2012 WAS A GOOD YEAR FOR THE GROUP, PARTICULARLY OUR PERFORMANCE IN THE LAST QUARTER WHICH GAVE THE BUSINESS MOMENTUM GOING INTO 2013.

Although the economic climate remains tough we are confident of our strategy and are well positioned in the fresh prepared foods market.

SALES REVIEW

In a very challenging economic environment, Bakkavor has retained its market share and extended its market-leading positions in key categories. We continue to grow ahead of the total foods market and we have benefited from our leading positions within this sector. Coupled with business wins enjoyed over the year and high levels of promotional activity, we continued to see good volume growth. This was achieved despite a number of adverse factors, including subdued consumer spending and exceptionally poor weather throughout the spring and summer.

Our North American and Asian businesses continue to build on their strong customer relationships to drive International revenues. Our Asian business, in particular, benefited from a renewed capital investment programme that allowed us to increase capacity in line with our customers' rapid growth plans.

INFLATIONARY PRESSURES

Whilst we benefited from deflation in raw material pricing in 2012 we are expecting that to reverse later in 2013. At this stage, however, we do not anticipate inflation reaching the levels seen in 2011.

CONTINUED EXCELLENCE IN INNOVATION

Raising the benchmark for innovation within the industry is core to our Group as we focus on attracting new customers and increasing sales. During the past year alone, we created and launched over 2,000 products across the business, received three supplier awards for excellence and won 11 industry food awards.

INVESTING IN OUR BUSINESS

Throughout 2012 we have focused on a series of capital projects to consolidate our market-leading positions and support our growth objectives. These investments have included: capacity enhancements to leverage the increasing demand for our products, such as chilled soups in the UK; product differentiation, which included water-only washing for our leaf based products; and efficiency investments as we continue to automate our production facilities.

SALE OF FRENCH AND SPANISH BUSINESSES

The Group has reached formal agreement to sell its French and Spanish produce businesses for €33 million debt-free cash-free. Completion of the transaction is subject to clearance by the Competition Authorities, which is expected by the end of the first half of 2013. The disposal of these businesses marks an important step in reshaping our portfolio to focus on our core fresh prepared market.

FOOD INTEGRITY

In January 2013 incidences of horsemeat contamination in the food supply chain affected a number of retailers and producers in Europe and weakened consumer trust in the food they buy. We maintain strict controls regarding product authenticity and quality control and are subject to regular inspection by food safety and other authorities for compliance with food laws such as traceability and food hygiene. We comply with strict national and international regulations and routinely inspect our production facilities and audit our suppliers. We remain committed to the highest standards of food safety and integrity and continue to work with customers, suppliers and the authorities on rebuilding consumer trust.