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Risk Management


Our approach

As with any business we face risks and uncertainties. We believe that effective risk management supports the successful delivery of our strategic objectives. We have an established risk management framework to identify, evaluate, mitigate and monitor the risks we face as a business. Our risk management framework incorporates both a top-down approach to identify our principal risks and a bottom-up approach to identify our operational risks. The Executive Leadership Team ('ELT') perform a robust risk assessment on a periodic basis and the output is reviewed with the Audit Committee at least twice a year. This review includes an assessment of the movement in the risks, the strength of the controls relied on and the status of mitigating actions. The principles of risk management have also been embedded into the day-to-day operations of the business units and corporate functions. The long-term viability statement (see below) provides a broader assessment of the longer-term prospects of the Group after consideration of the principal risks and availability of funding.


Principal risks and uncertainties

The Board has carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. We are exposed to a variety of other risks but we report those we believe are likely to have the greatest current or nearterm impact on our strategic and operational plans and reputation. These risks (gross) and uncertainties are identified in the heatmap opposite (in no particular order), followed by a more detailed description, including key mitigating activities in place to address them. We have also considered the broad potential impacts of the COVID-19 pandemic, which impacts a number of our principal risks. The ‘Changes since 2018/19’ highlight changes in the profile of our principal risks or describe our experience and activity over the last year.

Risk appetite

Our approach is to minimise exposure to reputational, financial and operational risk, while accepting and recognising a risk/rewards trade-off in pursuit of our strategic and commercial objectives. As a food manufacturing company, with many well-known brands, the integrity of our business is crucial and cannot be put at risk. Consequently, we have a zero tolerance for risks relating to Occupational Health & Safety and food safety. We operate in a challenging and highly competitive market place and, as a result, we recognise that strategic, commercial and investment risks will be required to seize opportunities and deliver results at pace. We are therefore prepared to make certain financial and operational investments in pursuit of growth objectives, accepting the risks that the anticipated benefits from these investments may not always be fully realised. Our acceptance of risk is subject to ensuring that potential benefits and risks are fully understood and sensible measures to mitigate those risk are established.

Emerging risks

There are two ways in which we have identified our emerging risks in this report. First, for our principal risks, we have noted in the following pages some emerging threats regarding these risks. These uncertainties may relate to future regulatory, economic or political changes. Secondly, we also face a number of uncertainties where an emerging threat may potentially impact us in the longer term. In some cases, there may be insufficient information available to understand the likely scale and impact of the risk. We also might not be able to fully define a mitigation plan until we have a better understanding of the threat. We have created a watchlist of these risks which we will review on a regular basis to monitor any changes to the likely impact on our business. Some examples of these are:

Healthy eating

The UK Government has in recent years introduced guidelines and legislation to help influence consumers to make healthy eating choices, for example the Department of Health and Social Care (‘DHSC’) issued proposals on curbing promotions on High Fat, Salt and Sugar (HFSS) products. Whilst we are confident that our product ranges cater to and enable healthy choices for consumers, continued government intervention in this area could have an impact on our product formulation and innovation pipeline. We will continue to engage with the DHSC on any proposed legislation.

Climate change

There is clear evidence that global temperatures are rising rapidly and a consensus among scientists and policymakers that human-made greenhouse gases (‘GHGs’) are having a direct impact on the climate. We support the view that urgent action is needed to address climate change. Climate change poses a number of potential risks for us from both a physical (e.g. isolated events such as increased intensity of storms, heatwaves or higher average operating temperatures) and regulatory (e.g. new or strengthened carbon reduction commitments) perspective. For further information on how we are working to reduce our environmental impact see the responsibility section of this website.



Click an image below to see a detail explanation.

Risk and potential impact

Our business has been subject to a period of prolonged uncertainty owing to political developments related to Brexit which presents a significant risk to our business and may affect our supply chain and expose us to the risk of a further devaluation of sterling against the euro, thereby increasing the Group’s cost base. The outbreak of COVID-19 has created wide macroeconomic uncertainty that has the potential to impact the Group, although to date it has seen an elevated level of consumer demand. A prolonged period of disruption could expose the Group to operational risks such as securing supplies of key ingredients which could disrupt production or increase costs (see Risk 3). A more detailed assessment of the potential impact of the UK's withdrawal from the EU and COVID-19 on our business and the viability statement can be found below.

How we manage it
  • We manage the impact of commodity price inflation and foreign exchange volatility through hedging activity and ongoing supplier risk management.
  • A cross-functional committee headed by the Group CFO and Group Procurement Director has been put in place to manage the Group’s readiness for Brexit. See below for more details.
  • The Executive Leadership Team closely monitors the COVID-19 threat to ensure appropriate incident and response plans are in place. Above all, we maintain our commitment to the health and safety of our employees and customers by putting people first.

