Glossary of general terms

This glossary includes some specific financial and business terms used in our Annual Reports and website. It is not exhaustive and many of the definitions have been interpreted from a Bakkavör Group perspective and so may not be pertinent to other businesses or countries.

AC Nielsen
An international marketing research company

Action Medical Research
A national UK charity dedicated to building a healthier future for everyone by funding research into many serious diseases and conditions, including premature birth, cerebral palsy, epilepsy, Parkinson’s disease etc. – www.action.org.uk

Actuarial valuation
Professional assessment of the funding position of a company’s pension scheme, based on assumptions regarding future events (including average lifespan of members, returns on the different investment types etc).

AEA Energy & Environment
A consultancy that assists the public and private sector in the UK and internationally to tackle challenges regarding  sustainable energy, climate change, waste management and other environmental issues – www.aea-energy-and-environment.com

Amortisation
Depreciation of an intangible asset – for Bakkavör, the cost of goodwill spread over the number of years which are judged to benefit.

Associate/ Associated company
Entity over which Bakkavör Group has significant influence and that is neither a subsidiary nor a joint venture. Significant influence means the power to participate in the financial and operating policy decisions of the investee but not to have control or joint control over those policies.

Base rate
Annual interest rate on which lending charges are calculated by British banks.

Basis point
One hundredth of a percentage point (0.01%), used in quoting movements in interest rates or yields on securities.

Book value
The net value of assets or liabilities (cost, less any amounts written off) held in the books of account at a point in time. 

Bond
A certificate of debt issued to raise funds.  Bonds typically pay a fixed rate of interest and are repayable at a fixed future date.

British Retail Consortium (BRC)
Trade association representing retailers in the UK.

BSI British Standards
The UK’s National Standards Body (NSB) that works with manufacturing and service industries, businesses, governments and consumers to facilitate the production of British, European and international standards – www.bsi-global.com

CAGR (Compound Annual Growth Rate)
The year-over-year growth rate over a specified period of time.

Capital commitment
The situation where a company has contractually agreed to undertake some capital expenditure before the period end, but the money has not yet been spent nor the asset received.

Capital expenditure (Capex)
Payment for acquisition of a longer-term asset e.g. buildings, machinery. 

Carbon Trust
A private company set up by the UK Government to support the development of low carbon technologies, and help the business and the public sectors to cut carbon emissions – www.carbontrust.co.uk/default.ct

Cash flow
A measure of the actual cash generated by the business rather than accounting profit.  Free cash generated by operating activities is defined as the amount of cash generated after meeting all its obligations for interest, tax and after investments in tangible assets.

Competition Commission
An independent UK public body established by the Competition Act 1998. It conducts in-depth inquiries into mergers, markets and the regulated industries. www. Competition-commission.org.uk

Consumer Price Index (CPI)
A basket of goods/services whose price is calculated monthly and which provides a broad measure of the level of inflation.

Continuing
Describes the ongoing element of a company’s results and excludes the results of disposed or discontinued activities.

Corporate governance
The code of conduct by which the Group is directed and controlled.

Courtauld Commitment
A voluntary agreement which numerous major grocery organisations in the UK have adopted with the aim of reducing the amount of packaging waste by 2010 – www.wrap.org.uk/retail/courtauld_commitment/index.html

Datamonitor
Business information company, specialising in industry analysis.

Defra
A UK Government Department for the Environment, Food and Rural Affairs that fights climate change and greenhouse gas emissions further to working on securing a healthy, resilient, productive and diverse natural environment – www.defra.gov.uk

Deferred tax
See Corporation tax.

Deliciouslyorkshire Awards
Awards established by The Regional Food Group for Yorkshire and Humber to showcase outstanding produce and celebrate the achievements of producers and suppliers of the very best food and drink in the region – www.deliciouslyorkshire.co.uk

Depreciation
The systematic allocation of the depreciable amount of an asset over its useful life. For an intangible asset, this is generally referred to as amortisation.

Derivatives
Financial instruments (for Bakkavör Group, mainly foreign currency forward contracts) to hedge risks associated with foreign currency fluctuations.

Dividends
The proportion of a company’s profits paid to shareholders, usually declared as a dividend per share. 

Earnings
Profit available to ordinary shareholders, after all operating expenses, interest charges, taxes and preference dividends have been deducted.

Earnings per share (EPS)
Earnings divided by the number of ordinary shares in issue.

EBIT
Earnings (as above) Before Interest and Tax.

EBITDA           
Earnings (as above) Before Interest, Tax, Depreciation and Amortisation.

