BUILDING BACK
Bakkavor Group plc
Annual Report &
Accounts 2024
stronger
STRATEGIC REPORT
At a glance
4
How we create value – our business model
and stakeholder engagement
6
Chairman’s statement
10
Chief Executive’s overview
12
Market and consumer trends
18
Strategy
22
People
34
Trusted Partner ESG strategy
38
Task Force on Climate-related Financial
Disclosures
46
Financial review
58
Key performance indicators
64
Risks and risk management
66
Disclosure statements:
– Viability
75
– Non-financial & sustainability information
76
GOVERNANCE
Chairman’s governance overview
82
Corporate governance compliance statement
84
Group Board
86
Corporate governance report
90
Nomination Committee report
105
Audit and Risk Committee report
110
ESG Committee report
120
Directors’ remuneration report
123
Directors’ report
142
Statement of Directors’ responsibilities in
respect of the Financial Statements
149
FINANCIAL STATEMENTS
Independent Auditors’ report
152
Consolidated income statement
160
Consolidated statement of comprehensive income
161
Consolidated statement of financial position
162
Consolidated statement of changes in equity
163
Consolidated statement of cash flows
164
Notes to the Consolidated Financial Statements
165
Company statement of financial position
208
Company statement of changes in equity
208
Notes to the Company Financial Statements
209
COMPANY INFORMATION
Advisers and registered office
214
+5.1%
Like-for-like revenue growth
(2023: 4.9%)
+4.0%
Reported revenue growth
(2023: 3.0%)
1.1x
Leverage
(2023: 1.5x)
9.6p
Basic earnings per share
(2023: 9.4p)
£113.6m
Adjusted operating profit
(2023: £94.3m)
£93.4m
Operating profit
(2023: £97.1m)
10.1%
Return on invested capital
(2023: 7.5%)
12.3p
Adjusted earnings per share
(2023: 8.8p)
+2.9%
Group net carbon emissions
(2023: -5.3%)
18.9%
UK employee turnover
(2023: 26.2%)
6.0%
UK food waste
(2023: 6.6%)
249
>7 day UK accident rate
per 100k employees
(2023: 259)
Financial KPIs
Non-financial KPIs
READ MORE
pg 64.
Alternative Performance Measures (“APMs”)
APMs are applied consistently throughout the 2024 Annual Report and
Accounts and are defined in full and reconciled to the reported statutory
numbers in Note 37 of the Notes to the Consolidated Financial Statements.
Disclaimer – forward-looking statements
This Annual Report and Accounts, prepared by Bakkavor Group plc (the
“Company”), may contain forward-looking statements about the Company
and its subsidiaries (the “Group”). Forward-looking statements involve
uncertainties because they relate to events, and depend on circumstances,
that will, or may, occur in the future. If the assumptions on which the Company
bases its forward-looking statements change, actual results may differ from
those expressed in such statements. Forward-looking statements speak only
as of the date they are made, and the Company undertakes no obligation to
update these forward-looking statements other than as required by law.
Nothing in this Annual Report and Accounts should be construed as a profit
forecast. Where relevant, some numbers and period-on-period percentages
have been rounded or adjusted to ensure consistency with the financial
information for the latest financial reporting year unless otherwise stated.
See our website here:
bakkavor.com
In 2024, we continued to lead the way in creating great-tasting
fresh food whilst empowering our stakeholders, living our values
and delivering profitable, sustainable growth.
Year in review
pg 12
Strong financial
performance
Board proactively engaged
with colleagues
Excellent strategic
progress
Significant
investment
in our people
Clear strategy
for sustainable
growth
On track for delivery
against our ESG
targets
pg 58
pg 22
pg 34
pg 38
pg 90
Bakkavor Group plc | Annual Report & Accounts 2024 |
1
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
At a glance
4
How we create value – our business
model and stakeholder engagement
6
Chairman’s statement
10
Chief Executive’s overview
12
Market and consumer trends
18
Strategy
22
People
34
Trusted Partner ESG strategy
38
Task Force on Climate-related
Financial Disclosures
46
Financial review
58
Key performance indicators
64
Risks and risk management
66
Disclosure statements:
– Viability
75
– Non-financial & sustainability
information
76
STRATEGIC
REPORT
2
| Bakkavor Group plc | Annual Report & Accounts 2024
In the UK, consumers are increasingly seeking nutritious
snacks and we saw demand for healthier food-to-go
alternatives surge in 2024.
As this trend emerged, we developed a range of snacking
pots that pair fresh-cut fruit and vegetables with tasty
yoghurt dips, becoming a staple of customers’ food-to-go
offering and delighting consumers across the country.
FRESH, CONVENIENT AND
NUTRITIOUS SNACK POTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
3
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
AT A GLANCE
c.3,500
fresh products
2
focused on meals,
pizza & bread, salads and desserts
43
sites
2
across our three markets;
UK, US and China
£2.3bn
Group reported revenue with
c.85% generated in the UK
c.18,000
diverse and talented colleagues
1
from over 100 nationalities
We are Bakkavor
...the leading manufacturer of fresh prepared food
PURPOSE
To lead the way through flawless execution, delighting customers
and consumers with fresh, convenient and great-tasting food that
we create every day.
STRATEGY
To deliver profitable and sustainable growth through our four strategic pillars.
UK
EXCELLENCE
TRUST
INTERNATIONAL
Drive returns by
leveraging scale
and market
leadership
Improve performance
through operational
excellence
Be a positive force
and a trusted
partner for all our
stakeholders
Drive sustainable
growth and Group
accretive margin
READ MORE
pg 22.
CULTURE
To empower and support all our stakeholders by living our values.
1
Refers to the average throughout 2024.
2
As of December 2024.
4
| Bakkavor Group plc | Annual Report & Accounts 2024
£105.2m
Adjusted operating profit
5.4%
Adjusted operating margin
£83.7m
Operating profit
£9.9m
Adjusted operating profit
4.3%
Adjusted operating margin
£9.3m
Operating profit
£(1.5)m
Adjusted operating loss
(1.3)%
Adjusted operating margin
£0.4m
Operating profit
UK:
85%
US:
10%
China:
5%
UK:
81%
US:
5%
China:
14%
Leading supplier of fresh prepared
food (“FPF”) to UK supermarkets with
category breadth and unrivalled scale
Focused on consolidating our market-
leading position whilst improving
margins through efficiency activities.
Well-established national manufacturer
of fresh meals to grocery retailers
Focused on developing a sustainable growth
pipeline whilst unlocking further efficiencies
and delivering margin improvement.
UNITED KINGDOM
UNITED STATES
China’s largest FPF manufacturer,
supplying foodservice and retail
customers nationally
Focused on remaining cash generative
as we assess our strategic options in
the region.
CHINA
UK:
c.1,600
US:
c.300
China:
c.1,600
Revenue by region
Colleagues by region
Products by region
Bakkavor Group plc | Annual Report & Accounts 2024 |
5
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
STRONG
CUSTOMER
RELATIONSHIPS
RESILIENT
SUPPLY CHAIN
GREAT
PEOPLE
LEADING
OPERATIONAL
DELIVERY
CONSUMER
INSIGHT
TARGETED
INNOVATION
BREADTH
OF OFFER
At Bakkavor, our focus is to empower all our stakeholders. We do this by living
our values whilst leveraging our market insight, expertise, innovation and strong
customer relationships to manufacture fresh prepared food (“FPF”) to the
highest standards every day.
c.18,000
skilled, engaged and
valued colleagues
1
c.3,500
high-quality, fresh and
convenient products
2
c.1,400
suppliers in our
well-established
supply chain
43
sites
2
driving efficiency
£55.5m
FY24 capital invested
to drive returns
3 ESG priorities
under our Trusted
Partner strategy
OUR RESOURCES
OUR CULTURE
To empower and support all our stakeholders by living our values.
HOW WE CREATE VALUE – OUR BUSINESS MODEL AND STAKEHOLDER ENGAGEMENT
CREATING VALUE FOR ALL OUR STAKEHOLDERS
OUR BUSINESS MODEL
OUR
STAKEHOLDERS
Respect and trust
each other
Keep the customer
at the heart of what
we do
Get it right,
keep it right
Be proud of
what we do
Our colleagues
Our customers
Our suppliers
Our investors
Our communities
1
Refers to the average throughout 2024.
2
As of December 2024.
6
| Bakkavor Group plc | Annual Report & Accounts 2024
Why we engage
To understand what matters to our colleagues and incorporate
their views into our Group Board decision-making. This
enables us to make Bakkavor a great place to work where
everyone feels supported and fulfilled.
What matters most to them
A safe and inclusive workplace; a voice in the Group’s decision-
making process; the opportunity to realise their potential;
support for their needs for fair pay and relevant benefits in
the face of ongoing socioeconomic pressures.
How the Group Board engages
The Group Board discusses company purpose, culture,
talent and people developments. It designates a workforce
engagement Non-executive Director, who holds sessions with
the Site Employee Forums (“SEF”) and Group Employee Forums
(“GEF”), and also visits factory sites. Colleague feedback, views
and outcomes are then relayed to the Group Board. It also
reviews our Employee Engagement Survey (“EES”) results and
takes action to address employee feedback. In addition, it
reviews food industry safety and health and safety data, updates
on the wellbeing and I&D support Bakkavor offers, and any
whistleblowing reports from the ‘Speak Up’ hotline, to ensure
that protecting and supporting colleagues remains a priority.
How the Company engages
We participate in SEF, GEF, Wellbeing Committee and I&D
Forums. The workforce engagement Non-executive Director
interacts with colleagues via the SEF and GEF. Business
updates are relayed via internal communications including
a weekly wrap up of news, the intranet and our colleague
magazine. UK factory workers are messaged directly through
a digital portal. The CEO holds quarterly business updates for
senior leaders, providing opportunities to connect in-person
and virtually.
How we are responding
Our sites operate with standardised food safety, health and
safety and risk management best practices. A review of
annual EES results is used to inform our People Plan and drive
improvement in the areas that matter most to our colleagues.
We delivered progress under the four focus areas of our People
Plan by investing in pay and benefits, embedding our ways of
working, developing our people and supporting our leaders to
reach their full potential.
READ MORE
pg 34.
Why we engage
To understand our customers’ and consumers’ needs so we can
respond to new trends through innovation. To build long-term
strategic relationships through ongoing engagement and
investment, as we seek to create mutual value. To support our
mutual business models by a fair and transparent approach to
sharing information. To support our customers’ sustainability
goals and ambitions as part of our Trusted Partner ESG strategy.
What matters most to them
Opportunities to leverage insights to develop innovative,
great-tasting and high-quality products that meet required
technical and food safety standards. High service levels with
minimised disruption from industry-wide challenges across
supply chain, inflation and labour. A collaborative approach
to delivering progress on sustainability issues.
How the Group Board engages
The Group Board receives updates from the CEO following his
regular engagements with key customers and broader supply
chain. It reviews updates on supply chain risk management,
any potential impact on service levels, and opportunities to
collaborate with customers to mitigate the impact. The Group
Board also reviews updates on inflation impact and outlook,
considering levers to offset pressure, including pass-through
mechanisms, pricing discussions, productivity improvements
and cost control. In addition, it reviews UK market insight updates
to understand consumers’ needs and how these are leveraged,
to inform category plans and new product pipelines. The Group
Board also reviews market updates on the latest developments
and growth opportunities in the US and China.
How the Company engages
We undertake daily engagement across Development, Marketing,
Commercial and Technical functional teams, liaising closely
with the CEO and Customer Directors, with outcomes reported
to the Group Board. Bakkavor is part of the Institute of Grocery
Distribution forum, which the CEO attends. Online surveys,
focus groups and research are also used. Customers perform
announced and unannounced audits of our sites. We work
collaboratively with customers on shared ESG priorities.
How we are responding
Customer-dedicated teams and category experts have driven the
development of new products to meet consumer demands, with
focus on value optimisation and efficiency initiatives, alongside
delivering on key sustainability commitments. High service levels
have been maintained despite supply chain disruption and labour
pressures. KPIs across food safety and health and safety have
remained strong. Customers have provided a good level of support
on inflation recovery. We have continued to invest in automation
and other improvements in factory performance.
COLLEAGUES
People are at the heart of our
business, with c.18,000 diverse
and talented colleagues belonging
to over 100 nationalities.
CUSTOMERS
We have strategic relationships
across our grocery retail, online,
direct-to-consumer, brand and
foodservice customers.
Bakkavor Group plc | Annual Report & Accounts 2024 |
7
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
HOW WE CREATE VALUE – OUR BUSINESS MODEL AND STAKEHOLDER ENGAGEMENT
CONTINUED
Why we engage
Our products require us to source a breadth of high-quality raw
materials that meet our standards of food safety and technical
integrity, and support innovation. Engagement ensures we
maintain continuity of supply and also ensures the integrity
of our supply chain through our Responsible Sourcing strategy.
What matters most to them
Clarity of forecast requirements to enable delivery on time and in
full; opportunities to improve, innovate and grow their business;
a partnership underpinned by trust and transparency; fair and
open discussions on movements in input costs and pricing.
How the Group Board engages
The Group Board reviews procurement updates on raw materials
sourcing, inflation, potential issues and action taken to minimise
disruption, our centralised category procurement structure
and the Bakkavor Inbound Logistics (“BIL”) centre of excellence.
It reviews quarterly supply chain KPIs. Our Procurement
Director presents to the Board annually on key supply chain
developments. It receives financial updates with detail of inflation
impact and recovery levers, with the CFO providing additional
commentary in Board meetings. It engages with the CEO and CFO
regarding plans to tackle supply chain issues, and receives
updates on our ‘Supply chain’ principal risk developments via the
Audit and Risk Committee. It has oversight of our Responsible
Sourcing strategy, in addition to commitments and progress
through our ESG Committee and Group Board ESG Sponsor.
How the Company engages
We undertake daily engagements with suppliers via procurement
colleagues, as well as workshops and conferences. Terms of
supply are agreed, and performance and improvement plans
are reviewed regularly, to ensure relationships are built on a
foundation of contractual mutual agreement. Our Supplier
Code of Conduct sets expectations of how our suppliers should
operate and is the basis of our Responsible Sourcing strategy.
This includes Human Rights, Environmental Sustainability and
Technical Integrity. The Sedex online supply chain platform is
used to monitor and assess labour practices in our supply chain.
How we are responding
We continued to leverage our scale, experience and strong
customer partnerships to enhance buying power, mitigate
disruption and embed our processes on inflation management.
We have further reviewed sourcing plans to build more resilience
in our inbound supply chain, and worked with suppliers to identify
potential issues and implement actions to minimise disruption,
which included managing Brexit-related changes to imports and
exports. We also worked with customers on supply performance,
collaborative buying and cost models, and continued to embed
our UK Supplier Code of Conduct, concluding a verification
programme of higher-risk suppliers, and supported supply chain
engagement on social issues within the US and China.
READ MORE
pg 40.
Why we engage
To effectively communicate our purpose, strategy and performance,
whilst regularly capturing feedback so that we can respond
appropriately, promote their interests and ultimately deliver value.
What matters most to them
A strategy and business model that will drive long-term, sustainable
and profitable growth to enhance returns. Understanding the
business and its opportunities and challenges, including its
exposure and plans in relation to ESG issues, including climate
risks. Fair, balanced and understandable reporting of financial
and non-financial results.
How the Group Board engages
The Chairman actively seeks to engage with shareholders, with
the Senior Independent Director and Committee Chairs available
for direct meetings. The Group Board also attends the AGM.
As part of the half- and full-year results, it receives: investor and
analyst feedback (collated by third-party advisers); and updates
from the CEO and CFO following investor roadshows. It reviews
monthly updates on share price performance, shareholder
register, broker updates on wider investor sentiment, how the
market views Bakkavor and areas of focus. It approves all half-
and full-year results, the Annual Report and Accounts and trading
updates. It oversees the Group’s capital allocation policy, including
dividend payments and leverage targets. It reviews updates on
our Trusted Partner ESG strategy, commitments and progress.
How the Company engages
We hold and attend meetings, calls, conferences and events
with investors, attended by the CEO, CFO and Head of Investor
Relations. We welcome queries from shareholders via phone,
post, email or brokers. Relevant shareholder communications
are updated on bakkavor.com, (including Annual Report and
Accounts, financial results, share price information, RNS).
Bakkavor reports on the Task Force on Climate-related Financial
Disclosures (“TCFD”) in this report and the Carbon Disclosure
Project in a separate annual ESG report.
How we are responding
Financial results are published, including business performance
and outlook, and followed by investor roadshows. We invited
shareholders to attend the 2024 AGM, and held 78 meetings with
investors and analysts, attended by the CEO, CFO and Head of
Investor Relations. We regularly engaged analysts to discuss
business performance, guidance and financial model review.
Topics of discussion included consumer behaviours and volume,
inflation and supply chain, efficiency initiatives, capital allocation,
and international developments. Financially, profit delivered
ahead of market expectations, with leverage at the bottom end
of target range. We proposed a final 2024 dividend of 4.80 pence
per Ordinary share, taking the total to 8.00 pence. We also
reported under the TCFD requirements, with net zero targets
were validated by the Science Based Targets initiative.
READ MORE
pg 12.
SUPPLIERS
Across our well-established global
network of c.1,400 suppliers, we
collaborate closely on supply chain
management and responsible sourcing.
INVESTORS
Building and maintaining open and
trustworthy relationships with our
current and prospective shareholders
is essential as we strive to deliver on
the long-term success of our business.
8
| Bakkavor Group plc | Annual Report & Accounts 2024
SECTION 172(1) STATEMENT
The Group Board has a duty under Section 172(1)
(a) to (f) of the Companies Act 2006 (“Section 172”)
to promote the success of Bakkavor.
The Directors confirm that, during the year,
they have acted in good faith in a way that best
promotes the success of Bakkavor for the benefit
of its shareholders as a whole, and in doing so,
they have had regard for the interests of all
Bakkavor’s stakeholders, while preserving
Bakkavor’s reputation and ensuring our
long-term sustainability.
READ MORE
pg 93.
Why we engage
Aim to be a trusted partner by upholding our high standards and
capability to operate responsibly. Engaging with our communities
helps us to support local economic development by creating jobs
and supporting local services, whilst remaining an employer of
choice, attracting and retaining the best talent.
What matters most to them
Supporting a business that acts with integrity and operates in
a safe, responsible and sustainable way, including: reduction in
environmental impact (such as food waste, carbon emissions and
packaging); support for local community initiatives; and provision
of economic opportunities for local people. A business that looks
after the health, safety and wellbeing of its colleagues.
How the Group Board engages
The Group Board oversees our climate transition plan and Trusted
Partner ESG strategy, commitments and progress through the
ESG Committee, with updates provided to the Group Board and
from the CFO (the Group Board Sponsor for ESG). It also considers
climate-related issues alongside the long-term strategy of the
Group, which informs investment decisions, and reviews and
considers community initiatives, as well as how we are delivering
on their progress, including our charity partnerships.
How the Company engages
We support local communities across charities, schools, sports
teams and projects through fundraising, donations, volunteering
and educational activities. We also have well-established Group
charity partnerships, with fundraising coordinated via a charity
events programme. In addition, we undertake food redistribution
via partners and colleague outreach to charities, and provide
employment opportunities, including apprenticeships and
graduate placements, via the use of agencies.
How we are responding
We meaningfully reduced our environmental impact, with UK food
waste down by 60bps to 6.0%, the equivalent of a 2,568 tonnes
reduction year-on-year as we focused on maximising redistribution.
Despite the increase in emissions on last year, we are on track
to meet our climate target of reducing scope 1 and 2 emissions by
42% by 2030. Plastic usage has also dropped by 23.9% since 2021.
We have provided job opportunities across the Group, and with our
industry-leading early careers programmes we were voted the top
FMCG company for apprentices and graduates by TheJobCrowd.
Charitable donations of £144,000 were made in 2024, including
to our Group charity partners GroceryAid and Natasha Allergy
Research Foundation. We also conducted site fundraising events
using a charity matched giving scheme, whereby each of our sites
receives an annual budget of up to £2,500 to match funds raised
by their site. We also continued efforts to support health, safety
and wellbeing, outperforming the food industry benchmark for
accidents at work and rolling out further initiatives to support
physical, emotional and financial wellbeing.
READ MORE
pg 44.
Engagement
in action:
Going for gold with GroceryAid
As a responsible food producer, we’re proud
to work with our industry charity, GroceryAid,
who provide emotional, practical and financial
support to people across the grocery sector.
We promote awareness of their great work, both
internally, with our colleagues, and externally
across the industry. We also run fundraising
initiatives and provide volunteer support.
This year, we donated over £88,000 to the charity,
celebrated GroceryAid Day with stalls and events
across our sites, and ran the ‘Big Bakkavor Walk’
event to promote awareness and our colleagues’
wellbeing. We were delighted to be awarded a top
tier Gold GroceryAid Award.
COMMUNITIES
We operate from 43 sites across the UK,
US and China and recognise that we
need to act responsibly and be a trusted
partner to our local communities.
Bakkavor Group plc | Annual Report & Accounts 2024 |
9
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CHAIRMAN’S STATEMENT
performance in all three
of our markets, with
our success underpinned
by the hard work of our
colleagues.
Simon Burke
Chairman
In my statement last year, I said
that in 2024 we would aim for
profitable growth rather than
headline growth, and also that
we hoped to make good progress
in all three of our markets. I am
pleased to report that we have
delivered on both of these fronts.
Our sales increased by 4.0% to £2.3bn,
whilst adjusted operating profit
increased by 20.5% to £113.6m. This
means that operating margins improved
to 5.0%, recovering some of the margin
dilution during the period of high
inflation across our cost base. This is
welcome progress, but we are aiming
for further improvement having set
out our medium-term margin target,
by continuing to drive efficiencies
along with further trading and profit
improvements internationally.
Progreive
10
| Bakkavor Group plc | Annual Report & Accounts 2024
We have also been able to record
good progress in each of our regions.
In the UK, we saw volume growth
return to the market, and thanks to
our strong efficiency performance,
we were able to offset the impact
of increased minimum wages and
deliver improvement in our margins.
Innovation was an important driver
of sales, and we were pleased to
add the Moorish business, which
specialises in houmous.
In the coming year, cost challenges
remain and are almost entirely driven
by labour, due to the rise in minimum
wage and the intention to increase
employers’ national insurance as
announced in the recent UK budget.
There is no doubt that these will be
inflationary across the food industry,
as we all try to re-balance our books
and maintain operating margins at
economic levels. At Bakkavor, we also
have further significant efficiency
measures planned to ensure that we
can continue to build on the progress
made in 2024. I very much regret
that we had to make another difficult
decision to close a factory and lose
some jobs as part of this process.
Our partnerships with our key
customers remained strong
throughout the year, and we were
pleased to continue to deliver
high service levels.
In the US, the team has been focused
on building profitable business and
meeting the needs of our strategic
US customers. The effects of this are
plain to see in an almost trebling of
profit, on like-for-like sales that were
up just 2.0%. We believe that we now
have a sound base from which to
grow our US business further, with
improving profitability, and this is
our plan for 2025.
Improving efficiency also featured
strongly in our China business, where
like-for-like sales and cash generation
increased again and operating losses
reduced. We have continued to reshape
our business to a more profitable core,
selling the bakery business during the
year and agreeing the sale of our
unprofitable operation in Hong Kong
in December 2024.
All of this was done whilst further
reducing debt and leverage, with
the latter just 1.1 times EBITDA by
the year-end. We also refinanced
our debt facilities during the year
on favourable terms. In line with
our policy to deliver a progressive
dividend, we are proposing a final
dividend of 4.80 pence per share,
giving a total dividend for the year
of 8.00 pence, an increase of 10%
on last year.
Away from financial matters, we made
further progress on our strategic
ESG targets, with food waste down
significantly and on track to meet our
2030 commitment. The Group’s net
carbon emissions saw an unwelcome
increase in the year, largely due to an
issue with refrigeration at one of our
US sites. Whilst UK emissions were
stable, this follows several years of
improvements and we remain on
track to achieve our medium-term
emissions targets, which are now
validated by the Science Based
Targets initiative (“SBTi”).
We also had a new record level
of response to our employee
engagement process, with improved
feedback on many of our priority
topics. A large reduction in employee
turnover is further evidence of
improvements in our relationship with
the great majority of our employees.
The Board is always conscious that
our success is achieved primarily by
our colleagues across the business,
and we continue to focus our efforts
on ensuring that they are listened to,
supported and thanked for all they
do for us.
During the year Ben Waldron, our
CFO, indicated that he wished to
relocate to Australia for personal
reasons, and so we carried out a
search for a potential replacement,
both inside and outside the company.
I am very pleased to report that the
best candidate was Lee Miley,
previously the UK Finance Director
of our UK business, and an identified
potential successor to Ben. We were
delighted to appoint Lee to the Board
on 1 November 2024.
Meanwhile Ben will continue to work
with us for a further period, providing
oversight of our China operations.
Ben has made an extraordinary
contribution to Bakkavor during his 13
years with us: in my time as Chair, he
has served as our Strategy Director,
managed our US business during a
particularly challenging time in 2019
and 2020, and, since becoming CFO,
has also taken responsibility for our
China business. In all of these roles,
he has achieved remarkable success,
for which we owe him much. We will
miss him greatly, but wish him well
down under.
Looking ahead, we have a plan to
continue the improvements seen
this year across all segments of our
business. This takes full account of
the challenges of labour inflation, and
is based on a robust series of planned
initiatives. The new financial year has
started well and we are therefore
looking on 2025 with confidence. We
believe that the strong base we have
consolidated in the past two years
will bear fruit for Bakkavor over many
years to come.
Simon Burke
Chairman
3 March 2025
Bakkavor Group plc | Annual Report & Accounts 2024 |
11
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CHIEF EXECUTIVE’S OVERVIEW
Strengthening
financial performance as
the Group continues to
deliver excellent progress
against its strategy, and
we remain focused on
our 6% margin target.
Mike Edwards
Chief Executive Officer
The Group’s financial performance in
2024 was up significantly year-on-year
and ahead of market expectations.
70bps
improvement in adjusted
operating margin
1.1x
leverage at lower end
of target range
12
| Bakkavor Group plc | Annual Report & Accounts 2024
Reported revenue increased 4.0% to
£2,292.7m and adjusted operating
profit increased 20.5% to £113.6m,
ahead of the upper end of market
expectations
1
. Adjusted operating
margin also improved, up 70 basis
points to 5.0%, as we have started
to build back margin through our
internal efficiency drive.
On a reported basis, operating profit
was £93.4m, down £3.7m on last year,
due to the impact of exceptional costs
associated with the closure of one of
our UK sites and impairment of our
Hong Kong business held for sale,
partially offset by proceeds from the
disposal of the China bakery business.
Our continued financial discipline and
strong cash generation strengthened
the balance sheet further, with a
£35.8m reduction in debt year-on-
year and an improvement in leverage
by 0.4 times to 1.1 times, which is at
the lower end of our target range
(1.0 to 2.0 times).
Our profit improvement has driven
a meaningful improvement in ROIC,
up 260 basis points to 10.1%.
This performance is testament to
the team’s ongoing commitment,
energy and drive. I would like to
thank everyone at Bakkavor for their
huge contribution to the significant
progress made as we continue to
deliver against our strategy.
EXCELLENT PROGRESS ACROSS ALL
FOUR PILLARS OF OUR STRATEGY
The four pillars of our strategy
remain clear:
1. UK:
Drive returns by leveraging scale
and market leadership.
2. INTERNATIONAL:
Drive sustainable
growth and Group accretive margin.
3. EXCELLENCE:
Improve performance
through operational excellence.
4. TRUST:
Be a positive force and a
trusted partner for all our stakeholders.
We are delivering on this strategy
through our well-embedded plan;
a lean and efficient organisational
structure; clear and focused regional
priorities; and a well-defined capital
allocation policy. This has driven a
strong performance during the year
and underpins our confidence in
delivering on our medium-term
adjusted operating profit margin
target of 6% (in FY27).
EXCELLENCE
Improve performance through
operational excellence
TRUST
Be a positive force and a trusted
partner for all our stakeholders
INTERNATIONAL
Drive sustainable growth and
Group accretive margin
UK
Drive returns by leveraging
scale and market leadership
LEAN &
EFFICIENT
organisational structure
CLEAR &
FOCUSED
regional priorities
WELL-
DEFINED
capital allocation policy
OUR CLEAR
STRATEGIC PILLARS
OUR WELL-EMBEDDED
PLAN
OUR MARGIN
2
TARGET
Where we
stand today
5.0%
(FY24)
Confident in driving
margin to
6.0%
(in FY27)
1
Based on company compiled consensus (“Consensus”) which includes all covering analysts except for Goodbody. Adjusted operating profit Consensus for FY24 at £111.2m,
with a range of £110.1m to £111.7m. Last updated on 28 February 2025.
2
Adjusted operating margin.
Bakkavor Group plc | Annual Report & Accounts 2024 |
13
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
US RECOVERY COMPLETE,
NOW FOCUSED ON LEVERAGING
STABILITY TO OPTIMISE
BUSINESS PERFORMANCE
The first half saw the business
sustaining the much-improved
operational performance that built
through 2023 with our recovery
phase now complete.
280bps
adjusted operating margin
improvement
Therefore, in the second half, our
focus returned to delivering on our
strategic priority for the region:
to rebuild our growth pipeline and
optimise our US business to deliver
sustainable profitable growth.
As a result, H2 delivered a return
to growth, up 9.1% year-on-year,
resulting in full-year like-for-like
revenue growth of 2.0%. This was
driven by underlying growth with
our strategic customers and new
product launches, including ranges
under our new ‘Fresh & Simple’
brand, whilst also benefitting from
a weaker prior year comparative.
Profit continued to step on in the
second half with our focus on driving
operational efficiencies key to this,
and we have now embedded the
basics of our Bakkavor Operating
System. Safety, quality and service
KPIs also continued to show best-in-
class delivery, including through
our important Thanksgiving peak.
As we continue to drive profitable
growth in a measured way in 2025
and beyond in this attractive market,
margin is expected to recover
further and be accretive to the Group,
therefore supporting the delivery
of the Group’s 6% margin target.
STRONG PERFORMANCE AND
MARGIN PROGRESSION, DRIVEN
BY VOLUME GROWTH AND
EFFICIENCY FOCUS
Our UK business delivered a strong
performance, with like-for-like
revenue up 5.2%, which, combined
with our ongoing efficiency focus,
drove a 30 basis point adjusted
operating margin improvement.
30bps
adjusted operating margin
improvement
Improving consumer confidence
drove good growth in the overall
fresh prepared food (“FPF”) market,
with volume up 2.6% and almost back
to pre-pandemic levels, and well
ahead of the wider grocery market
(up 0.2%). Shoppers are making more
frequent trips to the supermarket
which has supported growing
demand for our fresh, convenient and
high-quality meal solutions. Value
remains important for consumers,
supported through higher levels of
promotional activity, and demand
for more premium meal solutions
continued as shoppers looked to
eat at home instead of dining out.
At a FPF category level, salads
recovered strongly as cost-of-living
pressures eased, driving overall FPF
growth. Meals grew steadily and only
just behind the FPF market. Whilst
lagging the wider FPF market, pizza
and bread normalised following strong
demand through FY23. Desserts
continued to recover, however prices
have remained elevated due to
inflation, notably in dairy, which
resulted in growth behind the
overall market despite volume
growth returning in Q4.
UK
INTERNATIONAL
In terms of our own performance,
we outperformed the market, with
volumes up 2.8% (FPF volumes
+2.6%), and cemented our leading
position in all four FPF categories.
Price contributed to revenue growth
(up 2.4%) as we secured a good level
of support from our customers on
inflation recovery.
Our innovative new propositions have
performed strongly. We onboarded
new business wins and maintained
excellent service levels, despite
industrial action at one UK site in
Q4 (this dispute ended on 3 March
2025). Our performance in desserts
highlights our strength across these
areas. We onboarded a range of over
35 desserts for a key customer while
continuing to deliver market-leading
service across our broader customer
base and our new products have won
multiple awards.
The Bakkavor Operating System
has been fundamental in driving
our ongoing efficiency improvements
and margin progression, along
with initiatives to support our
sustainability targets.
As part of our focus on margin, we
have taken the difficult decision to
close our loss-making Wigan site,
and the closure completed at the end
of February 2025. We will exit a large
proportion of the c.£80m of sales,
with the balance to be transferred
to other sites. Cash closure costs of
£8.5m have been recognised as an
exceptional item in FY24, along with
£12.9m of asset impairments. We
have supported our colleagues in
securing alternative employment
opportunities wherever possible.
We expect to continue to drive
underlying growth in the UK and
our ongoing focus on operational
excellence through the Bakkavor
Operating System will enable
further margin improvement.
CHIEF EXECUTIVE’S OVERVIEW
CONTINUED
14
| Bakkavor Group plc | Annual Report & Accounts 2024
CHINA LOSSES HALVED AS
SIMPLIFICATION AND LEAN
INITIATIVES DELIVER
Like-for-like revenue growth of 13.8%
in mainland China was ahead of the
market (c.10%), with strong growth
in retail customers, now comprising
23% of sales, and the addition of
a new local quick service restaurant
customer. Lean manufacturing
initiatives are driving efficiencies
at all sites and have supported a
positive EBIT delivery in mainland
China in the year.
120bps
adjusted operating margin
improvement
We have continued to make progress
in simplifying our operations in China.
We disposed of our bakery business
in April 2024 and, agreed the sale
of our Hong Kong operations in
December 2024, which is anticipated
to complete in April 2025. This brings
proceeds from disposals in the region
to c.£13m in the last two years.
This means our remaining business
will be wholly based in mainland China.
It is well-invested with significant
headroom for growth, and cash
generative. As previously highlighted,
we continue to review our strategic
options in the region.
BAKKAVOR OPERATING SYSTEM
FUELLING STRONG EFFICIENCY
IMPROVEMENTS
The Bakkavor Operating System
has been fundamental in delivering
another strong year of efficiencies.
All three regions made good progress,
underpinned by our increasingly
standardised ways of working and
return enhancing investments
informed by insights from our smart
manufacturing system. Combined
with the annualisation of our
restructuring plan cost savings,
this has made a significant positive
impact across the business.
In the UK, we commenced the
roll-out of our Operational Excellence
Academy and delivered training to
over 500 operational colleagues, and
effectively managed peak volume
during seasonal events by being agile
in our approach to capacity across
multiple sites. Labour has been a key
area of focus, with activity around line
balancing, managing changeovers
and line automation. For example,
in Newark, automation of sponge
depositing has resulted in efficiency
improvements and waste reduction,
and our automated craft bread
production line at our site in Crewe,
which was installed last year, has
reduced the cost to manufacture.
EXCELLENCE
We also completed the first stage
of our houmous investment at our
London site in September 2024, with
efficiencies coming through from
an automated filling process and
building capability to remove lids, and
therefore reduce plastic packaging.
Our expertise has also been
leveraged internationally, with our
ways of working now well-embedded
in the US. We have started to unlock
further efficiency improvements in
Texas following the implementation
of our smart manufacturing system
at this site in the summer. As this
rolls out across our other sites we
expect to not only drive efficiency,
but to unlock additional capacity. In
addition, our lean initiative has now
been successfully rolled out at all
our mainland China sites, supporting
continued efficiency improvements.
Our approach to excellence also
encompasses our supply chain, and
once again we have demonstrated
our resilience and agility in this
area. Whilst significantly reduced
compared to the levels experienced
in the last two years, inflation was
still meaningful at £59m in 2024, and
adverse weather and geo-political
events have continued to cause
disruption. Our experience in recent
years has meant that, despite this,
we have continued to deliver excellent
service for our customers.
Looking ahead, we remain confident
in delivering further efficiency
improvements which will underpin
our continued margin progression.
In the UK, we have a strong pipeline
of initiatives centred on driving labour
and waste improvements. In the US,
we will continue the roll-out of our
smart manufacturing system to our
remaining sites over the next two
years, and in China we will maintain
our focus on lean initiatives.
Bakkavor Group plc | Annual Report & Accounts 2024 |
15
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CHIEF EXECUTIVE’S OVERVIEW
CONTINUED
TRUST
CONTINUED PROGRESS IN
NON-FINANCIAL KPIS
The ongoing integration of ESG
priorities across our business is
driving increased ownership and
oversight. This has supported the
improvement seen in three of our four
non-financial KPIs, alongside our
strengthening financial performance.
>22,000
tonnes of UK food waste reduction
since 2017
UK food waste reduced by 60bps to
6.0%, as our sites continue to address
the root causes of waste and maximise
surplus redistribution channels. Our
target is to halve UK food waste by
2030 from a 2017 baseline (9.2%), and
we remain on track to deliver on this,
with a 320bps reduction to date.
Group net carbon emissions were up
2.9% year-on-year, driven primarily
by a refrigeration leak at one of our
US sites. The UK comprises over 50%
of the Group’s carbon footprint which
delivered a small net reduction of
0.1% following consecutive years of
strong reductions. Despite the uptick
overall, we have ongoing investment
plans in refrigeration upgrades and
energy efficiency improvements,
such as heat recovery, which will
deliver improvements in the coming
years. The China business reduced
emissions by 6.9% driven by the sale
of our bakery site.
Positively, we remain on track
for our near-term target of reducing
operational emissions by 42% by
2030, with operational emissions
reduced by 20.9% and scope 3
emissions by 15.9% against our 2021
base. We remain committed to
reaching net zero in our Group
operations by 2040 and across the
full value chain by 2050, and the
Science Based Targets initiative
(“SBTi”) validated our targets in 2024.
20.9%
total operational emissions
reduction since 2021
Our people are central to our
business and we have continued to
invest in pay, wider benefits, including
our staff shops, and engagement
initiatives. UK employee turnover
is down significantly, by 730bps
to 18.9%, and we have also seen
a marked improvement in the US,
down 2,630bps to 27.6%.
Rates of pay for UK weekly paid
colleagues have increased
significantly, up 22.6% over the last
three years compared to a 21.0%
increase in CPI over the same period.