Changes since 2018/19
  • The Withdrawal Agreement and Implementation Bill received Royal Assent on 23 January 2020 and the UK left the EU on 31 January 2020. The UK subsequently entered a transition period which is due to end on 31 December 2020. The UK Government imposed a lockdown on the general population with the exception of key workers on 23 March 2020 to slow the rate of COVID-19 infections. As a food manufacturing business our factories remained open and modifications were made to enable social distancing while non-factory employees were told to work remotely.
Risk and potential impact

Risk and potential impact As a primarily UK based company, our sales are concentrated with a relatively small number of major customers who operate in a highly competitive market. Actions taken by these retailers (for example changes in pricing and promotion strategies), may negatively impact on our financial performance and can also have an impact on the overall market for our products.

How we manage it
  • We have strong relationships with the major retailers built on the strength of our brands, our expertise in our categories and shopper insight.
  • We have a programme of continuous innovation rooted in customer insight and designed to build category growth for our customers and brands.
  • We continue to develop our International business which reduces dependence on the UK market.

Changes since 2018/19
  • The discounters continue to outperform the major retailers who could respond by further dropping prices and moving to own-label products. This could negatively impact on our margins and demand for our brands.
  • Our international business has underperformed. We have a new strategy in place with the intent of delivering sustainable growth (see Risk 9).
Risk and potential impact

Delivery of our strategy depends on our ability to minimise operational disruption from issues with facilities, factory infrastructure as well as procurement and logistics functions. Supply chain weaknesses, e.g. disruption due to unforeseen events and single supplier risks, may impact negatively on our reputation, financial performance and key customer relationships.

How we manage it
  • We have a crisis management process in place and business continuity plans are reviewed and refreshed on an ongoing basis.
  • Insurance coverage mitigates against the financial impact of material site issues.
  • We consolidated our third party warehousing and distribution capability to increase our operational efficiency. There are close relationships at all levels of the business with our outsourced logistics provider.
  • Procurement category plans are in place to mitigate against single supplier risk.
  • We have robust quality management standards applied and rigorously monitored across our supply chain.

Changes since 2018/19
  • The COVID-19 pandemic has caused significant disturbance to global supply chains. Our suppliers have risen to the challenge to continue supplying us with raw materials and bought-in finished goods. Our Procurement, Operational and Technical teams have also managed to source alternative suppliers.
  • We have seen unprecedented levels of demand from consumers and our customers. Our factories have had to increase production levels while putting modifications to ensure compliance with WHO and UK Government guidelines to keep employees safe.
  • We worked with our logistics partner to ramp up operations at our Tamworth distribution centre to cope with the extremely high levels of orders and maintain customer service levels.
Risk and potential impact

A successful cyber-attack or other systems failure could result in us not being able to manufacture or deliver products, plan our supply chain, pay and receive money, or maintain proper financial control. This could have a major customer, financial, reputational and regulatory impact on our business.

How we manage it
  • We use a range of techniques including firewalls, anti-virus software, and duplicated systems that are comparable to those used in peer companies.
  • Cyber insurance has been purchased to insure the Group against potential losses arising from a cyber-security breach.

Changes since 2018/19
  • Our information technology infrastructure remains secure and has been able to cope with the additional network traffic as a result of our employees working from home during the lockdown with no significant loss of connectivity or productivity.
  • We are working to enhance the security of our factory operational technology environment.
Risk and potential impact

Our business is subject to a number of legal and regulatory requirements and must continuously monitor new and emerging legislation (domestic and international) in areas such as Health & Safety, Listing Rules, competition law, intellectual property, food safety, labelling regulations and environmental standards. Failure to comply with such requirements may have a significant negative impact on our reputation and incur financial penalties.

How we manage it
  • We have leading food industry processes in place to manage Health & Safety and food safety issues (including an ongoing programme of internal and external audits).
  • We have dedicated Legal and Regulatory teams in place to monitor the laws and regulations to ensure compliance, protect intellectual property and defend against litigation where necessary.
  • We work closely with our external advisers and the regulators, government bodies and trade associations regarding current and future legislation which would impact upon the Group.
  • Whistleblowing processes are in place.

Changes since 2018/19
  • There were no significant changes to this risk profile in the current financial year.
Risk and potential impact

Demand for our products is subject to changes in consumer trends and government legislation. Furthermore, sales of many of the Company’s products can be adversely affected by warm seasonal weather conditions. Failure to keep out product ranges comtemporary and relevant to out cinsumers would lead to a diminishing consumer demand which will impact negatively on our reputation and financial performance.

