Annual Financial Report

RNS Number : 4296K

Bakkavor Group PLC

10 April 2018

 



10 April 2018

Annual Report and Accounts and Notice of 2018 Annual General Meeting

Bakkavor Group plc ('The Company') announces that it has today published its 2017 Annual Report and Accounts and Notice of 2018 Annual General Meeting.  The following documents are being distributed or made available to shareholders electronically today, Tuesday, 10 April 2018:

·     2017 Annual Report and Accounts

·     Notice of 2018 Annual General Meeting

·     Proxy Form

(together "the Documents")

In compliance with Listing Rule 9.6.1, copies of the Documents will be submitted to the National Storage Mechanism and will shortly be available on its website: http://www.morningstar.co.uk/uk/

The documents will also be available to view and download shortly from the Company's website: https://www.bakkavor.com/investors and printed copies of the documents will be available from the Registered Office of the Company from 17 April 2018.

The Company's 2018 Annual General Meeting will be held at 9.30am on Wednesday 23 May 2018 at Bakkavor's Registered Office, Fitzroy Place, 5th Floor, 8 Mortimer Street, London, W1T 3JJ.

In compliance with the information required pursuant to Rule 6.3.5 of the UK Disclosure Guidance and Transparency Rules ("DTR"), the following information about the Company and its subsidiaries ("the Group") is extracted from the Company's 2017 Annual Report and should be read in conjunction with the Company's Full Year 2017 results announcement issued on 28 February 2018. Together, these constitute the information required by DTR.6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This information is not a substitute for reading the Company's Annual Report in full.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that to the best of their knowledge:

·    The Financial Statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the Company and the undertakings included in the consolidation taken as a whole 

·    The Strategic Report includes a fair review of the development and performance of the business and the position of the Group and the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face

·  The Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group and Company's performance, business model and strategy.

This responsibility statement has been approved by the directors of the Company ("the Group Board") and signed on its behalf on 9 April 2018 by Agust Gudmundsson, Chief Executive Officer.

RELATED PARTY TRANSACTIONS

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Company and its subsidiaries and associates are disclosed in the Company's separate Financial Statements.

Trading transactions

During the period, Group companies did not enter into any transactions with related parties who are not members of the Group.