Despite this, disappointingly we faced
industrial action at our Spalding site
through Q4 2024 (this dispute ended
on 3 March 2025), but disruption to
customers was limited.
The results of our Group-wide
Employee Engagement Survey also
highlight the positive progress we have
made, with the engagement score up
330 basis points to 75.1%, reflecting
improvement in all three regions.
Looking ahead, we will continue to
place Trust at the centre of everything
we do, ensuring our strategy is
well-embedded across the business
in order to achieve our ambitions on
carbon emissions and food waste,
whilst maintaining an engaged and
safe workforce.
16
| Bakkavor Group plc | Annual Report & Accounts 2024
OUTLOOK: STRONG FOUNDATIONS
TO DELIVER 6% MARGIN TARGET
IN FY27
Trading in early 2025 has started
well. As expected, volume growth
has continued in all three regions and
we remain focused on driving margin
improvement. Consumer confidence
has improved somewhat, but remains
subdued in the UK. We are not wholly
reliant on volume to deliver an
improvement through the remainder
of the year, with revenue expected
to be broadly in line with 2024. We
expect to deliver an improvement
in 2025 adjusted operating profit in
line with market expectations
1
as
we continue to deliver on the four
pillars of our strategy.
In the UK, we expect sales to be
slightly down, due to the exit of lower
margin business at Wigan largely
offset by underlying growth, with cost
savings and efficiencies expected to
support margin improvement. The
performance momentum combined
with strategic actions taken in recent
years means our business is now in
good shape and we remain focused
on delivering on our Group 6% margin
target in FY27.
Our now stabilised platform in the
US will allow us to drive sustainable
mid-single-digit growth and margin
improvement with our focus centred on
our strategic categories of fresh meals,
burritos and bread. Our recent focus on
improving operational efficiency across
our sites has provided us with further
confidence that we can accommodate
c.$500m of sales, meaning we have
ample headroom for growth in the
medium term.
In China, with the sale of our Hong
Kong business due to complete in
April 2025, we continue to review our
strategic options for the remaining
mainland China business which is
expected to deliver steady growth
and a low level of profitability, with
the business remaining cash
generative and self-sustaining.
Inflation is expected to remain
broadly in line with FY24 (c.£50m)
and heavily weighted to labour given
the increases in National Insurance
(c.£15m annualised impact) and
the National Living Wage. We are
positively engaged with customers
on price recovery and, as in previous
years, expect to secure a good level
of support, which, along with our
continued focus on cost and efficiency
will mitigate the impact of inflation.
Looking further ahead, we expect to
deliver further strategic progress and
this will drive an improvement to margin
in FY25 and beyond as we continue on
our trajectory to our 6% medium-term
margin target.
Mike Edwards
Chief Executive Officer
With debt and leverage at the lower
end of our target range, the Group
is well-positioned to make return-
enhancing investments to drive
efficiency. Recognising the importance
of the dividend to our shareholders,
we expect to continue to deliver a
progressive policy. We also maintain
the flexibility to assess acquisition
opportunities where we see strategic
fit and the potential to enhance Group
margins and returns.
Looking further ahead, we expect to
deliver further progress across our
four strategic pillars, supported by
the benefit from the above-mentioned
actions. This will drive an improvement
to margin in FY25 and beyond as part
of our trajectory to achieve our 6%
margin target in FY27.
Mike Edwards
Chief Executive Officer
3 March 2025
1
Based on company compiled consensus (“Consensus”) which includes all covering analysts. Adjusted operating profit Consensus for FY25 at £118.6m with a range of £114.0m
to £123.1m. Last updated on 28 February 2025.
Bakkavor Group plc | Annual Report & Accounts 2024 |
17
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
MARKET AND CONSUMER TRENDS
DEVELOPING INNOVATIVE PRODUCTS
ACROSS OUR MARKETS
Our market-leading insights help create the
great-tasting products that consumers desire.
BY LEVERAGING OUR INSIGHT…
...AND DEVELOP EXCITING NEW PRODUCTS TO MEET THEIR NEEDS
MEAL DEAL
SOLUTIONS
Transformed a strategic
customer’s gastropub-
inspired meals range
PREMIUM
RESTAURANT
EQUIVALENTS
Launched range of
12 ready meals inspired
by modern Indian
restaurants
FIRST-TO-MARKET
PRODUCTS
Leveraged existing
capability to develop
new cheesecake
propositions
HEALTHIER
SNACKS
Introduced fruit and
vegetable snacking
pots with healthy
yoghurt dips
REDUCED PLASTIC
PACKAGING
Removed the lid on
houmous pots, reducing
plastic packaging by
317 tonnes
WE HAVE A DEEP UNDERSTANDING OF WHAT CONSUMERS WANT…
1
VALUE
for their time
and money
3
INNOVATION
to elevate staples and
explore new cuisines
2
QUALITY
at home, replacing
restaurants and
takeaways
4
FRESH
and healthy
indulgences
5
SUSTAINABLE
products with reduced
environmental impact
Throughout this process, we work in partnership with our customers to provide category insight and innovation,
whilst responding to requests for macro/food/consumer trends and category reviews
MARKET INSIGHT
Gathered from multiple
sources: webinars, bespoke
research, listening groups,
consumer surveys and
sales data
INTERNAL EXPERTS
Dedicated team collates,
analyses and distils
insights into actionable
information
INFORMING PLANS
Actionable information shared
with Customer, Category and
Procurement teams to inform
strategic planning and product/
packaging development briefs
PRODUCT DEVELOPMENT
New recipes created by
our development chefs,
with continued investment
in the highest standards of
food safety and innovation
OPERATIONAL DELIVERY
Develop robust production
plans to manufacture
new products and deliver
excellent service for
our customers
REVIEW & FEEDBACK
Post-launch review of
performance and consumer
and customer feedback
informs future development
18
| Bakkavor Group plc | Annual Report & Accounts 2024
Growing demand for quality,
fresh, convenient and affordable
food at home
More frequent shopping and
evolving health needs boost
demand for fresh foods
WHAT WE ARE SEEING:
Consumer habits have shifted as a result of the Covid
pandemic and subsequent period of rising living costs,
with 56% of consumers now spending more time at
home and 52% dining out less often
1
. These consumers
have also become more willing to invest in higher-
quality and more convenient options to enjoy at home,
particularly as cost pressures have eased more recently.
This has materialised in three major trends that have
driven growth in the FPF market. Firstly, shoppers
traded up to fresher or more premium products to
enhance their at-home dining experience, with volumes
of premium tier products up 11.2% in 2024
2
. Secondly,
growth amongst value-conscious shoppers was
supported by an increase in promotional activity, with
purchases on promotion up 270 basis points to 32.7%
3
.
Thirdly, fresh side-of-plate options returned to the
menu, with 53% of shoppers buying more products
which help them create home-cooked meals
1
.
HOW WE ARE RESPONDING:
To satisfy the desire for quality at-home experiences, we
supported retail customers with the launch of takeaway-
style pizza propositions, in-home dining meal deal
promotions and supported pasta sauce promotional
activity, providing consumers with great-tasting
alternatives to restaurant visits and takeaway purchases.
We have continued to deliver on the fundamentals of
our proposition with high-quality added-value products.
As part of this we developed new and exciting premium
tier ranges, including the launch of a new range of
modern Indian meals under our own brand ‘Pinch’
exclusively for a strategic customer and a new gourmet
pizza range which was ‘highly commended’ in The
Pizza, Pasta & Italian Food Association’s industry
awards. We also delivered on the transformation
of a premium range of pub equivalent starters,
mains and sides as part of a deal.
1
Bakkavor State of the Nation Report, 2024.
2
Bakkavor Market Matrix, 2024.
3
Kantar WPO Category Gold, 2024.
WHAT WE ARE SEEING:
During 2024, we saw growing consumer demand
for fresher food, with 59% stating freshness as a key
influencer on perceptions of quality
1
. This, combined
with a focus on reducing waste, flexible working
patterns and more promotional activity, all contributed
towards more frequent store visits. This has
supported overall growth in the market (up 2.6% in
2024), and delivered strong outperformance against
the total grocery market, which was only up 0.2%
3
.
Shoppers made +1.8% more trips to stores compared
to last year, with FPF shopping frequency surpassing
pre-Covid levels
3
and often with specific occasions
in mind. This supported volume growth across our
categories, with dips and pizza particularly benefiting
from more outdoor gatherings around the ‘summer
of sport’. This return to more frequent shopping also
fuelled record volumes in our food-to-go (“FTG”) market,
with demand higher than ever for lunchtime deals and
treats. Discretionary purchases have also started to
return as consumers seek to round out their at-home
meal experiences. Demand for side dishes has
increased and shoppers are spending more on quality
desserts, albeit volumes still remain challenged.
Health also rose back up the agenda as budget
constraints eased and consumers sought nutritious,
less processed foods, driving more activity across
high protein, gut health and natural ingredients.
HOW WE ARE RESPONDING:
We refreshed and developed numerous products
across our categories, with flavours and healthy
options that have encouraged consumers to shop
more frequently. We have expanded our FTG offering
to meet demand, creating new high-protein and
gut-friendly salad ranges for two of our customers
and developing healthier fresh snacking options
for another strategic customer.
To provide our consumers with desirable, healthy
options to complete their meals, we also created
tasty and inspiring side dishes which feature some
of their favourite vegetables.
Our innovation in desserts, powered by our new
state-of-the-art development kitchen, produced
brand-new concepts for consumers to indulge in
while also reducing food waste and plastic usage.
READ MORE
pg 26.
UK
Bakkavor Group plc | Annual Report & Accounts 2024 |
19
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
MARKET AND CONSUMER TRENDS
CONTINUED
Continued growing demand for fresh,
nutritional options
1
84.51°, 2024, The Grocery Experience: Today & Tomorrow.
2
Supermarket News, 2024, 2024 Fresh Food Trends Survey.
3
The Food Institute, 2024, Private Label Retail Lever.
4
Deloitte, 2023, Fresh Food at the Intersection of Trust and Transparency.
US
WHAT WE ARE SEEING:
In the US, despite easing inflation
1
, consumers have
remained focused on prices which has contributed
to a slowdown in the growth of fresh food categories
compared to prior years. However, demand remains
robust and almost half of retailers are still reporting
increased FPF sales year-on-year
2
. The focus on
value has also supported the growth of private label
within grocery retail, which is expected to increase
penetration from 19% in 2024 to c.25% by 2030
3
.
Fresh and quality remain top of mind with consumers,
with 90% saying that fresh food makes them happy
and 68% willing to pay a premium for the best fresh
food
4
. Retailers, therefore, continue to see fresh
prepared foods as a strategic area to invest in for
the future; two-thirds are planning to expand their
ranges next year and one-third are planning to
expand the store space devoted to the category.
This expansion will be carefully controlled, however,
with retailers citing a reduction in food waste as their
top goal
2
.
US consumers are also becoming more aware and
interested in the nutritional benefits of their food, with
high protein content, clean ingredients and functional
benefits ranked the highest among what consumers
would like to see
1
.
HOW WE ARE RESPONDING:
In 2024, we launched Fresh & Simple, a brand that
delivers high-quality, affordable meal solutions
spanning our entire capabilities. By reducing the
average units per case, we also helped retailers
optimise for both waste reduction and efficient
shelf space utilisation, aligning with their focus
on minimising food waste.
We are also supporting retailers with innovative,
on-trend solutions. For example, for one customer
we introduced a breakfast burrito featuring flexible
packaging allowing for hot bar merchandising.
For another customer, we developed a range of
Mediterranean-inspired ready meals that were
health-focused and shareable, responding to
consumers’ preferences for fresh, high-protein
and functional foods that also meet their expectations
for value and convenience.
20
| Bakkavor Group plc | Annual Report & Accounts 2024
Consumer confidence impacted, but
solid growth recorded in affordable
dining-out channels
1
McKinsey, 2024, The Truth About Chinese Consumption.
2
National Bureau of Statistics of China, 2024.
3
McKinsey, 2024, Getting Granular: In Search of Pockets of Growth in China.
4
The Economist, 2024, Chinese Fast Food Insurgents.
CHINA
WHAT WE ARE SEEING:
In China, consumer confidence remains at all-time
lows, driven by macro-economic challenges, although
it is worth noting that Chinese consumers are still
among the most confident in the world, well ahead
of the UK and US
1
.
Food retail sales have remained robust, up 9.9%
on last year compared to total retail growth of 3.5%
over the same period
2
. Positively, over the next 12
months, 87% of consumers are planning to maintain
or increase their spending on food and beverages
3
.
Our customers in the quick-service retail and
café channels recorded solid growth by offering
an affordable dining out or snacking experience.
Local chains grew faster than international ones,
on the back of aggressive roll-out plans and an offer
that highlights value for money and local recipes
4
.
Premium grocery chains pushed ahead with their
expansion plans as well, taking share from traditional
and mainstream retailers by offering convenient
and high-quality fresh food.
HOW WE ARE RESPONDING:
Over 2024, we launched over 600 new products,
with products tailored to local recipes and providing
great value for money. For example, we developed a
Xinjiang-style honey melon chicory salad and a bolete
and beef tongue bibimbap cereal bowl for one core
retail customer and relaunched our entire range
of products, with a focus on value optimisation, for
another retailer.
To strengthen our business and further improve the
price competitiveness of our products, we also rolled
out an extensive ‘lean manufacturing’ internal efficiency
programme that led to both improved margins and new
business gains through competitive pricing.
Bakkavor Group plc | Annual Report & Accounts 2024 |
21
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
STRATEGY
To deliver profitable and sustainable growth through our four strategic pillars.
PURPOSE
To lead the way through flawless execution, delighting customers and
consumers with fresh, convenient and great-tasting food that we create
every day.
UK
TRUST
Drive returns
by leveraging
scale and market
leadership
EXCELLENCE
Improve performance
through operational
excellence
Be a positive force
and a trusted
partner for all our
stakeholders
INTERNATIONAL
Drive sustainable
growth and Group
accretive margin
Achieving
excellent progress on our strategy
The strategy of the Group remains clear: to deliver
profitable and sustainable growth.
STRATEGY
We are focused on driving returns in the UK by leveraging
our scale and market leadership, whilst internationally
driving sustainable growth that is accretive to the Group’s
margin. These priorities are underpinned by our relentless
focus on operational excellence and by being a positive
force and trusted by our stakeholders.
We have made excellent progress across all four pillars
of our strategy, underpinned by our lean and efficient
organisational structure, clear focus on regional priorities
and well-defined capital allocation policy. Our ongoing
delivery on each of our four strategic pillars will underpin our
trajectory to reach our medium-term margin target of 6%.
22
| Bakkavor Group plc | Annual Report & Accounts 2024
Colleagues
Communities
Suppliers
READ MORE
pg 7.
READ MORE
pg 34.
CULTURE
To empower and support all our
stakeholders by living our values.
Respect and trust each other
Keep the customer at the
heart of what we do
Get it right, keep it right
Be proud of what we do
KEY STAKEHOLDERS
A strong understanding of our
stakeholders is crucial to our value
creation, long-term growth and success.
Investors
Customers
Bakkavor Group plc | Annual Report & Accounts 2024 |
23
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
STRATEGY
CONTINUED
OUR KEY DRIVERS
•
Combine deep local knowledge with Group expertise to develop
innovative products that evolve with changing consumer
preferences and meet the highest food safety standards.
•
Broaden and strengthen existing customer partnerships across
product categories whilst building a pipeline of new customers
who are committed to expanding their fresh food offerings.
•
Ensure growth is sustainable and translates into higher profits
through robust capacity and productivity plans and training
local talent on best-in-class fresh food manufacturing.
•
Leverage existing capacity and capability, along with new
investment, to respond to growing demand and provide
best-in-class service.
WHAT WE HAVE ACHIEVED IN 2024
US
•
Completed business recovery, with best-in-class non-financial
metrics across safety, quality and service, and a meaningful
step-up in profitability.
•
Entered the next phase of our strategy to rebuild our growth
pipeline and optimise our US business to deliver sustainable
profitable growth.
•
Launched Fresh & Simple, a new fresh prepared food (“FPF”)
brand comprising 25 best-selling cross-category products.
•
Reintroduced our fresh meals range with a key customer
following a temporary delisting in late 2022.
China
•
Delivered a step-change in profitability in mainland China after
implementing a lean manufacturing programme and driving
operating leverage from higher sales.
•
Commenced supply of a leading QSR chain with a range of
produce products and continued to build our retail presence
which is now 23% of mainland China sales (FY23: 18%).
•
Further simplified our operations by disposing of our bakery
business, now focusing wholly on the supply of FPF.
OUR FOCUS FOR 2025 AND BEYOND
US
•
Rebuild our growth pipeline with current customers and
generate new business through our Fresh & Simple brand.
•
Deliver further profit improvement through volume
consolidation, tight cost control and targeted productivity
investments.
•
Improving margins in the region to become accretive to
the Group’s medium-term target of reaching 6% adjusted
operating profit margin.
China
•
Maintain momentum in profit delivery through factory
performance improvements and overhead cost control.
•
Continue to review our strategic options in the region
to maximise value creation for the Group.
UK
Drive returns by leveraging
scale and market leadership
INTERNATIONAL
Drive sustainable growth and
Group accretive margin
OUR KEY DRIVERS
•
Leverage our market insights, development expertise and
breadth of manufacturing capabilities to create attractive
propositions that delight our customers and consumers.
•
Utilise our scale to develop, prepare and distribute our products
in a cost-efficient way and with a sustainable use of resources.
•
Pursue organic and inorganic growth opportunities across
our categories and beyond, leaning on our strong customer
relationships, deep market understanding and strong
financial position.
•
Attract and develop talent to retain and further strengthen
our leading position in the market.
WHAT WE HAVE ACHIEVED IN 2024
•
Maintained our market-leading position in each of our four
categories: meals, pizza and bread, salads and desserts.
•
Led the way among the supply base of our strategic customers’
suppliers to deliver high-impact, award-winning innovation
across our categories.
•
Made net business gains across multiple categories and
retailers by leveraging our innovation, quality and price
competitiveness.
•
Strengthened our dips offer with the acquisition of Moorish, the
UK’s award-winning houmous brand, with plans to extend the
brand to a broader range of Mediterranean-inspired products.
•
Invested in our talent pipeline by scaling up our award-winning
Early Careers programme, recruiting over 100 apprentices,
graduates and placement students.
OUR FOCUS FOR 2025 AND BEYOND
•
Target new business wins with competitive pricing and product
innovation, leveraging economies of scale.
•
Collaborate with our customers to manage input cost inflation,
in particular labour cost, through efficiency initiatives and
product value optimisation.
•
Invest in automation and targeted capacity enhancements to
continue offering great value for money products at market-
leading service levels.
•
Continue exploring inorganic growth opportunities to broaden
our capabilities, generate scale efficiencies and bolster our
proposition to customers.
OUR CLEAR AND CONSISTENT STRATEGY
24
| Bakkavor Group plc | Annual Report & Accounts 2024
OUR KEY DRIVERS
•
Identify and deliver efficiency improvements and develop
the Bakkavor Operating System (“BOS”), which produces
standardised best practices, toolkits, and training packages.
We have Operational Excellence managers at every site to
complement the centralised team, helping to drive best
practice at a local level and disseminate training effectively.
•
Enhance productivity in our operations through a culture of
continuous improvement.
•
Maintain our resilient and efficient global sourcing platform,
supported by our dedicated teams in the UK, Spain and China,
managing demand volatility and effectively sourcing high-risk
materials to deliver excellent service levels across the Group.
•
Continue to uphold the highest technical standards of food and
health and safety for colleagues, customers and consumers.
•
Sustain market-leading service levels through agile
manufacturing, contingency plans and a flexible supply chain.
WHAT WE HAVE ACHIEVED IN 2024
•
BOS supported further efficiency improvements by
streamlining our UK footprint, optimising manufacturing
processes, automating manual processes, improving
material yields and rationalising overheads.
•
Rolled out a smart manufacturing system in Texas, generating
a 6% efficiency gain through better visibility and control.
•
Completed phase 1 of our houmous investment plan at one
of our London sites with new production lines, increased
automation to deliver efficiency savings, and reduced product
and packaging waste, including 69 million fewer pieces of
plastic per year.
•
Established the Operational Excellence Academy to train
our colleagues on the BOS principles and toolkit, with over
500 colleagues instructed in 2024.
OUR FOCUS FOR 2025 AND BEYOND
•
Support the delivery of the Group’s medium-term margin target
of 6% by implementing further efficiencies across the Group,
under the guidance of the Operational Excellence team and by
leveraging our BOS toolkit.
•
Identify further opportunities for investments in productivity,
with a focus on waste reduction and energy-efficient solutions
that also contribute to lowering our carbon emissions.
•
Roll out our smart manufacturing system to our sites in
California and North Carolina, whilst maintaining our focus
on continuous improvement and lean manufacturing
practices in China.
•
Ensure our food safety and health and safety standards
remain market leading through relentless focus on training
and processes.
OUR KEY DRIVERS
•
Live our values, generating a positive impact for our colleagues,
customers, suppliers, investors and communities.
•
Provide our people with a great place to work where they feel
valued, included and inspired.
•
Be a responsible global business by supporting the transition
to environmentally sustainable economies and maintaining
the highest ethical standards across our supply chain, in
collaboration with our customers and suppliers.
•
Support our communities through charity partnerships and
local grassroots initiatives.
WHAT WE HAVE ACHIEVED IN 2024
•
Cemented our commitment to reach net zero, with our near-
and long-term targets for scopes 1, 2 and 3 validated by the
Science Based Targets initiative (“SBTi”). Despite a 2.9%
increase in the year, we are on track to meet our commitments,
with scope 1 and 2 emissions reduced by 20.9% since 2021.
•
Reduced UK food waste by 60bps to 6.0% (FY23: 6.6%) of total
input, through operational excellence-led projects tackling
both the root causes of waste and increasing focus on surplus
redistribution to people through charities and our staff shops,
along with animal feed.
•
Supported this redistribution with our Staff Shop Transformation
Project, providing colleagues at every UK site with access to
great-quality products at discounted prices.
•
Ranked in the top 20% of companies globally in WWF’s Palm
Oil Buyers Scorecard and classified as ‘Well on the way’
to a responsible palm oil future, recognising our efforts
on sustainable palm oil.
•
Improved employee engagement and reduced employee
turnover in both the UK and US, supported by investments
across pay, wider benefits and engagement activities.
READ MORE
pg 38.
OUR FOCUS FOR 2025 AND BEYOND
•
Continue progress towards our carbon targets through
investments in priority carbon action areas; our targets being
a 42% reduction in net operational emissions by 2030, net zero
by 2040 and net zero across the value chain by 2050.
•
Continue working towards our target of halving UK food waste
by 2030 through better material yield, increased redistribution
and improved usage of surplus.
•
Uphold our commitment to responsible sourcing, with a
refreshed, strategically designed supplier engagement
programme. This will allow us to engage critical suppliers
with purpose to deliver tangible results on social and
environmental topics.
•
Ensure our work environment is safe and welcoming for all our
colleagues, offering opportunities for personal development.
EXCELLENCE
Improve performance through
operational excellence
TRUST
Be a positive force and a trusted
partner for all our stakeholders
Bakkavor Group plc | Annual Report & Accounts 2024 |
25
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
As the number one player in the UK
chilled desserts market, we continue
to invest and innovate to drive the
category forward.
In 2024, we invested in a new
development kitchen at our Newark
site and, by leveraging our capabilities
across multiple desserts categories,
launched first-to-market products,
such as the award-winning cream-filled
yum nuts that bring together ambient
bakery with chilled cream processing.
Consumers love to indulge at Christmas
and our development team also
showcased their skills by launching
several new innovative desserts,
including the popular ‘Christmas
Carol-Mel’ and brownie cheesecake.
This year, we onboarded c.60 SKUs
across cream cakes, hot desserts and
custard, including a major business
win with a key customer on the back
of our strong innovation capabilities
and price competitiveness. We also
retained our leading position in trifles
During 2024, we capitalised on our state-of-the-art
manufacturing capabilities, unrivalled innovation
ability and superior product quality to launch market-
leading products and win new business in the UK
chilled desserts market.
and cheesecakes, while continuing
to deliver market-leading service
across our broader customer base.
Our innovation is not only centred on
the product, but also on our broader
responsibilities, designing processes
to minimise food waste and reduce
plastic usage wherever possible.
For example, we cut 40 tonnes of
virgin plastic across cream cakes by
moving to partly recycled packaging.
Our investments and innovations
create a positive loop that leaves us
well-positioned to continue leading the
way in this category with great-tasting
products that delight consumers.
>190
new products launched
across desserts in 2024
our leadership in the chilled
desserts market
Strengthening
STRATEGY IN ACTION
26
| Bakkavor Group plc | Annual Report & Accounts 2024
Action
Insight
Data
performance and efficiency
through the Bakkavor
Operating System
Powering
Over the years, our Operational
Excellence team has developed a
set of tools and processes to improve
the efficiency and effectiveness of our
operations. This approach is defined
as the BOS and sits at the core of
how we operate, integrated into our
culture and ways of working across
sites and functions.
The BOS creates a standard and
repeatable process for identifying
opportunities and removing
inefficiencies. It includes a
standardised performance review
process across sites and a state-
of-the-art smart manufacturing
system which provides live
performance data.
We developed the BOS toolkit
and established the Operational
Excellence Academy, which trained
over 500 colleagues in 2024,
to support development whilst
encouraging autonomy and ownership
at all levels of the business.
The BOS and the work of our
Operational Excellence team have
been major contributors in supporting
the Group to deliver further efficiency
improvements this year, on top of the
gains already delivered over the past
few years. This has been paramount in
protecting the business from the past
three years’ high levels of inflation.
The knowledge gained in the UK is
shared across our markets, with 2024
seeing the first roll-out of our smart
manufacturing system in the US, as
well as the implementation of a lean
manufacturing programme across
our sites in China.
>500
colleagues participated
in our Operational
Excellence Academy
OUR BAKKAVOR OPERATING SYSTEM MODEL
Our Bakkavor Operating System (“BOS”) is driving
performance improvement in our operations by
introducing standardised practice across the business.
STRATEGY IN ACTION
CONTINUED
28
| Bakkavor Group plc | Annual Report & Accounts 2024
our new ‘Fresh & Simple’
brand in the US
Launching
‘Fresh & Simple’ brings together the best-selling
recipes across meals, burritos and breads.
In May 2024, we launched our
new Fresh & Simple range of fresh
prepared food across the stores of
a major US retailer. This marked the
culmination of a strong collaboration
between our Product Development
and Commercial teams to build a new
proposition, bringing together a suite
of delicious recipes that leverage
the breadth of our capability across
food categories.
A 25-strong range of meals, burritos
and artisan breads is now available
across c.450 stores in the east of the
country, with vibrant and enticing
packaging highlighting the freshness
of the products.
The brand provides a turn-key
and proven solution for retailers
who are looking to enter what is a
high-growth emerging segment
of the fresh department. Our next
step is to broaden distribution to
new retailers, providing them with
best-selling, on-trend products
that families across the country love.
25
products in the range
STRATEGY IN ACTION
CONTINUED
30
| Bakkavor Group plc | Annual Report & Accounts 2024
STRATEGY IN ACTION
CONTINUED
on our target to halve
UK food waste by 2030
Delivering
>22,000
tonnes of UK food waste
reduction since 2017
In 2018, we made a commitment to
halve the net food waste produced in
our UK business by 2030, recognising
the need to make better use of
resources, reduce emissions and
increase food availability.
Over time our approach has evolved,
starting with site-level partnerships
with external organisations.
For example, we partnered with
FareShare on the King’s Coronation
Food Project to help tackle food
insecurity by delivering 500,000 meals
to vulnerable communities. Now,
as part of the Bakkavor Operating
System, we have rolled out real-time
tracking tools and standardised
processes across our estate which
allows us to focus on systematically
identifying root causes of waste and
implementing corrective actions.
Our project to transform our
staff shops has also contributed
to redistribution, as more of our
colleagues can now access
discounted products.
In 2024, UK food waste reduction was
included as a KPI in our bonus scheme,
demonstrating the importance we as
a business have placed on driving
positive change in this area.
In 2024, we generated 2,568 fewer
tonnes of net food waste, lowering our
net food waste by 60bps to 6.0%,
another positive step towards building
a better future for our communities.
This brings our total reduction since
making our commitment to 320bps
or 22,039 tonnes, which leaves us on
track to meet our target.
A heightened focus on food waste across our
sites has delivered another progressive year
towards our 2030 target.
32
| Bakkavor Group plc | Annual Report & Accounts 2024
PEOPLE
Through our People Plan, we continue
striving to make Bakkavor a great place
to work. Investment in 2024 has been
significant as we have increased rates
of pay, improved access to wider benefits
and enhanced our engagement initiatives.
The impact of this has been evident across
our people metrics. In particular, we saw
a marked improvement in colleague
engagement and turnover in both the
UK and US.
26.3%
improvement in US
employee turnover,
down to 27.6%
7.3%
improvement in UK
employee turnover,
down to 18.9%
Our people are our
greatest asset. Their
continued hard work,
commitment and agility
have been fundamental
in delivering the Group’s
strong performance
this year.
Donna-Maria Lee
Chief People Officer
We are proud
to invest in our people
34
| Bakkavor Group plc | Annual Report & Accounts 2024
Pay and
benefits
Providing opportunities
for personal growth and
development
Proud
to lead
Our People Plan is focused on maintaining our key strengths
whilst driving improvement across four focus areas:
We recognise the importance of
listening and acting on the feedback
of our colleagues, and this is informed
by the Group-wide annual Employee
Engagement Survey (“EES”), alongside
our Site Engagement Forums (“SEF”)
and Group Engagement Forums
(“GEF”), regular subject-specific pulse
surveys, and at a Board level our
designated workforce engagement
Non-executive Director.
We have made good progress, but
we know there is still more to do.
This fuels our commitment to driving
sustainable improvements for our
colleagues and increasing their
engagement. We also continue to
strengthen our culture, which we
define by our ability to empower
and support all our stakeholders
by putting our values at the heart
of everything we do.
Respect and trust
each other
Responding to change
effectively and ways
of working
Keep the customer at
the heart of what we do
Get it right,
keep it right
Be proud of
what we do
89%
survey response rate
(2023: 88%)
3.3%
improvement in engagement
results, up to 75.1%
Progress in our UK bakery division
is an excellent example of how our
actions are supporting a stronger
culture of listening and responding
to colleague feedback.
Our suite of leadership training
programmes has facilitated better
communication within our teams
and enabled leaders and SEFs to
gather more site-specific feedback,
particularly from more junior
factory colleagues.
Our regular pulse surveys and
briefing sessions have helped
provide clear accountability,
whilst celebrating and recognising
colleagues’ contributions. These
actions drove a significant year-
on-year increase (+7.6%) in overall
engagement for the division,
demonstrating we have effectively
listened and taken action to respond
to our colleagues’ feedback.
You said, we did: embedding a culture of effective action
OUR PEOPLE PLAN
Our values are at the heart of our People Plan as we strive to
make progress and support our colleagues as effectively as possible:
Bakkavor Group plc | Annual Report & Accounts 2024 |
35
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
PEOPLE
CONTINUED
Pay and benefits
Offering competitive pay and relevant benefits
remains vital in our efforts to support, recruit
and retain our colleagues.
FAIR PAY
We have made a significant investment in pay, with a 21%
increase in rates for hourly-paid UK colleagues over the last
three years. This is above inflation, and has helped support
colleagues through cost-of-living pressures. Following a
challenging period for the US business, with performance
now stabilised, we were able to award pay increases across
our sites in FY24. Our investment has been recognised by
colleagues Group-wide, with 6.5% more colleagues feeling
they are paid fairly, and a further 12.1% in the US alone.
BENEFIT AWARENESS
We provide a wide range of benefits, including life and
personal accident insurance, upgraded healthcare and
multiple retailer discounts. We also deliver regular
benefits awareness sessions and held a ‘Benefits Week’
dedicated to helping colleagues understand and make
the most of the opportunities available.
STAFF SHOPS
Following significant progress in 2023, every UK site now
has a staff shop which provides colleagues with access to
our great-quality products at discounted prices. Through
our Staff Shop Transformation Project implemented in
2024, we expanded the range of products on offer and are
also in the process of improving our staff shop facilities,
with a full rebrand due to complete in early 2025.
HEALTH AND WELLBEING
We support three core pillars of physical, emotional
and financial wellbeing. In 2024, we appointed a UK
Head of Occupational Health & Wellbeing to provide
clear leadership and focus in this area. Our 120
Wellbeing Champions drive our wellbeing and mental
health initiatives and they all receive bespoke training
to enhance support across our sites.
Building on our Mental Health at Work Policy launched
in 2023 (available at: bakkavor.com/esg), we rolled out
Mental Health Awareness training to over 7,000 UK
colleagues in 2024, with a commitment to reach all
UK colleagues by the end of 2025.
We conducted a benefits and wellbeing pulse survey in
2024, which helped shape future actions and informed
activities for our Corporate Wellbeing Month, which
focused on mental, physical, and financial health.
We have also enhanced our wellbeing services, provided
to all UK colleagues, and are planning to introduce
wellbeing services for our teams in the US.
Our efforts have been recognised by our colleagues,
with +4.6% feeling that Bakkavor cares for their health
and wellbeing.
READ MORE
pg 44.
Responding to change effectively
and ways of working
Our leadership team is well-embedded,
following the renewed organisational structure
implemented in FY23, which has strengthened
our ability to drive change from the top.
We continue to evolve how we work together, gather
feedback and lead by example, to deliver effective
change for all our colleagues. As a result, 86.4% of
survey respondents told us that they have a clear
understanding of site and functional goals.
READ MORE
pg 93.
Our SEFs continue to play a vital role in communication
and collaboration across our teams and functions.
This year, we further embedded SEF-led activities
through refreshed skills and best practice training.
62.6% of colleagues agree that SEFs are “working on
things that matter”, a year-on-year increase of 9.8%.
We and our colleagues have also had to respond to
change, following the difficult decision to close our
Wigan site. We have worked hard to support affected
colleagues in securing alternative roles. This included
holding job fairs with local employers and providing
resources to support colleagues with interview skills
and CV writing.
To further strengthen two-way communication and
formalise idea generation, we launched our ‘Proud to
Make it Better’ company suggestion scheme in early
2025 as another avenue to hear from colleagues.
36
| Bakkavor Group plc | Annual Report & Accounts 2024
Providing opportunities for personal
growth and development
We are always striving to provide our current
and future workforce with more opportunities
to learn and grow.
We recognise that delivering engaging, inclusive training
and mentoring is crucial to developing career readiness,
skills confidence and leadership potential.
EARLY CAREERS
We have united with a wider network of leading food
and drink companies to build ‘Mmmake Your Mark’: a
showcase of why our industry is a vibrant and rewarding
place to work. As part of our work to raise awareness
of careers in manufacturing, we welcomed over 100
apprentices, graduates and placement students across
our sites in 2024.
Our Early Careers programme is industry-leading,
and we were named TheJobCrowd’s top company for
graduates and apprentices for the fourth year running.
We also continue to build links with local schools,
communities and networks to help students, teachers,
parents and supporting bodies understand the many
career opportunities available in manufacturing.
ONBOARDING
Feedback from our refreshed, interactive onboarding
programme for new joiners has been very positive,
with Bakkavor shortlisted for two prizes in the 2024
British Training Awards and winning a ‘highly
commended’ award.
MENTORING
Our female mentoring programme continues to play an
important role in our efforts to empower more women
to seek fulfilling careers in manufacturing. It offers
opportunities and support for colleagues to become
a mentee or mentor, and we were proud to double the
number of mentees in 2024. This has seen engagement
improve, with those on the programme reporting 6%
higher levels of engagement compared to UK salaried
colleagues.
In May, we broadened the programme to the wider
business to develop inclusivity across our personal
development offering.
Proud to lead
Our goal in 2024 was to build leadership not
only into our organisational structure and
ways of working, but also our culture.
We leveraged insights and colleague feedback from
our ‘Better Behaviours, Better Bakkavor’ workshops
to introduce three new leadership programmes in
2024. This supports teams to reach their full potential
whilst also emphasising the importance of creating
an inclusive workplace.
FOUNDATION LEADERSHIP PROGRAMME
Our Foundation Leadership programme aims to
empower newly appointed team leaders and managers
in developing their confidence and skills such as
effective communication, change management and
decision-making.
GENERAL OPERATIONAL MANAGEMENT
DEVELOPMENT PROGRAMME
This immersive programme provides both individual and
team development over 12 months through Executive
coaching, face-to-face development and digital learning.
LUMINA SPARK LEADERSHIP TEAM JOURNEY
This programme supports teams to work better together,
improve self-awareness, create better results, improve
working relationships and increase productivity.
EXISTING AND FUTURE PROGRAMMES
We also continued to invest in our existing Front-line
Leadership and Effective Leadership programmes.
In 2025, we will add a Senior Leadership programme,
thereby providing leaders at all levels with effective
and ongoing development.
LEVERAGING OUR UK MODEL IN THE US
Building on the success we have seen in the UK, we
rolled out our ‘Better Behaviours, Better Bakkavor’
workshops in the US to inform future programmes, and
development sessions for the senior leadership team.
Bakkavor Group plc | Annual Report & Accounts 2024 |
37
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TRUSTED PARTNER ESG STRATEGY
Partner
Trusted
Building a better
business for all our
stakeholders
Given the importance of ESG to our
future success, Trusted Partner is
integrated as part of the Trust pillar
of the Group strategy and is overseen
by the Board-level ESG Committee.
Our annual dedicated ESG report
provides further details on our
ESG topics and performance:
bakkavor.com/esg.
ESG ACROSS THE BUSINESS:
Trusted Partner ESG strategy
•
Focus areas
39
•
Strategic priorities
39
•
Executive summary
39
TCFD
•
Governance structure
47
•
Strategy
48
•
Risk management
53
•
Metrics and targets
53
Non-financial KPIs
64
ESG Committee report
120
Policies and documents:
bakkavor.com/en/esg/esg-reporting
All data shown is at a Group level,
unless specified.
