences (09) (7) - (280)
Employee share scheme 9-- 9
Pension scheme ,06 (33) (578) 305
Interest rate swaps 77 (98) - 529
Foreign exchange contracts (56) 87 - 31
IFRS fair value adjustments deferred consideration (09) 73 - (36)
76 (7) (578) (676)
Movement in deferred tax during the prior 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 on deferred consideration (5) (55) - (09)
(508) (69) 853 76
24 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
 July 0.
At year ended 2 July 2011
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 (20,468) (,333) (,396) (3,8) (0,37) (8,36)
Finance lease liabilities (3,341) (3,50) (,3) (990) (,088) -
Invoice discounting (12,879) (,879) (,879) ---
Deferred consideration (4,321) (,676) (,56) (0) --
(41,009) (5,389) (,5) (,58) (,5) (8,36)
Trade creditors (24,206) (,06) (,06) ---
Derivative ﬁnancial assets/(liabilities)
Interest rate swaps liabilities (2,034) (,57) (99) (80) (8) -
Foreign exchange contracts (117) (7) (7) ---
(2,151) (,688) (,066) (80) (8) -
53 24 Financial Risk Management (continued)
At year ended 3 July 2010
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)
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.
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 £5.5 million (00: £.
million) and the ageing of trade receivables at the period end date was:
2011 00
£000 £000
Not past due 23,141 9,000
Past due 0 – 30 days 1,958 ,77
Past due 3 – 0 days 310 509
Past due more than 0 days 122 9
25,531 ,377
e above numbers are net of impairment. Group policy is to provide in full against all receivable balances whose full recovery is signiﬁcantly in doubt.
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. million past due by more than 30 days is equivalent to less than  day sales
(00: £0.6 million, equivalent to  day).
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 four interest rate swap arrangements
in order to hedge its risks associated with any ﬂuctuations. Details of swaps are given in Note 3.
e proﬁle of the Group’s interest-bearing loans and overdraft at the period end date were split as follows:
2011 00
£000 £000
Fixed rate liabilities 3,135 ,38
Variable rate liabilities 37,282 39,39
40,417 3,733
5 24 Financial Risk Management (continued)
Swaps amounting to £,3,000 limit the risk associated with the variable rate liabilities, the weighted average interest rate at  July 0 is .9%.
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.
2011 00
£000 £000
Proﬁt decrease 199 56
Decrease in net assets 199 56
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.
iii) Foreign Exchange Risk
e Group currently supplies UK manufactured products to Lightbody Stretz Ltd its 50% owned selling and distribution business trading primarily in
Europe. e Group also purchases some raw materials in foreign currency. e consequence of this is that the Group is exposed to movement in foreign
currency rates. 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 0.8
(00: .07). e gearing ratio is calculated taking total net debt including deferred consideration over net assets.
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.
25 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 £8,000 gain (00: £6,000 loss).
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.
55 26 Share Capital
2011 00
£000 £000
In issue at beginning of the ﬁnancial year 52,688 5,8
Shares issued 100 ,0
In issue at end of the ﬁnancial year – fully paid 52,788 5,688
Allotted, called up and fully paid
Ordinary shares of p each 528 57
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.
Share-Based Payments
e Group operates both approved and unapproved share option schemes.
e fair value is calculated at the grant date and ultimately expensed in the Consolidated Statement of Comprehensive Income over the vesting period,
based on the best available estimate of the number of share options expected to vest, with a corresponding credit to reserves.
Upon exercise of the share options the proceeds received net of attributable transaction costs are credited to share capital and where appropriate share
premium.
ere have been a number of options granted during the course of the ﬁnancial year to  July 0 with further details given below. e options granted
on 9 July 00 are replacement options for the Long-Term Incentive Plan dated June 006.