How we manage it
  • We have a programme of innovation, based on deep rooted consumer insights, to continuously modernise our portfolio of distinctly British brands to ensure they remain relevant to today’s shoppers.
  • We continue to review the impact of weather on sales during our monthly product performance reviews.

Changes since 2018/19
  • The DHSC's proposal to curb multi-buy promotions for HFSS (High Fat, Salt and Sugar) products by late 2020 is still under consultation. We will continue to engage with the DHSC during the consultation process.
  • The current increased demand of grocery products has placed operational pressure on our major customers, some of whom have consequently delayed their range reviews. This may delay the launch of our new product ranges but this is balanced against increased demand for our core product ranges.
Risk and potential impact

We may be unable to attract and retain the critical capabilities, or develop the skills, required by the business to deliver our strategy, business plan and projects.

How we manage it
  • We continue to invest in colleague development and engagement initiatives on a focused basis.
  • We have processes in place to attract talent into the business with the right capabilities and behaviours, and recruit the majority of colleagues through our ‘in-house’ team.
  • We have succession plans in place to retain and progress our internal talent pipeline.
  • We have a well-established and successful graduate recruitment and development programme, and invest heavily in apprenticeship training.
  • We benchmark pay to make sure we remain competitive in the market.

Changes since 2018/19
  • The Group introduced a leadership-led development programme to embed Diversity & inclusion throughout the business.
  • There has been significant investment in on-line learning through the LinkedIn learning platform.
  • As a result of COVID-19, we introduced measures in line with the government’s advice on social distancing, including remote working arrangements and even more stringent Health & Safety measures in our sites, to protect the well-being of our colleagues.
Risk and potential impact

Description and potential impact Our balanced strategy seeks to deliver revenue growth, cash generation and cost efficiency. The strategy focuses marketing investment behind key brands. Our strategy may take longer than expected to deliver results which may impact on the speed at which we can deliver shareholder value.

How we manage it
  • Given the seasonal nature of many of our brands, media investment is targeted in the periods of peak consumer demand and through the most cost effective channels.
  • Our new and existing product development programmes are based on deep consumer insight and continue to make our product ranges more relevant to the ever-changing lives of our consumers.
  • Our strong strategic relationships with our key customers facilitate the creation and joint ownership of plans for mutual growth.

Changes since 2018/19
  • Our branded growth strategy for delivering new product innovation based on consumer trends, together with high quality advertising behind our major brands, continues to work very well.
  • We concluded our strategic review which resulted in a landmark pensions agreement between the Company and its pension Trustees.
  • Our strategy has delivered trading profit at the top end of market expectations on the back of consistent growth. Volumes in the fourth quarter rose sharply to fulfil increased consumer demand as a result of the COVID-19 pandemic in the last three weeks of March 2020.
Risk and potential impact

Our strategy has delivered trading profit at the top end of market expectations on the back of consistent growth. Volumes in the fourth quarter rose sharply to fulfil increased consumer demand as a result of the COVID-19 pandemic in the last three weeks of March 2020.

How we manage it
  • We carry out careful due diligence prior to entering a new market.
  • We closely monitor current and forecast performance of our business and where required adapt our marketing approach.

Changes since 2017/18
  • The Group has reviewed and realigned the strategy for the International business to position it to achieve sustainable growth.
  • A new International structure is in place to deliver the international strategy.
Risk and potential impact

We are the sponsoring employer of a number of large historical pension schemes and also have significant amounts of long-term debt, these items taken together are a substantial liability on the balance sheet. Tri-annual pension fund valuations, and hence requests for deficit repair contributions (‘DRCs’), are heavily impacted by financial market conditions over which the Group has no control. Trustees could potentially request DRC’s which are not compatible with the Group’s ability to pay. Furthermore, our ability to manage our debt capital structure may be impacted by market trends which are outside of our control, e.g. interest rate movements or volatility in the high yield debt markets. Our revolving credit facility expires in December 2020.

How we manage it
  • Our executive directors are actively engaged with the pension Trustees on scheme funding and investment matters. The RHM scheme has a high degree of hedging.
  • We have a strong relationship with our banking group and continue to review our debt capital structure and revolving credit facilities.

Changes since 2017/18
  • We announced a landmark pensions agreement between the Group and its pension Trustees. The agreement, once executed, could potentially provide a more secure future for the Group’s pension scheme members and reduce future funding requirements.
  • The Group continues to monitor performance of the pension assets.
  • The Group has ensured that it has adequate credit facilities in place and continues to monitor its covenants during the COVID-19 lockdown.