For ESG and sustainability enquiries:
ESG@bakkavor.com.
Trusted Partner is our ESG strategy that encompasses our
response to our material sustainability and engagement
topics, along with the governance of these areas.
38
| Bakkavor Group plc | Annual Report & Accounts 2024
1
From purchased goods and services.
2
The cut-off date is based on the Accountability Framework Initiative definition. This means that clearance of natural forest after this date renders the affected area
or production unit, and the commodity produced there, non-compliant with no-deforestation or no-conversion commitments.
3
Bakkavor submits sustainable commodities purchasing data to independent advisers 3Keel for verification. Due to their timelines, final 2024 data was not available
at time of publication, but will be published in our Deforestation Commitment Progress Report later in 2025.
EXECUTIVE SUMMARY
In 2024, our clear focus has supported a
strong financial performance, as well as
progress in three of our four non-financial
KPIs and ESG commitments.
This has been driven by the continued
integration of ESG principles into our
operational practices and routine business
reporting, ongoing investment in both
people and capital, along with external
validation of targets.
Our action on health and safety and employee
turnover has been well-embedded across the
business for some years, including robust
monthly reporting of KPIs for clear oversight
and to identify and respond quickly to trends.
Turnover has also been part of management
bonus metrics since 2018.
In 2024, we focused particularly on driving
an increased reduction in UK food waste
by further embedding our approach into
our day-to-day factory operations. This has
delivered another strong reduction in 2024,
keeping us ahead of our target, although
the remaining reductions will be the most
challenging to achieve.
Communicating our ESG ambitions and
plans resulted in increased employee
engagement amongst our colleagues in
our annual survey, with ESG topics showing
the largest annual increase overall.
Delivering a reduction in Group carbon
emissions also remains a priority. The
validation of our net zero aligned climate
targets by the Science Based Targets
initiative (“SBTi”) was a significant milestone
in 2024. Whilst the Group’s emissions
increased by 2.9% in 2024, we remain on
track for our first target – a 42% reduction
by 2030 for scopes 1 and 2 and for scope 3
purchased goods and services. We continue
to develop our climate transition plan and
are progressing how we address supply
chain emissions, the most significant
climate challenge for our industry.
We remain committed to driving progress
in this area and recognise the importance
of working collaboratively with the wider
food sector to share information and help
drive positive change across customers,
suppliers, NGOs, the public sector and
multi-stakeholder forums.
READ MORE
pg 46.
The landscape of ESG disclosure is rapidly
evolving and Bakkavor is committed to
continually improving our own reporting.
Bakkavor is not in scope of the EU’s
Corporate Sustainability Reporting Directive
(“CSRD”) however we acknowledge the
influence that it will have. We are preparing
to align to other new requirements as they
are rolled out, including those of the
International Sustainability Standards Board
(“ISSB”) and the Transition Plan Taskforce
(“TPT”), by upskilling our business and
reviewing where we currently have gaps.
TRUSTED PARTNER IS CENTRED ON THREE BROAD FOCUS AREAS:
•
Responsible Sourcing
in our Supply Chain
•
Sustainability and Innovation
in our Operations
•
Engagement and Wellbeing
in our Workplaces and Communities
Within this framework, we have three strategic priorities recognising
that these areas require most intervention to safeguard the resilience
of our business.
Based on a double materiality assessment, most recently updated in
2022, these reflect the needs of our stakeholders and the environment,
as well as our considerations for our business’s long-term resilience.
CLIMATE AND NET ZERO
FOOD WASTE
ENVIRONMENTALLY
SUSTAINABLE SOURCING
Net zero across our Group operations
by 2040 and across all scopes by 2050.
Reduce absolute scope 1, 2 and 3
1
emissions by 42% by 2030 (2021 baseline).
2.9%
increase in Group net
operational (scope 1 and 2)
carbon emissions in the year
(20.9)%
reduction achieved since
2021 (scopes 1 and 2) – on
track for our near-term
science-based target
(15.9)%
reduction in scope 3
emissions from purchased
goods and services since
2021 – on track for target
Halve food waste by 2030
(2017 baseline, UK).
320bps
reduction in UK food
waste since 2017
6.0%
UK food waste in 2024,
a reduction of 2,568
tonnes since 2023
100% deforestation- and conversion-
free sourcing of palm oil, soy, beef and
wood pulp by the end of 2025 (UK, 2020
cut-off date
2
).
5.4%
2023
3
volume of verified
Deforestation and
Conversion Free (vDCF)
soy plus 94.6% in transition
towards vDCF soy (UK)
99.7%
2023
3
volume of RSPO
segregated palm oil (UK)
Wood pulp:
100% certified
sustainable sourcing for primary
and secondary packaging
Beef:
100% from low-risk origin
PROGRESS ON OUR THREE STRATEGIC PRIORITIES
Bakkavor Group plc | Annual Report & Accounts 2024 |
39
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TRUSTED PARTNER ESG STRATEGY
CONTINUED
Responsible Sourcing
in our Supply Chain
Bakkavor’s Supplier Code of Conduct
is at the heart of our Responsible
Sourcing strategy and supply chain
engagement. It outlines the
standards that we expect to be met
and forms part of our supplier
selection process. The Code, along
with our Deforestation Commitment
Progress Report, Human Rights
Policy and Animal Welfare Policy,
can be found at bakkavor.com/en/
esg/esg-reporting.
The social and environmental sustainability of our supply chain is directly linked to its resilience.
Our business relies on supplier partnerships that minimise environmental harm and support the
rights and livelihoods of the millions employed in food production worldwide.
Industry collaboration in this area is
essential to address system-wide
issues. Bakkavor is active in multi-
stakeholder initiatives including the
UK Soy Manifesto, the Ethical Trading
Initiative (“ETI”), the Food Network
for Ethical Trade (“FNET”) and the
Spanish Ethical Trade Forum.
Our Responsible Sourcing strategy is
overseen by a governance group that
includes senior representation from
the Procurement, Finance, ESG and
Technical functions, who oversee the
day-to-day implementation of our
strategy via the Responsible Sourcing
action team.
Progress against our targets and commitments
Strategic priority
Achieved
Non-financial KPI
On track
Work to do
Ongoing
ENVIRONMENTALLY SUSTAINABLE SOURCING
100% deforestation- and conversion-free sourcing of palm oil, soy, beef and wood pulp by the end of
2025 (UK, 2020 cut-off date
2
).
As members of the Roundtable on Sustainable Palm Oil (“RSPO”) since 2012, we report our progress to the RSPO
annually and also through CDP’s Forest questionnaires
4
. In addition, palm oil, soy and cocoa volumes are reported
to independent advisers 3Keel for verification of sustainable sourcing volumes. Due to their reporting timelines,
2024 data was not available at the time of publication. 2024 data and progress will be disclosed in our updated
Deforestation Commitment Progress Report, available on our website.
As of 2023, 99.7% of UK-sourced palm oil was RSPO Segregated, meaning that it was sourced from RSPO Certified
mills and therefore traceable as deforestation and conversion free. WWF’s Palm Oil Buyers Scorecard classes
Bakkavor as ‘well on path’ and rated the company in the top 20% of buyers globally (44/285).
As signatories to the UK Soy Manifesto, we work with industry partners to ensure all shipments of soy and imports
of embedded soy to the UK are verified deforestation and conversion free (vDCF) by 2025. Our Deforestation and
Conversion Free Soy Policy makes our expectations clear with suppliers, and all UK suppliers are made aware of
this as a condition of supply. As of 2023, 5.4% of soy is certified or verified as deforestation- and conversion-free with
the remainder to transition towards verified deforestation and conversion free. 84.8% of this transitional volume is
covered by RTRS
5
credits that support the production of sustainable soy and the remainder with mass balance or
regional certificates.
All cardboard used for primary and secondary packaging is sourced from sustainable wood pulp PEFC/FSC
(Programme for the Endorsement of Forest Certification and/Forest Stewardship Council respectively) chain
of custody certification.
All beef used in the UK business comes from retailer-approved European farms which are low-risk for deforestation.
READ MORE
bakkavor.com/en/esg/esg-reporting.
4
CDP (formerly Carbon Disclosure Project) questionnaires, responses available at: bakkavor.com/en/esg/esg-reporting.
5
Round Table on Responsible Soy.
40
| Bakkavor Group plc | Annual Report & Accounts 2024
6
Target includes FLAG emissions and removals.
100% eggs from cage-free sources by 2025 (UK, and Group-wide by 2027).
In 2024 we achieved our goal to source only
eggs and egg products in the UK from cage-free
sources, a year ahead of schedule. In China
cage-free sources are less in demand or available,
however plans are in place that will increase this
volume in 2025.
UK:
100%
(2023: 80%)
CHINA:
6%
(2023: 6%)
US:
92%
(2023: 90%)
SBTi-verified targets (Forest, Land and Agriculture, ‘FLAG’ emissions):
Near-term:
Reduce absolute scope 1 and 3 FLAG GHG emissions
6
by 30.3% by 2030 (2021 base year).
Long-term:
Reduce scope 1 and 3 FLAG GHG emissions
6
72% by 2050 (2021 base year).
Scope 3 FLAG emissions increased by 8.5% in 2024, an increase of 6.8% since 2021. However, the current nature
of scope 3 calculations and reliance on secondary sources means that making interventions such as progress
towards zero deforestation are not directly accounted for in our footprint results.
READ MORE
Deforestation Commitment Progress Report 2024, Deforestation and Conversion Free Soy Policy.
ENVIRONMENTALLY SUSTAINABLE SOURCING
CONTINUED
Work collaboratively with suppliers on any breaches of our Code of Conduct to develop and implement
a clear and appropriate corrective action plan (UK, ongoing).
We continued to embed our Supplier Code of Conduct through ongoing supplier engagement. In 2024, we
concluded a verification programme of identified strategic suppliers, that represented 33% of procurement
spend, using an independent third-party human rights expert. The outcomes indicated a range of maturity
levels and risk, and supported the development of tailored risk mitigation programmes, which we continued
to follow up on throughout the year.
READ MORE
bakkavor.com/en/esg/esg-reporting.
SUPPLY CHAIN HUMAN RIGHTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
41
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TRUSTED PARTNER ESG STRATEGY
CONTINUED
Sustainability and Innovation
in our Operations
Climate and Net Zero, and Food
Waste are two of our strategic ESG
priorities and are also the Group’s
non-financial KPIs. Progress against
these areas is integrated into the
Group’s bonus metrics; UK food
waste performance is part of the
STIP and Group net carbon emissions
form part of the LTIP.
Ensuring efficiency and sustainability across our operations directly supports resilient manufacturing
operations. Our ESG objectives have become increasingly embedded into our day-to-day operations
and how we deliver for our customers, as part of the Excellence pillar of our strategy.
In 2024, the Science Based Targets
initiative (“SBTi”) validated our net
zero-aligned climate targets, forming
the framework for our climate transition
plan and roadmap for the years to come.
Also fundamental to sustainable
operations is our focus on Impact
of Packaging, Sustainable and
Healthier Products, and Water Use
and Management.
READ MORE:
KPIs pg 64.
ESG: TCFD pg 53.
Directors’ remuneration report
pg 140.
CLIMATE AND NET ZERO
SBTi-verified targets (energy and industry):
Near-term:
Reduce absolute scope 1 and 2 emissions by 42% by 2030 (2021 base year).
Reduce absolute scope 3 emissions from purchased goods and services 42% by 2030 (2021 base year).
Long-term:
Reduce absolute scope 1 and 2 and 3 emissions by 90% by 2050 (2021 base year).
For FLAG targets, see page 41.
Scope 1 and 2 Group net carbon emissions increased by 2.9% in 2024, due to engineering challenges in the US, where
refrigeration upgrades resulted in a significant increase in F-gas emissions primarily at one site, as well as a flat
performance in the UK versus 2023. Other sources of emissions in the US decreased, and net emissions from our
operations in the UK and China decreased by 0.1% and 6.9% respectively In China this was largely a result of the
disposal of a bakery site. For detail on our decarbonisation progress and actions in 2024 to reduce emissions and
increase energy efficiency, see page 54.
Since our baseline year of 2021, Bakkavor has reduced scope 1 and 2 emissions by 20.9%, meaning we remain
on track for our near-term target reduction of 42% by 2030. This has been driven by reducing emissions from
refrigeration gases, as well as steady reductions in other utilities arising from implementing energy efficiency
improvements such as heat recovery technologies.
Scope 3 emissions comprise 88.9% of our overall footprint and are therefore a significant focus area for the Group.
The vast majority (82.5%) of our scope 3 footprint comes from purchased goods and services and as such our
near-term target is to reduce these emissions by 42% by 2030. Since 2021 they have reduced by 15.9%, meaning
we are just on track for the target.
READ MORE
pg 53.
Progress against our targets and commitments
Strategic priority
Achieved
Non-financial KPI
On track
Work to do
Ongoing
42
| Bakkavor Group plc | Annual Report & Accounts 2024
6
As defined by the UK Department of Health’s Nutrient Profiling Model.
FOOD WASTE
Halve food waste by 2030 (UK, 2017 baseline).
In 2024, food waste reduced to 6.0% of total input, down from 6.6% in 2023, which equates to a reduction of 2,568
tonnes. This was driven by our UK sites continuing to both address the root cause of waste at each facility as well
as working to maximise surplus redistribution channels. This included expanding partnerships with food
redistribution organisations such as FareShare, diverting more surplus food to animal feed where possible and
also distributing products across our staff shops, providing discounted food for our colleagues.
Since 2017, net food waste has reduced by 320bps to 6.0% (2017: 9.2%), meaning that we are on track to meet our
2030 goal.
IMPACT OF PACKAGING
Support the UK Plastics Pact’s 2025 industry goals of eliminating problematic plastics, 100% recyclable
plastic packaging and >30% average recycled content.
98.7% of our UK business’s packaging is recyclable. This is a small reduction on 2023’s proportion (98.8%).
Since 2021, our use of plastic in the UK has fallen by 4,868 tonnes, a 23.9% reduction.
We do not use any items on the UK Plastic Pact’s ‘Problematic and Unnecessary’ Roadmap list.
The average recycled content of our UK plastic volume is 50.7% (52.9% in 2023).
Remove 125m pieces of plastic from our packaging formats by end 2024 (UK).
Between 2021 and 2023 we removed 160m pieces of plastic, achieving this goal a year early. We stretched
this goal for 2024, aiming to remove a further 25m pieces. In 2024, our investment in a new houmous
production line helped to remove 69m pieces of plastic, equivalent to 317 tonnes. We therefore surpassed
our target, removing over 229m pieces between 2021 and 2024.
READ MORE
pg 32.
Source both primary and secondary cardboard from certified sustainable sources such as FSC and
PEFC (UK, by 2025).
We have maintained this commitment of sourcing FSC/PEFC (Forest Stewardship Council/Programme
for the Endorsement of Forest Certification) in primary and secondary packaging.
SUSTAINABLE AND HEALTHIER PRODUCTS
Meet customers’ nutrition targets on salt, sugar, saturated fat and overall calories through
reformulation (ongoing).
In 2024, 62% of our products are considered healthier options
6
(2023: 58%). This is up due to new product
ranges. 90% of our products (2023: 90%) are compliant with the Food Standard Agency’s salt reduction targets.
71% are vegetarian (2023: 73%) and 14% are plant-based (2023: 15%).
WATER USE AND MANAGEMENT
Optimise operational water intensity whilst maintaining product quality and integrity.
We report our water consumption and management through CDP’s water questionnaire (www.cdp.net).
Our 2024 submission received a C disclosure score.
This is based on 2023 data, which showed a fractional (<1%) reduction in water withdrawals and a 15.4%
decrease in overall consumption, mirroring process changes in the business.
Bakkavor Group plc | Annual Report & Accounts 2024 |
43
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TRUSTED PARTNER ESG STRATEGY
CONTINUED
Engagement and Wellbeing
in our Workplaces and Communities
We measure our performance on this
through our non-financial KPIs (UK
accidents resulting in lost time and
UK employee turnover), as well as
the results of our annual Employee
Engagement Survey (“EES”),
feedback gathered from our Site and
Group Engagement Forums (SEF,
GEF) and more informally from
colleagues through line managers
to help us understand their view on
the support they are offered and
their ability to be themselves at work.
Ensuring that we provide a safe and inclusive environment for our colleagues where they can thrive
and develop is fundamental to our business.
Our People Plan, underpinned by
our values, provides clear focus
and direction as we strive to make
Bakkavor an even better place to work,
with four key areas of focus in 2024.
READ MORE
pg 35.
As well as Colleague Wellbeing,
Health and Safety, this focus area
covers Inclusive and Diverse
Workplaces, Engagement,
Development and Retention,
Responsible Recruitment and
Employment and Local Causes
and Community Engagement.
We have several working groups
which lead our approach across
these areas:
•
Inclusion and Diversity (I&D)
Forum; Chair – Group General
Counsel and Company Secretary;
•
Wellbeing Steering Committee;
Chair – CPO
•
Human Rights and Ethical Trade
programme; Chair – CPO.
7
UK HSE industry averages: hse.gov.uk/statistics/tables/index.htm#riddor.
8
Number of ‘major’ accidents and specified injuries as defined by the UK Health and Safety Executive.
Progress against our targets and commitments
Strategic priority
Achieved
Non-financial KPI
On track
Work to do
Ongoing
COLLEAGUE WELLBEING, HEALTH AND SAFETY
Continue to outperform UK industry averages on numbers of major accidents and >7 days
lost-time accidents.
We will always strive for zero harm and continuously look to improve on our approach. Our Global Health and Safety
Management Principles, based on ISO 14001, standardise our learnings and best practices across all our sites.
We report on this KPI monthly to the Board. In October, our innovative approach led us to be recognised for excellence
at the Institute of Occupational Safety and Health (IOSH) Awards.
In 2024, UK >7 day lost-time accidents decreased by 3.9% to 249 per 100k employees (2023: 259) which continues
to significantly outperform the food industry benchmark
7
reported by the Health and Safety Executive of 886.
Major accidents in the UK decreased by 56.3% to 21 per 100k employees
8
. There were no majors in the US or China
and there were no fatalities in 2024 across the Group.
READ MORE
pg 64.
Be recognised by our colleagues as supporting them to achieve positive wellbeing.
We aim to support our colleagues’ physical, emotional and financial wellbeing. Our cross-functional Wellbeing
Steering Committee is formed of colleagues from across the business, subject matter experts, and a dedicated
Head of Occupational Health and Wellbeing. It is responsible for delivering our wellbeing strategy, which is based
on various wellbeing KPIs, training progress and regular colleague feedback and, with direct access to the Group
Board, ensures wellbeing priorities are considered in the Group’s decision-making process.
In 2024, we aligned our Occupational Health & Wellbeing team and continued to promote a range of wellbeing
support, including rolling out mental health awareness training to 7,038 colleagues, installing health check machines
across UK sites as part of Wellbeing Month, and establishing on-site physiotherapy services across all our UK sites
to support colleagues’ physical health. Our site-based Wellbeing Champions continue to drive positive change, acting
as a point of contact and signposting to internal and external resources and support such as our Occupational Health
teams. Wellbeing Toolkit, GroceryAid, Employee Assistance Programme and Aviva DigiCare.
READ MORE
pg 36.
44
| Bakkavor Group plc | Annual Report & Accounts 2024
INCLUSIVE AND DIVERSE WORKPLACES
Promote an inclusive working environment, where differences are valued and individuals feel they
can be themselves, without judgement.
In 2024, the I&D Forum focused on three objectives: achieving better gender balance, completing the groundwork
to understand our ethnicity position, and focusing on inclusive leadership behaviours.
Our female mentoring programme doubled in size, with 39 colleagues now on the programme. In October we
celebrated Culture Month, a celebration of the diversity across the Group where everyone is encouraged to share
stories from their heritage.
Our EES showed a 1.5% increase in colleagues responding that “I can be myself at work” – up from 75.7% in 2023 to 77.2%.
READ MORE
bakkavor.com/en/esg/esg-reporting.
ENGAGEMENT, DEVELOPMENT AND RETENTION
Conduct an annual Group-wide Employee Engagement Survey (“EES”), aiming for an overall employee
engagement score above industry average.
Our 2024 EES response rate was 89.3%, a 1.2% increase on the previous year (88.1% in 2023).
Reduce our UK employee turnover and maintain below industry average.
UK employee turnover decreased 730 basis points to 18.9% (2023: 26.2%), with the benefit of our investment
across pay, benefits and engagement taking effect. We believe this remains lower than industry averages,
albeit comparable data is not widely available.
READ MORE
pg 34.
RESPONSIBLE RECRUITMENT AND EMPLOYMENT
Drive awareness and action on the issue of modern slavery with our colleagues and industry
partners (ongoing).
Bakkavor’s Human Rights and Ethical Trade programme is based on the UN Guiding Principles framework as well
as the ETI Base Code. Each year it delivers a programme of work designed to tackle the issue of modern slavery and
human rights risks.
We use tools such as Sedex and Stronger Together’s Progress Monitoring Tools (a multi-stakeholder initiative
working on the issue of modern slavery) to assess our modern slavery risk and implement actions as a result.
Risk assessment scores have steadily improved and we are the only large business to hold Stronger Together’s
‘Advanced Verified’ Business Partners status.
Progress is reviewed twice yearly and reported at Board level where overall responsibility for ethical trade and human
rights lies. In June, the ESG Committee was provided with an in-depth Human Rights and Ethical Trade programme update.
READ MORE
bakkavor.com/en/esg/esg-reporting.
LOCAL CAUSES AND COMMUNITY ENGAGEMENT
Fundraise and support our key Group charities through donations and colleague engagement
fundraising activities.
Bakkavor has strategic charity partnerships with GroceryAid and the Natasha Allergy Research Foundation.
In 2024, we donated over £130,000 to these organisations.
Furthermore, each of our sites have their own local charity partnerships run by our Site Employee Forum (“SEF”)
representatives. Sites have held fundraising events such as cricket tournaments, raffles and sponsored events.
Through our matched giving scheme, local fundraising is matched by up to £2,500 per year.
In 2024, the Group donated over £144,000 to charities, not including in-kind food donations.
Bakkavor Group plc | Annual Report & Accounts 2024 |
45
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
BAKKAVOR AND CLIMATE CHANGE
EXECUTIVE SUMMARY
Global food production and climate
change are directly linked. The sector
both relies on the stability of food
supply chains and contributes to
climate impacts at each stage from
agriculture, manufacturing, retailing
and consumer use. At Bakkavor, we
see the climate emergency as the
most pressing challenge facing us.
We have a responsibility to not just
manage our direct impact by reducing
our carbon emissions, but to also
support a wider sector transition
to net zero.
This will require innovation and
continuous improvement in measuring
and managing our own direct impacts,
whilst collaborating and supporting
change up and down our value chain
to support the decarbonisation of
our industry.
Along with our customers, we support
the need to increase understanding
of climate impacts associated with
raw materials, and are supporting
collaboration to gather more accurate
data, which is critical to making
appropriate changes to our products.
OUR CLIMATE AND NET ZERO TARGETS
Bakkavor is committed to reaching
net zero greenhouse gas emissions
across the full value chain (all
scopes) by 2050 and has set interim
targets along the way.
In 2024, we saw our decarbonisation
progress slow, however we are still
on track towards our 2030 targets,
as we have reduced our net scope 1
and 2 emissions by 20.9% since 2021,
meaning we are approximately halfway
to our 42% reduction target, and scope
Report against the recommendations of the Task Force on Climate-related
Financial Disclosures (“TCFD”).
This section comprises our response to the TCFD
recommendations and our compliance with the Financial
Conduct Authority’s (“FCA”) Listing Rule 6.6.6(8).
The disclosures contained within the report are fully
consistent with these recommendations.
In preparation, Bakkavor considered the TCFD Annex
including the supplemental guidance for non-financial
groups and specifically the Agriculture, Food, and Forest
products group. This is reflected in our approach to
scenario analysis, use of historical trend data, our
consideration of physical risk exposure and use of
appropriate metrics. We also considered the guidance
on metrics, targets and transition plans in developing
appropriate metrics and targets for each of our stated
climate risks and opportunities.
Recommended disclosures
Page
Governance
a.
Board oversight of climate risks and opportunities
47
b.
Management’s role in assessing and managing climate risks and opportunities
47
Strategy
a.
Identified climate-related risks and opportunities
48-52
b.
Impact of climate risks and opportunities on the business, strategy and planning
52-53
c.
Climate-related scenario analysis
48, 52
Risk Management
a.
Process for identifying climate-related risks
48
b.
Managing climate-related risks
49-51, 53
c.
Integrating climate-related risks into risk management
53
Metrics and Targets
a.
Metrics used to assess and manage climate-related risks and opportunities
49-51
b.
Scope 1, 2 and 3 emissions
56-57
c.
Climate-related targets
53
CONSISTENCY WITH THE TCFD RECOMMENDATIONS
3 emissions from purchased goods
and services have reduced by 15.9%
in the same timeframe.
Our operations have a clear mandate
and detailed plans to work towards
reducing our scope 1 and 2 footprint.
Scope 3 emissions comprise 88.9%
of our overall footprint and in 2024 we
continued to increase our focus on these
by incorporating value chain emissions
within a revised Responsible Sourcing
and Supplier Engagement strategy.
Bakkavor recognises the importance
of our climate strategy in mitigating
future material impacts and its
interconnectivity with other risks.
Therefore, our risk management
framework identifies ‘Climate change
and sustainability’ as a principal risk.
READ MORE
pg 73.
46
| Bakkavor Group plc | Annual Report & Accounts 2024
Governance of climate and ESG
•
Considers the impact of ESG and climate-related
issues on the Group’s long-term strategy, meeting
eight times a year. Climate and ESG topics form
part of the Board agenda when required.
•
Reviews Group policies and commitments,
including our ESG and climate targets, KPIs,
progress and approach.
In 2024:
received regular updates from the ESG
Committee on the execution of the Trusted Partner ESG
strategy and performance against non-financial KPIs,
including quarterly carbon emission results. This was via
the designated Non-executive Director for ESG matters
and the Group Board ESG Sponsor.
READ MORE:
Board training pg 103.
Incentives pg 127.
ESG Sponsor:
until November 2024: Ben Waldron, CFO
and Asia CEO. November 2024 onwards: Lee Miley, CFO.
GROUP BOARD
•
Dedicated committee for ESG and climate matters,
meeting three times a year. Manages climate change
risks and opportunities, including net zero targets.
•
Debates ESG and climate issues and provides
guidance and recommendations to the Group Board
and Senior Executive Team (“SET”).
•
Reviews and approves ESG-related reporting,
including Gender Pay Gap and Modern Slavery reports.
In 2024:
met three times. Received in-year
performance updates including quarterly carbon
emissions data and ESG KPIs including food waste,
accident data and turnover. Received a detailed update
on our Human Rights and Ethical Trade programme.
READ MORE
pg 120.
Chair:
Umran Beba, Independent Non-executive Director.
ESG COMMITTEE
•
Reviews principal risk ‘Climate change and
sustainability’ as part of the Group’s risk
management framework as well as reporting
under TCFD, meeting quarterly.
•
Ensures climate- and ESG-related risks are
considered in the Group’s viability assessment
and impairment reviews.
•
Ensures financial reporting disclosures of these risks
are fair and balanced, and considers broader impact
across assets, liabilities and future profitability.
In 2024:
met four times, reviewed and approved the
outcomes of an internal audit on carbon reporting.
READ MORE
pg 110.
Chair:
Jane Lodge, Independent Non-executive Director.
AUDIT AND RISK COMMITTEE
•
Oversees ESG and climate-related issues and performance against targets.
•
Receives updates from the ESG function including on risks and opportunities.
•
Oversees direct strategic implementation of, and capital allocation for, energy efficiency and low-carbon projects.
Considers major plans of action, annual budgets, business plans and overseeing major capital expenditures,
acquisitions and divestitures.
In 2024:
twice-yearly agenda included climate and ESG matters with updates on developing climate targets,
and quarterly carbon emissions progress by region.
Sponsor:
until November: Ben Waldron, CFO and Asia CEO. November onwards: Lee Miley, CFO.
SENIOR EXECUTIVE TEAM
•
Reviews performance on all ESG and climate matters.
•
Provides overall direction of the Group’s Trusted Partner ESG strategy.
•
Identifies resources required to meet climate targets.
•
Identifies ESG and climate-related risks and opportunities as required.
•
Advises SET on climate considerations of major strategic plans, major capital expenditures, acquisitions and divestitures.
In 2024:
met monthly and as required. Convened twice-yearly regional ESG meetings with UK Operations, US Senior
Leadership and the China ESG Committee.
Lead:
Lee Miley, UK Finance Director (until November) and CFO (November onwards).
ESG FUNCTION
Bakkavor Group plc | Annual Report & Accounts 2024 |
47
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
UK
INTERNATIONAL
EXCELLENCE
TRUST
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
Impact
1
Negligible
2
Minor
3
Moderate
4
Major
5
Catastrophic
Likelihood
1
Rare
2
Unlikely
3
Possible
4
Likely
5
Almost certain
Risk type
Technology
Market
Policy and legal
Physical
Link to our strategy
READ MORE
pg 22.
STRATEGY: CLIMATE RISKS,
OPPORTUNITIES AND
STRATEGIC IMPACT
This involved:
1.
Building scenarios against which
the business could be stress-
tested, following the TCFD
Guidance on Scenario Analysis
for Non-Financial Companies.
2.
Running catastrophe and climate
modelling for physical risks.
3.
Identifying and evaluating
transition risks and quantifying
risks where possible.
The transition risk assessment used
scenarios aligned with projections to
keep global warming ‘well below’ 2°c
by 2030, in line with the ambitions of
the Paris Agreement, and considered
impacts on different geographies
and sectors.
Assumptions take into account
the implications of transitioning
to a low-carbon economy on
environmental, social, economic,
political and technological dimensions.
Sources informing the scenarios
included projections used in Shared
Socioeconomic Pathways (“SSP”), the
IEA (Sustainable Development), IPCC
(RCP 2.6) and Network for Greening
the Financial System (“NGFS”) Below
2°c Orderly Scenario.
The physical risk assessment looked
at the acute and chronic impacts of
climate change. For example: damage
to our sites or sourcing locations
caused by increased frequency and/or
severity of extreme weather events
(acute risks); increased heat; and/or
drought stress (chronic risks).
Sources included the Representative
Concentration Pathways (“RCP”) as
defined by the Intergovernmental
Panel on Climate Change (“IPCC”)’s
Fifth Assessment Report (“AR5”),
specifically the ‘best possible’ scenario
of ‘well below 2°c’ (at +1.5°c) RCP 2.6
and ‘worst case’ or ‘hothouse world’
scenario of RCP 8.5 (4°c). The impact
of acute physical risks increase with
the ‘hothouse world’ scenario of RCP
8.5 (4°c) as well as over time (2050
and beyond). Chronic physical risks
emerge under the ‘hothouse world’
scenario from 2050. For both types,
risks may be more pronounced in
some regions than others.
To quantify risks, we have used the
rating criteria from Bakkavor’s risk
management framework. Each risk
was assessed on its likelihood and
impact, and the potential financial
impact classified based on these
criteria. To further align, we interpreted
the timelines used in the RCPs to our
own risk framework. Other metrics,
such as carbon price forecasts, were
used where relevant. This exercise was
first conducted in 2021 and updated
in 2023 and 2024 as described above.
The outcomes of the scenario analysis
have been used to identify the following
climate-related risks and opportunities
and evaluate our business’s strategic
resilience, as described in the Strategy
section above. The process and
outcomes were reviewed by both the
Group Board and Senior Executive
Team (“SET”).
ASSUMPTIONS AND PARAMETERS USED IN SCENARIO ANALYSIS
TO IDENTIFY CLIMATE-RELATED RISKS
Bakkavor has undertaken a scenario analysis and climate
risk assessment of our operations and supply chain.
KEY
48
| Bakkavor Group plc | Annual Report & Accounts 2024
Increased cost of raw materials
Scenarios
Likelihood
Impact
‘Well below’ 2°c
4
2
‘Hothouse world’
4
3
Risk update vs 2023
No change.
Potential impact
Increased spend on raw materials due to price fluctuations
and instability caused by transition and physical climate risks.
Associated opportunity
Opportunity for ongoing rebase of costings as our business
evolves our product offering to reflect trends and seasonality.
Risk update and mitigations
Our diverse product portfolio means we source an extensive
range of raw materials and packaging items from a diverse
and global supply chain. Our Procurement function includes
product- and supplier-specific category managers and
in-bound supply chain experts, based in the UK, Continental
Europe and China.
As part of our Responsible Sourcing strategy, plans are
developed for key raw materials that incorporate social
and environmental risk management and align to customer
specifications.
We assess compliance against sustainability topics through
our Supplier Code of Conduct and will continue to engage
our suppliers on climate matters in years to come.
Risk reviewed and managed by:
Responsible Sourcing
Governance group.
Related metrics and targets
•
Reduce absolute scope 1 and 3 FLAG GHG emissions 30.3%
by 2030 from a 2021 baseline.
•
Reduce scope 1 and 3 FLAG GHG emissions 72% by 2050.
•
No deforestation across our primary deforestation-linked
commodities by the end of 2025.
Progress
: pg 56 and 38.
Link to our strategy
1–5
(short-term)
5–10
(medium-term)
10–50
(long-term)
Time horizon
(years):
Costs of implementing
low-emissions technology
Scenarios
Likelihood
Impact
‘Well below’ 2°c
4
2
‘Hothouse world’
4
2
Risk update vs 2023
No change.
Potential impact
Additional operational costs to deliver our climate targets
through investments in lower-emission technologies.
Associated opportunity
Utility savings from increased resource efficiency.
Risk update and mitigations
Continued utility plans to reduce our carbon emissions
across our operational footprint. These plans are medium-
term and regional in nature due to the differing emissions
profiles of our Group’s businesses. They include:
•
Decarbonising UK heat and fuel.
•
Transitioning refrigeration to lower-carbon alternatives
(UK, US).
•
Minimising emissions from refrigeration systems (all markets)
and where some alternatives are not possible (China).
•
Planning for on-site renewables projects.
•
Expanding use of renewables in our international markets.
Risk reviewed and managed by:
ESG function.
Related metrics and targets
•
Reduce scope 1 and 2 emissions by 42% by 2030 from a 2021
base year and scope 3 emissions from purchased goods and
services also by 42% baseline within the same timeframe.
•
Net zero operational (scopes 1 and 2) emissions, Group-wide
by 2040.
•
Net zero across the full value chain by 2050.
Progress
: pg 56.
Non-financial KPI:
Group net carbon emissions.
Link to our strategy
Time horizon
(years):
1–5
(short-term)
5–10
(medium-term)
10–50
(long-term)
Bakkavor Group plc | Annual Report & Accounts 2024 |
49
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
Scenarios
Likelihood
Impact
‘Well below’ 2°c
4
3
‘Hothouse world’
4
3
Risk update vs 2023
No change.
Potential impact
Increased operating costs due to forecasted carbon pricing,
introduced through possible mechanisms including
emissions trading schemes, tax or carbon border
adjustment mechanism.
Associated opportunity
Informing decision-making in support of our targets where
investment is otherwise financially unviable.
Risk update and mitigations
Bakkavor mitigates this risk by delivering our Climate and
Net Zero targets through our operational workstreams.
Risk reviewed and managed by:
Finance and ESG functions.
Related metrics and targets
•
Net zero, Group-wide for operational emissions by 2040.
•
Reduce absolute scope 1 and 2 GHG emissions by 42%
by 2030 from a 2021 baseline.
•
Net zero across the full value chain by 2050.
Progress
: pg 56.
Non-financial KPI:
Group net carbon emissions.
Link to our strategy
1–5
(short-term)
5–10
(medium-term)
10–50
(long-term)
Time horizon
(years):
Pricing of GHG emissions
Changing consumer preferences
Scenarios
Likelihood
Impact
‘Well below’ 2°c
5
2
‘Hothouse world’
5
2
Risk update vs 2023
No change.
Potential impact
Decreased revenues due to failure to respond to retailer
and consumer demand for lower climate impact products.
Additional costs for potential carbon or eco labelling.
Associated opportunity
Increased market share, by responding to market demands
for lower-carbon products.
Improved reputation by demonstrating reduction in
scope 3 footprint.
Risk update and mitigations
Bakkavor’s Packaging and Development teams consider
sustainability throughout the product development process
and work towards time-bound ESG packaging targets (below).
We have actively participated in industry discussions around
eco-labelling and lifecycle analysis, enabling us to shape
and adopt practices as they evolve. In 2024 we worked with
the BRC Mondra Coalition to continue shaping our
product-level lifecycle analysis.
Our market research is regularly presented at Board level
and supports strategic decision-making in new and existing
product development.
Risk reviewed and managed by:
ESG function and
Packaging teams.
Related metrics and targets
•
% of products that are plant-based (20%, up from 15%
in 2023).
•
Support progress towards achieving the UK Plastics Pact’s
2025 industry goals: eliminating unnecessary plastic
packaging; 100% reusable or recyclable plastic packaging;
at least 30% average recycled content in plastic packaging.
Progress
: pg 42.
Link to our strategy
1–5
(short-term)
5–10
(medium-term)
10–50
(long-term)
Time horizon
(years):
50
| Bakkavor Group plc | Annual Report & Accounts 2024
Scenarios
Likelihood
Impact
‘Well below’ 2°c
4
2
‘Hothouse world’
4
3
Risk update vs 2023
No change.
Potential impact
Increased energy consumption due to higher cooling
demand, increased stress on water resources, reduced
productivity and increased logistics disruption (chronic
climate impacts).
Site damages, disruption, increased maintenance, repair
and insurance costs from acute events such as floods.
Associated opportunity
Opportunities for innovation and upgrades in our sites
through our response to risk mitigation.