Date of grant Amount
Number of options Exercise expensed in year Period of
granted price Fair value to 2 July 2011 expense
7 Dec 00 50,00 8.0p £60,000 £,000 3 years
9 Jul 00 5,36 7.5p £,000 £3,000 3 years
9 Jul 00 ,77,338 7.5p £9,000 £8,000 3 years
Charge relating to options granted in the current year £53,000
Charge relating to options granted in the previous year £0,000
Charge included in Administration expenses £73,000
ere were 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
A summary of share options outstanding and movements for the year to  July 0 is shown below:
At 3 July  0 0 Granted Forfeited Cancelled Exercised At 2 July 2011
Number of options ,95,673 ,,900 (938,8) (60,000) (00,000) 5,898,155
56 57
26 Share Capital (continued)
Details of share options outstanding at  July 0 and movements during the year by exercise price is shown below:
First Last
Exercise Exercise Exercise At 3 July At 2 July
price date date 00 Granted Forfeited Cancelled Exercised 2011
.0p Apr 00 Apr 07 5,000 - (7,000) -- 27,000
06.0p Apr 0 Oct 09 ,500 - (85,000) (85,000) - 42,500
06.0p Sep 008 Mar 0 ,500 -- - - 42,500
00.0p Apr 00 Apr 07 36,000 - (73,000) -- 173,000
88.0p Sep 0 Sep 03 75,000 - (5,000) (50,000) - -
88.0p Sep 008 Mar 0 7,500 -- - - 17,500
85.6p Apr 00 Oct 00 35,000 - (35,000) -- -
85.6p Apr 00 Oct 00 65,000 - (65,000) -- -
67.5p Nov 008 Nov 05 00,000 -- (00,000) - -
67.5p Jan 0 July 0 37,733 - (5,83) -- 319,899
5.5p July 00 July 05 5,000 -- (5,000) - -
5.5p Sep 008 Mar 0 0,000 -- - - 40,000
3.0p Oct 009 Mar 0 5,88 -- - - 52,848
3.0p Nov 0 May 0 30,0 - (05,960) -- 204,480
9.0p Dec 005 Mar 0 500,000 -- - - 500,000
7.0p Mar 0 Mar 0 ,000 -- - - 111,000
0.0p Dec 0 July 03 80,05 - (97,8) -- 382,228
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
8.0p Jan 0 July 0 - 50,00 -- - 520,200
7.5p July 03 July 07 - 5,36 -- - 544,362
7.5p July 03 July 00 - ,77,338 -- - 1,177,338
.0p Mar 0 Mar 09 76,00 - (69,800) -- 594,300
.0p Nov 00 Nov 0 00,000 -- - (00,000) -
,95,673 ,,900 (938,8) (60,000) (00,000) 5,898,155
ere were ,7,77 (00: ,30,38) options exercisable at the period end date.
ere were 00,000 options exercised during the (00: nil).
e options outstanding at the year end have weighted average exercise price of .9p (00: 0.6p) and a weighted average contractual life of 5.8 years
(00: 6.3 years).
Since the year end the board has granted 6,7,9 options in terms of the Finsbury Food Group Long-Term 006 Plan at an exercise price of 0.5p
per share.
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.
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:
2011 00
Expected life of option 3 years .9 – . years
Volatility of share price 79.2% – 81.0% 78.3% – 79.%
Dividend yield 0% 0%
Risk-free interest rate 1.39% – 1.56% .9% – .95%
Share price at date of grant 17.0p – 23.0p 5.0p – 7.0p
Exercise price 17.5p – 18.0p 0.0p – 7.0p
Bid price discount 10% 0%
Estimated conversion rate 100% 00%
Fair value per option 8.0p – 11.0p .0p – 6.0p
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. 27 Dividends
During the year a dividend of £6,000 (00: £5,000) was paid to the non-controlling interest in Lightbody Stretz Ltd.
28 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 £96,000 was recognised as an expense in the Consolidated Statement of Comprehensive Income in respect of operating leases
(00: £77,000).
Future minimum lease repayments under non-cancellable operating leases at the end of the ﬁnancial periods are as follows:
Land and Buildings Other
2011 00 2011 00
£000 £000 £000 £000
On leases which expire in:
Less than one year 86 - 122 95
Between one and ﬁve years 729 , 1,552 ,37
More than ﬁve years 4,705 5,83 25 3
5,520 7,05 1,699 ,98
29 Capital Commitments
At the ﬁnancial year ended  July 0, the Group had capital expenditure commitments of £5,000 (00: £9,000).