UK Withdrawal from the EU

The UK’s withdrawal from the EU has the potential to significantly change the terms of trade which currently exist between the EU and the United Kingdom. The Group will continue to monitor the ongoing political situation and upcoming trade negotiations. While the outcome of these talks is difficult to predict, the Group has considered a number of different scenarios and appropriate mitigation plans have been developed.

Our fundamental objective is to ensure that we offer continuity of service and supply to our customers, wherever they are, and the purpose of this statement is to provide further information on how we plan to achieve this objective.


Although we are a UK based business we purchase a meaningful amount of our commodities from the EU, which leaves us exposed to movements in Sterling and Euro quoted commodities. Our supply chain is also primarily UK based although we do have a seasonal labour workforce from EU countries in our Sweet Treats business.

Focus areas

Our initial risk assessment identified a number of key areas that may potentially be impacted. If a UK-EU Free Trade Agreement (FTA) is not agreed by the end of the 2020 transition period, and no extension of talks is agreed, the default trading scenario implies the application of tariffs in line with World Trade Organisation (WTO) rules. This may have implications for the Group which will need to be managed through its sourcing policy and pricing model and by utilising operational flexibility to realign supply chains as appropriate. Reduced access to EU labour supply and a more restrictive migration policy may result in a tighter or more expensive UK labour market.

We recognise that the current climate makes the final outcome of the negotiations between the UK and the EU more uncertain. While we would prefer a negotiated trade deal, we are prepared for any potential outcome, including trading on WTO terms. Our established Brexit Committee has fully assessed each area and the likely impacts have been evaluated. The Group has taken reasonable steps to mitigate the potential risks. The key risks identified, and the actions taken are as follows:

Trading model

We made minor amendments to our internal trading model within Europe (principally the Republic of Ireland (ROI)) to ensure that our ability to move UK manufactured product into the EU and vice-versa is not at risk. These amendments include reviewing which ports and airports are best placed to offer the appropriate service levels as well as ensuring that we have the right Group companies (i.e. those with full EU recognition) looking after our imports and exports. We do not expect customers or suppliers to be significantly affected by our changes.

Customer service and supply chain

We worked with our customers and supply chain partners to prepare for a WTO trading arrangement. We developed contingency plans to ensure supply continuity and the effective operation of our manufacturing sites and the likely resulting confusion and delays at borders. These included a programme of building our inventory of finished goods and critical raw materials for our key products, which we are able to execute while closely monitoring political developments. We also secured additional warehousing capacity in ROI to ensure continuity of supply.


We have researched the implications of potential tariffs and considered the potential impact on our cost base and explored strategies to mitigate them, should the UK be required to trade on WTO terms. The actions we have undertaken include a review of our supply chain for components and raw materials, a plan to build stocks in-country, i.e. ROI, prior to the date the UK leaves the EU and changes to systems and processes to capture and report on the new tariffs under any new trading arrangement.


The Brexit Committee has reviewed the potential regulatory impact of moving to WTO terms on our products, which are produced and packaged in the UK. We have put in place measures to ensure our products remain compliant so as to protect customer service levels.

Viability statement

The Board has determined that the most appropriate period over which to assess the Company’s viability, in accordance with the UK Corporate Governance Code, is three years. This is consistent with the Group’s business model which devolves operational decisionmaking to the businesses, each of which sets a strategic planning time horizon appropriate to its activities which are typically of three years duration. The Board also considered the nature of the Group’s activities and the degree to which the businesses change and evolve in the relatively short-term. The Board considered the Group’s profitability, cash flows and key financial ratios over this period and the potential impact that the principal risks and uncertainties set out in this risk management report could have on the solvency or liquidity of the Group.

Sensitivity analysis was applied to these metrics and the projected cash flows were stress tested against a number of severe but plausible scenarios. As of 28 March 2020, £92m of committed borrowing facilities available to the Group were undrawn. The Board considered the level of performance that would cause the Group to breach its debt covenants (see note 2 of the financial statements in the 2019/20 Annual Report) and a variety of factors that have the potential to reduce trading profit substantially. These included the rate and success of the Group’s strategy; and macroeconomic influences such as fluctuations in world currency, commodity markets, climate change, COVID-19 and the implications of the UK’s withdrawal from the EU.

The Board has considered the principal risks or uncertainties and the potential impact of these on the Group’s profitability or available cash resources. In assessing the Group’s viability, the Board also considered all the severe but plausible scenarios simultaneous materialising and for a sustained period, in conjunction with mitigating actions such as reducing discretionary costs. The likelihood of the Group having insufficient resources to meet its financial obligations and remain within its covenants is unlikely under this analysis.

Based on this assessment, the Board confirms that it has a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period to 1 April 2023.