Risk update and mitigations
Successful delivery of our net zero aligned climate strategy
supports industry-wide decarbonisation to mitigate the
physical impacts of climate change.
We also work to optimise water intensity and monitor its
use through site-level environmental trackers.
Currently, two of our China sites, Haimen and Guangzhou,
are deemed high-risk for river flooding although we have
not seen any impacts to date. If experience worsens due
to rising sea levels and/or increased frequency/severity of
weather events, we will consider investment in flood walls.
Future capital projects and acquisitions take account
of flood risk.
Risk reviewed and managed by:
Property Insurance team.
Related metrics and targets
•
Net zero, Group-wide for operational emissions by 2040.
•
Reduce absolute scope 1 and 2 GHG emissions by 42%
by 2030 from a 2021 baseline.
Progress
: pg 56.
Non-financial KPI:
Group net carbon emissions.
Link to our strategy
Scenarios
Likelihood
Impact
‘Well below’ 2°c
4
3
‘Hothouse world’
4
4
Risk update vs 2023
No change.
Potential impact
Disruption and higher costs due to decline in agricultural
yield, increased heat stress and drought (chronic impacts).
Bottlenecks, shortages and sourcing disruption from
increased exposure to acute climate impacts such as
floods and storm events.
Associated opportunity
Supply chain engagement to mitigate risks could increase
resilience and strengthen supplier relationships, increasing
competitive advantage.
Risk update and mitigations
Bakkavor’s Responsible Sourcing strategy is designed to
safeguard supply chain resilience by sourcing raw materials
as sustainably as possible.
Our Supplier Code of Conduct and environmental questionnaire
ensure that suppliers manage environmental issues in line
with our sourcing standards for key raw materials.
Our supply chain risk assessment system analyses hot spots
based on product(s), location, capabilities and exposures
to environmental risks as determined by global intelligence
sources. Through this, we work with suppliers to reduce
their risk.
Suppliers are engaged as required to ensure we have
an up-to-date understanding of our supply chain risk.
Risk reviewed and managed by:
Responsible Sourcing
Governance group.
Related metrics and targets
•
No deforestation across our primary deforestation-linked
commodities by the end of 2025.
Supplier risk is assessed by responses to our Code of
Conduct questionnaires and tracked on our supply chain
risk management platform.
Progress
: pg 38.
Link to our strategy
1–5
(short-term)
5–10
(medium-term)
10–50
(long-term)
1–5
(short-term)
5–10
(medium-term)
10–50
(long-term)
Time horizon
(years):
Time horizon
(years):
Actual physical risks to our operations
Actual physical risks to our supply chain
Bakkavor Group plc | Annual Report & Accounts 2024 |
51
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
UK
INTERNATIONAL
EXCELLENCE
TRUST
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
Bakkavor first undertook
scenario analysis and a climate
risk assessment in 2021 and has
reviewed the outputs annually,
updating when required. In 2023
this update included a scenario
analysis of our strategic supply
chain resilience. The review looked
at the likelihood of supply chain
disruption as well as the impact on
pricing and/or availability of raw
materials due to physical climate
impacts. In 2024, we reviewed and
updated our modelling of carbon
pricing impacts to align with the
timelines and decarbonisation
pathway required to meet our
science-based targets.
Based on the risk analysis
performed and mitigations in
progress, our risk exposure overall
is deemed to be low. Of the
identified risks and opportunities,
‘Pricing of GHG emissions’ is the
sole financially material risk.
This is based on the impact of
increased operating costs required
to meet our voluntary commitment
to eliminate residual scope 1 and 2
emissions to reach operational net zero
in 2040 using forecasted carbon pricing
as a proxy for carbon credits. We do not
anticipate a risk of direct carbon pricing
affecting our sector before 2040,
albeit we acknowledge that the
regulatory landscape may change.
Whilst there is considerable
uncertainty around medium- to
long-term carbon pricing, based on
our updated modelling, the estimated
potential financial impact to the Group
is £14m p.a. by 2040. In reference to
the Group’s risk assessment matrix,
given it is expected to be less than
10% of future profits it is therefore
considered ’moderate’.
Beyond 2040, we will continue to
reduce operational emissions further,
aiming for a maximum of 10% of our
baseline (2021) emissions by 2050,
which aligns to our long-term
science-based target and will
mitigate the long-term impact
of carbon pricing. GHG emissions
pricing is taken into account in
the impairment reviews.
READ MORE
pg 182.
Our mitigation against this price
risk is directly linked to successful
delivery of our science-based,
net zero aligned targets. We are
on track to reach our near-term
targets and are aligning these
costs to our financial planning
as part of refining our climate
transition plan.
Our business continues to
incorporate climate risks into our
overall strategy on an ongoing
basis, such as through some of
the examples shown below.
Strategic impact and resilience
•
Refrigeration: Accelerate refrigeration system
replacement with low- or zero-carbon alternatives.
•
Product: Collaborate with our customers on
product-level carbon footprint modelling.
•
Asset replacement: Implement energy-efficient
solutions as part of the normal end-of-life asset
replacement cycle.
•
Efficiency: Prioritise efficiency initiatives that combine
cost saving with lower carbon emissions.
•
Maximising energy and process efficiency and
implementing heat recovery systems.
•
Food waste: Leverage our operational excellence
model to drive food waste reduction.
•
KPIs: Deliver against our science-based 2030 target,
achieve net zero operational emissions by 2040 and
across the value chain by 2050.
•
Value chain: Engage with our customers and suppliers
towards the climate transition in our value chains
through increasing transparency and understanding
of climate impacts.
•
Supplier engagement: Sourcing policies for higher
impact ingredients, data collection, training, integration
into procurement practices and supplier accountability.
•
Refrigeration: Capital spend for improved monitoring
and asset upgrades to reduce risk.
•
Asset replacement: Implement energy-efficient
solutions as part of the normal end-of-life asset
replacement cycle.
•
Solar: Install solar panels at our Beijing site, and
International Renewable Energy Certificates (I-RECs)
purchased for a proportion of our electricity in China.
•
Green growth: Ensure site development has low-
carbon design built in, with clear renewables-focused
energy sourcing.
Our strategy: to deliver profitable and sustainable growth
READ MORE:
Our strategy pg 28.
ESG: Trusted Partner pg 38.
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| Bakkavor Group plc | Annual Report & Accounts 2024
The Group recognises the importance
of maintaining a robust and regular
assessment of Bakkavor’s climate risk
exposure as well as climate change’s
impacts on other sustainability topics.
Furthermore, Climate and Net Zero
are a strategic priority within our
Trusted Partner ESG strategy, which
uses a double materiality lens in
prioritisation.
The output of the analysis of our
operations and supply chain indicates
our overall climate risk exposure is
deemed to be low. Mitigation factors
include risk-sharing mechanisms
for raw material price fluctuations,
energy projects and low- or zero-
carbon equipment upgrades aligned
to planned asset replacement.
We have integrated ESG issues into our
Group risk management framework
through the principal risk ‘Climate
change and sustainability’, which
incorporates climate and delivery
of our ESG strategy as a whole. This
requires principal risk owners to
consider relevant environmental, social
or governance issues when conducting
reviews and assessments of each risk.
Whilst a number of transition risks
are deemed highly likely, we are
well-placed to mitigate the impacts
on the business, and their financial
impact is considered low to moderate,
as described above. We have also
identified a number of related
opportunities; for example, increased
market share through aligning our
product portfolio to support market
trends for more climate-friendly diets.
Recognising the importance of
climate change in the wider societal
agenda, our risk management
framework identifies ‘Climate change
and sustainability’ as a principal risk.
Achieving carbon emissions
reductions in line with our science-
based targets and decarbonisation
trajectory is a metric within our
Long-Term Incentive Plan (“LTIP”).
Risk management: assessing and managing our exposure to climate risks
SCIENCE-BASED, NET ZERO
ALIGNED TARGETS
In 2024, the Science Based Targets
initiative (“SBTi”) validated our suite
of net zero science-based targets.
The SBTi is the leading body in
validating corporate climate change
commitments. Their assessment
confirmed that Bakkavor’s targets
are aligned to scientific consensus
and the objective of minimising
planetary warming to 1.5°c,
supporting the Paris Climate
Agreement, and therefore among
the most ambitious in the sector.
These targets are:
Overall net zero target
•
Bakkavor commits to reach net
zero GHG emissions across the
full value chain by 2050.
Near-term energy and industrial
•
Bakkavor commits to reduce
absolute scope 1 and 2 GHG
emissions by 42% by 2030 from
a 2021 baseline year
1
and scope 3
emissions from purchased goods
and services by 42% within the
same timeframe.
Long-term energy and industrial
•
Bakkavor also commits to reduce
absolute scope 1, 2 and 3 GHG
emissions by 90% by 2050 (from
a 2021 base year).
Forest, Land and Agriculture (FLAG)
•
Bakkavor commits to reduce
absolute scope 1 and 3 FLAG GHG
emissions by 30.3% by 2030 (from
a 2021 base year)
2
.
•
Bakkavor also commits to reduce
scope 1 and 3 FLAG GHG emissions
by 72% by 2050
2
(from a 2021
base year).
•
Finally, Bakkavor commits to no
deforestation across its primary
deforestation-linked commodities
by the end of 2025.
Bakkavor will review these targets
and update as necessary in line with
SBTi recommendations and every five
years as a minimum.
Our metrics and targets
READ MORE:
ESG: Trusted Partner pg 38.
Risks and risk management pg 66.
Directors’ remuneration report pg 123.
1
The target boundary includes land-related emissions and removals from bioenergy feedstocks.
2
The target includes FLAG emissions and removals.
Bakkavor Group plc | Annual Report & Accounts 2024 |
53
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2020
2021
2022
2023
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
DECARBONISATION PROGRESS
Operational (scope 1 and 2)
emissions
As a Group, Bakkavor saw emissions
increase in 2024 by 3.0% (location-
based) and 2.9% (market-based).
This has been driven by engineering
challenges in the US, where
refrigeration upgrades resulted in a
significant increase in F-gas emissions,
primarily at one site, following several
years of low or no emissions as well as
flat performance in the UK. All other
sources of emissions in the US reduced
during the year.
UK operations decreased market-based
emissions by 0.1% and in China they
reduced by 6.9%, driven by the sale
of a bakery site at the end of Q1. This
business contributed approximately 4%
of Group emissions, and as such does
not meet the 5% threshold for
recalculation in our restatement policy.
Since our SBT baseline year of 2021
we have reduced scope 1 and 2
emissions by 20.9%, meaning that
we are nearly halfway to our target
of 42% by 2030.
Despite the overall increase in 2024,
the carbon efficiency of our business
has improved as our intensity ratio
(gross emissions per £m reported
revenue) reduced by 1.0% to 62.4
tCO
2
e/£m reported revenue.
During 2024, we discovered a
supplier error that overstated our
natural gas measurement at our
San Antonio site. The correction
would reduce 2023’s US scope 1
and 2 emissions by 11% and our
Group scope 1 and 2 by a further 1%.
Whilst significant, this correction
does not trigger the threshold for
error correction in our emissions
restatement policy. The correction
has been applied from 2024.
Value chain (scope 3) emissions
Scope 3 emissions comprise 88.9%
of our overall footprint and are
therefore a significant focus area for
the Group. The vast majority (82.5%)
of our scope 3 footprint comes from
purchased goods and services. These
are predominantly raw materials and
ingredients such as dairy and meat
and also plastic packaging. Tackling
these emissions in our value chain
will form a major component of our
Responsible Sourcing and supplier
engagement strategy, steered by
a cross-functional working group,
as we must work with our suppliers
and customers to capture more
representative data and support
efforts to reduce supply chain
emissions through our ability to
influence wherever possible.
In 2021 we conducted a baseline
assessment of our scope 3 footprint
for our UK business that helped to
determine the material areas of our
scope 3 footprint. As a result, of the
15 scope 3 categories, six have been
excluded, due to immateriality. The
materially relevant categories are
shown on page 57.
As a food manufacturer, our scope 3
value chain emissions include both
those from energy and industry
sources, and those from Forest, Land
and Agriculture (FLAG). Bakkavor can
influence scope 3 FLAG emissions
associated with deforestation and
land use change in an indirect way
through our sustainable sourcing
approaches for the forest-risk raw
materials we use: soy, palm oil, beef
and timber used for card packaging.
•
Launched Trusted
Partner ESG strategy.
•
Reviewed internal
structures to help
monitor climate-
related issues.
OUR NET ZERO JOURNEY SO FAR
•
Announced commitment
to reach net zero in
Group operations
(scopes 1 and 2) by 2040.
•
Undertook a climate
risk assessment and a
baseline analysis of our
UK scope 3 footprint.
•
Quarterly carbon footprint
measurement for
improved reporting and
trend analysis.
•
First TCFD report published.
•
Formalised ESG
Committee to oversee
objectives. Began
developing transition plan.
•
Extended scope 3
reporting to global
businesses, committed
to reaching net zero
across value chain
(all scopes).
•
Submitted targets to
the SBTi.
•
Introduced incentives
as part of LTIP.
54
| Bakkavor Group plc | Annual Report & Accounts 2024
2024
2030
2040
2050
For example, for soy, used as feed
for animal and dairy products, we
require evidence from suppliers that
the soy used comes from an origin
with low risk of deforestation or
conversion. We are also sourcing
through appropriate third-party,
company or regional schemes.
However the current nature of scope
3 calculations and reliance on
secondary sources means that these
direct interventions are not always
accounted for or reflected in our
footprint results.
We can directly address FLAG and
energy and industry scope 3 emissions
associated with packaging by:
•
Reducing and removing plastics
in our packaging where possible.
•
Increasing use of recycled content
and widespread recyclability.
•
Using certified sustainable sources
for card-based packaging.
Energy Efficiency Statement
Energy use (that is, excluding
emissions from refrigeration)
has decreased 1.8% Group-wide
compared to 2023. This is split as
a 0.1% decrease in the UK, a 16.0%
decrease in the US and a decrease
of 3.0% in China.
This is principally driven by a
reduction in natural gas usage in
the US and electricity in China.
Data, including an intensity ratio
metric, is shown on the following
pages. Scope 1 FLAG emissions
(originating from our China farm)
have been restated to correct an
overstatement.
Principal energy efficiency actions
The year-on-year improvement is
driven by a combination of increased
energy efficiency measures such as
refrigeration upgrades which include
implementation of heat recovery
systems and measures of continuous
improvements as part of our ongoing
operational efficiency engineering
programme, such as adding insulation,
monitoring and maintenance to avoid
compressed air leaks.
All eligible UK manufacturing sites
operate under Climate Change
Agreements and we employ an
Environmental Management System
which includes risk management
standards, guidance and tools.
In China, as well as the solar installation
at our Beijing site, we purchased a
proportion of our electricity through
I-RECs (International Renewable Energy
Certificate). In China (8.3% of Group
energy demand), solar panels at our site
in Beijing produced almost 592 MWh
of clean energy for the site. In the US
(8.0% of Group energy consumption),
we focused on opportunities to reduce
refrigeration demand.
•
Science-based targets
validated by the SBTi.
•
Established utility-based
and regional
decarbonisation plans.
42%
REDUCTION
ALL SCOPES
NET ZERO
OWN OPERATIONS
NET ZERO
ALL SCOPES
42%
REDUCTION
>90%
REDUCTION
42%
REDUCTION
1
>90%
REDUCTION
SCOPES 1 & 2
(OWN OPERATIONS)
1
>90%
REDUCTION
SCOPE 3
(VALUE CHAIN EMISSIONS)
2
1
The target boundary includes land-related emissions and removals from bioenergy feedstocks.
2
Scope 3 from purchased goods and services.
3
The target includes FLAG emissions and removals.
OUR TARGETS
2021 baseline, not to scale.
30.3%
REDUCTION
3
FLAG
Energy & industry
FLAG
Bakkavor Group plc | Annual Report & Accounts 2024 |
55
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
OUR CARBON EMISSIONS
MEASUREMENT
This is our seventh year reporting
carbon emissions for the Group,
which includes our three businesses:
the UK, US and China.
GHG emissions for 2024 have been
measured and reported as required
under the Companies Act 2006
(Strategic and Directors’ report)
Regulations, the Companies
(Directors’ report) and Limited
Liability Partnerships (Energy and
Carbon report) Regulations 2018.
The total gross GHG emissions
reported include all scope 1 and 2
emissions for the Group. This covers
all sites where Bakkavor has full
operational control. Data has not been
collected for sites owned by Bakkavor
but leased to tenants as Bakkavor
does not have oversight or control
of this energy usage and emissions
data. These properties are
immaterial within the context of
our overall property footprint.
The Group’s Environmental
Management System is based on
ISO 14001.
Scope 1 emissions: those that directly
release GHGs including fuel consumed
by our manufacturing facilities, offices,
warehouses and our vehicle fleet, and
releases of fluorinated gases from our
refrigeration facilities.
Scope 2 emissions: released indirectly
from our consumption of energy sources
(electricity and cooling streams).
Scope 3 emissions: indirect
emissions that are associated with
the operation of the business that are
not under our direct control. Scope 3
categories deemed not applicable
or ‘de minimis’ following our baseline
assessment are not shown.
The methodology applied to the
calculation of GHG emissions is the
GHG Protocol Corporate Accounting
and Reporting Standard and the
Corporate Value Chain (scope 3)
Standard. An ‘operational control’
boundary has been applied. Carbon
factors from Defra’s UK Government
GHG Conversion Factors for Company
Reporting and the International
Energy Agency (“IEA”) database are
used to calculate the GHG emissions,
where they are not separately
provided by a supplier. Emissions are
reported as tonnes of carbon dioxide
equivalent (tCO
2
e).
Bakkavor also discloses to CDP’s
climate change questionnaire.
The most recent questionnaire is
based on the 2023 reporting year
and received a disclosure score of B.
See: cdp.net.
The tables below show GHG
emissions and total annual energy
for both the Group (Bakkavor’s global
footprint) and Bakkavor Foods
Limited (UK) and include the data for
our Streamlined Energy and Carbon
Reporting (“SECR”). For the previous
year’s actions, see the 2023 report.
Operational (scope 1 and 2) greenhouse gas emissions – Group
–
tCO
2
e, for the period 1 January 2024 – 31 December 2024
2024
Change
2023
2022
2021
2020
Scope 1: emissions from combustion
of fuel and operation of facilities
UK
58,576
0.5%
58,293
59,855
70,336
83,926
US
12,388
72.8%
7,168
8,386
11,264
14,515
China
5,108
-3.9%
5,315
9,029
17,754
8,418
Total scope 1 emissions
76,072
7.5%
70,776
77,270
99,354
106,858
Scope 2: emissions from purchased electricity
and cooling
UK
39,200
0.7%
38,915
39,121
44,012
49,396
US
5,655
-3.3%
5,848
6,052
6,495
7,583
China
22,201
-5.2%
23,417
21,592
23,375
20,708
Total scope 2 emissions (location-based)
67,056
-1.6%
68,180
66,765
73,881
77,687
Green tariff and on-site renewable generated
35,852
3.4%
34,687
33,928
37,544
43,007
Total scope 2 emissions (market-based)
31,204
-6.8%
33,492
32,836
36,337
34,680
Total gross emissions (location-based)
143,128
3.0%
138,956
144,035
173,235
184,545
Total net (market-based) emissions
107,276
2.9%
104,269
110,106
135,691
141,538
Intensity ratio (gross tCO
2
e/£m reported revenue)
62.4
-1.0%
63.1
67.3
92.6
102.9
Annual energy consumption – Group –
kWh
2024
Change
2023
2022
2021
2020
Scope 1: energy from combustion of fuel
and operation of facilities including
transport (kWh)
311,742,393
-3.4%
322,710,333
338,883,129
352,728,213
391,680,450
Scope 2: energy from purchased
electricity and cooling (kWh)
246,585,752
0.3%
245,785,716
257,698,953 265,077,689
269,787,168
(Of which, on-site generated renewable
consumption)
631,323
1.2%
623,987
–
–
–
Total energy (kWh)
558,328,145
-1.8%
568,496,048
596,582,083
617,805,902
661,467,618
56
| Bakkavor Group plc | Annual Report & Accounts 2024
Greenhouse gas emissions – UK –
tCO
2
e
2024
Change
2023
2022
2021
2020
Scope 1 emissions from combustion
of fuel and operation of facilities
58,576
0.5%
58,293
59,855
70,336
83,926
Location-based scope 2 emissions
from purchased electricity and cooling
39,200
0.7%
38,915
39,121
44,012
49,396
Green tariff
35,289
1.7%
34,687
33,928
37,544
43,007
Market-based scope 2 emissions
3,911
-7.5%
4,227
5,193
6,468
6,389
Total gross emissions (location-based)
97,776
0.6%
97,208
98,976
114,348
133,322
Total net (market-based) emissions
62,487
-0.1%
62,521
65,048
76,804
90,315
Intensity ratio (gross tCO
2
e/£m
reported revenue)
50.2
-4.4%
52.5
55.5
71.8
85.1
Annual energy consumption – UK –
kWh
2024
Change
2023
2022
2021
2020
Total non-renewable energy consumption
(kWh)
467,687,712
-0.1%
468,018,080 501,953,056
521,885,147 573,288,445
Total renewable energy consumption
(kWh)
0
–
Total renewable energy consumption:
on-site generated, (kWh)
0
–
–
–
–
–
Total energy consumption (kWh)
467,687,712
-0.1%
468,018,080 501,953,056
521,885,147 573,288,445
Totals may not reflect sum of values shown due to rounding.
Greenhouse gas emissions – scope 3 (energy and industry) – Group
– tCO
2
e, for the period 1 January 2024 – 31 December 2024
Emissions (tCO
2
e)
Scope 3 category
2024
Change
2023
2022
2021
1. Purchased goods and services
707,224
-0.1%
707,662
873,932
840,486
2. Capital goods
9,265
-34.2%
14,078
13,896
18,025
3. Other fuel-and-energy-related activities
27,539
-12.1%
31,167
32,136
35,764
4. Upstream transportation and distribution
6,017
2.6%
5,867
5,945
4,682
5. Waste generated in operations
5,871
19.3%
4,922
5,177
5,240
6. Business travel
405
-44.7%
733
266
160
7. Employee commuting
20,920
-6.8%
22,449
22,329
22,240
9. Downstream transportation and distribution
9,599
23.1%
7,801
7,980
6,200
12. End-of-life treatment of sold products
70,453
-1.2%
71,303
64,748
57,682
Total scope 3 energy and industry emissions
857,294
-1.0%
865,981
1,026,409
990,481
Greenhouse gas emissions – Forest, Land and Agriculture (FLAG) – Group
– tCO
2
e, for the period 1 January 2024 –
31 December 2024
Emissions (tCO
2
e)
Scope 3 category
2024
Change
2023
2022
2021
1. Purchased goods and services
1,497,393
8.5%
1,379,749
1,463,947
1,401,968
Scope 1 FLAG emissions from our farm in China
280
-1.5%
284
345
406
Total scope 3 FLAG emissions
1,497,673
8.5%
1,380,033
1,464,292
1,402,374
Bakkavor Group plc | Annual Report & Accounts 2024 |
57
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
FINANCIAL REVIEW
Strong
financial performance in 2024 and
we remain confident in delivering on
our medium-term margin target.
Lee Miley
Chief Financial Officer
+5.1%
Like-for-like revenue growth
1
(2023: 4.9%)
+4.0%
Reported revenue growth
(2023: 3.0%)
£88.7m
Free cash flow
1
(2023: £103.2m)
12.3p
Adjusted earnings per share
1
(2023: 8.8p)
£113.6m
Adjusted operating profit
1
(2023: £94.3m)
£93.4m
Operating profit
(2023: £97.1m)
1.1x
Leverage
(2023: 1.5x)
10.1%
Return on invested capital
1
(2023: 7.5%)
FINANCIAL HIGHLIGHTS
1
Alternative Performance Measures are referred to as ‘like-for-like’, ‘adjusted’ and ‘underlying’ and are applied
consistently throughout this document. These are defined in full and reconciled to the reported statutory measures
in Note 37.
58
| Bakkavor Group plc | Annual Report & Accounts 2024
Q&A
Lee Miley
Chief Financial Officer
What’s been your
path to CFO?
Over the years, I’ve always found that
opportunities to grow will present
themselves if you work hard, and
that’s certainly been the case for me.
My career started at Coopers &
Lybrand, now PwC, where I qualified
as a Chartered Accountant and spent
four years working in audit. I then
joined Bakkavor in 1998 as an Internal
Auditor, now over 26 years ago, where
I’ve had a huge variety of roles that
has provided me with a breadth of
experience across the business.
In the early part of my career in
Bakkavor, I held various finance
roles but also gained valuable
experience outside of my comfort
zone by, completing a secondment
as Section Manager at our Spalding
site, and working as the Business
Improvement Manager of our
Bread and Pasta business.
Following this I led our M&A activity
in Continental Europe as Group
Investment Manager, and spent five
years as Head of Finance for the
Pizza division. In 2014, I was appointed
Finance Director of our UK business,
which comprises c.85% of the Group’s
revenue. I led the UK Finance Function
of 250 colleagues and my role also
broadened as I set up what is now
Operational Excellence, and for the
last two years oversaw our ESG
agenda, an increasingly important
area to all our stakeholders.
My experience to date has provided
great foundations for my new role,
with hands on experience across
the business, but it’s the people I’ve
worked with and learnt from along the
way that has been the real journey!
What excited you about
the CFO role?
As someone who has spent almost
their entire career at Bakkavor, I’m
excited to be joining the Group Board,
and to play a more significant role
in supporting Mike in driving our
business forward as we deliver on
our strategic priorities. We have
continued to build a track record of
delivery and 2024 saw another strong
performance. We have a great team
in place that is laser focused on
executing our strategy and delivering
against our target of 6% adjusted
operating profit margin by 2027.
My career at Bakkavor has been
primarily UK focused, and therefore
I’m looking forward to having a more
holistic view of the entire group,
working alongside more of our
colleagues and enhancing the
depth of my understanding of our
international operations. Since I’ve
been in role as CFO, I’ve already
made two trips to the US to meet the
teams and see our factories, along
with visiting our customers stores to
better understand the customer and
consumer dynamics. I left feeling
energised at how the US team has
turned the business around and
confident in the clarity of the plan
they are delivering on to continue
to drive progress going forward.
Now you’re established
in the CFO role, what are
your priorities?
I talked above on the momentum the
business has created and the clarity
of our medium-term target. My main
priority is to work in partnership
with Mike and the wider leadership
teams to drive intensity through the
business to ensure we continue the
positive trajectory in all areas of the
business. Of course there are some
challenges, such as increases in
labour costs announced in the UK
budget, but the business is in
excellent shape and I am confident
we will successfully navigate through
them and deliver, not only our
financial targets, but also continuing
our investment in our business and
our people.
Another of my priorities is Project
Vision, the implementation of our new
UK Enterprise Resource Planning
(ERP) system, where I am the senior
sponsor for the project. This is a
multi-year project that will see us
invest significantly in improving our
UK systems and processes, and I’m
pleased with the progress we have
made since the project started in 2024.
As CFO, I’m really enjoying the
investor relations part of the role,
working alongside our Group Financial
Controller & Head of Investor
Relations, Emily Daw, as I build
my relationships with our existing
shareholders and prospective
investors, along with our sell-side
analysts, ahead of my maiden set
of financial results in March 2025.
What’s the best thing about
working for Bakkavor?
Anyone who works with me will
know this – our people. I truly believe
we have some of the best people in
our industry here at Bakkavor, and
I have the privilege of working
alongside hugely talented and driven
colleagues. It’s one of the main
reasons why I have spent almost
thirty years with the business.
Every year, we host our ‘Proud to
Be Awards’, where we celebrate our
colleagues’ achievements, big and
small, and some of the stories that
emerge from the business are
amazing – it’s always a real high
point in the calendar for me!
What’s your favourite
Bakkavor product?
Asking me to choose my favourite
Bakkavor product is like asking
“what’s your favourite song?”; it just
depends on the situation I am in.
I’m a huge fan of our salsiccia picante
pizza, New York vanilla cheesecake,
crayfish and mango salad, and
basically any of our houmous!
Outside work, what do you
enjoy doing in your spare time?
I have three boys aged between nine
and fourteen, so I am not sure I have
much ‘spare time’ these days! Having
said that, I do love both rugby and
cricket, and my boys are passionate
players of the sports. I completed my
England Rugby Coaching Award last
year, and coach my youngest son’s
rugby team.
Bakkavor Group plc | Annual Report & Accounts 2024 |
59
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
FINANCIAL REVIEW
CONTINUED
£m
FY24
FY23
Change
Reported revenue
2,292.7
2,203.8
4.0%
Like-for-like revenue
1
2,300.9
2,188.5
5.1%
Adjusted operating profit
1
113.6
94.3
20.5%
Adjusted operating
margin
1
5.0%
4.3%
70bps
Operating profit
93.4
97.1
(3.7)
Operating margin
4.1%
4.4%
(30bps)
Reported revenue increased by 4.0% to £2,292.7m
(FY23: £2,203.8m). Like-for-like revenue grew by 5.1%
to £2,300.9m (FY23: £2,188.5m). Of this 3.0% was
volume, as UK demand returned and internationally
we delivered good growth. As inflation has moderated,
the contribution from price has reduced year-on-year
(+2.1% in FY24). Like-for-like revenue growth adjusts
for the impact of the disposal of the bakery business
in China and the impact of currency movements.
1
Alternative Performance Measures are referred to as ‘like-for-like’, ‘adjusted’ and ‘underlying’ and are applied consistently throughout this document. These are defined in full and
reconciled to the reported statutory measures in Note 37.
GROUP TRADING PERFORMANCE
Adjusted operating profit increased by £19.3m to
£113.6m (FY23: £94.3m), with volume growth and our
focus on efficiency improvements driving a 70 basis
point improvement to adjusted operating profit margin
of 5.0% (FY23: 4.3%).
Operating profit of £93.4m was down £3.7m (FY23:
£97.1m) and margin of 4.1% was down 30 basis points
(FY23: 4.4%). This is due to the impact of £20.2m of net
exceptional costs (FY23: £2.8m net income), excluded
from adjusted operating profit, which primarily relate to
the costs of closure of our UK Wigan site and impairment
of our Hong Kong business held for sale, partially offset
by proceeds from the China bakery disposal.
£m
FY24
FY23
Change
Reported revenue
1,948.5
1,852.7
5.2%
Like-for-like revenue
1
1,948.5
1,852.7
5.2%
Adjusted operating profit
1
105.2
93.9
12.0%
Adjusted operating
margin
1
5.4%
5.1%
30bps
Operating profit
83.7
96.7
(13.0)
Operating margin
4.3%
5.2%
(90bps)
Like-for-like and reported revenue increased by 5.2% to
£1,948.5m (FY23: £1,852.7m). Volume growth was strong,
up 2.8%, and ahead of the FPF market (up 2.6%), as we
delivered new innovative products, net business wins
and excellent customer service. Price contributed 2.4%
of like-for-like revenue growth, and reflects the good
level of support we have received from our customers,
with inflation now at a more normal level.
Adjusted operating profit increased by 12.0% to £105.2m
(FY23: £93.9m), with margin up 30 basis points to 5.4%
(FY23: 5.1%), underpinned by our efficiency initiatives.
Operating profit of £83.7m (FY23: £96.7m) is after £21.5m
of net exceptional costs (FY23: £2.8m net income).
UK TRADING PERFORMANCE
Key:
1
head office
26
factories,
distribution centres,
growing units
60
| Bakkavor Group plc | Annual Report & Accounts 2024
£m
FY24
FY23
Change
Reported revenue
116.5
121.7
(4.3%)
Like-for-like revenue
1
118.4
106.4
11.3%
Adjusted operating loss
1
(1.5)
(3.0)
50.0%
Adjusted operating
margin
1
(1.3%)
(2.5%)
120bps
Operating profit/(loss)
0.4
(0.1)
0.5
Operating margin
0.3%
(0.1%)
400bps
Like-for-like revenue was up 11.3% to £118.4m (FY23:
£106.4m), driven by volume in retail and adding new
foodservice customers. Reported revenue was down
4.3% to £116.5m (FY23: £121.7m), which includes the
bakery business up to its disposal at the end of March
2024 and the impact of currency movements.
Adjusted operating loss of £1.5m improved by 50% (FY23:
£3.0m), with momentum building through the year as our
lean manufacturing initiatives have delivered efficiencies,
partially offset by challenges in the Hong Kong market.
Operating profit of £0.4m (FY23: £0.1m loss) includes
£1.9m of net exceptional income (FY23: £2.9m), reflecting
proceeds from the bakery disposal partially offset by
impairment of assets in Hong Kong with the business
held for sale at December 2024. The sale is anticipated
to complete in April 2025.
CHINA TRADING PERFORMANCE
Key:
1
head office
9
factories, farms
£m
FY24
FY23
Change
Reported revenue
227.7
229.4
(0.7%)
Like-for-like revenue
1
234.0
229.4
2.0%
Adjusted operating profit
1
9.9
3.4
191.2%
Adjusted operating
margin
1
4.3%
1.5%
280bps
Operating profit
9.3
0.5
8.8
Operating margin
4.1%
0.2%
390bps
Like-for-like revenue increased by 2.0% to £234.0m
(FY23: £229.4m), all driven by volume. In line with our plan,
H2 returned to growth, up 9.1%, driven by good underlying
growth with strategic customers and new product
launches. Due to the impact of currency, reported
revenue was down 0.7% to £227.7m (FY23: £229.4m).
Adjusted operating profit increased by 191.2% or £6.5m to
£9.9m (FY23: £3.4m) and adjusted operating profit margin
was up 280 basis points to 4.3% (FY23: 1.5%), underpinned
by our focus on driving operational efficiencies.
Operating profit of £9.3m (FY23: £0.5m) is net of £0.6m
of exceptional costs (FY23: £2.9m).
US TRADING PERFORMANCE
Key:
1
head office
5
factories
Bakkavor Group plc | Annual Report & Accounts 2024 |
61
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
FINANCIAL REVIEW
CONTINUED
EXCEPTIONAL ITEMS
Exceptional items excluded from adjusted operating
profit comprise:
£m
FY24
FY23
China: net profit on disposal
or impairment
1.9
2.9
UK: restructuring and site closures
(20.8)
2.8
UK ERP transformation costs
(0.7)
–
US: impairments
(0.6)
(2.9)
Total exceptional items included
in operating profit
(20.2)
2.8
Exceptional finance costs
(0.6)
–
Total exceptional items (before tax)
(20.8)
2.8
Tax on exceptional items
5.4
–
Total exceptional items (after tax)
(15.4)
2.8
In 2024, the Group incurred a net exceptional charge of
£20.8m (before tax). Of this, the net profit on disposal and
impairment arising from our China operations of £1.9m
includes: £4.0m profit on disposal from the 100% owned
subsidiary Bakkavor (Taicang) Baking Company Limited
on 28 March 2024, £3.2m of costs resulting from our Hong
Kong site being held for sale, and a further £1.1m of net
profit arising from the sale of our Hong Kong associate
in 2023 (FY23: £1.4m net profit).
Of the UK restructuring and site closure charge of
£20.8m, £8.5m relates to the cash costs of closure of our
UK Wigan site (by the end of Q1 2025), with the majority of
the cash cost to be incurred in 2025. There is a non-cash
impairment charge of £12.9m which relates primarily to
the fixed assets at the site due to close.
In 2024, the Group commenced a multi-year project
to replace the UK’s legacy ERP system, with £3.7m of
spend in the year, of which £0.7m was expensed and £3.0m
capitalised. The total project costs remain at c.£40m,
with the balance to be incurred over the next three years.
There is a small (£0.6m) impairment charge relating to
US equipment that was partially written down in 2023 that
is no longer in use (FY23: £3.5m).
An additional £0.6m charge is excluded from adjusted
profit before tax, relating to accelerated amortisation of
fees following the Group’s refinancing of its core debt
facilities in July 2024 (see Note 37).
FINANCE COSTS
Group profit before tax of £68.6m (FY23: £70.3m) is after
finance costs (net) of £26.5m (FY23: £26.8m), which
includes £0.6m of exceptional fees associated with the
refinancing (as outlined above). Removing the impact of
this, finance costs reduced by £0.9m on last year, driven
by lower average debt levels, management of customer
financing drawdowns and the lower base interest rate
from August 2024. The Group’s fixed interest rate swaps
totalling £150m at an average rate of 0.37% expired at the
end of March 2024 and were replaced by swaps totalling
£130m at an average rate of 3.73%, which will remain in
place until March 2026. For FY25, we expect finance costs
to reduce slightly as we maintain lower debt levels and
expect UK base rates to decrease marginally.
TAX
The Group tax charge for FY24 was £12.9m (FY23: £16.4m),
representing an effective tax rate of 18.8% (FY23: 23.4%).
Excluding the impact of net exceptional costs (including
financing costs) of £20.8m, the effective tax rate was 20.5%
(FY23: 24.4%). This is 4.5% lower than the UK corporation
tax rate and mainly due to the benefit of additional losses
brought forward following a review of the Group’s taxable
loss position and the release of uncertain tax positions
where ambiguity on EU tax law has been resolved through
a legal case. For FY25, we expect the effective tax rate to
return to being marginally above the UK corporation tax
rate at c.26%.
EARNINGS PER SHARE (“EPS”)
Adjusted EPS increased by 3.5 pence to 12.3 pence (FY23:
8.8 pence), driven by the strong improvement in trading
performance and decrease in finance and tax costs.
Basic EPS increased by 0.2 pence to 9.6 pence (FY23: 9.4
pence), as the improvement in trading performance was
largely offset by exceptional costs, which are excluded
from adjusted earnings per share.
CASH FLOW
Strong free cash generation of £88.7m (FY23: £103.2m)
reflects an improvement in trading performance offset by
an increase in capital expenditure, as it returned to more
normal levels following a year of restricted spend in FY23,
and consolidation of the strong improvement in working
capital delivered last year with a further inflow in FY24.