30 Related Parties
Related Party Transactions and Directors’ Material Interests in Transactions
e Group paid £78,86 (00: £83,097) in the year to City Group Plc, a subsidiary of London Finance and Investment Group Plc, which is a substantial
shareholder in Finsbury Food Group. At  July 0, £,6 (00: £,335) was due to City Group Plc. Details of fees are as follows:
• 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 (00: £5,000). 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.
• e amount paid for the provision of company secretarial services and oﬃce services was £33,86 (00: £38,097).
Mr A Cunningham is a Managing Director of United Central Bakeries Ltd. £,000 was paid to a family member for the provision of engineering services
for the year (00: £nil).
A Group subsidiary paid Mr M W Lightbody, a Group Director, £80,000 (00: £76,000) in respect of rent of a property at the Lightbody of Hamilton
site. No balances were outstanding at either year end relating to rent.
A 50% owned subsidiary, Lightbody Stretz Ltd, paid Mr P Stretz, the Managing Director of Lightbody Stretz Ltd, £6,000 (00: £5,000) in respect
of rent for oﬃces. No balances were outstanding at either year end.
e Group paid £33,000 for the supply of ﬁnished products from and received £86,000 for the sale of ﬁnished products to Party Fizz, a company 50%
owned by Mr M W Lightbody, a Group Director, and 50% owned by Mr P Stretz. e amount payable and receivable at the year end was £99,000 and
£9,000 respectively.
A Group subsidiary sold ﬁnished goods with a value of £03,000 to Lightbody Ventures Ltd, a company wholly owned by Mr M W Lightbody, a Group
Director. e amount receivable at year end was £39,000.
Transactions with the Memory Lane pension scheme are detailed in Note .
58 59
30 Related Parties (continued)
Transactions with Key Management Personnel
Directors of the Company and their immediate relatives control 9% (00: 9%) of the voting shares of the Company.
e compensation of key management personnel (i.e. Group Directors, Group Commercial Director, Brand Director, Technical Director and Operating
Subsidiary Managing Directors) is as follows:
2011 00
£000 £000
Fees 153 63
Company contributions to money purchase pension schemes 167 59
Executive salaries and beneﬁts 1,315 ,9
Executive bonuses 261 8
1,896 ,76
Details of share options outstanding at  July 0 for key personnel by exercise price is shown in the table below. Share options held by Group Directors
are set out in Note 6.
Number of Number of
options at options at Earliest Exercise
2 July 3 July Exercise exercise expiry
2011 00 price date date
I Chree 28,300 8,300 .0p 5/05/0 5/05/09
148,788 - 7.5p 9/07/03 9/07/00
72,912 - 7.5p 9/07/03 9/07/07
A Cunningham - 00,000 67.5p //008 //05
- 5,000 88.0p 8/09/0 8/09/03
- ,500 06.0p 05/0/0 05/0/07
171,425 - 7.5p 9/07/03 9/07/00
78,575 - 7.5p 9/07/03 9/07/07
S Staddon - 00,000 .0p 5//00 5//0
- 5,000 5.5p /07/00 /07/05
- 5,000 88.0p 8/09/0 8/09/03
- ,500 06.0p 05/0/0 05/0/07
171,425 - 7.5p 9/07/03 9/07/00
78,575 - 7.5p 9/07/03 9/07/07
K Smith 171,425 - 7.5p 9/07/03 9/07/00
78,575 - 7.5p 9/07/03 9/07/07
P Graddon 171,425 - 7.5p 9/07/03 9/07/00
78,575 - 7.5p 9/07/03 9/07/07
L Trist 171,425 - 7.5p 9/07/03 9/07/00
78,575 - 7.5p 9/07/03 9/07/07
F Swallow 171,425 - 7.5p 9/07/03 9/07/00
78,575 - 7.5p 9/07/03 9/07/07
1,750,000 388,300
31 Post Consolidated Statement of Financial Position Events
Since the period end date there have been no signiﬁcant events.