Effective tax rate (%)
See Income tax.

Equity Ratio
Used to describe the relationship between debt and equity. Calculated by dividing the company net debt by the shareholders’ equity.

Ethical Trading Initiative
An alliance of companies, non-government organisations and trade unions working to promote and improve the implementation of corporate codes of practice which cover supply chain working conditions. www.ethicaltrade.org.

Eurostat
The Statistical Office of the European Communities.

Executive Directors
Board Directors who are also full-time employees of the company and have management responsibility.

Fairtrade
An alternative approach to conventional international trade. It is a trading partnership which aims at sustainable development for excluded and disadvantaged producers. It seeks to do this by providing better trading conditions, by awareness raising and by campaigning. www.fairtrade.org.uk

FESE (Federation of European Securities Exchanges)
The foremost aim of FESE is to represent and promote the common interests of securities exchanges in Europe. www.fese.be

Financial Supervisory Authority (FSA)
Icelandic state authority whose role is to ensure that the activities of parties (e.g. financial institutions) subject to supervision are in accordance with laws and regulations and are consistent with sound and proper business practices. www.fme.is

Food Standards Agency (FSA)
An independent UK Government department set up by an Act of Parliament in 2000 to protect the public’s health and consumer interests in relation to food. www.food.gov.uk

Functional currency
A company’s working currency. For Bakkavör Group, GBP.

Gangmasters Licence
A licence temporary labour providers in the UK are required to obtain in order to operate legally in the agriculture, food processing and packaging sectors. www.gla.gov.uk

GBP
Pound sterling. The UK’s official currency.

GDP
Gross Domestic Product.

Goodwill
The excess of the cost of acquisition over the company’s interest in the fair value of the identifiable assets and liabilities at the date of acquisition.

Hedging
Reducing exposure to risk of loss resulting from fluctuations in exchange rates, commodity prices, interest rates etc.  Typical tools include forward foreign exchange contracts and interest rate swaps.

Impairment
Impairment write-downs are made when the carrying amount of an asset or a cash generating unit exceeds the higher of the estimated value in use and the fair value less costs of disposal.

Income tax
The tax on company profits or losses. This is influenced by the tax rate applicable to the size of the company and the level of profits and any differences between accounting treatment and tax treatment. This gives rise to the effective tax rate, which expresses tax payable as a percentage of profit. Deferred tax relates to the tax that may be payable in future as a result of the differences between accounting treatments and tax treatments adopted to date.

Institute of Grocery Distribution (IGD)
Research organisation for the UK food and grocery industry. www.igd.com.

Interest cover
The number of times a company could pay its most recent interest charges out of its net profit after tax.

International Financial Reporting Standards (IFRS) 
Set of accounting standards, currently issued by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS).

International Labour Organisation (ILO)
The United Nation’s specialised agency which seeks the promotion of social justice and internationally recognised human and labour rights. www.ilo.org

International Organisation for Migration (IOM)
An intergovernmental organisation established in 1951, which is committed to the principle that humane and orderly migration benefits migrants and society. www.iom.int

ISK
Icelandic Króna. Iceland’s official currency.

iSuppli
A north American corporation which provides facts, analysis and advice to the electronics industry. www.isuppli.com

Joint venture
Contractual arrangement whereby a company and other parties undertake an economic activity that is subject to joint control, i.e. the strategic financial and operating policy decision relating to activities requires the unanimous consent of the parties sharing control.

Leatherhead Food International
An international research, information and training centre for the food and drinks industry.

LIBOR
London Inter Bank Offered Rate – the rate of interest at which banks will lend in the inter-bank market. 

Management Board
Bakkavör Group’s executive operational team.

Market capitalisation
Value at current market prices of a company’s share capital.  Calculated by multiplying current share price by the number of shares in issue.

Minority interests
Arise when subsidiary undertakings are not 100% owned by the parent company.  Amounts reflecting the share of the results in the period, or assets at the balance sheet date, of the subsidiaries that are not attributable to the group.

Mintel
Global supplier of consumer, media and market research.

Net debt
The excess of the company’s borrowings over its cash and liquid resources.

Non-government organisation (NGO)
Any local, national, or international organisation whose members are not employed by a government.