£m
FY24
FY23
Operating profit
93.4
97.1
Exceptional items (before tax)
20.2
(2.8)
Adjusted operating profit
113.6
94.3
Depreciation, amortisation
& other
71.2
73.8
Net working capital
(excl. exceptional items)
9.3
28.4
Purchases of property,
plant and equipment (net)
& intangible assets
(55.5)
(43.8)
Net interest and tax paid
(36.0)
(35.4)
Net retirement benefits
charge less contributions
(1.9)
(2.1)
IFRS 16 lease payments
(12.0)
(12.0)
Free cash flow
88.7
103.2
62
| Bakkavor Group plc | Annual Report & Accounts 2024
DEBT AND LEVERAGE
Continued strong cash generation has enabled a further
£35.8m reduction in operational net debt to £193.8m
(FY23: £229.6m). Leverage, the ratio of operational net
debt to adjusted EBITDA, improved by 0.4 times to 1.1
times and is now at the lower end of the Group’s target
range of 1.0 to 2.0 times.
REFINANCING
On 25 July 2024, the Group refinanced its debt facilities
with £350m of new facilities, comprising a £200m
revolving credit facility (“RCF”) and a £150m Term Loan,
maturing in July 2028 with the option of two additional
one-year extensions. Our new facilities include a 25 basis
point improvement in margin at 1.85%, along with the
addition of an acquisition spike to take leverage to 3.5
times, which provides flexibility to support our medium-
term strategic ambitions. The remaining covenants under
the new facilities are in line with our existing facilities,
with the exception of the sustainability-linked targets
which no longer apply. Delivering on our sustainability
targets, however, remains a key priority and these targets
are already incorporated in the Group’s bonus schemes.
The Group’s liquidity position has remained strong, with
liquidity headroom of c.£185m.
INVESTMENT AND RETURNS
FY24 capital spend of £55.5m was up £11.7m (FY23: £43.8m)
compared to last year as we increased investment in
a controlled manner following reduced spend in FY23.
We have continued to see returns from our investment
in productivity and capacity materialise, as evidenced in
the strong efficiencies that have supported the step-up in
profitability in the year. Our spend in the year included £3.0m
related to the replacement of our legacy UK ERP system.
We expect to return to more normal levels of spend in
FY25 of c.£70m. This includes c.£7m of capital spend in
relation to the UK ERP replacement, with a further c.£8m
to be expensed in FY25 and treated as an exceptional cost.
ROIC improved significantly, up 260 basis points to 10.1%
(FY23: 7.5%), reflecting the Group’s improved profitability
and lower average invested capital, following two years
of controlled capital spend, along with rationalising our
UK footprint.
Our medium-term target to deliver adjusted operating
profit margin of 6%, combined with our previous
investments delivering an increase in returns, mean
we expect to deliver further improvement in ROIC in
the medium term.
DIVIDEND
During the period, the Group paid £25.3m in respect of
the final dividend for FY23 and £18.5m for the FY24 interim
dividend declared in September 2024.
The improved strength of the Group’s financial position
and continued good cash generation support our long-
term growth aspirations and commitment to increasing
returns to shareholders. In combination with the Group’s
strong trading performance, the Board has proposed a
final FY24 dividend of 4.80 pence per Ordinary share.
This results in a total FY24 dividend of 8.00 pence per
Ordinary share, up 10% on last year. The final divided
record date will be 25 April 2025 and subject to approval
by shareholders at the Annual General Meeting (AGM)
on 22 May 2025, the dividend will be paid on 28 May 2025.
Going forward, the Board expects to maintain a progressive
dividend policy and for the level of increase to be more
closely aligned to historical levels at c.5% per annum.
PENSIONS
Under the IAS 19 valuation principles, as at 28 December
2024 the Group recognised a surplus of £18.8m for the
UK defined benefit scheme (30 December 2023: £12.0m
surplus). This increase is mainly due to an increase in
discount rates over the year, primarily linked to bond
yields, which has led to a decrease in the defined benefit
obligation, partially offset by a small increase in market
expectations for inflation.
The Group and the Trustees agreed the triennial valuation
of the UK defined benefit pension scheme as at 31 March
2022 in May 2023, resulting in the Group agreeing to
make recovery payments of £2.5m per annum through
to 31 March 2025, with an extension through to 31 August
2025 if the scheme is in deficit at the end of December
2024 and the end of January 2025. As the scheme was
in surplus at December 2024 and January 2025, final
deficit contributions are expected to be £0.6m, paid over
a recovery period ending on 31 March 2025.
CAPITAL ALLOCATION
We maintain a disciplined approach to capital allocation,
with the overriding objective to enhance shareholder
value. In delivering against this objective, we have
simplified our operations in China resulting in proceeds
of c.£13m over the last two years, and we will continue
to seek opportunities to redeploy our capital in the most
effective way. Our allocation of capital is primarily split
across capital investment, driving further debt reduction
to decrease financing costs given base rates remain
elevated, and maintaining a progressive dividend policy.
With the strength of the Group’s balance sheet, we are
well-positioned to explore potential acquisition
opportunities as we seek to stimulate non-organic growth.
In the medium term, we remain committed to investing
to enhance returns and are focused on maintaining
leverage within our target range whilst continuing with
a progressive dividend policy.
Lee Miley
Chief Financial Officer
3 March 2025
Bakkavor Group plc | Annual Report & Accounts 2024 |
63
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
2022
-18.9%
2023
2024
-5.3%
+2.9%
2022
2023
2024
8.1%
6.6%
6.0%
2022
2023
2024
28.1%
26.2%
18.9%
2022
2023
2024
321
259
249
UK
INTERNATIONAL
EXCELLENCE
TRUST
KEY PERFORMANCE INDICATORS
1
Alternative Performance Measures (“APMs”), including ‘like-for-like’, ‘adjusted’ and ‘underlying’, are applied consistently throughout the 2024 Annual Report and Accounts and are
defined in full and reconciled to the reported statutory numbers in Note 37 of the Notes to the Consolidated Financial Statements. The Group’s financial reporting period is typically
52 weeks, however, every six years an additional week is included to ensure that its year-end date remains near the end of December. Throughout the 2024 Annual Report and Accounts,
the Group’s FY23 results are based on a 53 week period. FY23 reported revenue is for the 53 weeks ended 31 December 2023 and FY23 like-for-like revenue excludes the 53rd week.
MEASURING SUCCESS
NON-FINANCIAL PERFORMANCE
What are we measuring?
Year-on-year change in scope 1 and 2 net
(market-based) emissions across the Group.
Why is it important?
Climate change is the single biggest
sustainability challenge facing the world and
Bakkavor has a part to play in supporting a
low-carbon economy.
Group net carbon emissions (%)
PROGRESS ON OUR SUSTAINABILITY AND PEOPLE TARGETS
Link to our strategy
What are we measuring?
UK food waste as per the Food Loss and
Waste Accounting and Reporting Standard.
Why is it important?
Addressing food waste is part of what we
and our industry must do to address climate
change, support communities and become
a more efficient business.
UK food waste (%)
Link to our strategy
What are we measuring?
The number of colleagues leaving the
business (excluding fixed-term contracts and
redundancies) divided by total headcount.
Why is it important?
Our colleagues are our priority and we
must remain focused on being the local
employer of choice for both existing and
new talent to attract and retain a skilled
and diverse workforce. Driving improvements
also creates efficiency through reduced
recruitment and onboarding.
UK employee turnover (%)
Link to our strategy
What are we measuring?
The rate of accidents across our sites that
resulted in affected colleagues taking more
than seven days off work, calculated based
on 100k colleagues in line with the UK Health
and Safety Executive (“HSE”).
Why is it important?
We have a duty of care to colleagues in
ensuring their health, safety and wellbeing.
Our health and safety culture is based on a
governance process driven by the Group
Board, with Health and Safety teams in place
to set standards and monitor compliance.
UK accidents
Link to our strategy
READ MORE
pg 76.
+2.9%
6.0%
18.9%
249
Link to our strategy
Performance incentives
STIP
LTIP
Our key performance indicators (“KPIs”) help us to
measure the progress of both our Group strategy
and Trusted Partner ESG strategy whilst managing
our risk framework.
READ MORE:
Our strategy pg 22.
Trusted Partner pg 38.
Risks and risk management pg 66.
READ MORE
pg 123.
64
| Bakkavor Group plc | Annual Report & Accounts 2024
2022
2023
2024
+10.7%
+4.9%
+5.1%
2022
2023
2024
£89.4m
£94.3m
£113.6m
2022
2023
2024
£53.4m
£103.2m
£88.7m
2022
2023
2024
1.9x
1.5x
1.1x
2022
2023
2024
9.5p
8.8p
12.3p
2022
2023
2024
7.1%
7.5%
10.1%
FINANCIAL PERFORMANCE
CONTINUED GROWTH & IMPROVED PROFIT
SIGNIFICANTLY STRONGER BALANCE SHEET
ENHANCED SHAREHOLDER RETURN
READ MORE
pg 58.
What are we measuring?
Revenue growth at a constant currency
excluding acquisitions and closed and sold
businesses. In FY23 this also excludes the
53rd week of trading.
Why is it important?
The Group uses like-for-like revenue
because it allows for a more meaningful
comparison of revenue trends from
period to period.
Like-for-like revenue growth (%)
1
Link to our strategy
What are we measuring?
Adjusted operating profit measures the
underlying profitability of the business, excluding
restructuring costs, asset impairments
and additional charges or credits that are
considered significant or one-off in nature.
Why is it important?
The Group uses adjusted operating profit
as it excludes the impact of items that hinder
comparison of profitability between periods.
Adjusted operating profit
1
(£m)
Link to our strategy
What are we measuring?
Cash generated by the Group after meeting all of
its obligations for interest, tax and pensions, after
purchases of property, plant and equipment, and
after IFRS 16 capital lease payments, but before
payments of refinancing fees and other exceptional
or significant non-recurring cash flows.
Why is it important?
This is a key liquidity measure as it indicates
the underlying cash available to repay debt,
make further investments in the Group or
pay dividends.
Free cash flow
1
(£m)
Link to our strategy
What are we measuring?
The level of debt held by the Group calculated
by dividing operational net debt
1
by adjusted
EBITDA pre IFRS 16
1
.
Why is it important?
Ensuring bank facilities remain available by
keeping the ratio below the agreed maximum
level, determining the interest margin payable
on debt drawn and ensuring the Group has
capacity for future investments.
Leverage (times)
Link to our strategy
What are we measuring?
Profit per share of the Group, calculated by
dividing adjusted earnings
1
by the weighted
average number of Ordinary shares in issue
during the year.
Why is it important?
It tracks the underlying profitability of the
Group and enables the comparison of
performance with the Group’s peer companies.
Adjusted earnings per share
1
(pence)
Link to our strategy
What are we measuring?
How effectively the Group generates returns
from its assets, calculated as adjusted
operating profit after tax divided by the average
invested capital.
Why is it important?
Indicates returns generated for shareholders
and is used by investors and other
stakeholders to evaluate the efficiency of the
Group’s capital allocation, including evaluating
the quality of investments.
Return on invested capital
1
(%)
Link to our strategy
+5.1%
£113.6m
£88.7m
1.1x
12.3p
10.1%
Bakkavor Group plc | Annual Report & Accounts 2024 |
65
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
REPORT
& ESCALATE
IDENTIFY
ASSESS
MITIGATE
MONITOR
RISKS AND RISK MANAGEMENT
Our risk management process is
designed to support the Group as
we set out to deliver long-term
sustainable value, whilst protecting
the interests of our stakeholders
and safeguarding our assets,
finances and reputation.
We have an established risk
management framework which has
proven successful and has allowed
us to strike the right balance between
risk and opportunity through
significant macro-headwinds, and
helped support the delivery of our
strategic objectives.
The risk management framework
is supported by a system of internal
controls designed to embed the
effective management of the key
business risks throughout the Group.
Furthermore, the risk management
framework underpins our preparation
for the revised UK Corporate
Governance Code 2024. This
particularly supports: the amendment
of Principle O which ensures the
Group Board has established and
maintains procedures to manage
risk and oversee the internal control;
and Provision 29 which focuses
on monitoring Bakkavor’s risk
management and internal controls
framework. As part of our response,
we have strengthened our Internal
Risk and Control team in H2 2024.
We appointed a Head of Risk and
Control – Finance Transformation
(supporting the implementation of
our new ERP system), as well as a
Head of Internal Controls and Risk
(focusing on internal controls and risk
management across the business),
with both individuals reporting to
the Group Finance Director who has
responsibility for risk.
OUR APPROACH
The Group Board is responsible
for effective risk management and
has embedded a strong culture of
risk awareness across the Group.
The Group Board has achieved this by:
•
Identifying and monitoring key
strategic and emerging risks to
deliver its strategic objectives.
•
Performing risk management
workshops, facilitated by our
Internal Auditors, with the Senior
Executive Team (“SET”) and Group
Board to identify and challenge
the appropriateness of the Group’s
principal risks and associated
risk appetite.
•
Reviewing and approving the ongoing
risk management process, including
the internal control system, risk
management framework, and
policies and procedures that
outline what can be considered
an acceptable level of risk for
an appropriate level of return.
•
Reviewing our formal Risk Register.
This identifies the principal risks faced
by the Group, the key risk indicators
which determine the likelihood of their
occurrence, the potential impact
on the Group, and the key mitigating
actions used to address them.
Ownership of each principal risk
included in our Risk Register is
assigned to a SET member. The Risk
Register also outlines how we plan
to minimise future probable risks
through Bakkavor’s policies and
procedures, Code of Conduct and
business ethics. It is updated on a
quarterly basis with input from the
Senior Management Team (“SMT”),
reviewed and discussed at the
regional and corporate risk
committees (“Risk Committees”),
reviewed by the Audit and Risk
Committee (“A&RC”), and
subsequently the Group Board as
part of half- and full-year reporting.
A process that underpins the sustainable delivery of our strategic objectives.
RISK MANAGEMENT FRAMEWORK
OUR APPROACH TO RISK
TOP-DOWN
APPROACH
Identification
of the Group’s
principal risks
BOTTOM-UP
APPROACH
Identification of
operational risks
66
| Bakkavor Group plc | Annual Report & Accounts 2024
•
Reports to the Group Board on the effectiveness of the risk management process and internal control system.
•
Informed by regular reports from the Risk Committees and Internal and External Auditors.
•
Maintain the Risk Register with assignment of individual principal risks.
•
Manage and monitor their own risks and corresponding action plans in line with risk appetite through timely review.
•
Escalate additional risks and evolutions in existing or emerging risks to their respective Risk Committees for review.
•
Provide regular reports to the Risk Committees, A&RC and Group Board from key functions such as Technical
(including health and safety, food safety), HR, Finance, Legal and IT.
AUDIT AND RISK COMMITTEE
Outputs from the individual regional and Corporate Risk Committees are summarised and presented to the A&RC on a quarterly basis.
RISK COMMITTEE
•
Perform a quarterly review of the principal risks, emerging risks and actions plans outlined in the Risk Register.
•
Provide a summary of the changes to the SET.
•
Each chaired by the Group Finance Director with SET representation.
Corporate Risk Committee
UK Risk Committee
US Risk Committee
China Risk Committee
Risk assurance is delivered using the ‘four lines of defence’, which comprises:
RISK ASSURANCE
We have an established risk management framework to identify, assess, mitigate, monitor, report
and escalate the risks our business faces.
Risk management process and assurance
READ MORE
pg 110.
Ensures the effective identification and management of key strategic and emerging risks.
GROUP BOARD
Chairman, Non-executive Directors
Chief Executive Officer
Chief Financial Officer
Management controls
•
Governing day-to-day
activities
•
Bi-annual self-
assessments
•
Policies and procedures
1ST LINE
Central Functional teams
•
Board Committee
and Sub-Committee
structure
•
Monitor and report
against KPIs
2ND LINE
Internal Audit and other
assurance providers
•
Internal Audits
•
Independent audits
•
Customer audits
•
Insurance audits
3RD LINE
Regulatory audits
•
External Audit
•
Other regulatory
including BRC
and food safety
4TH LINE
Audit and Risk Committee/Senior Executives/other management
SET AND OTHER MANAGEMENT
Bakkavor Group plc | Annual Report & Accounts 2024 |
67
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
RISKS AND RISK MANAGEMENT
CONTINUED
The A&RC reviews and reports to the
Group Board on the effectiveness of
the Group’s risk management process
and internal control system. This is
delivered through a regular review of:
•
Reports received from the SET
and Risk Committees.
•
The output of internal audit work
performed by our external adviser,
KPMG.
•
The output of external audit work
performed by our External Independent
Auditors, PricewaterhouseCoopers
LLP (“PwC”).
•
Advice from other experts
and advisers.
These reports provide detail on
current and emerging risks related
to business activity, as well as looking
at how effectively the internal
controls deal with these risks, and
an update on how approved mitigating
actions are being implemented.
RISK APPETITE
The Group Board annually reviews
and sets our risk appetite for each
of the principal risks. This helps
us to provide clear boundaries on
the acceptable level of risk, and
influences our decision-making
to support the delivery of our
strategic objectives.
Our approach is to minimise
exposure to reputational, financial
and operational risk, whilst accepting
a risk/reward trade-off in supporting
the delivery of our strategic growth
and change objectives. As a producer
of fresh food, food safety and integrity
are of paramount importance. We
therefore have a low appetite for risks
which may impact this area, and take
all practical precautions to mitigate
them. A low-risk appetite is also
applied to health and safety and we
take all practical precautions in
compliance with laws and regulations
to ensure the health and safety of
our colleagues.
EMERGING RISKS
We recognise the importance of
future-proofing our business, and
therefore we not only assess risks
that are affecting us today, but also
what has the potential to adversely
impact us in the future. As part of
our top-down and bottom-up risk
assessment process, we seek to
capture and monitor emerging risks.
Their potential effects on the delivery
of our strategy are considered at our
regular risk reviews, using horizon
scanning inputs from both internal
and external sources. Emerging risks
are highlighted during each Risk
Committee meeting and discussed
with the A&RC on a quarterly basis.
Emerging risks of particular note:
•
In 2024, the Group Board approved
a project to replace our UK ERP
system and, since then, work has
primarily focused on the design
of the new system. This project
increases our inherent ‘Strategic
growth and change programmes’
and ‘IT systems and cyber’ risks.
The risk level is likely to increase
as we move into the build and
deployment phases of the project.
However, we have established
strong programme management,
governance and assigned adequate
resource, subject to independent
programme assurance.
•
In recent years, macro-headwinds
have impacted our business, such
as elevated energy costs and rising
geo-political tensions (Russia/
Ukraine, Middle East, China/
Taiwan). These events also have the
potential to impact overall inflation,
availability of ingredients, consumer
demand and financing costs.
•
The change in UK Government
and changes in legislation could
have an impact on several of
our principal risks by potentially
increasing our cost base and
making labour relations more
challenging. The US election
results could also lead to changes
to legislation that may impact
our US and China business.
•
Climate change continues to
cause risk to the supply chain
both in terms of availability and
quality of raw materials. This could
result in pressure on existing
suppliers and could require us to
engage with new suppliers and/or
new countries of origin. There are
also increasing and evolving legal
and reporting requirements in
relation to sustainability, which
may impact how we operate and
the disclosure requirements.
These emerging risks are kept
under review during Risk Committee
meetings and mitigating actions are
discussed and documented. This
ensures that we can react ahead
of any risk materialising, therefore
minimising our risk exposure.
INTERNAL CONTROL SYSTEM
Our internal control system provides
a structure and an ongoing process
for risk management. This helps
assure our Senior Executives and
Senior Management that processes
have been implemented effectively to
manage operational risk. The system
is designed to manage rather than
eliminate all risks in line with the
risk appetite set out by the Group
Board, therefore it can only provide
reasonable, and not absolute,
assurance. This is combined with
a central governance framework
which supports the business through
Group-wide policies, procedures
and training. Our SMT is responsible
for implementing procedures and
monitoring controls.
Work is currently ongoing as we look
to enhance our internal controls
system in readiness for the effective
date of Provision 29 of the revised UK
Corporate Governance Code. The
focus for 2024 has been on enhancing
our assurance mapping across our
principal risks to identify material
controls, carrying out a Fraud Risk
Management Assessment to develop
an action plan to comply with the
expected new legislation in this area,
and ensuring that the design of the
new UK ERP system is underpinned
by a strong control environment.
68
| Bakkavor Group plc | Annual Report & Accounts 2024
Principal risk trends 2024
Risk
Risk trend
1.
Consumer and retailer dynamics
1
2.
Food safety and integrity
3.
Strategic growth and change programmes
4.
Health and safety
5.
Supply chain
6.
Availability, recruitment and retention of colleagues
7.
IT systems and cyber risk
8.
Climate change and sustainability
9.
Disruption to operations
10.
Corporate and regulatory
OUR PRINCIPAL RISKS
The Group Board and A&RC have reviewed the business’s risk environment and considered that no changes
were required to our principal risks. They therefore remain in line with the prior year.
Our principal risks, their corresponding risk score and movement throughout the year are reflected within
the risk assessment scale below:
RISK ASSESSMENT MAP
•
The risk heat map shows the position of each principal risk as at December 2024 compared to the position
in December 2023.
•
The commentary on the following pages gives updates on each of our principal risks.
Key
Risk trend
LOW
HIGH
Severity
(Likelihood x Business impact after mitigation)
Increased
Decreased
Unchanged
1
Risk previously titled ‘Consumer demand and retailer landscape’.
2024
2023
Risk severity
Bakkavor Group plc | Annual Report & Accounts 2024 |
69
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
RISKS AND RISK MANAGEMENT
CONTINUED
1. CONSUMER AND RETAILER DYNAMICS
The loss of business as a result of competitor activity, significant changes in commercial terms, and/or reputational damage
could result in a loss of market share, leading to a significant impact on the Group’s results. This may be driven by a significant
change to the economy and changes in consumer attitudes such as changes in household budgets, sustainability and health.
CONTROLS
RISK TREND
•
Work closely with customers to adapt to changing consumer trends such as dietary changes,
sustainability concerns and the impact of changes in household budgets.
•
Leverage insight from market data analysis, consumer surveys/feedback, industry reports
and operational performance to inform new and existing product development to meet
consumers’ needs.
•
Draw on a well-established global supply chain to source a wide range of ingredients to help
drive innovation.
•
Maintain well-established, multi-level relationships with key customers to deliver high levels
of service.
Due to an improvement in
consumer sentiment, UK
volumes returning to growth
and our continued success
in mitigating cost inflation
through multiple levers.
LINK TO OUR STRATEGY
PRINCIPAL RISKS AND UNCERTAINTIES
Risk trend
Increased
Decreased
Unchanged
2. FOOD SAFETY AND INTEGRITY
Whilst we must ensure food is safe and clearly/correctly labelled, there are still risks of product contamination. This could affect
consumer confidence and customer trust, potentially leading to product withdrawal or recall, financial and/or reputational
impact, and loss of/reduction in business.
CONTROLS
RISK TREND
•
Maintain industry-leading standards of food safety. Includes traceability procedures and processes,
overseen by our experienced Central Technical function, and a clear approach to Responsible
Sourcing under our Trusted Partner ESG strategy.
•
Use Hazard Analysis Control Point principles at all sites to identify and control food safety risks,
with colleagues trained in these procedures.
•
Monitor and report to the Group Board performance against established food safety metrics,
managed via a team of technical/food safety experts at each site.
•
Conduct regular audits against recognised global food safety standards by our internal Central
Technical team, and independent bodies on an announced and unannounced basis.
•
Perform regular industry-leading allergen testing to monitor our controls and raw materials.
•
Continue to monitor emerging issues, in conjunction with other industry players, to ensure
increasing compliance requirements are met.
•
Maintain and review Food Safety and Integrity policies to ensure alignment with expectations
of legislation, regulatory bodies and retail customer requirements.
Due to a combination of
strong audit results across
customer, BRC and internal
compliance for each region.
In addition, the FDA removed
their warning letter in
respect of one of our US
sites following the corrective
actions we had taken.
LINK TO OUR STRATEGY
70
| Bakkavor Group plc | Annual Report & Accounts 2024
UK
INTERNATIONAL
EXCELLENCE
TRUST
3. STRATEGIC GROWTH AND CHANGE PROGRAMMES
Capital investments, corporate transactions and organisation change programmes based on forecasted financial returns are, by
their nature, uncertain. Climate change (in terms of physical and transitional risks) also has the ability to impact future returns.
CONTROLS
RISK TREND
•
Leverage the Group’s capital allocation policy to balance spend across capital expenditure,
acquisitions and disposals, debt reduction and dividends.
•
Maintain robust and standardised processes for evaluation and approval of capital expenditure.
•
Implement governance processes for key projects to ensure individual project risks are
documented and action plans are implemented to mitigate risks.
•
Track and report regularly to the Group Board on performance of significant projects against
forecast metrics.
•
Due diligence on potential M&A activity to identify key risks, with mitigations taken to reduce
exposures to an acceptable level.
•
UK ERP implementation project is governed by a cross-functional programme board with
regular reporting and independent third-party programme assurance to the A&RC.
Due to the Group Board
approving a project to replace
our UK ERP system, this is
likely to lead to significant
change across the UK
business in future years.
LINK TO OUR STRATEGY
4. HEALTH AND SAFETY
We have a duty to secure and protect the health and safety of our colleagues, contractors and visitors. Failure to maintain
appropriate health and safety across the Group could result in a significant reputational, regulatory and/or financial impact
on our business.
CONTROLS
RISK TREND
•
Maintain strong health and safety policies, processes and controls across all sites, supported
by an established culture of engagement around accident prevention.
•
Health and safety managed locally by colleagues at a site level on a digital platform to monitor
performance, supported by in-house health and safety experts.
•
Review and share standards and best practice, and support implementation of new processes
and controls.
•
Undertake risk control and risk reduction activities across health and safety projects including:
ammonia risk assessment; boiler reviews; factory transport vehicles; fire suppression;
and machinery.
•
Report metrics to the Group Board, with any significant issues reported immediately.
LINK TO OUR STRATEGY
Link to our strategy
Bakkavor Group plc | Annual Report & Accounts 2024 |
71
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
5. SUPPLY CHAIN
An impact to the business due to disruption affecting continuity of supply of goods or services and/or an adverse material
movement in cost versus forecast.
CONTROLS
RISK TREND
•
Maintain a sophisticated, agile supply chain and robust supplier selection with monitoring
and management processes.
•
Leverage scale, experienced central and regional procurement teams and strong customer
partnerships to enhance buying power, with spend governed by a clear delegation of authority
and process for approving contracts and/or annual source plans.
•
Balance price, quality, availability and service levels to meet demand and supply forecast.
•
Seek protection on forward-purchasing and price variations through agreements with
customers, including cost pass-through mechanisms.
•
Monthly Energy Hedging Committee held to ensure utility pricing for future periods is compliant
with the Group Energy Hedging Policy to reduce the risk of volatility in the cost base.
•
Utilise internal levers to mitigate the impact of input cost price increases, drive productivity
improvements, and focus on value optimisation across product portfolios.
•
Increase end-to-end control of our supply chains through our Bakkavor Inbound Logistics
(“BIL”) team.
•
Ensure integrity of supply chain and the quality of raw materials through our Responsible
Sourcing approach.
LINK TO OUR STRATEGY
Risk trend
Increased
Decreased
Unchanged
6. AVAILABILITY, RECRUITMENT AND RETENTION OF COLLEAGUES
Labour availability and cost could be affected by political, economic, legislative and regulatory developments. Increasing
competition from competitors and/or local employers could reduce the availability of labour and increase cost pressure.
CONTROLS
RISK TREND
•
Manage recruitment through our Central Talent team, supported by regional heads of HR, to drive
campaigns and initiatives tailored to the local market and the offer of competitive remuneration
and benefits packages.
•
Invest in training and development to upskill colleagues and support career progression.
•
Enhance and upgrade site facilities to make Bakkavor a better place to work.
•
Conduct an annual Employee Engagement Survey (“EES”) to gather feedback from colleagues,
which informs our People Plan.
•
Seek to fill vacancies through direct recruitment with improved timescales following
the introduction of new software within the year and utilise agency labour to provide
short-term solutions.
•
Ongoing engagement with employee representatives, including unions, to build relationships
and understanding of key issues.
•
Designated workforce engagement Non-executive Director engages with colleagues and
provides feedback to the Group Board.
Due to the current macro-
UK employee relations
landscape, industrial action
may impact the availability
of employees, along with
increased cost pressure.
LINK TO OUR STRATEGY
RISKS AND RISK MANAGEMENT
CONTINUED
72
| Bakkavor Group plc | Annual Report & Accounts 2024
UK
INTERNATIONAL
EXCELLENCE
TRUST
7. IT SYSTEMS AND CYBER RISK
Group infrastructure becomes out-dated, inefficient and/or vulnerable to third-party cyber-attacks or malfunction.
Unauthorised access or unplanned outages to the Group’s IT systems could lead to data breaches and the release of
market-sensitive information as well as business disruption with potential reputational, financial and operational impact.
CONTROLS
RISK TREND
•
Actively identify risks and threats, design and implement layers of control that allow for an
appropriate balance between preventive and detective controls, including business continuity
planning and testing.
•
Evaluate independently against leading industry standards published by the US Department
of Commerce (National Institute of Standards and Technology Cyber Security Framework),
and partner with external expert advisers to actively reduce risks posed.
•
Mitigate information security risks through a Group-wide security programme with reporting
to the A&RC.
•
Invest further in IT system modernisation, including external advice on the use of Artificial
Intelligence in our sector.
Due to the completion of our
Cyber Security Programme
rollout in the USA, whilst
also driving major success
in operational and people
projects focused on improving
IT service availability, partner
performance, continuity and
user experience.
LINK TO OUR STRATEGY
8. CLIMATE CHANGE AND SUSTAINABILITY
A scenario-driven climate risk assessment of our business has identified four transition risks: costs of implementing low-
emissions technology; increased cost of raw materials; changing consumer preferences; and pricing of GHG emissions.
We have also identified two physical risks: operations and supply chain. There is also a potential reputational impact of failing
to meet our ESG commitments.
CONTROLS
RISK TREND
•
Mitigating risks against the identified climate risks is detailed in the TCFD section.
•
Addressing our wider material ESG activities through Trusted Partner, our ESG strategy.
•
Regularly monitor and report on non-financial KPIs to senior management and Group Board,
including net carbon emissions, UK food waste, voluntary employee turnover, packaging use
and health and safety.
•
Seek to integrate ESG factors into investment decisions and wider financial forecasts.
READ MORE:
ESG: Trusted Partner pg 38.
ESG: TCFD pg 46.
LINK TO OUR STRATEGY
Link to our strategy
Bakkavor Group plc | Annual Report & Accounts 2024 |
73
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
UK
INTERNATIONAL
EXCELLENCE
TRUST
9. DISRUPTION TO GROUP OPERATIONS
Damage to our sites by fire, flood, mechanical breakdown and natural disaster, or disruption from industrial action, could present
a serious risk to our business operations and performance. Significant capital investment projects could also impact our ability
to maintain production at required levels, negatively impacting our financial performance.
CONTROLS
RISK TREND
•
Apply building and property management protocols in conjunction with our property insurers,
with regular progress reporting on recommended site improvements.
•
Implement continuity and disaster recovery plans at each site to identify and assess key risks,
key controls, improvement actions and preparedness for an event. Audit plans bi-annually with
insurance brokers. Ensure that plans are communicated to relevant business teams.
•
Report regularly and proactively on progress of any identified site improvements or issues
to encourage timely resolution.
•
Support employee engagement in our factories through site representatives, employee forums
and trade union engagement.
•
Implement governance processes for key capital investments to ensure project risks are
documented and action plans are implemented to reduce and mitigate risks.
•
Maintain adequate levels of insurance in line with legal requirements and agreed risk appetite.
Due to the potential
financial and operational
impact of industrial action.
LINK TO OUR STRATEGY
Risk trend
Increased
Decreased
Unchanged
10. CORPORATE AND REGULATORY
Failure to comply with local laws, regulations, codes of practice, or breach of internal policies and standards could impact our
reputation and result in financial penalties and/or operational disruption. External financial risks include interest rate risk on
borrowings, availability of liquidity, compliance with our financial covenants, changes in exchange rates and the funding of the
defined benefit pension scheme.
CONTROLS
RISK TREND
•
Regularly review the Group’s investment strategy and its potential impact on liquidity and leverage.
•
Overarching framework of approved policies and procedures for internal controls and financial risk
management; including funding, liquidity, currency, interest rate and counterparty credit overseen
by our Treasury function.
•
Key external reporting including full-year results, RNS and the going concern and viability
statements are subject to independent external audit and internal approval prior to publication.
•
Monitor financial results and projections through weekly, monthly and quarterly reporting
and forecasting.
•
Meet quarterly with the Group Hedging Committee to review and ensure compliance with the
hedging policy for foreign currency.
•
Regularly review defined benefit pension scheme’s investment and liability hedging strategy.
•
Review and update key Group policies on standards and procedures including legal, financial,
tax, HR, food safety, health and safety and environmental on an annual basis, and engage with
Internal Auditors to provide assurance on principal and financial risks.
LINK TO OUR STRATEGY
RISKS AND RISK MANAGEMENT
CONTINUED
Link to our strategy
74
| Bakkavor Group plc | Annual Report & Accounts 2024
DISCLOSURE STATEMENTS
VIABILITY STATEMENT
In undertaking this review, the Directors have concluded
that a three-year timeframe is an appropriate period for
this assessment, on the basis this is the period over which
the Directors set the strategic plan for the Group, and
also recognises the fast-paced sector in which we operate
continually adapting to meet the changing needs of
customers and consumers.
The Directors have assessed the principal risks to the
business, as described on pages 70 to 74, and the key
mitigating actions used to address them within this
three-year timeframe. For each of the principal risks,
action plans have been developed to mitigate the risk
with a clear allocation of responsibilities for mitigation
and the timescales for completion.
Whilst all of the principal risks identified could have an
impact on the Group’s performance, the specific risks
which could potentially impact the Group’s level of sales,
profitability and cash generation include the impact of
a weakening in consumer demand on volume due to the
impact of ongoing inflationary pressures on household
budgets. Further inflation across the Group’s input costs
(raw materials, people and utilities) following macro-
economic or geo-political events could also impact the
Group’s profitability if not recovered through price.
Specifically on labour, due to the current macro-employee
relations landscape, this could increase cost pressure
and may result in disruption to operations.
On 25 July 2024, the Group refinanced its debt facilities
with £350m of new facilities, comprising a £200m
Revolving Credit Facility and a £150m Term Loan, maturing
in July 2028 with the option of two additional one-year
extensions. The new facilities include a 25 basis point
improvement in margin at 1.85%, along with the addition
of an acquisition spike to take leverage to 3.5 times. The
remaining terms are in line with our previous financing
structure, with the exception of the sustainability-linked
targets which no longer apply. At the end of 2024, the
Group also had £29m of other debt facilities that will be
repaid on an amortising basis by August 2028.
In line with Provision 31 of the 2018 UK Corporate Governance Code, the Directors
have carried out a thorough review of the prospects of the Group and its ability to
meet its liabilities as they fall due through to the end of December 2027.
As part of our annual strategic planning, the Group prepares
a detailed financial model which forecasts the Consolidated
income statement, balance sheet, cash flow, covenant
performance and liquidity requirements of the Group for a
three-year period. A downside scenario that is severe but
plausible has been modelled taking account of the potential
financial impact of the specific risks outlined above. The
downside scenario model showed that even without taking
any mitigating actions that would be available to the Group
if such a scenario occurred, the Group would not breach
the financial covenants in its bank facilities agreement and
would have significant liquidity headroom available.
Beyond the three-year timeframe of this viability
statement, the Group would face transition and physical
risks as a result of climate change, as set out on pages 48
to 51. The Group has a relatively low exposure from the
transition to a low-carbon economy and at this stage we
do not expect the transition and physical risks to have a
material impact on the business.
Based on the results of this analysis, the Directors
consider that the Group will be able to continue in
operation and meet its liabilities as they fall due over
the three-year period to the end of December 2027.
Bakkavor Group plc | Annual Report & Accounts 2024 |
75
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DISCLOSURE STATEMENTS
CONTINUED
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
The following detail sets out where stakeholders can find further non-financial information on each of the key areas
of disclosure as required under the UK Companies Act 2006 (sections 414CA and 414CB).
Data for our Streamlined Energy and Carbon Reporting (“SECR”) can be found on pages 56 and 57, along with narrative
on the principal measures taken to improve our energy efficiency on page 55.
Reporting
requirement
Outcomes and further
information in this report
Page
reference
Relevant policies
Climate-related
Financial Disclosures
See consistency statement,
TCFD report.
46
ESG: TCFD
46
Requirement s414CB(2A)
Governance
47
(a)
Our strategy
22
(b), (d) (i) and (ii), (e), (f), (g)
Risks and risk management
66
(c)
Metrics and targets
53
(g), (h)
Environment
Sustainability and Innovation
Environmentally Sustainable
Sourcing
Related principal risk: climate
change and sustainability
42
40
73
Deforestation Statement
1
Deforestation and Conversion Free Soy Policy
1
Supplier Code of Conduct
1
Environment Policy
1
Supplier Code of Conduct
1
Animal Welfare Policy
1
Employees
Engagement and Wellbeing
Our people
Related principal risk: health and
safety, availability, recruitment
and retention of colleagues
44
34
71
Code of Conduct
2
Inclusion and Diversity Policy
1
Group Supplier Code of Conduct
1
Ethical Trade and Human Rights Policy
1
Mental Health at Work Policy
1
Human Rights
Responsible Recruitment
and Employment
Supply Chain Human Rights
Related principal risks: supply
chain, climate change and
sustainability
45
41
72
Modern Slavery Statement
1
Freedom of Association Policy
1
Responsible Operations Policy
2
Ethical Trade and Human Rights Policy
1
Supplier Code of Conduct
1
Social Matters
Engagement and Wellbeing
Our people
Related principal risk: health
and safety, supply chain,
availability, recruitment and
retention of colleagues
44
34
71
Code of Conduct
2
Modern Slavery Statement
1
Supplier Code of Conduct
1
Freedom of Association Policy
1
Animal Welfare Policy
1
76
| Bakkavor Group plc | Annual Report & Accounts 2024
Reporting
requirement
Outcomes and further
information in this report
Page
reference
Relevant policies
Anti-bribery and
Corruption
Anti-bribery and Business
Ethics Policy
Whistleblowing Policy
Charity and Political
Donations Policy
Related principal risk: corporate
and regulatory
77
77
77
74
Anti-bribery and Business Ethics Statement
1
Anti-bribery and Business Ethics Policy
2
Whistleblowing Policy
2
Charity and Political Donations Policy
2
Supplier Code of Conduct
1
Business Model
How we create value
6
Principal Risks
Related to Non-
financial and
Sustainability Matters
Relevant principal risks
include ‘Climate change and
sustainability’, ‘Health and safety‘
and ‘Availability, recruitment
and retention of colleagues’.