32 Ultimate Parent Company
Finsbury Food Group Plc is the ultimate parent company. Company Balance Sheet
at 2 July 2011 and 3 July 2010
2011 00
Note £000 £000
Fixed assets
Investments 0 64,434 6,78
64,434 6,78
Current assets
Debtors  12,807 ,7
12,807 ,7
Creditors: amounts falling due within one year  (27,050) (,630)
Net current (liabilities)/assets (14,243) (9,98)
Total assets less current liabilities 50,191 5,80
Creditors: amounts falling due after more than one year 3 (18,420) (,533)
Net assets 31,771 3,77
Capital and reserves
Called up share capital 5 528 57
Share premium account 6 26,918 6,98
Capital redemption reserve 6 578 578
Proﬁt and loss account 6 3,747 ,5
Shareholders’ funds 6 31,771 3,77
ese Financial Statements were approved by the Board of Directors on 3 September 0 and were signed on its behalf by:
Stephen Boyd
Director
60 6
Company Reconciliation of Movements in Shareholders’ Funds
for the 52 weeks ended 2 July 2011 and 3 July 2010
2011 00
£000 £000
Loss for the ﬁnancial year (322) (07)
Retained loss (322) (07)
Impact of share based payments current year charge 73 3
Impact of share based payments credit to subsidiaries (256) -
New share capital subscribed (net of issue costs) 1 5
Foreign exchange translation diﬀerences (2) -
Net reduction to shareholders’ funds (506) (5)
Opening shareholders’ funds 32,277 3,30
Closing shareholders’ funds 31,771 3,77 Notes to the Company Financial Statements
(forming part of the Financial Statements)
33 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  July 0 (prior ﬁnancial year 5 weeks ended 3 July 00). 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.
34 Remuneration of Directors
Details of Directors’ remuneration are set out in Note 6 of the Group’s Financial Statements.
35 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
2011 00
Directors and administrative staﬀ 30 7
e aggregate payroll costs of these persons were as follows:
2011 00
£000 £000
Wages and salaries 2,191 ,0
Social security costs 271 
Other pension costs 107 96
2,569 ,3
36 Employee Share Schemes
Under the ShareSave scheme, 50,00 share options were granted to Group employees on 7 December 00 at an option price of 8.0p. (00: 55,5
shares were granted to Group employees on 0 December 009 at an option price of 0.0p). Details of Directors share options are set out in Note 6 of the
Group’s Financial Statements.
37 Share Based Payments
As set out in Note 6 to the Group Financial Statements, 853,00 (00: ,309,368) of the total ,,900 (00: ,785,5) share options granted during
the year were issued to employees of the Company resulting in a charge to the Company proﬁt and loss account of £,000 (£98,000). e remaining
options were granted to employees of the subsidiary companies with corresponding charges to the relevant proﬁt and loss accounts. Credits relating to
options exercised, cancelled or lapsed after vesting have also been passed to the subsidiaries during the year. e net credit totalled £9,000 (00: charge
£33,000) and has resulted in a reduction in the total cost of investments in the Company balance sheet.
6 63
38 Dividends
ere were no dividends paid during the year.
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 reestablish the dividend as soon as cash ﬂow and debt levels allow.
39 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  July 0.
Direct/Indirect Country of Class of Ownership Ownership
Ownership Incorporation shares held 2011 00
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.
40 Fixed Asset Investments
£000
Cost
At beginning of ﬁnancial year 6,78
Disposals (9)
At end of ﬁnancial year 6,3
Net book value
At 2 July 2011 64,434
At 3 July 00 6,78
e disposals to investments during the year relate to the share option credits of £9,000 (00: cost £33,000) passed down to individual subsidiaries.
