Bakkavor : 2022 Annual Report and Accounts

Adapting

SUCCESSFULLY TO CHANGE

Bakkavor Group plc Annual Report & Accounts 2022

CONTENTS

STRATEGIC REPORT
Our business at a glance	2
Key performance indicators	4
Chairman's statement	6
A final message from Agust Gudmundsson	8
Chief Executive's overview	10
How we create value	16
Our markets	18
Our strategy	22
Our people	32
Divisional review: UK, US, China	36
ESG: Trusted Partner	40
ESG: TCFD	56
Stakeholder engagement	66
Financial review	72
Risk management and risks	76
Viability statement	87
GOVERNANCE
Chairman's governance overview	88
Corporate Governance Compliance statement	89
Group Board and Management Board	92
Corporate governance report	98
Nomination Committee report	113
ESG Committee report	119
Audit, risk and internal control	122
Audit and Risk Committee report	124
Directors' remuneration report	132
Directors' report	152
Statement of Directors' responsibilities in respect	158
of the Financial Statements
FINANCIAL STATEMENTS
Independent Auditors' report	159
Consolidated income statement	169
Consolidated statement of comprehensive income	170
Consolidated statement of financial position	171
Consolidated statement of changes in equity	172
Consolidated statement of cash flows	173
Notes to the Consolidated Financial Statements	174
Company statement of financial position	217
Company statement of changes in equity	217
Notes to the Company Financial Statements	218
COMPANY INFORMATION
Advisers and registered office	223

Disclaimer - forward-looking statements

This report includes forward-looking statements. By their nature, forward-looking statements involve risk, uncertainty and other factors, which may cause the actual results and developments of the Group to differ materially from any results and developments expressed or implied by such forward-looking statements. You should not place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this Annual Report and Accounts. The Group is under no obligation to publicly update or review these forward-looking statements other than as required by law.

A refined focus to deliver returns through a clear strategy

Our strategy remains focused on driving returns from our market-leading position in the UK, accelerating profitable growth internationally, driving operational excellence and being a trusted partner for all of our stakeholders.

pg 22

Robust financial performance and in a position of financial strength

Group like-for-like revenue up 10.6% to over £2bn and Group adjusted operating profit in line with market expectations.

Maintenance of a strong balance sheet and good cash generation mean we are well-placed to support future growth.

pg 72

Investment in our people and embedding our new values

A positive impact from our pay and engagement activities, with new values helping shape our culture and behaviours, so we can all be 'Proud to be Bakkavor'.

pg 32

Financial highlights

£2,139.2m	£2,069.0m
Group reported revenue	Group like-for-like revenue
(2021: £1,871.6m)	(2021: £1,871.6m)
£37.8m	£89.4m
Operating profit	Adjusted operating profit
(2021: £102.0m)	(2021: £102.0m)
2.2p	9.5p

A targeted approach under Trusted Partner to ensure sustainability progress

Delivered reduction in Group carbon emissions and UK food waste, along with enhancing our governance of ESG. Updated assessment of our material ESG issues has shaped our focus for the future.

pg 40

New CEO appointed, Board committee responsibilities rebalanced

Welcomed Mike Edwards as new CEO, and rebalanced Board committee responsibilities to best use the talent and experience of our Directors, along with a new ESG Committee.

pg 113

Basic EPS	Adjusted EPS
(2021: 9.8p)	(2021: 10.4p)	Bakkavor Group plc  |  Annual Report & Accounts 2022  |  1

OUR BUSINESS AT A GLANCE

Leading manufacturer of Fresh Prepared Food

Our vision:	Our purpose:
To lead the way in bringing great-	To delight our customers and
tasting, Fresh Prepared Food ("FPF")	consumers through the fresh,
to people across our markets.	convenient and innovative food that
	we proudly create every day.

Our culture:

To empower and support all our stakeholders by living our values.

Respect	Keep the customer	Get it right,	Be proud of
and trust	at the heart of
keep it right	what we do
each other	what we do

Our strategy:

To deliver profitable and sustainable growth.

		ELLE	N
	C	C
X			E
E

UK: Drive returns by leveraging our UK number one market position

UK

I
N
T
E
R
N
	A
	T
	I
N	O
A
L

TRUST

INTERNATIONAL: Accelerate profitable growth in the US and China

EXCELLENCE: Deliver superior performance through operational excellence

TRUST: Be a trusted partner for our people, customers, suppliers and communities

2|  Bakkavor Group plc  |  Annual Report & Accounts 2022

STRATEGIC REPORT

Our business overview:

Our deep understanding of consumers' changing needs enables us to create innovative products for our customers around the world.

45	>1,300	>18,500
total sites	total suppliers	total colleagues
c.2,900	£2,139.2m	#1
total products	Group reported revenue	Bakkavor position in UK FPF market

Our UK division:	Our US division:	Our China division:
Leading supplier to	National provider of	Supplies foodservice
grocery retailers with	fresh meals to grocery	and retail customers
category breadth and	retailers and direct-to-	nationally with value-
unrivalled scale.	consumer customers.	added fresh products.

c.1,500	c.110	c.1,300
products across meals,	products across fresh meals,	products across fresh cut salads,
pizza and bread, salads	dips, artisan bread, soups,	food to go salads and sandwiches,
and desserts	sauces and burritos	bakery, meals, soups and sauces

28	6	11
sites: 22 factories, 1 head office,	sites: 5 factories,	sites: 9 factories,
4 distribution centres, 1 growing unit	1 head office	1 head office, 1 farm
£1,783.1m	£255.3m	£100.8m
reported revenue	reported revenue	reported revenue
83%	12%	5%
of Group reported revenue	of Group reported revenue	of Group reported revenue
£92.7m	£3.3m	£(6.6)m
adjusted operating profit	adjusted operating profit	adjusted operating loss
£54.6m1	£(0.5)m1	£(16.3)m1
operating profit	operating loss	operating loss
READ MORE on pg 36.	READ MORE on pg 38.	READ MORE on pg 39.

1 Operating profit is after exceptional and adjusting items. Group operating profit was £37.8m.

Bakkavor Group plc  |  Annual Report & Accounts 2022  |  3