See: Risks and risk management
73
Non-financial KPIs
Key performance indicators
64
1
Available at bakkavor.com and to all colleagues through the Bakkavor intranet.
2
Available to all colleagues through the Bakkavor intranet. Not published externally.
WHISTLEBLOWING POLICY
The Whistleblowing Policy applies to the whole Group
and provides a mechanism through which individuals can
raise concerns on illegal, unsafe or inappropriate activities
including discrimination or harassment in the workplace.
This policy represents Bakkavor’s internal procedure and
enables us to effectively address any wrongdoing within
the business. The Bakkavor service, ‘Speak Up’, is
available Group-wide by Freephone or online 24 hours
a day/365 days a year and in 15 languages. Cases logged
in 2024 were investigated thoroughly through local HR
contacts, General Managers and/or Business Directors,
as well as the CPO, Technical Director, General Counsel
or the CFO when relevant. Whistleblowing is also regularly
monitored by the Board.
CHARITY AND POLITICAL DONATIONS POLICY
Bakkavor believes in giving back to the communities in
which we operate. Our Charity and Political Donations
Policy sets out the ways charitable giving may be
channelled: through monetary and product donations;
supporting our colleagues in their fundraising efforts;
and advocating skills and volunteering events, where
appropriate. We never use charitable donations as a
means to gain improper influence and all monies given
to charity in Bakkavor’s name are subject to due process.
Our Matched Giving Scheme allows sites to raise funds
for local causes that receive a matched donation from
the company. As per our policy, Bakkavor does not give
financial donations or support to political individuals,
representatives, parties or causes in any country in
which we operate.
READ MORE
pg 45.
ANTI-BRIBERY AND BUSINESS ETHICS POLICY
This policy, which also includes an embedded Gifts
and Hospitality Policy, sets out the highest standards of
business and ethical conduct expected of those who work
for, and on behalf of, Bakkavor in all its business dealings,
whether with customers, suppliers, competitors or other
business partners in all the countries in which Bakkavor
does business. We take a zero-tolerance approach to
bribery and corruption and are committed to acting
professionally, fairly and with integrity in all business
dealings and relationships wherever Bakkavor operates,
implementing and enforcing effective systems to counter
bribery and corruption. In 2024, the policy was reviewed
and updated to reflect latest best practices, and all
salaried staff completed mandatory refresher training.
Bakkavor requires all employees and third parties to
be familiar with the basic principles of anti-bribery law
in order to avoid any actions or omissions which might
infringe those laws.
Our Procurement team assesses our supply chain partners
for corruption and bribery risk through compliance with our
Supplier Code of Conduct. Implementing these policies,
with the support of Bakkavor’s e-learning platform, has
enabled the business to re-state the importance of vigilance
in identifying any bribery and corruption issues within the
business and across the supply chain, together with greater
awareness of reporting procedures.
READ MORE
pg 118.
Bakkavor Group plc | Annual Report & Accounts 2024 |
77
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DISCLOSURE STATEMENTS
CONTINUED
EMPLOYEE DATA
Employee numbers in the tables below are based on the average monthly number of employees.
By location
2024
% of total
2023
2022
2021
2020
UK
14,473
81%
14,689
15,567
15,863
16,356
US
899
5%
925
973
875
808
China
2,492
14%
2,497
2,009
2,205
2,125
Continental Europe (Spain, Italy)
25
<1%
25
31
29
29
Total
17,889
18,136
18,580
18,972
19,318
By function
2024
% of total
2023
2022
2021
2020
Production
14,675
82%
14,906
15,283
15,578
15,938
Management and administration
2,321
13%
2,345
2,378
2,521
2,488
Sales and distribution
893
5%
885
919
873
892
Total
17,889
18,136
18,580
18,972
19,318
Group
By gender
2024
% of total
2023
2022
2021
2020
Female
7,953
44%
8,247
8,420
8,450
8,654
Male
9,936
56%
9,889
10,160
10,522
10,664
Total
17,889
18,136
18,580
18,972
19,318
UK
By gender
2024
% of total
2023
2022
2021
2020
Female
5,932
41%
6,184
6,670
6,612
6,888
Male
8,541
59%
8,505
8,897
9,251
9,468
Total
14,473
14,689
15,567
15,863
16,356
International
1
By gender
2024
% of total
2023
2022
2021
2020
Female
2,021
59%
2,063
1,750
1,838
1,766
Male
1,395
41%
1,384
1,263
1,271
1,196
Total
3,416
3,447
3,013
3,109
2,962
1
Includes US, mainland China, Hong Kong, Spain and Italy.
78
| Bakkavor Group plc | Annual Report & Accounts 2024
Gender pay (UK)
2024
2023
2022
2021
2020
Median gender pay gap
4.9%
6.4%
9.3%
7.3%
2.1%
Mean gender pay gap
10.2%
9.3%
9.6%
9.3%
8.2%
2024
2023
2022
2021
2020
M
F
M
F
M
F
M
F
M
F
1st quartile (lower paid)
49.8%
50.2%
47.1%
52.9%
40.9%
59.1%
49.3%
50.7%
58.8%
41.2%
2nd quartile
58.9%
41.1%
56.9%
43.1%
62.0%
38.0%
58.6%
41.4%
59.6%
40.4%
3rd quartile
62.1%
37.9%
65.4%
34.6%
66.1%
33.9%
63.0%
37.0%
58.1%
41.9%
4th quartile (highest paid)
67.0%
33.0%
67.8%
32.2%
67.8%
32.2%
67.4%
32.6%
67.6%
32.4%
Median gender bonus gap
10.4%
18.2%
12.1%
15.2%
14.5%
Mean gender bonus gap
33.4%
31.9%
20.9.%
17.0%
28.1%
Proportion of males and
females receiving a bonus
9.0%
7.9%
9.2%
8.0%
9.3%
7.6%
9.9%
7.8%
9.3%
7.8%
Senior leadership by gender, 2024
Group Board
Senior
Management
1
Senior Executive
Team
Senior
Leadership
2
Number
%
Number
%
Number
%
Number
%
Female
3
27%
5
33%
2
33%
14
26%
Male
8
73%
10
67%
4
67%
40
74%
Total
11
15
6
54
Senior leadership by ethnicity
3
, 2024
Group Board
Senior
Management
1
Senior Executive
Team
Senior
Leadership
2
Number
%
Number
%
Number
%
Number
%
Of white European heritage
10
91%
12
88%
4
67%
46
85%
Of Black, Asian, minority and/or mixed
ethnic heritage
1
9%
3
13%
2
33%
8
15%
Total
11
15
6
54
1
Refers to the definition within the Companies Act 2006 s414C (8)-(10).
2
Refers to the Senior Executive Team’s direct reports as per the FRC’s 2018 UK Corporate Governance Code Provision 23. Data is for the financial year.
3
Reflects the Parker Review methodology. Totals may not sum to 100 due to rounding.
The Strategic Report was approved by the Group Board and signed on its behalf by:
Mike Edwards
Lee Miley
Chief Executive Officer
Chief Financial Officer
3 March 2025
3 March 2025
Bakkavor Group plc | Annual Report & Accounts 2024 |
79
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
GOVERNANCE
Chairman’s governance overview
82
Corporate governance
compliance statement
84
Group Board
86
Corporate governance report
90
Nomination Committee report
105
Audit and Risk Committee report
110
ESG Committee report
120
Directors’ remuneration report
123
Directors’ report
142
Statement of Directors’
responsibilities in respect
of the Financial Statements
149
80
| Bakkavor Group plc | Annual Report & Accounts 2024
Consumers are dining out less often but still crave
the experience of quality food to celebrate events
and treat themselves. Our fresh, convenient and
high-quality products naturally fulfil that need.
Working closely with one of our strategic UK
customers, we developed an innovative new range
of mouth-watering starters, mains and sides to
bring the gastropub experience to people’s homes,
with products such as a mushroom, leek and
butterbean cobbler.
BRINGING THE GASTROPUB
EXPERIENCE TO PEOPLE’S HOMES
Bakkavor Group plc | Annual Report & Accounts 2024 |
81
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CHAIRMAN’S GOVERNANCE OVERVIEW
CHAIRMAN’S LETTER ON
CORPORATE GOVERNANCE
On behalf of the Group Board, I present
our corporate governance report for
the year ended 28 December 2024. The
UK Corporate Governance Code 2018
(the “Code”), which is available on the
Financial Reporting Council (“FRC”)’s
website (frc.org.uk), continues to
be the standard against which we
measure ourselves. I am pleased
to confirm that the Group has fully
complied with the provisions of the
Code for FY24, and this report sets
out how we have applied the principles
as set out in the Code. Our strong
governance structures underpin our
strategic priorities which the Group
Board continued to have oversight
of during the year.
CORPORATE GOVERNANCE REFORM
In January 2024, the FRC published
the UK Corporate Governance Code
2024 (the “2024 Code”). As it applies to
financial years beginning on 1 January
2025, we will be reporting against it
in our FY25 Annual Report. The 2024
Code includes several changes in
relation to Board leadership, company
purpose, succession, evaluation
and remuneration, much of which
Bakkavor has, in practice, already
adopted or is soon to implement. More
substantive changes have also been
introduced relating to audit, risk and
internal controls which enhance the
Group Board’s obligation to monitor
and report on the effectiveness of
such controls. In anticipation of the
proposed changes, the Audit and Risk
Committee has commenced work to
ensure that appropriate plans are in
place to enhance internal controls
documentation and testing in light of
the requirements under Provision 29
of the 2024 Code, effective from
1 January 2026.
READ MORE:
Strategy pg 22.
Key activities in 2024 pg 94.
CHANGES TO OUR GROUP BOARD
Shareholder structure:
Following
Baupost’s sale of its entire stake in
Bakkavor to LongRange Capital in
January 2024 (as reported in the
2023 Annual Report and Accounts),
on 16 January 2024 Patrick Cook,
representative of Baupost, stepped
down and Robert Berlin was
appointed as the representative
Director for LongRange Capital.
Executive Directors:
The Group Board
focused on Executive succession
planning during the year, with Ben
Waldron stepping down as Chief
Financial Officer (“CFO”) on 31 October
2024 to relocate to Australia. In his
14 years at Bakkavor, Ben has
contributed significantly to the Group;
leading our IPO work in 2017, then as
CEO of our US business through the
Covid pandemic, and more recently as
CFO he has brought increased clarity
to our financial processes. Ben has
been a most excellent CFO and a
pleasure to work with, and we wish
him well in Australia.
Ben is succeeded by Lee Miley,
formerly our UK Finance Director.
He took up the role as CFO and
Executive Director, effective
1 November 2024.
Dear fellow shareholders,
82
| Bakkavor Group plc | Annual Report & Accounts 2024
Lee joined Bakkavor in 1998 and
has held many roles both within
the finance function and across
the broader business, having been
responsible for the Group’s approach
to M&A, Operational Excellence and
ESG at various times. Lee’s transition
to CFO has gone smoothly and
the Group Board looks forward
to continuing to work with him.
READ MORE:
Report of the Nomination
Committee pg 105.
Q&A with Lee Miley pg 59.
GROUP BOARD AND COMMITTEES’
PERFORMANCE REVIEW
Our 2023 Group Board and Committee
performance review was externally
facilitated by Clare Chalmers Ltd
(“Clare Chalmers”), who also
undertook the last independent review
of the Group Board three years ago.
Clare Chalmers’ evaluation report
was robust and informative and
provided a valuable perspective
on the Group’s governance.
This year, our performance review
was internally facilitated by our
Company Secretarial team and
consisted of a questionnaire that
was completed by each of Bakkavor’s
Group Board and Committee
members. Throughout 2024, we have
taken significant steps to address the
recommendations from the externally
facilitated performance review, and
we are pleased to see these reflected
in the outcomes and actions in our
2024 internal performance review.
READ MORE
pg 104.
REFRESHING OUR BOARD
SKILLS MATRIX
We recognise that our Directors have
a broad range of skills, experience
and knowledge. During the year, the
Directors completed a self-capability
assessment to inform our Group Board
skills matrix, to support our succession
planning and to enable us to identify
any potential gaps that may arise when
Directors retire from the Group Board.
READ MORE
pg 101.
OUR STAKEHOLDERS
The Group Board is responsible for
leading stakeholder engagement in
line with Section 172 of the Companies
Act 2006 (“Section 172”). I have sought
to engage with our investors, with the
opportunity to meet up and discuss
the performance of the business with
major shareholders of the Company,
including a major institutional
shareholder.
The Group Board received updates
from the Procurement Director
during the year. This included an
update on supply chain challenges
and a deep-dive on Bakkavor’s
suppliers and engagement with
them through Bakkavor’s Supplier
Code of Conduct. It also received
updates on engagement and
collaboration with our key customers
on product development to meet
consumer demands, with focus on
value optimisation and efficiency
initiatives, alongside delivering on
key sustainability commitments.
At Bakkavor, we are proud to be
supporters of the Coronation Food
Project – a visionary initiative working
to reduce food waste across the UK,
inspired by His Majesty King Charles
III. In November, our CEO, Mike
Edwards, and some of our colleagues
had the pleasure of having a stall at
the opening of the Coronation Food
Hub in Deptford in celebration of the
first anniversary of the Coronation
Food Project. Bakkavor was one of
four chosen suppliers to participate,
and showcased our Tesco Hearty
Chicken Tikka, and our team of chefs
prepared a Roasted Vegetable Pasta
with a Tomato and Basil sauce for the
150 guests to enjoy!
From a colleague engagement
perspective, Sanjeevan Bala, our
designated workforce engagement
Non-executive Director, provided
feedback to the Group Board
following his meeting with the Group
Engagement Forum (“GEF”), where
he explained Executive compensation
framework to the GEF. Sanjeevan
also visited six sites to talk to
production line colleagues and the
senior leadership team on areas
of improvement within the workforce
and the ongoing work to ensure
all voices are heard by the Site
Engagement Forum (“SEF”) community.
Umran Beba, Non-executive Director,
also visited the US Carson site to gather
feedback from colleagues and feed
back their views to the Group Board.
The Group Board attended a site visit to
our London sites when, as part of our
tour, we had the opportunity to meet
both members of local management
and production line colleagues.
I was pleased to see that these
initiatives are helping to improve
the relationship with the vast majority
of our colleagues; with the large
reduction in employee turnover and
improvement in scores from our
annual employee engagement survey
helping evidence this.
READ MORE:
Stakeholder engagement pg 7.
Governance in action pg 97.
AGM
I am pleased to confirm that this
year’s AGM will be held on 22 May
2025. The Group Board considers the
AGM to be an important opportunity
to engage with our shareholders.
READ MORE
pg 146.
LOOKING AHEAD
The governance priorities for 2025
include continued stakeholder
engagement and steps to implement
the UK Corporate Governance Code
2024. Work has commenced on
enhancing our assurance mapping
across our principal risks to identify
material controls and we have carried
out a Fraud Risk Assessment to
develop an action plan to comply with
the new legislation in this area which
becomes effective in September.
Simon Burke
Chairman
3 March 2025
Bakkavor Group plc | Annual Report & Accounts 2024 |
83
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE COMPLIANCE STATEMENT
Section 1: Board leadership and company purpose
pg 85
Code principles:
A. Effective Board
B. Purpose, strategy, values and culture
C. Governance framework
D. Effective engagement with stakeholders
E. Workforce policies and practices
•
Chairman’s letter on corporate governance
82
•
Strategic Report
2
•
Section 172 statement and the Group Board’s
engagement with key stakeholders
7, 93
•
Purpose, values and culture
90
•
Group Board’s key activities
94
Section 2: division of responsibilities
pg 99
Code principles:
F. Leadership of Board by Chair
G. Board composition and responsibilities
H. Role of Non-executive Directors
I. Board resources
•
Group Board composition
101
•
Roles and responsibilities
99
•
Time commitment, external appointments,
independence and tenure
86
Section 3: composition, succession and evaluation
pg 101
Code principles:
J. Board appointments and succession plans
K. Board skills, experience and knowledge
L. Annual Board and Committees’
performance review
•
Group Board composition
101
•
Nomination Committee report
105
•
Inclusion and Diversity
108
•
Group Board and Committees’ performance review
104
Section 4: audit, risk and internal controls
pg 111
Code principles:
M. Internal and External Audit
N. Fair, balanced and understandable assessment
O. Risk management and internal controls framework
•
Audit and Risk Committee report
110
•
Risk management
66
•
Fair, balanced and understandable assessment
113
•
Going concern
112
•
Viability statement
75
Section 5: remuneration
pg 123
Code principles:
P. Remuneration policies and practices
that support our strategy
Q. Remuneration Policy review
R. Authorisation of remuneration outcomes
•
Directors’ remuneration report
123
THE UK CORPORATE GOVERNANCE CODE: COMPLIANCE STATEMENT
The Group Board is pleased to report that the Company has applied the principles and complied with the provisions
of the UK Corporate Governance Code 2018 (the “Code”) for the period ended 28 December 2024. A copy of the Code,
issued by the Financial Reporting Council, can be found at frc.org.uk.
THIS REPORT’S KEY FEATURES
Disclosures required under DTR 7.2.6 and the Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 (SI 2008/410), providing information on major interests in shares, the Company’s
Articles of Association, share capital and capital structure, and restrictions attaching to shares and the powers
of the Company issuing or buying back shares, can be found in the Directors’ report on page 144.
This governance statement explains how we have applied the principles and complied with the provisions
of the Code, and includes the reports of the Nomination, ESG, Audit and Risk, and Remuneration Committees.
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| Bakkavor Group plc | Annual Report & Accounts 2024
SECTION 1: BOARD LEADERSHIP
AND COMPANY PURPOSE
REGIONAL BOARDS
UK operations
UK customers
US
China
Our governance framework
•
Comprises the Group CEO and CFO (the Executive Directors), CPO, UK MD – Meals, UK MD – Bakery, and US COO.
Note that, until November 2024, the UK Finance Director (now CFO) was part of the SET.
•
The Executive Directors share feedback from the SET meetings with the Group Board.
•
Meets on a regular basis throughout the year (on a schedule aligned to the Group Board meetings) to focus
on strategic, operational, commercial, financial (including capital allocation), regulatory and risk matters.
•
Other senior leaders in the business (across risk, regulatory, finance and strategy) are invited to the meetings
of the SET from time to time.
•
Collectively responsible for promoting the long-term sustainable success of the Group for the benefit
of our stakeholders.
•
Lead and direct the Group by setting the purpose and strategy, overseeing management, monitoring
and assessing culture.
•
Assist the Group Board in the fulfilment of its duties and responsibilities.
•
Oversee activities within each Committee’s Terms of Reference.
•
Report to the Group Board via the Committee Chairs on the matters discussed at Committee meetings.
BOARD OF DIRECTORS (“GROUP BOARD”)
NON-EXECUTIVE DIRECTORS AND EXECUTIVE DIRECTORS
SENIOR EXECUTIVE TEAM (“SET”)
Nomination Committee
Remuneration Committee
ESG Committee
Audit and Risk Committee
•
Undertake monthly structured reviews of the business on a regional basis which supports strategic
decision-making and operational activity in each region.
•
Meet regularly to discuss operational, commercial, regulatory and risk matters affecting the business.
•
The Executive Directors share feedback from the Regional Boards with the Group Board.
Bakkavor Group plc | Annual Report & Accounts 2024 |
85
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Skills and experience:
Simon is a
Chartered Accountant with extensive
experience within the retail and
food sectors. Following multiple
high-profile CEO positions, Simon
completed the successful restructure
and sale of Hamleys plc between 1999
and 2003, as its Chairman and Chief
Executive. Since then, he has
specialised in value creation roles for
both quoted and private equity-backed
businesses, acting as Chair for many
consumer businesses, including
Majestic Wine, Mitchells & Butlers,
Bathstore.com and Superquinn.
Appointment:
Non-executive
Director of Bakkavor since February
2017, appointed as Chairman in
October 2017.
External appointments:
Chairman of
Blue Diamond Limited, Independent
Non-executive Director of Allwyn UK.
SIMON BURKE
Non-executive Chairman
Skills and experience:
Since joining
Bakkavor, Lee has held several
finance, business improvement, M&A
and investment management roles.
In his previous role as Investment
Manager, Lee identified and led
acquisition opportunities in the UK
(New Primebake), France (4G), Italy
(Italpizza) and Czech Republic (Heli
Foods). Since his appointment as UK
Finance Director, he has overseen
various functions and projects,
including site closures, new business
development, and starting up what
is now Operational Excellence. Lee
studied Finance & Law at De Montfort
University in Leicester, then trained
as a Chartered Accountant during his
four years with Coopers & Lybrand.
Appointment:
joined Bakkavor in 1998,
appointed UK Finance Director in 2014,
Chief Financial Officer and Executive
Director since November 2024.
External appointments:
none.
Skills and experience:
Mike started
working in fresh prepared food in
1989 as a graduate at United Biscuits
(subsequently acquired by Heinz)
before joining Bakkavor in 2001.
Mike started his career in HR before
quickly moving onto operations
and then general management.
Appointment:
joined Bakkavor in 2001,
appointed Chief Operating Officer in
2014, joined the Board in 2020, became
Chief Executive Officer in 2022.
External appointments:
none.
MIKE EDWARDS
Chief Executive Officer
LEE MILEY
Chief Financial Officer
Group Board ESG Sponsor
MEET OUR GROUP BOARD
GROUP BOARD
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| Bakkavor Group plc | Annual Report & Accounts 2024
Group Board Committees
Audit and Risk
Committee pg 110
Nomination
Committee pg 105
Remuneration
Committee pg 123
ESG Committee
pg 120
Committee
Chair
Skills and experience:
Sanjeevan
is a multi-award-winning data and
analytics professional who has
operated across a range of sectors
and brings expertise in digital
transformation, data and AI science,
innovation and culture. He has a
proven track record of driving
customer-centric business
transformations through the
strategic use of data, resulting in
EBIT and revenue growth. Sanjeevan
has had exposure to the food and
beverage sector through his time
consulting with PwC to Bestfoods,
and through his time with
Dunnhumby working with Tesco.
Appointment:
Non-executive Director
of Bakkavor since August 2021.
External appointments:
Independent
Non-executive Director and member
of the Audit and Risk, Nomination
and Remuneration Committees of
SThree plc. Co-Chair of the Chief
Data and AI Office Board at Evanta
and on the Advisory Board of DataIQ.
SANJEEVAN BALA
Independent, Non-executive Director
Designated workforce engagement
Non-executive Director
Skills and experience:
Umran
is an experienced senior business
executive with a general
management background and
significant expertise in talent and
diversity. She spent 25 years at
PepsiCo Inc in commercial and
functional roles, also serving as
Senior Vice President, Chief Global
Diversity and Engagement Officer.
From 2010 to 2015, she served as an
Independent Non-executive Director
on the board of Calbee, Inc, a major
Japanese snack foods manufacturer,
and from 2012 to 2020 was a Future
Council Member of the World
Economic Forum. She holds an MBA
and a Bachelor of Science degree in
Industrial Engineering from Bogazici
University in Istanbul.
Appointment:
Non-executive Director
of Bakkavor since September 2020.
External appointments:
partner at
August Leadership, and serves on
the board of the International Youth
Foundation, Baltimore and BIS Çözüm.
UMRAN BEBA
Independent, Non-executive Director
Designated Non-executive Director
for ESG matters
Skills and experience:
Jill has
extensive sales, marketing and
general management experience
across multiple blue-chip food and
beverage companies including
Mars, PepsiCo and Premier Foods.
Jill brings deep understanding of
the food industry, and has been
involved in turnaround and growth
situations for a range of branded
and own-label businesses.
Appointment:
Non-executive Director
of Bakkavor since March 2021.
External appointments:
Non-
executive Director, Remuneration
Committee Chair, and Audit/
Nomination/ESG Committee member
of Bellway plc and Halfords Group plc.
Senior Independent Director of
Halfords Group plc, and Non-
executive Director, Remuneration
and Audit Committee member of
C&C Group plc. Senior Independent
Director, Remuneration Committee
Chair and a member of the Audit/
Nomination Committees of St. Austell
Brewery Company Limited.
JILL CASEBERRY
Independent, Non-executive Director
Senior Independent Director
Bakkavor Group plc | Annual Report & Accounts 2024 |
87
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
GROUP BOARD
CONTINUED
Skills and experience:
Bob is a
senior investment professional
with strategic operating experience
across the consumer goods, food,
manufacturing, technology and
services sectors. From 2008 to 2018,
Bob was principally responsible for
private equity investments at the
Baupost Group, aggregating more
than $5bn in total enterprise value.
Bob received a Bachelor of Science
degree with Honors from Washington
and Lee University.
Appointment:
Non-executive Director
of Bakkavor since January 2024.
External appointments:
Founder
and Managing Partner of LongRange
Capital L.P. and Director of BL
Memorial Holdings, L.L.C.
ROBERT (BOB) BERLIN
Non-independent, Non-executive
Director
Skills and experience:
Lydur has
unique expertise and insight into
the Company’s business as a
founder of Bakkavor. He received
his education from the Commercial
College of Iceland.
Appointment:
one of the founders
and a Non-executive Director since
January 2017, Chief Executive Officer
from 1986 to 2006 and Non-executive
Chairman from 2006 to 2017,
Chairman of Exista from 2006 to 2010.
External appointments:
none.
Skills and experience:
Agust
received his education from the
College of Ármúli in Reykjavik,
Iceland. As one of the founders of
Bakkavor, Agust’s deep business
know-how and understanding of
the fresh prepared food market has
been an essential building block for
the company’s direction and values.
Appointment:
one of the founders
and a Non-executive Director of
Bakkavor since November 2022,
Executive Chairman from 1986
through to May 2006, and Chief
Executive Officer from 2006 to
November 2022.
External appointments:
none.
AGUST GUDMUNDSSON
Non-independent, Non-executive
Director
LYDUR GUDMUNDSSON
Non-independent, Non-executive
Director
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| Bakkavor Group plc | Annual Report & Accounts 2024
Skills and experience:
Denis has
extensive leadership experience
within the retail sector, spending
the majority of his career with the
McDonald’s Corporation in a variety
of senior financial and operational
roles before becoming President and
Chief Executive Officer of McDonald’s
Europe, where he was responsible
for changing the image and concept,
securing its market-leading position.
In 2011 Denis was appointed
Chairman and CEO of Accor, where
he was responsible for an estate
spread across 90+ countries, leaving
in 2013 to pursue an advisory and
portfolio career.
Appointment:
Non-executive Director
of Bakkavor since February 2017.
External appointments:
Non-
executive Director of JDE Peet’s,
Elior and Expresso House. Vice-
Chairman of Pret A Manger, Chairman
of Kellydeli, and a founding partner of
investment fund French Food Capital.
DENIS HENNEQUIN
Independent, Non-executive Director
Skills and experience:
Jane spent 25
years with Deloitte where she advised
multinational companies, including
businesses in the transport, leisure,
consumer and technology sectors.
Since 2012 she has served as a
Non-executive Director and Audit
Committee Chair at several UK public
companies in a range of sectors.
In addition to broad international
experience in a range of sectors, Jane
brings substantial audit, risk and audit
committee expertise to the Board.
Appointment:
Non-executive Director
of Bakkavor since April 2018.
External appointments:
Non-
executive Director and Chair of the
Audit Committees of FirstGroup plc
and TI Fluid Systems plc, and
Non-executive Director and Chair
of the Remuneration Committee of
Glanbia plc. On 28 February 2025
it was announced that Jane would
be appointed as an independent
Non-executive Director of Morgan
Advanced Materials plc, effective
1 June 2025.
JANE LODGE
Independent, Non-executive Director
Skills and experience:
Annabel has
held senior legal positions in several
companies, including Britvic plc and
Ladbrokes plc. She was the Group
General Counsel and an Executive
Committee member at Ladbrokes
plc. Annabel began her career in
private practice, at the multinational
law firm SJ Berwin LLP, in London.
Annabel obtained her post-graduate
law degree at The University of Law,
UK and qualified as a solicitor
(England and Wales) in March 2005.
She is also a Chartered Company
Secretary (ACIS) and an alumna of
London Business School.
Appointment:
joined Bakkavor
as Group General Counsel and
Company Secretary in June 2019.
External appointments:
Non-
executive Director of Edinburgh
Investment Trust plc.
ANNABEL TAGOE-BANNERMAN
Group General Counsel and
Company Secretary
Group Board Committees
Audit and Risk
Committee pg 110
Nomination
Committee pg 105
Remuneration
Committee pg 123
ESG Committee
pg 120
Committee
Chair
Bakkavor Group plc | Annual Report & Accounts 2024 |
89
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND
COMPANY PURPOSE
The Group Board challenges strategy, performance and the responsibility of
management. This serves to align our purpose, strategy and culture, promote
the long-term success of the Group, and create value for all our stakeholders.
THE ROLE AND RESPONSIBILITIES
OF THE GROUP BOARD
The Group Board provides effective and
entrepreneurial leadership by setting
the long-term strategic direction of the
Group. It oversees and monitors the
internal controls, principal risks and
the risk management of the Group. In
addition, The Group Board challenges
management’s performance against,
and implementation of, our strategy,
whilst aligning it to the purpose and
values which underpin the culture
of the business.
It is collectively responsible for
promoting the long-term success of
the Group through the creation and
delivery of sustainable stakeholder
value. In exercising this responsibility,
the Group Board considers the needs
of all relevant stakeholders and its
contribution to wider society. The
Group Board endeavours to ensure
that workforce policies and practices
are in line with our values and support
long-term sustainable success.
It is accountable for ensuring that, as a
collective body, it has the appropriate
skills, knowledge, experience and
resources in place to meet its objectives
and perform its role effectively. The
Group Board is provided with timely and
comprehensive information to enable
it to discharge its responsibilities, to
encourage strategic debate and to
facilitate robust, informed and timely
decision-making. The Group Board also
receives regular presentations from
key heads of functions and updates
from the Chair of each Committee.
PURPOSE
To lead the way through flawless execution, delighting customers and consumers
with fresh, convenient and great-tasting food that we create every day.
RESPECT AND TRUST
EACH OTHER
We have a culture of
collaboration, openness
and honesty, ensuring
that we treat all
colleagues with equal
respect. Our values
are people-focused and
the foundation of our
culture. They guide our
behaviours, reflecting
who we are today and
aspire to be tomorrow.
CULTURE
To empower and support all our stakeholders by living our values.
KEEP THE CUSTOMER
AT THE HEART OF
WHAT WE DO
Our customers and
suppliers remain at the
core of how we operate.
We value and protect our
partnerships, maintain
our commitment to the
highest standards of food
safety, integrity and
quality, innovate to help
customers stay ahead,
and work together to
anticipate future needs.
GET IT RIGHT,
KEEP IT RIGHT
It is important that we
establish and maintain
correct standards, stay
safe and look after
ourselves and each other.
We take responsibility for
the impact of our actions
on the environment and
in our communities.
BE PROUD OF
WHAT WE DO
We take pride in our
work, inspire others
to act with passion and
enthusiasm, and look
for ways to improve
the way we work.
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| Bakkavor Group plc | Annual Report & Accounts 2024
ASSESSING OUR CULTURE
All Directors act with integrity
and lead by example to promote
the desired culture, with the Group
Board responsible for assessing
and ensuring it is closely aligned
with our strategic priorities. The
latter are underpinned by our focus
on operational excellence and being
a responsible, caring and trusted
partner for all our stakeholders.
The Group Board receives
updates from the CPO on colleague
engagement through the annual
Employee Engagement Survey (“EES”)
and updates from the designated
workforce engagement Non-executive
Director on colleague engagement
during site visits and attendance at the
Group Employee Forums (“GEF”).
Under the Group’s People Plan, four
areas of focus were identified following
the 2023 EES: responding to change
effectively and embracing new ways of
doing things; providing opportunities
for personal growth and development;
embedding our values; and providing
relevant colleague benefits. Our 2024
EES showed a 330 basis point increase
in engagement to 75.1%. Responses
showed a significant improvement
in the proportion of people willing
to recommend Bakkavor as a great
place to work. We also saw significant
improvements in colleagues’
understanding of our values, our
ESG (Environmental, Social and
Governance) strategy, what our Site
Employee Forums (“SEF”) do and how
they can help. Management responded
to feedback from the 2024 EES which
was completed in September 2024
and have identified the key areas of
focus through 2025.
READ MORE:
Our people pg 34.
Key activities in 2024 pg 94.
RISK MANAGEMENT AND
INTERNAL CONTROL
The Group Board ensures the effective
identification and management of key
strategic and emerging risks, and the
review and approval of the ongoing
risk management process, including
clear policies that outline what can be
considered an acceptable level of risk.
The Group Board has established
procedures to:
•
Manage risk, oversee the internal
control framework and determine
the nature and extent of the
principal risks that Bakkavor is
willing to take in order to achieve
its long-term strategic objectives.
•
Ensure the maintenance of the
Group’s risk management and
internal control systems, reviewing
them annually.
The Directors confirm that the
Group Board has carried out a robust
assessment of the principal and
emerging risks facing the Group,
including those that would threaten its
business model, future performance,
solvency and liquidity. No significant
failings or weaknesses were identified
in the Group Board’s assessment of the
Group’s systems of risk management
or internal control.
INTERNAL CONTROLS OVER
FINANCIAL REPORTING
The Group’s financial reporting
process has been designed to provide
assurance regarding the reliability of
the financial reporting and preparation
of its Financial Statements, including
Consolidated Financial Statements, for
external purposes, in accordance with
UK-adopted International Financial
Reporting Standards (“IFRS”).
The annual review of the effectiveness
of the Group’s system of internal
controls included reviews of systems
and controls relating to the financial
reporting process.
Internal controls over financial
reporting include procedures
and policies that:
•
Pertain to the maintenance of
records that, in reasonable detail,
accurately and fairly reflect the
transactions of the Group.
•
Provide reasonable assurance that:
–
Transactions are recorded as
necessary to allow the preparation
of Financial Statements.
–
Receipts and expenditures are
being made only in accordance
with authorisations of
management and Directors.
•
Provide reasonable assurance
regarding prevention or timely
detection of unauthorised acquisition,
use or disposal of Group assets that
could have a material effect on the
Group’s financial and operational
controls, and compliance with laws
and regulations.
PURPOSE AND CULTURE
The Group Board sets the Group’s
purpose and assesses its culture.
Both are key to strengthening
the Group’s impact among its
stakeholders and are supported by
the Group’s values and strategy.
Bakkavor Group plc | Annual Report & Accounts 2024 |
91
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE REPORT
CONTINUED
MONITORING OUR CULTURE
Throughout the year, the Group Board
monitored the Group’s culture and
how our colleagues’ feedback was
being implemented. It received
regular updates from the CPO and
designated workforce engagement
Non-executive Director on the role of
the SEF and feedback sessions with
the GEF. The Group Board reviewed
the suggestions made during the
feedback sessions on the involvement
of the SEF in staff pay negotiations,
site conditions and extending the
variety of products available for
colleagues at our staff shops. The
Group Board recognises that the
role of the SEF at sites is vital by
providing an open and transparent
communication forum, where
employees can share their views
and contribute to the wider Group
operational decision-making process.
READ MORE
pg 101.
EMBEDDING OUR CULTURE
We define our culture as being able
to empower and support all our
stakeholders by putting our values
at the heart of everything we do.
Progress in our UK bakery division
is an excellent example of how our
actions are supporting a stronger
culture of listening and responding
to colleague feedback.
READ MORE
pg 34.
SCHEDULE OF MATTERS RESERVED
FOR THE BOARD
Subject to company law and the
Articles of Association, the Directors
may exercise all of the powers of
Bakkavor Group plc (“the Company”)
and delegate their power and
discretion to Committees. Decisions
reserved for the Group Board include
approval of strategic plans and annual
budgets, acquisitions and disposals,
audited Financial Statements, and
appointment of additional Directors.
Its work also includes engagement
with key stakeholders, including our
shareholders. The powers of the
Directors are set out in the Schedule
of Matters Reserved for the Group
Board which was updated in
November 2024. This is available for
review on our website www.bakkavor.
com/en/governance.
GROUP BOARD COMMITTEES
The Group Board has four
Committees: the Audit and Risk
Committee (“A&RC”), the ESG
Committee, the Nomination
Committee and the Remuneration
Committee. All four Committees
comprise only Non-executive
Directors and each Committee
has agreed Terms of Reference
which are available on our website
www.bakkavor.com/en/governance.
The Group Board also has a Disclosure
Committee which comprises the
Chairman, CEO, CFO, and Group
General Counsel and Company
Secretary. The Disclosure Committee
has oversight of the Company’s
regulatory compliance with its
disclosure obligations under the
Market Abuse Regulation.