Principal Risks and UNCERTAINTIES

Risk area		Risk description		Mitigating controls		Developments in 2017
Food safety and integrity Change in risk level over past 12 months: LEVEL		Millions of people eat our products every day. We have a duty to make food that is safe and is clearly and correctly labelled. Consumer safety and confidence are vital to our business; any issue that breaches that trust could result in loss or reduction of customer business and also impact our credibility and reputation.		Stringent food safety policies in place throughout the organisation and use of Hazard Analysis Critical Control Point ("HACCP") principles to identify and control food safety risks. Employees trained against documented procedures. Food safety controls regularly audited by internal and external parties. Emerging risks monitored by working with industry and regulatory bodies. Food safety audits conducted for new suppliers with regular audits of existing suppliers. Regular reporting of food safety performance to the Group Board and immediate reporting of significant issues.		Continued to ensure Bakkavor met all legal and customer standards and is HACCP compliant. New UK Technical Director joined the team to ensure standards are continually reviewed. Improved approach to internal audits.
Raw material costs Change in risk level over past 12 months: HIGHER		The Group's cost base and margin are vulnerable to fluctuations in the price and availability of raw materials, packaging materials and freight. Ability to pass on any increases in these costs to customers within a reasonable timeframe is a challenge and failure to do so could impact the Group's profitability and hence its ability to continue to invest in the business.		Central procurement team focused on achieving a balance between price, quality, availability and service levels. Forward purchasing agreed and price variations passed on where possible. Agreements in place with some customers on recovery of raw material cost impacts. Continued focus on cost reduction and productivity enhancements.		Continued to extend numbers of cost models in place with customers through inflationary period. Continued to work more collaboratively with customers regarding purchasing strategies. Further strengthened supplier base, particularly in the US and Europe.
Customer concentration Change in risk level over past 12 months: LEVEL		We work with four of the largest food retailers in the UK and a significant proportion of our revenue is from these customers. Any major customer loss would have a significant negative impact on our business.		Partnership model in place with customers. In the UK, customer specific champions and teams manage strategic customer relationships. Relationships with all grocery retailers beyond four largest gives breadth of cover. Strong reputation in food safety and quality. Reputation amongst customers for strong insights and innovation capabilities. Significant investment in manufacturing facilities and highly complex 'just in time' manufacturing process.		Continued to drive 'partnership' model with four largest customers to develop deep relationships and arrangements. Built more strategic relationships with smaller, emerging customers. Continued to evaluate opportunities outside mainstream grocery retailer base.
Labour scarcity and costs Change in risk level over past 12 months: HIGHER		Higher labour costs and the scarcity of labour could affect the Group's business and future profitability. The Group competes with other manufacturers for good and dependable employees. The supply of such employees is limited and competition to hire and retain them may result in higher labour costs. Additionally, for the Group's UK operations, Brexit presents a risk as historically the Group has employed a material number of citizens from the European Union.		Specific campaigns and focus groups in place targeting recruitment of future employees and building attractiveness of careers in food industry. Initiatives in place to enhance and upgrade factory site facilities to help attract and retain employees. Central staff dedicated to recruitment and management of staff costs. Initiatives in place to support employees with Brexit-related concerns.		Centralised resource function to support recruitment process. Focused on talent development including apprenticeship schemes to build future talent. Introduced Brexit retention programme to offer advice and support to employees.
IT systems Change in risk level over past 12 months: HIGHER		Unauthorised access of the Company's Information Technology ("IT") systems could lead to breaches of data protection and release of market sensitive information. Any breakdown or failure in the Group's IT infrastructure or the Group's communication networks, including malicious cyber-attacks by third parties, could delay or otherwise impact the Group's day-to-day business.		Group Information Systems ("IS") manage access to business data through strong password protection, role-based access to business systems and policies to ensure appropriate use. The Group IS department has delivered Disaster Recovery ("DR") for critical systems and is working towards delivering DR for important systems. Group IS has strict policies and actively ensures IS infrastructure and equipment are sufficiently protected against malicious cyber attacks.		Business as usual continual improvements supported by a continuous Risk and Security programme. DR delivery programme will continue through to the end of 2018. Focus areas included improvements to patching regimes and a number of upgrade projects to ensure services remain on supported platforms. The Risk and Security programme continued to support the delivery of enhancements in these areas.
Health and safety and the environment Change in risk level over past 12 months: LEVEL		We understand our duty of care to secure and protect the health and safety ("H&S") of our employees and to reduce the environmental impact of our operations. Failure to maintain the H&S of employees could have a significant reputational impact and also have serious legal consequences.		H&S and environmental impacts are managed by the Group's in-house experts who embed and monitor practices. Stringent processes are implemented for identifying and managing H&S and environmental risks. Regular reporting of H&S Key Performance Indicators to the Group Board and immediate reporting of significant issues. Culture of employee engagement around accident prevention across the Group.		Increased central resource. Changed approach to Internal Audit, increasing frequency and moving to an unannounced format. Improved data capture process to record environmental performance.
Loss of key employees Change in risk level over past 12 months: HIGHER		We have a highly experienced Senior Management team who are passionate about our business and who are integral to our continued growth and success as a market leader. The loss of any of these personnel or the Group's inability to recruit new personnel would have an adverse impact on the Group. We risk being unable to achieve our strategic growth objectives without the recruitment, development and retention of talented and committed people who understand and respect our values.		Company values used to recruit, appraise, reward and develop employees. Ongoing succession planning, commitment to training and bonus schemes in place to retain key personnel and manage staff turnover.		Post the public listing management retention initiatives devised for early 2018 implementation.
Exchange rate Change in risk level over past 12 months: LEVEL		In the multi-currency trading environment in which the Group operates, there are inherent risks associated with fluctuations in foreign exchange rates.		Treasury function operates within framework of strict Group Board-approved policies and procedures. Active foreign exchange hedging programme maintained. Active policy of hedging known non-Sterling denominated expenditure both for specific projects and on a rolling basis for material purchases.		Continued review of exposures and subsequent hedging, with regular reporting back to the Group Hedging Committee and Audit and Risk Committee. Assessment of financial instruments available for hedging.
Liquidity and covenant compliance Change in risk level over past 12 months: LOWER		To achieve our growth objectives, we require a strong financial platform. The Group has significant facilities governed by financing agreements under which we are subject to various financial covenants and undertakings. Breaching any covenant would impair our ability to maintain existing financing and secure future financing, thereby destabilising the business.		Financial results, projections and covenant performance reviewed regularly. Open and regular dialogue with our lenders and an active investor engagement programme.		New financing arrangements entered into in 2017 with extended maturity and reduced interest costs. Public bonds redeemed. Overall net debt and leverage reduced through trading profit and funds raised in the public listing.

ENQUIRIES:

Simon Witham, General Counsel and Company Secretary                       [phone]

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About Bakkavor 

Bakkavor is the leading provider in the large and fast-growing UK Fresh Prepared Food ("FPF") market, which consists of the four categories of Meals, Salads, Desserts and Pizza & Bread, and has a growing international presence in the US and China.

In the UK the Group is the number one producer by market share in all four FPF categories, supplying all of the UK's leading grocery retailers, including Tesco, M&S, Sainsbury's and Waitrose.

The International segment has operations in the US and China, supplying both retail and foodservice customers.

LEI number: 213800COL7AD54YU9949

 

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