NOREX Alliance (NOREX)
An alliance between the Nordic and Baltic exchanges in Denmark, Finland, Estonia, Iceland, Norway, Latvia and Sweden giving single access to the Nordic and Baltic equity markets. www.norex.com

Office of Fair Trading (OFT)
UK’s competition authority which enforces consumer protection law and competition law, reviews proposed mergers and conducts market studies. www.oft.gov.uk

OMX The Nordic Exchange
Bakkavör Group is listed on OMX The Nordic Exchange, formerly Iceland Stock Exchange, acquired by OMX the Nordic Exchange in October 2006. http://omxnordicexchange.com/

Office for National Statistics (ONS)
The government department that provides UK statistical and registration services. www.statistics.gov.uk

Organic growth
Growth achieved by increasing the scale of business by internal activities as opposed to acquiring other established businesses.

Price sensitive information (PSI)
Any information which if in the public domain could cause the share price to move.

Quick ratio
A measure of a company’s liquidity and ability to meet its obligations. Quick ratio (or acid test ratio) is obtained by subtracting inventories from current assets and then dividing by current liabilities.

Record date
The date on which a shareholder should be entered on the company’s share register to qualify for a dividend payment.

Renminbi (RMB)
The currency of the People’s Republic of China, the base unit of which is the yuan (CNY).

Retail Price Index (RPI)
A basket of goods/services whose price is calculated monthly and which provides a broad measure of the level of inflation.

SAXESS
Electronic trading system used on the OMX Exchanges (Copenhagen, Stockholm, Helsinki, Iceland, Tallinn, Riga and Vilnius Stock Exchanges).

SEDEX
Ethical Data Exchange (SEDEX) – a not for profit organisation which aims to be recognised throughout global supply chains as the first choice for the collection, management, analysis and reporting of ethical data – www.sedex.org.uk

Shareholder value
The value a company generates for shareholders in terms of both dividends and growth in the company’s share price.

Sharesave scheme
A savings related share option scheme whereby employees are granted an option to purchase shares in the company after a certain time period, usually at a discount of up to 20% to the market price at date of grant.  Employees save regularly to accumulate the funds to exercise the option.

Store format IGD definitions

Cash-and-carry - Large format stores retailing goods to members only. The income from the membership system means that prices can be kept low. The shopping environment and pack sizes are tailored to both individuals and businesses. Examples include Metro, Costco and SAM’S Club.

Convenience and forecourt – stores are typically under 300 square metres and offer specific convenience-focused ranges. Forecourt convenience stores are located on or next to a supermarket/hypermarket site. Examples include Tesco Express, AH to Go and Petit Casino.

Hard and soft discount – Typically small to medium sized stores which usually stock less than 3,000 product items. Maintain a strict focus on price, usually EDLP (Every Day Low Prices). The stores stock a limited fresh food provision. Examples include Aldi, Lidl, Netto, Leader Price, Dia and Plus. Holds both retailer private label and manufacturer branded ranges.

 

Hypermarket – Large stores with sales areas greater than 6,000 square metres. Non-food is a substantial part of their offer. Examples include stores from Carrefour, Auchan and Wal-Mart.

 

Limited-line discount supermarket – medium sized stores range limited to no more than 7,000 product items. Increased range of fresh foods compared to hard and soft discounters – role of retail private label and branded products can vary. Examples include Mercadona and Colruyt.

 

Supermarket/ Superstore – a wide ranging category of stores with sales areas between 300 and 6,000 square metres (superstores mainly 2,500 sqm and above) which predominantly sell food. Stores described as ‘Compact Hypermarkets’ by some retailers propose a similar offer to stores others categorise as superstores depending on size of non-food offering. Examples include Tesco, Asda, Albert Heijn, Delhaize, Trader Joe’s.

The Food Processing Awards 2007
Annual awards of the Food Processing online magazine designed to recognise companies whose efforts and achievements have made a significant contribution to professional excellence in the food industry.

The Hartman Group
An American market research company providing a consumer-centric approach for insights & action, studying consumers in their natural environments. www.hartman-group.com

The Recycling Factory
A global company providing ethical recycling solutions aimed at reducing landfill, reduce C02 emissions etc. – www.therecyclingfactory.co.uk

Taylor Nelson Sofrès (TNS)
Global market information group. www.tnsinfo.com

World Health Organisation (WHO)
A specialised agency of the United Nations that acts as a coordinating authority on international public health.

Working capital
The cash that the business has tied up in funding day to day operations – this includes the value of the stock it holds, the amount owed to it in trade debts by customers less any amounts that are funded by our suppliers/creditors in the form of our trade debts to them.

World Bank
The World Bank is made up of two unique development institutions owned by 185 member countries—the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Each institution plays a different but supportive role in the World Bank’s mission of global poverty reduction and the improvement of living standards. www.worldbank.org