These Committees assist with: detailed
oversight of Bakkavor’s financial
reporting; disclosure obligations; risk
management; Internal and External
Audit work; ESG matters; establishing
the Remuneration Policy and overseeing
its implementation; building appropriate
succession and contingency plans for
the Directors and Senior Executives,
including overseeing workforce
engagement; and establishing a diverse
pipeline of talent for the Group Board,
SET and senior leadership positions.
SENIOR EXECUTIVE TEAM
The SET meets on a regular basis
throughout the year (on a schedule
aligned to the Group Board meetings)
and the Executive Directors share
feedback from the SET meetings with
the Group Board.
READ MORE
pg 85.
CONFLICTS OF INTEREST
Directors have a duty to avoid
situations in which they have, or may
have, direct or indirect interests that
conflict or may potentially conflict
with those of the Company, unless
that conflict is first disclosed and
authorised by the Group Board. At
each Group Board meeting, Directors
declare any conflicts of interest in
respect of the agenda items for the
meeting and the Group Board is
permitted to authorise potential
conflicts that may arise and to impose
such conditions or limitations as it
deems fit. The Group Board confirms
that the procedures in place to
deal with conflicts of interest are
operating effectively.
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| Bakkavor Group plc | Annual Report & Accounts 2024
During the year ended 28 December
2024, the Group Board has acted in
accordance with Section 172(1) (a)
to (f) of the Companies Act 2006
(“Section 172”), with each Director
acting in the way they consider,
in good faith, to most effectively
promote the success of Bakkavor
Group plc (“the Company”) for the
benefit of its members as a whole.
In doing so, the Directors considered:
(a) the likely consequences of any
decision in the long term; (b) the
interests of the Company’s employees;
(c) the need to foster the Company’s
business relationships with suppliers,
customers and others; (d) the impact
of the Company’s operations on the
community and the environment;
(e)the desirability of the Company
maintaining a reputation for high
standards of business conduct; and
(f) the need to act fairly as between
shareholders of the Company.
How the Directors fulfil their
Section 172 duties:
SKILLS, KNOWLEDGE AND
EXPERIENCE
•
The Group Board has a diverse
set of skills, knowledge and
experience which assists it in
making informed decisions to
promote our long-term success
whilst considering the needs
of our colleagues, customers,
suppliers, investors and
communities (“our stakeholders”).
READ MORE
pg 101.
BOARD INFORMATION
AND MONITORING
•
A tailored agenda is agreed
before each Group Board and
Committee meeting by the
Chairman, Committee Chair, CFO
(as appropriate), and Group General
Counsel and Company Secretary.
•
The Group Board receives detailed
papers and in-person updates
from management which it queries,
challenges and debates. A typical
meeting will comprise: reports from
the CEO and the CFO; regional
reports on current trading and
financial performance; and a report
from the CPO on the colleague
engagement plan, values and
culture, and employer brand. There
are also two or three deep-dives
into areas of strategic importance.
•
Updates are provided on the
progress of agreed actions to
allow the Group Board to review
and adjust as situations (and
stakeholder priorities) evolve.
BOARD DISCUSSION
•
All Directors constructively challenge
and contribute to discussions whilst
offering their perspectives, advice
and strategic guidance.
•
The Group Board considers
stakeholder views and interests
in business decisions.
•
The Group Board is mindful of having
substantial shareholders, but any
decisions it makes are in the interests
of all shareholders and the need to act
fairly between them.
Section 172 statement
STRATEGIC DIRECTION
AND CULTURE
•
The Group Board sets the
strategic direction, values
and culture of the Company.
•
Our strategic priorities are
underpinned by our relentless
focus on operational excellence
and by being a positive force
and trusted partner for all our
stakeholders, ensuring we
maintain a reputation for high
standards of business conduct.
•
Bakkavor sets the expectation
that stakeholder considerations
are central to decision-making
at all levels of the organisation.
READ MORE
pg 90.
STAKEHOLDER ENGAGEMENT
•
The Group Board considers how
we continually engage and foster
business relationships with our
customers and suppliers, and
the impact of our operations on
the community and environment.
•
We understand that there can
be different and sometimes
conflicting views across our
stakeholders and we seek to
balance competing interests/
respond in a way that maximises
value for all.
READ MORE
pg 7.
Firmly embedding Section 172(1) through the Group Board’s decision-making process:
INFORMATION GATHERING
•
Group Board papers include
table of Section 172 factors
and relevant information.
•
Stakeholder engagement
activities are recorded, and
detail included in papers
where applicable.
STRATEGIC DISCUSSIONS
•
Section 172 factors considered in
strategy discussions and decision-
making, including how they
underpin long-term value creation.
•
Group’s culture fully considers
the potential impacts of decisions.
•
Group Board receives updates
on a timely basis and assurance
where appropriate.
DECISION-MAKING
•
Group Board updated and
informed on the outcomes
of its decisions.
•
Actions taken as a result of
engagement and dialogue
with stakeholders.
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Key activities in 2024
Board meetings are an important mechanism through which the Directors fulfil their Section
172 duties. Over the following pages, we describe the Group Board’s activities during 2024
and the factors affecting our stakeholders, which we consider in Board discussions.
COLLEAGUES
SUPPLIERS
CUSTOMERS
INVESTORS
COMMUNITIES
Our key stakeholders
GROUP
•
Oversight and challenge of management’s
implementation of the Group strategy, embedding new
tactics alongside our established strategy to continue
driving positive momentum across the business.
UK
•
Attended a dedicated UK strategy session.
•
Received updates on UK trading performance.
•
Discussed commercial landscape and competitor
environment across the UK business.
•
Approved the acquisition of Moorish, the award-
winning houmous brand.
•
Approved capital investment projects across Meals
London sites.
•
Approved the potential closure of our Wigan facility,
which has subsequently been confirmed.
•
Discussed new business opportunities across desserts
and other categories by leveraging our innovation
capabilities, product quality and price competitiveness.
US
•
Attended a dedicated US strategy session.
•
Approved the launch of Fresh & Simple, a new
fresh prepared food (“FPF”) brand bringing together
the best-selling lines across our categories.
•
Approved the reintroduction of our meals range with a
key customer following a temporary delist in late 2022.
•
Approved the roll-out of our smart manufacturing
system to our site in Texas, generating a 6% efficiency
gain through better visibility and control.
CHINA
•
Received regular China business and strategy
updates at meetings.
•
Approved the business transfer agreement for the
trade and assets of our Hong Kong business.
•
Approved the disposal of the China bakery business
as we further simplified our operations in this region,
with our remaining sites wholly focused on the supply
of FPF.
•
Oversaw a step up in profitability following the roll-
out of a lean manufacturing initiative and on the back
of improved operating leverage from volume growth.
•
Approved the commencement of supply to a leading
Chinese foodservice chain with a range of produce and
continued to build our presence in the retail channel.
STRATEGY AND COMPANY PERFORMANCE
•
Reviewed financial and non-financial KPIs, along
with the Group’s wider financial performance and
that of the three regions, UK, US and China.
•
Received updates on performance against the prior
year and against the budget.
•
Approved the 2025 budget, including material capital
expenditure projects.
•
Considered and approved the Group Tax Strategy.
•
Approved an interim dividend of 3.20 pence per
Ordinary share on 11 October 2024 to shareholders
and agreed to propose a final dividend of 4.80 pence
per Ordinary share at the AGM on 22 May 2025.
•
Discussed the Group’s capital allocation strategy
including capital efficiency and the leverage position
of the Group.
•
Oversaw a disciplined approach to, and the
implementation of, the capital allocation framework
to enhance shareholder value.
•
Received updates from the Audit and Risk Committee Chair
on the Committee’s oversight of financial performance.
•
Approved the viability and going concern statements.
•
Approved the reappointment of PriceWaterhouseCoopers
LLP (“PwC”) as the Company’s External Auditors subject
to shareholder approval at the 2025 AGM.
FINANCIAL UPDATES
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| Bakkavor Group plc | Annual Report & Accounts 2024
•
Undertook an internal performance review of the
Group Board and Committees (including a
performance review of the Chairman, led by the
Senior Independent Director) and considered the
output and recommendations.
•
Approved the appointment of Lee Miley as CFO.
•
Approved the termination of the relationship
agreement with the Baupost Group, which resulted
in Patrick Cook, Baupost’s representative to the
Group Board, stepping down.
•
Approved the entry into the relationship agreement
with LongRange Capital and the appointment of
Robert Berlin as a Non-independent Non-executive
Director of the Group Board, as LongRange Capital’s
representative.
•
Approved the Annual Report and Accounts and the
half-year results, going concern and longer-term
viability statement, Notice of AGM and the Modern
Slavery Statement which can be viewed on the
Bakkavor website (bakkavor.com/en/esg/policies-
and-documents).
•
Reviewed and approved the Schedule of Matters
Reserved for the Board.
•
Received regular updates on whistleblowing and
approved the Group’s Whistleblowing Policy.
•
Approved the Group’s AI Policy.
•
Oversight of governance of the implementation
of our UK ERP system, including approval of scope
and budget.
•
Received regular updates from the Audit and Risk
Committee, ESG Committee, Nomination Committee
and Remuneration Committee Chairs on the activities
of the Committees throughout the year.
•
Received governance updates on relevant matters
throughout the year and governance training was
provided by our external advisers.
GOVERNANCE AND LEGAL
•
Reviewed the Group’s principal risks to determine the
nature and extent of the principal risks that Bakkavor
is willing to take in order to achieve its long-term
strategic objectives.
•
Received presentations on Group risk twice in the
year. These consisted of a comprehensive review
and consideration of changes to both existing and
emerging risks, including attention to risk appetite
across principal risks and risk and control reviews
conducted for each of the principal risks.
•
Attended a Board Risk workshop, hosted by the
Company’s Internal Auditors, to identify and challenge
the appropriateness of the Group’s principal risks
and associated risk appetite.
•
Received technical updates at each meeting from
the UK, US and China across health and safety, food
safety and whistleblowing.
•
Received an in-depth presentation from the Group
Technical Director covering health and safety and
food safety.
•
Received risk updates from the Group IT Director
to assess the impact of cyber risk, covering cyber
security and AI risks and opportunities.
•
Considered risk appetite in connection with major
capital proposals and transformation projects
(supported by detailed analysis to ensure the risks
associated with each project are fully understood).
•
Discussed the impact of climate change and
sustainability risk on the Group.
•
Received regular updates on the design,
implementation and change management of our
UK ERP system, including reviewing independent
third-party programme assurance work.
•
Received updates from the Audit and Risk Committee
Chair after each Audit and Risk Committee meeting
to enable the Group Board to evaluate how the Group
can continue to improve the effectiveness of its
approach to risk management.
RISK
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE REPORT
CONTINUED
COLLEAGUES
•
Reviewed feedback from our 2024 Employee
Engagement Survey (“EES”) and approved the
areas of focus for 2025.
•
Received updates from Sanjeevan Bala, designated
workforce engagement Non-executive Director, and
the CPO on feedback sessions with the SEF and GEF.
•
Received updates on our Wellbeing strategy and our
Mental Health Awareness Policy.
•
Received updates on building leadership into our
culture and embedding our values through our
‘Better Behaviours, Better Bakkavor’ workshops.
•
Received updates on our Inclusion & Diversity objectives.
•
Received updates on workforce remuneration and
related policies, taking into account the alignment
of incentives and rewards with wider Company pay
policy when setting the policy for Executive Director
remuneration.
CUSTOMERS AND SUPPLIERS
•
Received updates on discussions with customers
and suppliers to enable price increases, helping to
mitigate inflation impact, and share deflation in raw
materials and other input costs.
•
Received updates on business opportunities with
new and existing customers.
•
Oversaw engagement with suppliers on sourcing
raw materials and the early identification of
potential issues.
•
Oversaw our Responsible Sourcing strategy,
commitments and progress.
COMMUNITIES
•
Received updates on the execution of the Trusted
Partner ESG strategy covering our key ESG strategic
priorities of Climate and Net Zero, UK Food Waste,
and Environmentally Sustainable Sourcing.
•
Oversight of performance against non-financial KPIs:
UK food waste, UK accidents, Group net carbon
emissions and UK employee turnover.
•
Reviewed and considered the Group’s community
initiatives, how we are delivering these and our
progress in doing so.
INVESTORS
•
Held an AGM on 23 May 2024, meeting shareholders
in person.
•
Received updates on Bakkavor’s share price
performance, analyst consensus, ratings and target
prices, and summary of listed peer results and
investor feedback post roadshows and meetings.
•
Chairman actively sought to engage with shareholders.
Senior Independent Director and Committee Chairs
were available for direct meetings where required.
STAKEHOLDER ENGAGEMENT
•
Continuing to foster relationships and engage
with stakeholders, including colleagues, customers,
suppliers, investors and communities.
•
Engaging with capital markets to drive share
price performance.
•
Reviewing strategy and plan to target new business
wins with competitive pricing and product innovation.
•
Further strengthening our talent pipeline and
leadership development offer.
•
Focusing on the UK ERP implementation.
•
Reviewing the UK/US long-term strategy and
ensuing five-year financial plan, ensuring we consider
market risks and opportunities whilst contributing
to the Group’s long-term success.
•
Focusing on the ESG framework and its implementation,
including of our science-based targets in the near term.
KEY PRIORITIES FOR THE GROUP BOARD IN 2025
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| Bakkavor Group plc | Annual Report & Accounts 2024
GOVERNANCE IN ACTION:
BOARD VISIT TO OUR LONDON SITES
Between December 2023 and June
2024, the Group Board approved
capital investment projects totalling
£12m. This enabled us to enhance
our operations, facilities, productivity
and capacity, with opportunities for
innovation and packaging reduction
to underpin our Group strategy
across three of our sites:
•
Abbeydale: new in-line steaming
and boxing capability which
supported incremental new
business and improved quality of
existing products with strategic
customers, as well as a move from
plastic to cardboard packaging.
•
Elveden: investment in additional
headroom and greater seasonal
contingency across the Group,
as well as a transformation of
site facilities.
•
Cumberland: investment in our
houmous operation to remove
plastic lids across most products.
During the implementation of these
investments, the Group Board visited
the sites for tours and presentations
from the MD, General Manager and
Head of Development, which focused
on the projects’ implementation
progress and extensive benefits.
SECTION 172 FACTORS CONSIDERED
Prior to approval, the Group Board
considered how the investment would
promote strategic long-term success
through the creation and delivery
of sustainable value for all relevant
stakeholders, including customers,
suppliers and colleagues.
LONG-TERM CONSEQUENCES
OF THE DECISION
With most elements of the capital
projects now live, the financial and
non-financial benefits are being
realised for all relevant stakeholders,
ensuring sites are well-placed to
capitalise on future opportunities,
with headroom for growth.
FOSTERING RELATIONSHIPS WITH
CUSTOMERS AND SUPPLIERS
For our customers, it is imperative
we maintain our high levels of service
and continue to deliver quality
products. The projects at Cumberland
and Abbeydale have delivered product
quality improvements and unlocked
innovation, resulting in improved
customer category metrics. We also
worked collaboratively with our
suppliers to deliver these projects.
INTERESTS OF OUR COLLEAGUES
The significant transformation at
Elveden will drastically improve the
experience of on-site colleagues
thanks to a state-of-the-art canteen,
changing room and office facilities.
The Site Leadership team has worked
with the Site Employee Forums (“SEF”)
to share details of all the projects, from
concept stage through to launch. Their
feedback has helped to ensure that the
projects were positively received and
the benefits understood.
IMPACT ON THE COMMUNITY
AND ENVIRONMENT
The Cumberland investment
enabled us to remove excess plastic
from houmous dips, resulting in a
plastic reduction of 137m pieces of
plastic. This has been recognised
y customers as a significant step
towards their own corporate ESG
initiatives. Lower carbon and energy
efficiency have also been a key
consideration for decision-making
in the other projects.
ACTING FAIRLY BETWEEN
SHAREHOLDERS
The Group Board is confident that
these investments are in the interests
of all shareholders, as they were
return-enhancing, delivered in
line with the plan, created more
opportunities for business wins, and
improved financial performance.
MAINTAINING OUR REPUTATION
FOR HIGH STANDARDS
OF BUSINESS CONDUCT
The customers of our London product
offering have trust and confidence in
our capability and capacity for future
delivery, making us ideally placed for
longer-term growth opportunities.
Overall, the investment has positively
impacted the business and enhanced
our stakeholder relationships. It has
supported our ability to deliver fresh,
convenient and great-tasting food
for our customers and consumers,
whilst empowering our colleagues,
suppliers and communities.
READ MORE
pg 91.
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Engagement with our colleagues
is vitally important, as is ensuring
that the voices across our diverse
workforce are heard. I really enjoy
engaging with our on-site colleagues
whilst making sure their interests
are considered in the Group Board’s
decision-making.
During the year, I visited six sites
to meet with the leadership teams,
observe operations, and discuss key
site challenges and achievements.
I was provided with an overview
of the site background, workforce
composition, and financial metrics.
Each site tour allowed me to meet with
our production line colleagues, discuss
achievements and hear people’s views
on areas for improvement.
It was evident during my visits that
Bakkavor has a strong, unified culture,
with notable progress made in
reducing employee turnover at many
sites. I also saw clear efforts to ensure
inclusivity and amplify diverse voices,
for example: targeted workshops to
better understand the wellbeing needs
of different communities and evolve
the benefits available; the introduction
of cultural events to understand and
celebrate different traditions across
a wide range of ethnicities; and
multi-faith prayer rooms at all the sites
to support colleagues who observe
religious ceremonies and prayer times.
Each location has a Site Employee
Forum (“SEF”). The SEFs strive to
help colleagues express their views
to the senior leadership teams,
contributing to wider operational
decision-making. This helps to
support the execution of our strategy,
with SEF discussions covering topics
such as business unit performance,
opportunities to improve efficiency,
or supporting our communities
through charity partnership and
local grassroots initiatives.
We discussed areas for improvement,
such as evolving the SEF model
to focus on specific roles (e.g.
communications to our product line
colleagues, organising cultural events,
local community outreach), improving
site conditions, and the involvement
of the SEFs in staff pay negotiations.
We have started to make progress
against these priorities, including a
£7m investment in the refurbishment
of our staff shops and the expansion
of their product offering, with further
improvements in progress. It struck
me that our sites are critical to the
redistribution of food, which supports
local food banks and our Group
strategy’s focus to reduce food waste.
This is also a key part of our ESG
Trusted Partner strategy, and
increasingly important as cost-of-
living challenges persist for both our
colleagues and wider communities.
In April, I had the opportunity to
present to the Group Employee Forum
(“GEF”) on Bakkavor’s Executive
compensation and framework. The
GEF comprises SEF representatives
at Group level, providing an open and
regular channel of communication
between colleagues and management.
The GEF provided valuable feedback
on areas such as our transparency
around Executive pay and our
long-term view to ensure ongoing
business success and sustainability.
I discussed this feedback with the
Group Board and updated the GEF
in November. The GEF suggested
we provide materials to explain
Executive pay to the wider workforce
as they were pleased to hear how a
wide range of metrics were used to
drive reward. In fact, it was an earlier
GEF conference that suggested the
inclusion of carbon emissions, which
led to a comprehensive discussion at
the Remuneration Committee and
Group Board. The feedback was then
actioned and has been incorporated
into LTIP rewards.
By engaging with our workforce, we
continue to strengthen our connection
with colleagues, driving long-term
sustainable growth. I plan to attend
further GEF sessions and visit other
sites throughout the year to hear how
the 2024 EES is shaping our focus
for 2025, so that colleagues’ views,
concerns and ideas remain a feature
of our Group Board discussions.
GOVERNANCE IN ACTION
Update from Sanjeevan Bala,
workforce engagement
Non-executive Director
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| Bakkavor Group plc | Annual Report & Accounts 2024
SECTION 2: DIVISION OF RESPONSIBILITIES
The Group Board is satisfied that there is a clear division of responsibility between
the leadership of the Group Board and the Executive leadership of the business.
Through the leadership of the Chairman, a culture of debate and open dialogue is promoted with the effective
contribution of all Non-executive Directors who provide constructive challenge and hold management to account.
KEY ROLES AND RESPONSIBILITIES
Non-executive
Chairman
Simon Burke
There is a clear division of responsibilities between the roles of the Group Board Chairman
(“the Chairman”) and the CEO. It is the role of the Chairman to lead the Board. His leadership style
fosters a culture of openness, active participation, dialogue and debate at Group Board level.
He facilitates the right conditions for effectiveness across the Group Board and its Committees.
The Chairman promotes effective communication between the Group Board, Senior Executives,
shareholders and other key stakeholders. Through regular investor relations updates and
investor engagement feedback, the Chairman ensures that the Group Board, as a whole, has
a clear understanding of investors’ views, and how those views have influenced its decisions.
CEO
Mike Edwards
Reporting to the Chairman, the CEO has specific responsibility for recommending the Group’s
strategy to the Group Board, executing the strategy once approved, and overseeing the day-to-
day running of the business, driving shareholder value and developing strong relationships
with stakeholders.
In undertaking such responsibilities, the CEO is supported by the Senior Executive Team
(“SET”). The CEO is also responsible for the recruitment and development of the Group’s
SET below Group Board level.
CFO
Lee Miley
1
The CFO is primarily responsible for managing the financial affairs of the Group and optimising
its financial performance. The CFO supports the CEO in implementing the Group’s strategy and
is also responsible for Internal Audit and risk management, the Group Treasury, Tax, Investor
Relations, and Information Systems functions.
Non-executive
Directors
Sanjeevan Bala
Umran Beba
Robert Berlin
2
Simon Burke
Jill Caseberry
Agust Gudmundsson
Lydur Gudmundsson
Denis Hennequin
Jane Lodge
The role of the Non-executive Directors is to offer guidance and advice to the Group Board as a
whole and the Executive Directors in particular, drawing on their wide experience across many
industries. They also provide scrutiny, constructive challenge and oversight of the Executive
Directors and Senior Executives. The roles and responsibilities of each Non-executive Director
are approved by the Group Board and set out in their letters of appointment.
Of the nine Non-executive Directors, six are Independent and three are Non-independent.
Independent and Non-independent Non-executive Directors assess, challenge and monitor
the Executive Directors’ delivery of strategy within the risk appetite and governance structures
agreed by the Group Board.
As Group Board Committee members, they also review the integrity of the Group’s Financial
Statements, recommend appropriate succession plans, monitor Group Board diversity,
oversee the execution of the Group’s ESG strategy and set the Directors’ remuneration.
Senior Independent
Director
Jill Caseberry
The Senior Independent Director (“SID”) acts as a sounding board for the Chairman and serves
as a trusted intermediary for the other Directors when necessary. The SID is also available to
shareholders if they are unable to resolve any concerns through communication with the Chairman,
the CEO or other Executive Directors, or when shareholders prefer to speak to the SID directly.
The SID is responsible for evaluating the performance of the Chairman on behalf of the other
Directors. Led by the SID, the Non-executive Directors meet without the Chairman at least
annually to appraise the Chairman’s performance, and on other occasions as necessary.
1
Lee Miley was appointed to the Group Board on 1 November 2024 and Ben Waldron stepped down from the Group Board on 31 October 2024.
2
Robert Berlin was appointed to the Group Board on 16 January 2024 and Patrick Cook stepped down from the Group Board on 16 January 2024.
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Designated workforce
engagement Non-
executive Director
Sanjeevan Bala
The Group Board has designated a Non-executive Director with the role of ensuring that
the Group Board is kept informed of the views, interests and wellbeing needs of the Group’s
workforce. He ensures that the views, interests and wellbeing of the workforce are considered
in Group Board discussions where relevant and provides regular updates to the Group Board
on the learnings in relation to colleague engagement, culture and/or development initiatives.
Group General Counsel
and Company Secretary
Annabel Tagoe-
Bannerman
The Group General Counsel and Company Secretary, whose appointment and removal is a matter
for the Group Board as a whole, is responsible for advising the Group Board on all governance
matters and ensuring that Board policies and procedures are followed. The Group General Counsel
and Company Secretary is available to each of the Directors for any advice or additional support
they may require. She leads the Legal function and the Group Company Secretariat and is
responsible for administering Bakkavor’s Share Dealing Code and organising the AGM.
NON-EXECUTIVE DIRECTOR
TIME COMMITMENT
Each Director commits to dedicating
an appropriate amount of time to
their duties during the financial year
and it is expected that each Non-
executive Director will meet this time
commitment, pursuant to their letters
of appointment. Where Directors are
unable to attend meetings, they are
encouraged to give the Chairman
their views in advance on the agenda
items. They also have the option to
join meetings virtually.
EXTERNAL APPOINTMENTS
In advance of any new Group Board
appointments, each potential new
Non-executive Director is asked to
disclose details of all other directorships
and significant commitments, together
with a broad indication of the time
commitment associated with such
other directorship(s) or significant
commitment(s).
Prior to undertaking any additional
external appointments, Directors
must seek prior approval of the
Group Board. Before approving any
additional external appointments,
the Group Board considers the time
commitment required for the role,
as well as the experience, skills and
other commitments of the Director.
Each proposed external appointment is
reviewed independently. The Company
recognises that external appointments
enable Directors to broaden their
knowledge and experience. However,
they must not interfere or conflict
with their roles on the Group Board.
In respect of Sanjeevan Bala’s
appointment to the role of Independent
Non-executive Director of SThree plc in
April 2024, the Group Board approved
the appointment following a review of
Sanjeevan’s time commitment required
for the role, as well as his experience,
skills and other commitments.
Jane Lodge has been appointed
as an independent Non-executive
Director of Morgan Advanced
Materials plc, effective 1 June 2025.
On 5 February 2025, the shareholders
of TI Fluid Systems plc (“TI Fluid
Systems”) approved the terms of
the recommended offer from ABC
Technologies Acquisitions Limited
to acquire the entire issued, and to
be issued, ordinary share capital of
TI Fluid Systems by way of a court-
sanctions scheme of arrangement
under Part 26 of the Companies Act
2006 (the “Acquisition”).
This Acquisition is expected to
become effective in the first half of
2025. Jane Lodge will then step down
from the board of TI Fluid Systems.
When approving Jane’s appointment
to the board of Morgan Advanced
Materials plc, the Group Board
considered the timing of Jane’s
appointment and the potential effective
date of the TI Fluid Systems Acquisition
and consequently Jane stepping down
from the board, and agreed that, in
line with guidelines as to the number
of external directorships considered
acceptable, this new appointment
will not adversely impact the time
commitment required for her role
as a Non-executive Director.
MONITORING NON-EXECUTIVE
DIRECTOR INDEPENDENCE
During the Group Board and
Committees’ annual effectiveness
review, the Nomination Committee
and the Group Board review the
independence of the Non-executive
Directors, giving consideration to
the circumstances which are likely
to impair, or could appear to impair, a
Non-executive Director’s independence,
as set out in Provision 10 of the UK
Corporate Governance Code 2018 (“the
Code”). With the exception of Agust
Gudmundsson, Lydur Gudmundsson
and Robert Berlin (Group Board
representative of LongRange Capital
since 16 January 2024), the Group Board
considers the remaining Non-executive
Directors to be independent and the
Chairman was considered to be
independent on appointment.
TENURE
The Company maintains clear records
of the terms of service of the Chairman
and Non-executive Directors to
ensure that they continue to meet the
requirements of the Code. Neither
the Chairman nor any of the Non-
executive Directors have exceeded the
maximum nine-year recommended
term of service set out in the Code.
Simon Burke
Oct 2017
Mike Edwards
Dec 2020
Lee Miley
Nov 2024
Sanjeevan Bala
Aug 2021
Umran Beba
Sep 2020
Robert Berlin
Jan 2024
Jill Caseberry
Mar 2021
Agust Gudmundsson
Nov 2022
Lydur Gudmundsson
Oct 2017
Denis Hennequin
Oct 2017
Jane Lodge
Apr 2018
<1 year
1-5 years
5-10 years
9%
55%
36%
TENURE (%)
100
| Bakkavor Group plc | Annual Report & Accounts 2024
SECTION 3: COMPOSITION, SUCCESSION
AND EVALUATION
The Group Board continuously evaluates the balance of skills, experience, diversity,
knowledge and independence among the Directors.
GROUP BOARD COMPOSITION
The Group Board consists of a total of 11 Directors – two Executive Directors and nine Non-executive Directors –
and collectively is well-resourced, with a combination of skills, experience and knowledge. Within this report,
we have set out biographical details of each of the Directors, along with each of their individual dates of appointment.
READ MORE
pg 76.
MEETING ATTENDANCE
The Group Board held eight scheduled meetings during the year and the meeting attendance is set out below.
Sufficient time is provided, periodically, for the Chairman to meet privately with the Senior Independent Director
and the Non-executive Directors to discuss any matters arising.
CURRENT DIRECTORS EXCEPT AS NOTED
Group Board
AGM
Total number of meetings in 2024
8
1
Meetings attended/scheduled meetings eligible to attend
Executive Directors
Mike Edwards
8/8
1/1
Lee Miley
1
1/1
n/a
Ben Waldron
2
7/7
1/1
Non-executive Directors
Simon Burke (Chairman)
8/8
1/1
Sanjeevan Bala
8/8
1/1
Umran Beba
8/8
1/1
Robert Berlin
3
8/8
1/1
Jill Caseberry
8/8
1/1
Agust Gudmundsson
7/8
1/1
Lydur Gudmundsson
8/8
1/1
Denis Hennequin
7/8
1/1
Jane Lodge
8/8
1/1
1
Lee Miley was appointed to the Group Board on 1 November 2024.
2
Ben Waldron stepped down from the Group Board on 31 October 2024.
3
Robert Berlin was appointed to the Group Board on 16 January 2024 and Patrick Cook stepped down from the Group Board on 16 January 2024.
Bakkavor Group plc | Annual Report & Accounts 2024 |
101
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE REPORT
CONTINUED
GROUP BOARD COMMITTEE COMPOSITION
Director
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
ESG
Committee
Other
Sanjeevan Bala
Designated workforce engagement NED
Umran Beba
Designated NED for ESG matters
Robert Berlin
Simon Burke
Jill Caseberry
Senior Independent Director
Lydur Gudmundsson
Agust Gudmundsson
Denis Hennequin
Jane Lodge
Committee Chair
Committee member
GROUP BOARD SKILLS AND EXPERTISE
In light of the current and future needs of the Group Board, part of the role of the Chairman and the Nomination Committee
is to maintain a balance of skills and expertise on the Group Board, and to recommend changes, where required, to maintain
that balance. For this, they take account of the Group Board knowledge and skills matrix, which identifies key areas of
diversity, skill or experience that add to the effectiveness and reach of the Group Board.
During the year, the Directors completed a self-capability assessment to inform our Group Board skills matrix, to support
our succession planning and enable us to identify any potential gaps that may arise when Directors retire from the Group
Board. Collectively and individually, the Directors are highly experienced with a wide range of skills, understanding and
expertise which facilitates effective and entrepreneurial leadership.
GROUP BOARD SKILLS AND EXPERIENCE
Executive experience
Financial acumen
PLC board experience
Corporate transactions (M&A/capital management)
Strategy
Food retail
International
General retail
Climate/ESG
Digital, data and technology
People/culture
Risk management
Dark circles represent the number of Directors with relevant skills, knowledge or experience.
Further information about the skills and experience of each Director and appointments to the Group Board can be found
on page 86.
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| Bakkavor Group plc | Annual Report & Accounts 2024
GROUP BOARD SUCCESSION
More information on Group Board
succession is available in our
Nomination Committee’s report.
READ MORE
pg 105.
GROUP BOARD INDUCTIONS
Following appointment, each Director
receives a comprehensive and formal
induction to understand their duties,
as well as Bakkavor’s business
operations and risk and governance
arrangements. The induction
programme, co-ordinated by the CPO
and the Group General Counsel and
Company Secretary, includes
briefings on industry and regulatory
matters relating to Bakkavor, site
visits, and face-to-face meetings with
the SET, senior leaders and different
teams within the business.
ONGOING PROFESSIONAL
DEVELOPMENT AND SKILLS
TRAINING
To facilitate greater awareness and
understanding of Bakkavor and the
environment in which it operates, all
Directors are given regular updates
on changes and developments in
the business. Directors continually
update and refresh their skills and
knowledge and seek independent
professional advice when required.
Throughout the year, the Directors
received training on governance-
related matters and external advisers
were invited to attend Board
meetings as appropriate. In FY24,
this included, for example, training
on corporate governance, corporate
reform and internal controls,
sustainability and climate transition
planning. Directors also received
presentations throughout the year
from various departments within the
business. These covered key topics
including financial performance,
human resources, legal, audit, risk
and compliance, food safety, health
and safety, sustainability, investor
relations, corporate governance and
corporate finance.
ANNUAL RE-ELECTION OF THE
GROUP BOARD
The rules governing the appointment
and replacement of Directors can be
found in the Articles of Association,
the Code, the Companies Act 2006
and related legislation. Under the
Terms of Reference of the Nomination
Committee, any appointment must
be recommended by the Nomination
Committee for approval by the
Group Board.
In compliance with the Code, all
Directors will retire and offer
themselves for election or re-election,
as appropriate, on an annual basis.
At our seventh AGM, held on 23 May
2024, each Director offered himself or
herself for election or re-election as a
Director. All Directors will retire at the
2025 AGM to be held on 22 May 2025
and offer themselves for election or
re-election, as appropriate.
Bakkavor Group plc | Annual Report & Accounts 2024 |
103
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE REPORT
CONTINUED
INTERNAL GROUP BOARD
AND COMMITTEES’
PERFORMANCE REVIEW
In accordance with the Code, there
should be formal and rigorous annual
evaluation of the performance of the
Board, its Committees, the Chair and
individual Directors and an externally
facilitated Board evaluation at least
every three years.
The Group Board operates a
three-year cycle of performance
reviews, and our 2023 Group Board
and Committee performance review
was externally facilitated by Clare
Chalmers Ltd, an independent
provider of Board performance
reviews, with no connections to the
Group or any individual Directors.
This year’s Group Board and
Committees’ performance review
was an internal review, undertaken
in November 2024 and facilitated
by the Group General Counsel and
Company Secretary (“the 2024
internal performance review”).
PROCESS
The 2024 internal performance
review was based on a questionnaire
which covered the topics and themes
from the 2023 externally facilitated
performance review.
The initial conclusions from the 2024
internal performance review were
discussed with the Chairman and a
report was prepared by the Group
General Counsel and Company
Secretary, which was circulated to
all members of the Group Board and
Committees, then presented to the
Group Board and discussed at its
January 2025 meeting.
FINDINGS
The report concluded from the
feedback to the questionnaire that
Bakkavor operated an efficient
and effective Group Board which
continues to be able to draw on some
considerable strengths including:
•
Skilled and committed
Non-executive Directors.
•
Positive, collaborative relationships,
based on openness, trust and a
strong sense of common purpose.
•
A dynamic new Senior Management
Team bringing new ideas and
energy to the business.
•
Clear values and purpose, which
are well-socialised throughout
the organisation.
•
Good relationships with stakeholders,
including shareholders, employees
and customers.
•
Progress on the ESG agenda
resulting in ongoing reductions in UK
food waste, accidents and turnover.
2024 INTERNAL PERFORMANCE
REVIEW RECOMMENDATIONS
•
Oversee Group Board succession
planning and the recruitment of
new Independent Non-executive
Directors, as some of the more
experienced Board members
prepare to stand down in the
next two years.
•
The Group Board to receive a deeper
dive into ESG objectives, in addition
to ESG training on the UK Transition
Plan Taskforce framework.
•
Continue to oversee the Company’s
adoption of the newly introduced
UK Corporate Governance Code
2024 (“the 2024 Code”).
As well as considering the results
of the 2024 internal performance
review, the Group Board also
reviewed performance against
the recommendations identified
in the 2023 externally facilitated
performance review, with the
following actions taken during 2024:
•
Continued to drive the Group
Board’s work on the strategy and
provide opportunities to widen
some of the Group Board’s
discussions on key strategic issues.
•
The Group Board oversaw and
monitored Executive succession
planning and received updates
on the plan for fostering talent
and preparing Executives for
leading roles.
•
The Group Board received
regular updates on the work
of the designated workforce
engagement Non-executive
Director and engagement
with the workforce.
•
The Group Board received an
in-depth risk workshop facilitated
by Bakkavor’s Internal Auditors,
to identify and challenge the
appropriateness of the Group’s
principal risks and associated
risk appetite.
Group Board and Committees’ performance review
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| Bakkavor Group plc | Annual Report & Accounts 2024
During the year, the Committee
oversaw the selection and
appointment of our new CFO,
as well as multiple initiatives in
response to feedback from our
Employee Engagement Survey.
Simon Burke
Chair of the Nomination Committee
Committee purpose
To review the structure, size and composition of the Group Board, and make
recommendations on new appointments of Executive and Non-executive Directors.
COMMITTEE MEETINGS
AND MEMBERSHIP
The Committee consists of three
Independent Non-executive
Directors, one Non-independent
Non-executive Director, and the
Chair of the Committee who is
also the Group Board Chair.
READ MORE
pg 86.
4
meetings were held
during the year.
MAIN DUTIES OF THE COMMITTEE
To review and report on the leadership
and succession needs of the Group.
The Committee also ensures that
appropriate procedures are in place
for nominating, training, evaluating
and succession planning for the Group
Board and the senior leadership team.
In performing its role, the Committee
considers the benefits of diversity in
terms of gender, social and ethnic
backgrounds, and cognitive/personal
strengths. The Committee is vital to
maintaining a strong, progressive
and effective Group Board and Senior
Executive Team (“SET”) that deliver
our long-term strategic objectives.
NOMINATION
COMMITTEE REPORT
The Committee discharges its
responsibilities appropriately through a
series of scheduled meetings during the
year, linked to the Committee’s Terms
of Reference, which are available on the
Bakkavor website (bakkavor.com/en/
governance) and were last updated in
January 2025. After each meeting, the
Committee Chair reports activities and
recommendations to the Group Board
as appropriate.
The Group General Counsel and
Company Secretary attends all
Committee meetings to record
minutes and provide advice to the
Directors. The CPO is invited to
update on succession planning,
talent acquisition, learning and
development, and colleague
engagement. No Director attends
discussions relating to their
own appointment.
