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.

MEETINGING 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 how we aim to achieve our vision through our four point strategy for growth and expand on the positive trends which continue to drive the strong long-term demand for fresh prepared foods in our market trends section.

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 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.

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.

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.





Lydur Gudmundsson
Non-executive Chairman

20 February 2013