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BAKKAVOR ANNUAL REPORT AND ACCOUNTS 2012 chairman’s address IN 2012 THE GROUP DELIVERED A STRONG FINANCIAL PERFORMANCE AGAINST A BACKDROP OF CHALLENGING MARKET CONDITIONS. In the same period, we simplified the Group’s capital structure, facilitating access to wider financial markets. This will allow the Group to take advantage of the considerable long-term growth potential in fresh prepared foods. Lydur Gudmundsson Non-executive Chairman MEETING LONG-TERM CONSUMER DEMAND Our belief that we can fulfil our vision to be recognised and respected as the world’s leading fresh prepared foods provider is underpinned by our ability to meet long-term demand through our world-class operations, consumer knowledge and manufacturing expertise. We outline our four point strategy for growth to achieve our vision on page 7. Positive trends continue to drive the strong long-term demand for fresh prepared foods and we expand upon this on pages 11 and 29. 2012 PERFORMANCE Despite continuing economic uncertainty the Group performed well in 2012, achieving like-for-like sales growth of 5.4% which converted into EBITDA growth of £7.4 million. In the Business Review on page 23 our CEO expands upon our performance. CORPORATE RESTRUCTURING A key achievement in 2012 was to attain a simpler corporate structure, addressing the Group’s legacy ownership and funding issues. On 28 September 2012 we announced the completion of this corporate re-organisation. Bakkavor Finance (2) plc’s ultimate parent became Bakkavor Group Limited, domiciled in the UK, with a single class of shares. In addition, after over 40 years of service in our business, Gordon Pates, our CEO of UK and Europe, retired from the Management Board in December 2012. Gordon will continue to work with us as a consultant, allowing us to continue to benefit from his extensive knowledge and experience in the fresh prepared foods market. Our three UK Managing Directors on the Management Board – Ivan Clingan, Mike Edwards and Steve Broadbent – have assumed Gordon’s day-to-day responsibilities and will continue to lead our customer relationships, as they have done for several years in the UK. OUR PEOPLE At Bakkavor, we continue to be immensely proud of the calibre of our people and their passion and loyalty to the Group and we would like to thank them for their commitment throughout the year. Management remains focused on providing training to ‘grow our own’ people and enable them to develop to their best of their abilities. OUTLOOK The Group made good progress in 2012, particularly in the last quarter which gave the business momentum into 2013. Although the economic climate remains tough we are confident of our strategy and are well positioned in the fresh prepared foods market. The leverage covenant in the Group’s banking facilities was also reset to provide additional headroom. Finally, my brother, Agust Gudmundsson, and I personally invested £12.8 million through the issuance of new shares in Bakkavor Group Limited. These monies were used in repayment of borrowings. BOARD AND MANAGEMENT BOARD CHANGES Upon completion of the corporate restructuring, Asgeir Thoroddsen resigned from the Group Board as Non-executive Director and Gudmundur Sigurdsson was elected as a Non-executive Director on 25 September 2012. I would like to take this opportunity to thank Asgeir for his many years of loyal service to the Group. Lydur Gudmundsson Non-executive Chairman 20 February 2013 the fast read how we do business at bakkavor PAGE 3 VIEW THE FULL REPORT AT ANNUALREPORT12.BAKKAVOR.COM
welcome to our Bakkavor 'Fast Read' which provides an overview of our business, complementing more detailed information on our website. working smarter through innovation I am passionate about innovation and chair the Group’s Innovation Committee to drive innovation throughout the business. In 2012 we launched our first Group Innovation Awards covering six categories – Manufacturing, Core Product, New to Market Product, Marketing, Packaging and Process – reaffirming our belief that innovation is relevant to all business disciplines across the Group. The highly competitive market environment in which we operate is now a given. Our focus on benefiting commercially and operationally from our leading positions and relationships, growing sustainably in existing and new markets and investing with rigorous discipline has never been more important. Underpinning this focus is our relentless commitment to promoting innovation in everything we do in order for our businesses to work more effectively and creatively together. Together with our clear strategy, robust business model, talented employees and a strong set of values, we are confident of our ability to succeed in our chosen markets. I hope you enjoy reading about our business in the following pages. Agust Gudmundsson Chief Executive Officer Throughout this brochure we indicate where innovative thinking has brought significant commercial benefits to our business, demonstrating our ability to turn ideas into actions. page 4 www.bakkavor.com
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