41 Debtors
2011 00
£000 £000
Amounts owed by Group undertakings 12,658 ,66
Other taxation 7 0
Deferred taxation 39 0
Prepayments and accrued income 103 3
12,807 ,7 42 Creditors: Amounts Falling Due Within One Year
2011 00
£000 £000
Loan notes 3 36
Bank overdraft 15,702 3,7
Bank loan 1,410 3,33
Trade creditors 51 8
Deferred purchase consideration 3,240 ,60
Amounts due to Group undertakings 5,473 3,56
Other taxes and social security 82 7
Accruals and deferred income 1,089 3
27,050 ,630
e deferred consideration relates to Anthony Alan Foods Limited of £,600,000 and to Yorkshire Farm Bakery and A&P Foods acquisition of £,60,000,
both payable by instalments over the next ﬁnancial year.
43 Creditors: Amounts Falling Due After More an One Year
2011 00
£000 £000
Bank loans and mortgages
Between one and two years 2,291 3,090
Between two and ﬁve years 8,605 ,393
Between ﬁve and ten years 7,104 ,857
Between ten and ﬁfteen years 420 953
Total bank loans and mortgages 18,420 9,93
Deferred consideration - 3,0
18,420 ,533
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.
44 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 .
2011 00
£000 £000
Current liabilities
Current portion of secured bank loans 1,410 3,33
Loan notes 3 36
1,413 3,370
Non-current liabilities
Secured bank loans 18,420 9,93
19,833 ,663
6 65
44 Interest-Bearing Loans and Borrowings (continued)
Terms and debt repayment schedule
Frequency of Year of 2011
Currency Margin Above repayments maturity £000
Mortgage GBP .750% Base Monthly 03 6,095
Term loan GBP 3.500% LIBOR Quarterly 07 14,139
Loan secured on assets GBP .70% Base Monthly 03 187
Loan notes GBP % below Base On demand 0 3
20,424
Amounts falling due within one year 1,628
Amounts falling due after more than one year 18,796
20,424
Unamortised transaction costs (591)
19,833
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,6
Term loan GBP 3.769% LIBOR Quarterly 0 3,89
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 66
Loan notes GBP % below Base On demand 0 36
3,69
Amounts falling due within one year 3,585
Amounts falling due after more than one year 9,88
3,69
Unamortised transaction costs (806)
,663
e base rate at the balance sheet date was 0.5% (00: 0.5%) and LIBOR rate 0.8% (00: 0.7%).
45 Called Up Share Capital
Note 6 in the Group Financial Statements gives details of called up share capital. 66
46 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  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)
Balance at 3 July 2010 527 26,918 578 4,254 32,277
Balance at  July 00 57 6,98 578 ,5 3,77
Shares issued --- 
Impact of share based payments --- (83) (83)
Retained loss for the ﬁnancial year --- (3) (3)
Foreign exchange translation diﬀerences --- () ()
Balance at 2 July 2011 528 26,918 578 3,747 31,771
47 Contingent Liabilities
e Company has guaranteed the overdrafts of its subsidiaries; there was a net cash position at the year end of £,55,000 (00: £,803,000).
48 Related Party Disclosures
Note 30 in the Group’s Financial Statements gives details of related party disclosures.
49 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  in the Group’s
Financial Statements and also referred to in the Business Review. 67
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 reestablish 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 D C Marshall, P J Monk and D C Currie retire by rotation and being eligible oﬀer themselves for
re-election.
e beneﬁcial interests of the Directors on  July 0 and 3 July 00 are set out below:
Ordinary Shares
2 July 2011 3 July 00
E J Beale 40,000 0,000
S A Boyd Nil Nil
D C Currie Nil Nil
J G Duﬀy 1,250,781 ,0,000
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
Mr D C Marshall is deemed to be interested in 8,000,000 (00: 8,000,000) ordinary shares by virtue of his directorship and shareholding in London
Finance & Investment Group Plc.
Since  July 0 Mr S A Boyd subscribed for 76,90 ordinary shares and Mr D C Currie subscribed for 95,38 ordinary shares.
Details of Directors' share options are set out in Note 6 to the Financial Statements.
Since  July 0 the board has granted 6,7,9 options in terms of the Finsbury Food Group Long-Term 006 Plan at an exercise price of 0.5p per
share to the following Directors; J G Duﬀy ,500,000, S A Boyd ,900,000 and D C Currie ,07,9.
Details of the emoluments of the Directors are given in Note 6 to the Financial Statements.
Share Capital
Details of the changes in the share capital of the Company during the year are set out in Note 6 to the accounts.
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  September 0:
Number % of Issued
of shares share capital
Mr Martin Lightbody 3,700,000 5.7%
London Finance & Investment Group P .L.C. 8,000,000 5.0%
Aviva Investors ,98,879 3.7%
Mr Trevor David Wild ,630,000 3.%
Research and Development
Research and development expenditure is written oﬀ in the year in which it is incurred. 68
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 Consolidated Statement of Financial Position date there were 68 days’ purchases outstanding (00: 59)
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, one bank term loan, asset ﬁnance facilities, a conﬁdential invoice ﬁnancing 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 £7. million is available. is includes
an overdraft facility of £.8 million, undrawn invoice discounting facility of £.6 million and unused asset ﬁnance of £0.8 million. e interest rate risk is
managed through four interest rate swap transactions, of which three are ﬁxed, one is amortising. e total balance of these swaps was £.3 million at the
period end date. 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 .
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 £7,000 (00: £,000) 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.
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
• they 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. 69
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 0,67,979 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. 70
Statement of Directors’ Responsibilities
in Respect of the Directors’ Report and the Financial Statements
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
3 September 0 7
Report of Corporate Governance
Although not formally required to do so, the Directors have sought to embrace the principles contained in the UK Corporate Governance Code (00),
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 30. e Company is not yet large enough to justify the employment of a full time
Company Secretary.
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 7.
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 73 to 7.
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 website (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. 7
Audit Committee Report
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 three 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 8.
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. Additional resource has been recruited to assist
with the reporting of risks, policies and procedures.
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. The 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 speciﬁcally discussed issues arising from:
• the growth of sales in Europe
• the closure of the deﬁned beneﬁt scheme
• the settlement of prior year tax issues, and
• bank facility utilisation and renegotiation.
Certain tax and pension 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 73
Remuneration Committee Report
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  July 0 are disclosed in Note 6 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.
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. 7
Long-Term Incentive Scheme
e Company has a Long-Term Incentive Plan for Executive Directors. As previously announced, and subsequent to the year end, the committee
recommended and the board agreed substantial award of share options to the Executive Directors as set out in Note 6 to the Accounts. is one oﬀ
grant of share options is a reward for past performance and an incentive for future performance.
Group SAYE Scheme
e Group SAYE ShareSave Scheme was introduced in January 008, and a fourth tranche of options was granted following an invitation to qualifying
employees in December 00. Demand for the options was higher than could be met and grants were scaled back to 9% of the application. 50,00
options were granted under this Scheme to 75 employees with an exercise price of 8.0p per share, giving rise to a charge in the year of £,000 and
an annual charge of £0,038 to November 0. Annual awards under this Scheme are limited to approximately % of the shares in issue.
Ian Farnsworth
Chairman of the Remuneration Committee 75
We have audited the Financial Statements of Finsbury Food Group Plc for the 5 weeks ended  July 0 set out on pages  to 66. 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 auditor’s 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 Auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 70, 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 and express an opinion on 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/private.cfm
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  July 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
3 September 0
Independent Auditor’s Report
to the Members of Finsbury Food Group Plc 76
Notice is hereby given that the 87th 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 ursday  November 0 for the following purposes:-
Ordinary Business
. To receive the Directors' Report and Financial Statements for the year ended  July 0.
. To re-elect as a Director Mr David Marshall who retires in accordance with the Company's Articles of Association and being eligible oﬀers
himself for re-election.
3. To re-elect as a Director Mr. Paul Monk 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 Crawford Currie 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 £66,0;
(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 £06,79 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 0,67,979 representing 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;
Notice of Meeting 77
(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 3 September 0
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 9.30 a.m. on Tuesday,  November 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. 78
Advisers
Registered Oﬃce
Maes-y-coed Road
Cardiﬀ
CF XR
Tel: 09 0 357 500
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 Number
0368
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 79 Designed and Produced by www.rare-breed.co.uk
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. Designed and produced by Rare Breed ﬁnsburyfoods.co.uk