Details of members’ attendance at the meetings are set out below:
Member
Meetings attended/
Total meetings held
% of
meetings attended
Simon Burke (Chair)
4/4
100%
Umran Beba
4/4
100%
Jill Caseberry
4/4
100%
Lydur Gudmundsson
4/4
100%
Denis Hennequin
3/4
75%
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105
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
NOMINATION COMMITTEE REPORT
CONTINUED
DETAILS OF KEY ACTIVITIES
GROUP BOARD APPOINTMENTS
Robert Berlin, Non-independent
Non-executive Director
Following the transition of share
ownership from Baupost to LongRange
Capital, the Committee put
recommendations to the Group Board
regarding: the termination of the
Baupost relationship agreement;
Patrick Cook stepping down from
the Group Board; the entry into a
relationship agreement with LongRange
Capital; and the appointment of Robert
Berlin as a Non-independent Non-
executive Director to the Group Board
on 16 January 2024.
Lee Miley, CFO
On 5 September 2024, it was announced
that Ben Waldron would be stepping
down from the Board and leaving the
business and would be replaced by Lee
Miley, effective 1 November 2024. The
search process for a new CFO was led
by the Group Board Chairman and the
CEO and supported by the Committee.
Odgers Berndtson (an independent
search consultant, which has no
affiliation with the Group or any
individual Director) supported the
process, which was completed in
accordance with the Committee’s
Terms of Reference.
The Committee is responsible for
ensuring that the Company has a
formal, rigorous and transparent
process in place for Board
appointments. At the start of the
process, the Committee evaluated the
experience, skills, knowledge and
profile required for the CFO role. A role
profile, including the candidate job
specification, was prepared on the
basis of the requirements stipulated by
the CEO and the Committee. This was
then shared with Odgers Berndtson,
who undertook a comprehensive
search and rigorous assessment
of potential candidates suitable for
the role. Their search resulted in
an international longlist of potential
candidates, which following
assessment and calibration, was
reduced to a shortlist of both
external and internal candidates.
The shortlisted candidates were
interviewed by the Group Board
Chairman, CEO, CPO and Chair
of the Audit and Risk Committee.
The Committee’s 2024 activities
1
Group Board appointments
In January 2024, the Committee recommended the appointment
of Robert Berlin as a Non-executive Director to the Group Board
for approval.
On 5 September 2024, we announced that Ben Waldron, the
CFO and Asia CEO, was stepping down from the Group Board.
The Committee undertook a rigorous appointment process,
which included internal and external candidates, leading to
the appointment of Lee Miley as CFO, the details of which
are outlined further below.
2
Board and Senior Leadership succession planning
A key 2024 focus was on clear succession planning for the
Group Board, SET and their direct reports.
3
Workforce engagement
The Committee received updates from Sanjeevan Bala, the
designated workforce engagement Non-executive Director.
4
Group Board and Committees’ performance review
The 2024 Group Board and Committees’ performance
review was internally facilitated during the year. The internal
performance review concluded that the Group Board and its
Committees continue to provide effective leadership and the
required levels of governance and control.
NOMINATION COMMITTEE ACTIONS
The Committee will continue to oversee and monitor a
long-term view of Senior Leadership succession and a plan
for fostering talent and preparing Executives for leading roles.
The Committee will also play a key role in the recruitment
of new Independent Non-executive Directors, as some of the
more experienced Group Board members prepare to stand
down in the next two years.
5
Employee Engagement Survey (“EES”)
The Committee oversaw actions taken in response to the 2023
EES feedback which informed our 2024 People Plan. It also
discussed the results and recommended actions arising from
the 2024 EES which will be carried out in 2025.
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| Bakkavor Group plc | Annual Report & Accounts 2024
Following the interviews, the
Committee unanimously favoured Lee
Miley as the potential successor to Ben
Waldron and made a recommendation
accordingly to the Group Board,
which unanimously approved his
appointment. Lee had joined Bakkavor
in 1998 and had held many roles within
both the Finance function and the
broader business, with responsibilities
that included the Group’s approach
to M&A, Operational Excellence and
ESG strategy. Lee has a wealth of
experience both of our industry and our
business which made him the standout
candidate. His appointment will ensure
we maintain the momentum we have
recently established.
READ MORE
pg 58.
Process for Non-executive Director
appointments to the Group Board
Prior to making new Non-executive
Director appointments to the Group
Board, the profile for proposed new
Directors is prepared using the
criteria laid down by the Committee.
This considers the Group Board’s
knowledge and skills matrix which
identifies key areas of diversity, skill
or experience that would add to the
effectiveness and reach of the Group
Board. In all Director recruitment
activity, a formal and rigorous
selection process is followed, and the
Committee employs the services of
an experienced independent search
consultant (who has no affiliation with
the Group nor any individual Director,
and who has adopted the Voluntary
Code of Conduct for Executive Search
Firms on gender diversity and best
practice). A longlist of candidates
is reviewed by the Committee and
reduced to a credible shortlist of
candidates who are then interviewed
by members of the Committee.
The most suitable candidate is then
recommended to the Group Board
for formal approval.
GROUP BOARD INDUCTIONS
Following their appointment, Robert
Berlin and Lee Miley received a formal
induction to become familiar with their
duties, as well as Bakkavor’s business
operations and risk and governance
arrangements. The Committee had
oversight of the induction programme,
which included training on regulatory
and governance-related matters from
our external advisers (covering topics
such as corporate governance, market
abuse, directors’ duties), internal
briefings on industry matters relating
to Bakkavor and face-to-face
meetings with senior leaders and
different teams within the business.
BOARD AND SENIOR LEADERSHIP
SUCCESSION PLANNING
During the year, the Committee
reviewed succession planning for
the Group Board, SET and senior
leaders to ensure a diverse pipeline
of required skills and expertise.
The review included: contingency
arrangements for sudden and
unforeseen exits to ensure orderly
replacement; medium- to long-term
planning for identifying candidates
within the Group; and potential
areas for external recruitment.
This highlighted robust plans for key
roles across the business, supported
by our Leadership Development
programme. High-performing senior
colleagues are sometimes invited to
attend Group Board or Committee
meetings to present on specific
matters, projects or their divisions’
performance, serving as good
exposure for our colleagues and
an opportunity for the Group Board
to assess our talent pool. The Group
Board is also updated on our Inclusion
and Diversity plans to prioritise the
development of under-represented
groups through the organisation.
Board division
Committee action
Group Board
Group Board knowledge and skills matrix used to inform
recruitment criteria.
During the year, the Directors completed a self-capability
assessment to inform our Group Board knowledge and
skills matrix, to support our succession planning and
enable us to identify any potential gaps that may arise
when Directors retire from the Group Board. The Group
Board knowledge and skills matrix was updated and
reviewed by the Committee.
Collectively and individually, the Directors are
highly experienced with a wide range of skills,
understanding and expertise which facilitates
effective and entrepreneurial leadership.
Senior Executive
Team
Looked at succession planning for the SET, identifying
future successors using our performance and potential
framework. This aligns with our talent principles to
develop leaders at all levels, invest in high potential,
develop capabilities required for the next three years,
and consider those who are 80% ready for a new role
to be ready for promotion.
Senior leaders
Considered longer-term planning for two levels below
the SET, focused on identifying potential candidates
within the Group for progression, as well as areas
where external recruitment may be required.
Bakkavor Group plc | Annual Report & Accounts 2024 |
107
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
NOMINATION COMMITTEE REPORT
CONTINUED
BOARD COMPOSITION –
NON-EXECUTIVE DIRECTORS
Renewal of terms of appointment
The Committee recommended the
reappointment of Jill Caseberry,
Jane Lodge and Sanjeevan Bala to
the Group Board for a further term
of three years, based on their
independence, performance, skills
and experience which continue
to contribute to the Group Board.
Time commitment
The Committee reviewed the
responsibilities of the Non-executive
Directors to ensure they are
sufficiently balanced, considering:
time commitment; number of Group
Board and Committee meetings held
during the year; and preparation
and attendance at those meetings.
The Committee is pleased to report
that there are no over-boarding
concerns at the current time, and
believes that the Non-executive
Directors have devoted sufficient
time to be effective representatives
of stakeholders’ interests.
In respect of Sanjeevan Bala’s
appointment to the role of Independent
Non-executive Director of SThree plc
in April 2024, the Committee reviewed
Sanjeevan’s time commitment required
for the role, as well as his experience,
skills and other commitments and
recommended the appointment for
approval by the Group Board.
Independence
The Committee considered the
continued independence of the
Non-executive Directors and the
circumstances which are likely to
impair this independence, as set
out in Provision 10 of the Code.
The Committee concluded that all
Non-executive Directors remained
independent, with the exception
of Agust Gudmundsson, Lydur
Gudmundsson and Robert Berlin
(Group Board representative
of LongRange Capital), who are
all significant shareholders of
the Company.
WORKFORCE ENGAGEMENT
The Committee received updates
from the CPO on engagement with
Bakkavor’s Site Engagement Forums
(“SEF”) and Group Engagement
Forums (“GEF”). It reviewed feedback
from the sessions on the involvement
of the SEF in staff pay negotiations, site
conditions and extending the variety of
products available for colleagues at our
staff shops. Additionally, the designated
workforce engagement Non-executive
Director provided updates to the
Group Board.
READ MORE
pg 98.
Feedback from our 2024 EES
The Committee reviewed the
2024 EES results, which showed a
significant improvement in the overall
employee engagement scores (+3.3%
since 2023). The Committee discussed
the recommended action areas which
it will continue to oversee in 2025.
READ MORE
pg 34.
INCLUSION AND DIVERSITY
Bakkavor’s success relies on the
skills, experience and commitment of
a diverse workforce. Therefore, all
appointments, including recruitments
and internal promotions, are based
on merit, qualification and ability,
encouraging greater diversity in
social and ethnic background and
cognitive and personal strengths.
Beyond this, we strive to create an
equal and inclusive workplace where
colleagues feel valued, included
and inspired to perform their best.
Our Inclusion and Diversity Policy
supports the delivery of the ‘Trust’
element of our Group strategy and
can be found at: bakkavor.com/en/
esg/esg-reporting.
READ MORE
pg 44.
The Committee received regular
updates on the work of the Inclusion
and Diversity Forum chaired by the
Group General Counsel and Company
Secretary, including a programme
of events to promote inclusive
behaviours and focusing on the
following 2024 objectives: achieving
better gender balance; completing
the groundwork to understand our
ethnicity position; and focusing on
inclusive leadership behaviours.
The Committee reviewed and agreed
the Inclusion and Diversity focus
areas for 2025, which are:
•
Continue to focus on specific
workforce groups that are less
well-represented in our industry.
•
Maintain the focus and effort
on gender balance.
•
Prepare for ethnicity pay gap
reporting in 2026 (in addition
to gender reporting).
•
Maintain a wide focus on policy
areas, practices and activities
that may emotionally impact
our colleagues.
•
Acknowledge and celebrate the
breadth of our cultural diversity.
•
Understand and optimise a multi-
generational workforce, improving
how we mitigate the associated
risks and realise the benefits.
•
Newly appointed I&D Manager
to focus on I&D objectives and
support the above agenda.
Local causes and community
engagement
The Committee received updates
on the Local Causes and Community
Engagement workstream, and
Bakkavor’s corporate charity
programme with partners GroceryAid
and the Natasha Allergy Research
Foundation.
READ MORE
pg 44.
Group Board and Committee
diversity
The Committee recognises the
importance and benefits of having
a diverse Group Board and
Committees. It therefore considers
diversity at succession discussions for
the Group Board and its Committees,
in line with our Group-wide I&D
Policy. The Committee is proud of its
progress in this area, with Bakkavor
compliant with the recommendations
of the Parker Review. The Group
Board will continue to appoint based
on merit, skills and experience, being
mindful of the Hampton-Alexander
and Parker Reviews, and considering
all forms of diversity when the
Committee reviews the Group Board
and Committees’ composition.
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| Bakkavor Group plc | Annual Report & Accounts 2024
The Company ensures that potential
candidates for Non-executive
Directors reflect the Group Board’s
diversity commitments in respect
of gender and ethnicity. All lists of
potential appointments include at
least 50% female candidates, and the
Company is committed to ensuring
that candidates from all ethnicities
are considered. For Group Board
appointments, we use Executive
Search Consultants signed up to
the Voluntary Code of Conduct for
executive search firms, setting out
the key principles of best practice
which include the consideration of
gender diversity.
The Financial Conduct Authority’s UK
Listing Rule 6.6.6R(9) (“the Rule”) on
diversity and inclusion disclosures
requires companies to explain where
they do not meet the following targets:
at least 40% of the Board are women;
at least one senior Board position
(Chair, CEO, Senior Independent
Director, CFO) is held by a woman;
and at least one Board member is
from a minority ethnic background.
Bakkavor does not meet the target
with respect to the requirement that
at least 40% of the Board are women,
(currently, there are three women
out of the 11 members on the Group
Board). It is our aim to meet this
requirement when there is suitable
opportunity to do so. We are pleased
to report that one of Bakkavor’s senior
Board positions is held by a woman,
following the appointment of
Jill Caseberry as Senior Independent
Director, effective 1 January 2023, and
one Board member is from a minority
ethnic background, following the
appointment of Sanjeevan Bala to the
Group Board in August 2021. These
targets were met on 28 December
2024 and no changes have occurred
since then which affect the Company’s
ability to meet the targets.
Diversity representation
as at 3 March 2025
The above tables set out the information
required to be disclosed under the Rule
as at 3 March 2025. For the purposes of
these tables, executive management is
as defined in the Listing Rules, being the
Executive Committee or the most senior
executive or managerial management
body below the Board (or where there is
no such formal Committee or body, the
most senior level of managers reporting
to the CEO), including the Company
Secretary but excluding administrative
and support staff. For Bakkavor, this is
the SET including the Group General
Counsel and Company Secretary.
Collection of data was carried out on
the basis of self-reporting.
CORPORATE GOVERNANCE
The Committee received regular
updates on corporate governance
developments from the Group General
Counsel and Company Secretary
and our external legal advisers.
Overall, there has been good
progress made this year. I would
like to express my thanks to my
colleagues on the Committee for
their ongoing support.
Simon Burke
Chair, Nomination Committee
3 March 2025
Reporting table on sex and gender representation
Percentage of the Group
Board
Number of Group
Board members
Percentage of the
Group Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
73%
27%
Male
8
73%
3
4
57%
Female
3
27%
1
3
43%
Not specified/prefer not to say
–
–
–
–
–
Reporting table on ethnicity
Percentage of the Group Board
Number of Group
Board members
Percentage
of the Group
Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
91%
9%
White British or Other White
(including minority White groups)
10
91%
4
4
57%
Mixed Multiple Ethnic Groups
–
–
–
1
14.3%
Asian/Asian British
1
9%
–
1
14.3%
Black African/Caribbean/Black British
–
–
–
1
14.3%
Other Ethnic Group including Arab
–
–
–
–
Bakkavor Group plc | Annual Report & Accounts 2024 |
109
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Committee continues to support
the Group Board and protect the
interests of shareholders by monitoring
the integrity of financial reporting
and reviewing risk management and
internal control.
Jane Lodge
Chair of the Audit and Risk Committee
Committee purpose
The Committee’s remit covers accounting and financial reporting, the effectiveness of internal controls,
identification and management of risks, and the External and Internal Audit processes.
COMMITTEE MEETINGS
AND MEMBERSHIP
The Committee currently comprises
three Independent Non-executive
Directors. Jane Lodge has relevant
financial experience, having spent
25 years at Deloitte, and recent
financial experience in the UK listed
environment. The Committee as a
whole has competence relevant to the
sector in which Bakkavor operates.
READ MORE
pg 86.
4
meetings were held
during the year.
MAIN DUTIES OF THE COMMITTEE
To monitor the integrity of the Group’s
Financial Statements and
announcements, review internal
financial controls and risk management
systems, monitor and review the
Internal Audit function, recommend the
appointment of the External Auditors,
review the effectiveness of their work
and develop and implement policy on
the use of the External Auditors for
non-audit services.
The Committee discharges its
responsibilities appropriately through a
series of scheduled meetings during
the year, linked to the Committee’s
Terms of Reference, which are
available on the Bakkavor website:
bakkavor.com/en/governance.
AUDIT AND RISK
COMMITTEE REPORT
The Terms of Reference were last
updated in February 2025.
Following each Committee meeting,
the Committee Chair reports to the
Group Board on the activities of the
Committee, including how it has
undertaken its responsibilities in
relation to the External Audit, Internal
Audit reviews and risk updates and
makes recommendations to the
Group Board as appropriate.
Only Committee members have the
right to attend meetings, but the CFO,
Group Finance Director, Group Financial
Controller and Head of Investor
Relations and the Internal Auditors
KPMG LLP (“KPMG”) and the External
Auditors PricewaterhouseCoopers LLP
(“PwC”) are invited to attend meetings
of the Committee as the Committee
feels appropriate.
The Committee also meets privately
without management present and
the Committee Chair meets with
the External and Internal Auditors,
without management present, on
a regular basis in order to discuss
any issues which may have arisen.
Details of members’ attendance at the meetings are set out below:
Member
Meetings attended/
Total meetings held
% of
meetings attended
Jane Lodge (Chair)
4/4
100%
Sanjeevan Bala
4/4
100%
Umran Beba
4/4
100%
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| Bakkavor Group plc | Annual Report & Accounts 2024
Key activities in 2024
1
Risk management and internal control
Ensured that the Group can manage its risks and has the
processes needed to make going concern and viability
statements. This was through a robust and consolidated risk
management process, incorporating an analysis of emerging
risks and an effective internal control framework.
Conducted in-depth reviews of our risk management
and mitigation in IT systems, tax compliance and treasury
and pensions.
2
Oversight of UK ERP system implementation
Provided oversight and challenge of the project to replace
the UK ERP system.
3
Corporate reform and implementation of UK Corporate
Governance Code 2024
Considered the potential impact of any changes needed to
the Group’s risk management framework and its internal
control processes in response to the proposed changes arising
from UK corporate reform and developed a plan to ensure
compliance by the effective date.
Oversaw and applied the Financial Reporting Council’s
Minimum Standard: Audit Committees and External Audit.
4
Integrity of financial reporting
Continued to focus on ensuring the integrity, quality and
compliance of the Group’s external financial reporting.
5
TCFD – Group’s financial reporting approach
Continued to oversee, in conjunction with the ESG Committee,
the alignment of ESG focus areas within the Group’s principal
risks and reviewed the Group’s financial reporting approach
to the TCFD recommendations.
6
Group Board and Committees’ performance review
The 2024 Group Board and Committees’ performance review
was internally facilitated during the year, the details of which
are outlined further on this page.
SECTION 4: AUDIT, RISK
AND INTERNAL CONTROLS
AUDIT AND RISK COMMITTEE
ACTIONS
The performance review indicated
that the Committee continues on an
upward trajectory, under the strong
leadership of its Chair. Described
as experienced and inclusive, the
Chair takes care to ensure all the
Committee members can put
forward their views.
The Committee’s focus over the next
year will be on the implementation
of the newly introduced 2024 UK
Corporate Governance Code (the
“2024 Code”) as we look to enhance
our readiness for the effective date
of Provision 29 of the 2024 Code.
The Committee will have oversight
of the enhancement of our assurance
mapping across our principal risks
to identify material controls and our
Fraud Risk Management Assessment
to develop an action plan to comply
with the expected legislation on
the failure to prevent fraud. The
Committee will continue to provide
oversight and challenge of the UK
ERP system implementation project
as we move into the build phase of
the project during 2025.
The Group Board is satisfied that the
Chair, Jane Lodge, has significant
financial experience in the UK listed
environment, and the necessary
qualifications, skills and experience to
fulfil the role as the Committee Chair.
READ MORE
pg 104.
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
AUDIT AND RISK COMMITTEE REPORT
CONTINUED
DETAILS OF KEY ACTIVITIES DURING THE YEAR
HOW THE COMMITTEE HAS DISCHARGED ITS RESPONSIBILITIES DURING 2024
Key areas of focus
The Committee has an extensive agenda which focuses on the audit, assurance and risk management processes
within the business. During 2024, the work of the Committee principally fell under the following key areas:
KEY AREAS OF FOCUS AND MATTERS CONSIDERED
FINANCIAL REPORTING
The Committee reviewed the form and content of the Annual Report and Accounts as well as the half-year and full-year
results statements, including the key estimates and judgements made by management in the preparation of the
Financial Statements.
In order to fulfil these duties, during the year under review, the Committee:
•
Considered the FY23 full-year results statements, 2024 half-year results and FY24 Annual Report and Accounts.
•
Considered the ongoing elevated inflationary environment and the impact on consumer demand, and additionally the
impact of closure costs associated with the Wigan site on the full-year Financial Statements.
•
Reviewed and challenged management on the appropriateness of estimates and judgements made in the preparation
of the Financial Statements, including financial reporting and disclosure considerations in respect of climate change.
•
Reviewed papers on the Group’s significant accounting estimates and judgements.
•
Reviewed the judgements made with respect to which items should be disclosed separately as exceptional items
in the Financial Statements to confirm these were in line with the Group’s accounting policies.
•
Reviewed the critical judgements (presentation of exceptional items) and key sources of estimation uncertainty (pension
obligations and impairment of goodwill) disclosed in the Financial Statements to ensure they fairly reflected the potential
financial impact on the business.
MONITORING THE INTEGRITY OF THE 2024 FINANCIAL STATEMENTS INCLUDING SIGNIFICANT JUDGEMENTS
The Committee:
•
Reviewed the appropriateness of Group accounting principles, practices and policies and monitored changes to, and
compliance with, accounting standards on an ongoing basis.
•
Reviewed the half-year and full-year results statements for 2024. Before recommending their release to the Group Board,
it compared the results to management financial statements and budgets, focusing on key areas of judgement and also
discussed the statements with the External Auditors.
•
Reviewed, prior to making recommendations to the Group Board, the Annual Report and Accounts for the period ended
28 December 2024.
In undertaking the review, the Committee discussed with management and the External Auditors the critical accounting
policies and issues considered most significant in preparing the Annual Report and Accounts.
GOING CONCERN
•
The Committee reviewed the Group’s assessment of going concern which is for a period of 12 months from the date of
approval of the Financial Statements. Management presented a number of stress scenarios to the Committee which
considered historical forecasting inaccuracy and the implications of weaker consumer demand on revenue volumes and
the associated impact on factory performance, along with the potential impact of further cost inflation on the Group’s
performance. In assessing going concern, the Committee also reviewed the steps taken by management to ensure adequate
liquidity is available to the Group. The Committee concluded that, under the scenarios presented, the Group would have
sufficient financial resources available to continue to operate through to at least March 2026 and it was therefore appropriate
to recommend the adoption of the going concern basis in preparing the Financial Statements.
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| Bakkavor Group plc | Annual Report & Accounts 2024
KEY AREAS OF FOCUS AND MATTERS CONSIDERED
IMPAIRMENT OF GOODWILL AND NON-CURRENT ASSETS
As at 28 December 2024, the Group had significant amounts of goodwill and intangible assets that are subject
to an annual impairment review under IFRS.
The Committee:
•
Reviewed a paper prepared by management that set out the basis and assumptions for the annual impairment review
of goodwill and intangible assets. The paper set out the determination of cash-generating units (“CGUs”), the cash flow
forecasts used and the discount rate to be applied for the purpose of the value-in-use calculation. The impairment review
allowed for the forecasted costs and expenditure required from 2040 for the Group to meet its net zero carbon commitment.
The paper also considered downside scenarios if financial performance was below the forecasted amounts. The Committee
challenged management on the key assumptions used in the impairment review. The impairment review indicated that no
impairment provisions were required for the period ended 28 December 2024.
•
Reviewed and approved the associated disclosure in the Financial Statements including the sensitivity analysis in respect
of the US CGU and the estimation uncertainty of the future costs of carbon credits in the China CGU.
FAIR, BALANCED AND UNDERSTANDABLE REPORTING
Each year, in line with Provision 25 of the Code and the Committee’s Terms of Reference, the Committee is asked by the
Group Board to assess, through discussion with, and the challenge of, the CFO whether disclosures in the Group’s published
Financial Statements are fair, balanced and understandable, and whether or not the disclosures provide the information
necessary for shareholders to assess the Group’s position and performance, business model and strategy.
The Committee:
•
Received papers on key judgement areas that set out management’s accounting treatment, and also sought and obtained
confirmation from the CFO and his team that they considered the disclosures to be fair, balanced and understandable.
•
Discussed this evaluation with the External Auditors, which took this into account when conducting their audit. It also
established through reports from management that there were no indications of fraud relating to financial reporting
matters.
•
Received a detailed paper covering key points and areas of consideration in the preparation of the Group’s published
Financial Statements for the period ended 28 December 2024, to assist the Committee with its assessment that
the disclosures were considered to be fair, balanced and understandable. The key points and areas for consideration
included ensuring that:
–
The overall message of the narrative reporting is consistent with the Financial Statements, and is appropriate,
in the context of the industry and the wider economic environment.
–
The Annual Report and Accounts provide a description of the business model, strategy and risks and the links
between these is clear.
–
The Annual Report and Accounts are consistent with messages already communicated to investors, analysts
and other stakeholders.
–
Taken as a whole, the Annual Report and Accounts are internally consistent and understandable.
–
The Chair’s statement and CEO’s review include a balanced review of the Group’s operational performance
and prospects, and of the industry and market as a whole.
–
Any summaries or highlights are balanced and reflect the position of the Group appropriately.
–
Examples are of strategic importance and do not over-emphasise immaterial matters.
Having assessed the available information and the assurances provided by management, concluded that the processes
underlying the preparation of the Group’s published Financial Statements were appropriate in ensuring that those
statements were fair, balanced and understandable.
Bakkavor Group plc | Annual Report & Accounts 2024 |
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
AUDIT AND RISK COMMITTEE REPORT
CONTINUED
KEY AREAS OF FOCUS AND MATTERS CONSIDERED
RISK MANAGEMENT AND INTERNAL CONTROL
As delegated by the Group Board, the Committee is responsible for establishing procedures to oversee the internal
control framework and it is required to assist the Group Board in the annual review of the effectiveness of the Company’s
risk management process and internal control systems.
In order to fulfil these duties, during the year under review, the Committee:
•
Received regular reports and assessments of the current and emerging risks that might threaten the Group’s business
model, future performance, liquidity or reputation.
•
Received regular reports from management and both the Internal and External Auditors. These include: the risks that
are relevant to business activity; the effectiveness of internal controls in dealing with these risks; and an update on any
necessary corrective actions.
•
Received reports on the risk management and mitigation for the Group’s principal risks (refer to risk section for more detail
on page 66). As part of this, it included the approval of the Group Tax Strategy and Policy.
•
Considered and challenged management on the overall effectiveness of the risk management and internal control systems
in accordance with the Group Board’s risk appetite.
•
Reviewed relevant disclosures within the ‘Audit, risk and internal control’ section of the corporate governance report of the
Annual Report and Accounts.
•
Received updates on the impact to the business of the proposed changes to the UK Corporate Governance Code 2024 and
developed a plan to ensure compliance by the effective date. Work commenced on enhancing our assurance mapping
across our principal risks to identify material controls, as well as enhancing process and controls documentation for our
US business.
•
Undertook a Fraud Risk Assessment to develop an action plan to comply with the new legislation on the failure to prevent
fraud which becomes effective on 1 September 2025.
•
Reviewed and approved the risk-based IA Plan for 2025, which sets out the planned activities for the year ahead.
In light of the above, the Committee continues to be satisfied that the Group control environment remains appropriate
and effective and that the risk management and internal control procedures comply with the requirements of the FRC’s
Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. The Committee has
reported this opinion to the Group Board and regularly monitors compliance throughout the year.
PRINCIPAL RISKS AND VIABILITY
The Committee:
•
Evaluated a paper from management that set out the view of the Group’s longer-term viability and the forecasts over
the Group’s three-year planning horizon, taking account of the potential risks faced by the business over that period.
•
Reviewed and challenged the principal risks update at each Committee meeting and approved the principal risks
disclosures and the viability statement in the Annual Report and Accounts.
Taking the management assessment into account and having considered other relevant information in terms of the risk
profile of the Group, the Committee agreed to recommend the viability statement to the Group Board for approval.
GROUP IT RISKS
The Group IT Director provides the Committee with regular updates on cyber security and, during the year, the Committee
received an in-depth report on Group IT risks.
The Company has rapidly scaled technology, driven change and delivered some major successes at an operational, people
and security level, with a major step forward in risk mitigation through our Group-wide security programme. With AI
becoming widespread, we have assessed this risk and continue to invest in further IT system modernisation, including
external advice on the use of AI in our sector.
During the year, the Committee had oversight of the UK ERP system implementation project, receiving regular updates on
the programme management and governance of the project and reviewing independent third-party programme assurance
work in relation to the UK ERP system implementation. Work in 2024 primarily focused on the design of the new system and
we will move into the build phase of the project during 2025.
114
| Bakkavor Group plc | Annual Report & Accounts 2024
KEY AREAS OF FOCUS AND MATTERS CONSIDERED
TCFD
The Group has reported under the TCFD framework for 2024. The Committee, in conjunction with the ESG Committee,
reviewed the Group’s financial reporting approach to TCFD.
The Committee:
•
Challenged management’s approach to reporting under the TCFD framework for 2024.
•
Reviewed the TCFD report prepared by management, including carbon emissions data for 2024, to ensure it was
prepared and disclosed on a consistent basis.
•
Considered the impact of future carbon tax on the Group’s impairment review assumptions.
•
Reviewed the principal risk ‘Climate change and sustainability’ and ensured climate-related risks were considered
in the Group’s viability assessment and impairment reviews.
The Committee was satisfied that the TCFD report prepared by management adequately summarised progress made
by the Group under the TCFD framework and that the impact of TCFD had been considered in the Group’s annual
impairment review.
EXTERNAL AUDIT
Following a competitive tender carried out in 2018, PwC have been the Group’s External Auditors since their appointment in
2019. The current External Audit partner, Sarah Phillips, took on the role in 2024, replacing Sandeep Dhillon, who stepped
down having held this role since 2021. The next External Audit tender will be undertaken in 2028 for the FY29 year-end
audit, in line with mandatory retendering requirements. The Company has commenced work on a replacement to the UK
ERP system and therefore stability and consistency of the External Auditors is important during this transition phase. The
tender in 2028 is therefore considered to be in the best interests of our stakeholders.
During the year, the Committee considered the approach, scope and risk assessments of External Audit.
The Committee:
•
Met with the key members of the PwC Audit team to discuss the 2024 Audit Plan and agree areas of focus.
•
Assessed regular reports from PwC on the progress of the 2024 Audit and any material issues identified, including
management override of controls and fraud in revenue recognition.
•
Reviewed and debated the draft audit opinion for the 2024 year-end and was briefed by PwC on their approach to the audit
of critical accounting estimates and areas where significant judgement is needed.
•
Reviewed and approved the Audit Plan which included PwC’s approach to risk, including the following significant risks: Fraud
in revenue recognition, Management override of controls and Recoverable amount of goodwill (US cash-generating unit).
•
Reviewed and discussed with PwC its Audit and Risk Committee report on the 2024 Financial Statements which highlighted
any matters arising from the audit work undertaken by the External Auditors and no significant issues were identified.
Audit and audit-related fees
The Committee:
•
Reviewed and approved a recommendation from management on the Company’s audit and audit-related fees payable
to the Company’s External Auditors, PwC.
•
Considered the 2024 audit fees to be in line with those expected for a listed company of this type given the complexities
of the business, the external reporting requirements and recent regulatory developments that require External
Auditors to exercise greater independence and rigour in the provision of their services and in the setting of their fees.
•
Total audit fees of £1.49m were paid to the External Auditors in 2024.
Bakkavor Group plc | Annual Report & Accounts 2024 |
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
AUDIT AND RISK COMMITTEE REPORT
CONTINUED
KEY AREAS OF FOCUS AND MATTERS CONSIDERED
Non-audit fees
To prevent the objectivity and independence of the External Auditors becoming compromised, the Committee has
a formal policy governing the engagement of the External Auditors to provide non-audit services which is reviewed
on an annual basis.
The Committee reviews and updates the Group’s policy for the provision of non-audit services to be provided by the
External Auditors to ensure that it is in line with regulatory guidance for public-interest entities. The Committee ensures
that there are no exceptions to the policy. All non-audit services to the Group provided by the External Auditors will be
put to the Committee for prior consideration and approval.
The External Auditors do not provide any non-audit services to the Group other than:
•
Subscription to PwC’s online technical portal (Viewpoint) which is a generic accounting subscription service.
Management confirmed this platform met their requirements.
•
The half-year review of the Financial Statements. The Committee provided prior approval for this, having noted that
the External Auditors’ knowledge of the business made them the preferred choice.
Non-audit fees of £59k were paid to the External Auditors for these services.
Further information on the audit and non-audit fees can be found in Note 6 of the Notes to the Consolidated Financial
Statements on page 176.
The Committee confirms that it has complied with the requirements of the CMA Order 2014 regarding audit tendering,
Auditors’ appointment, negotiation and agreement of audit fees and approval of non-audit services.
EXTERNAL AUDIT EFFECTIVENESS
Under its Terms of Reference, the Committee assesses annually the qualifications, expertise, resources and
independence of the External Auditors as well as the quality and effectiveness of the audit process.
The Committee assessed the External Auditors’ performance and effectiveness through a questionnaire completed
by the Committee members and other relevant internal parties. The Committee reviewed the FRC’s practice aid on
assessing audit quality and the FRC’s Audit Committees: Minimum Standard and considered the following factors in
assessing the effectiveness of the External Audit process:
•
The experience and expertise of the Audit partner and team.
•
The internal quality-control processes in place.
•
Any risks to audit quality identified by the External Auditors and how they were addressed.
•
The findings from external inspections, including the FRC’s July 2024 Audit Quality Inspection and Supervision report.
•
The level of professional scepticism displayed throughout the audit process.
•
The extent to which the Audit Plan was met and the quality of its delivery and execution.
•
The robustness and perceptiveness of work performed on key accounting and audit judgements.
•
The content of reports on audit findings and other communications.
•
The External Auditors’ own assessments of the quality of the audit and its quality assurance systems.
The assessment highlighted that PwC had provided a detailed review of the Annual Report and Accounts 2023 and
best-practice approaches on disclosures, as well as demonstrating strong technical knowledge. The assessment
also highlighted proposed actions for further consideration to ensure the smooth running of the FY24 External Audit
and these were reflected in the approach presented to the Audit and Risk Committee for the FY24 audit.
In assessing the External Auditors’ professional scepticism, the Committee noted in the current year that PwC had
robustly challenged management’s assumptions and judgements made in carrying out the impairment review of
goodwill and intangible assets including the sensitivity analysis in respect of the US CGU. In addition, PwC challenged
management’s assumptions around downside scenarios including the implications of weaker volumes and the
associated impact on factory performance, and the potential impact of further cost inflation on the Group’s performance.
116
| Bakkavor Group plc | Annual Report & Accounts 2024
KEY AREAS OF FOCUS AND MATTERS CONSIDERED
EXTERNAL AUDITORS’ INDEPENDENCE
In assessing the independence of the External Auditors, the Committee takes into account the information and
assurances provided by the External Auditors confirming that its engagement team and its network firms involved
in the audit are independent of any links with the Company.
During the year, the Committee reviewed and considered the following factors to assess the objectivity and
independence of PwC:
•
PwC’s procedures for maintaining and monitoring independence, including those to ensure that the partners and
staff have no personal or business relationships with the Group, other than those in the normal course of business
permitted by UK ethical guidance.
•
The degree of challenge to management and the level of professional scepticism shown by the Audit partner and
team throughout the process.
•
PwC’s policies for rotation of the Audit partner every five years, and regular rotation of key audit personnel.
Sandeep Dhillon held this role since 2021 and was replaced by the current Audit partner, Sarah Phillips, in 2024.
Following consideration of the performance and independence of the External Auditors, the Committee recommended
to the Group Board that the reappointment of PwC as the Company’s External Auditors should be proposed to
shareholders at the 2025 AGM.
INTERNAL AUDIT
The Committee oversees the performance, resourcing and effectiveness of the Internal Audit (“IA”)’s activity.
IA services have been outsourced to KPMG, who were appointed with effect from the beginning of the FY19. Overall
responsibility and direction for the Group’s IA activity is retained by the Group Finance Director, who reports to the
Committee. The IA provides assurance over the effectiveness of key internal controls, as identified as part of the risk
assessment process. KPMG reports to the Group Finance Director throughout the year and to the Committee at least
four times a year.
The Committee:
•
Reviewed and assessed the IA Plan for 2024. The proposed plan represents the assurance plan that KPMG put in place
on its appointment as the Company’s Internal Auditors and will be a mixture of full systems audits, in-flight reviews
and high-level limited-scope reviews, as agreed with the Committee. The IA Plan responds to certain factors across
the Group’s operations such as: i) the requirement to continue providing assurance over financial controls across the
UK, US and China in support of ‘Operational Excellence’; ii) maintaining a strong system of internal controls across
the Group, including Human Resources, ESG and Inflation Recovery; and iii) coverage of information security/cyber
controls and the continued importance of infrastructure, network and data security to the Group.
•
Reviewed and approved the IA Charter.
•
Assessed the IA quality.
•
Reviewed and monitored management’s responsiveness to the findings and recommendations of the IA’s activity.
•
Received all reports from the IA and, in addition, received summary reports on the results of the work of the
IA on a periodic basis.
•
Reviewed independent programme assurance reports in relation to the UK ERP implementation project.
The Committee is actively engaged in strengthening the IA’s activity and extending its scope during 2025.
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
AUDIT AND RISK COMMITTEE REPORT
CONTINUED
KEY AREAS OF FOCUS AND MATTERS CONSIDERED
INTERNAL AUDIT’S EFFECTIVENESS
The Committee has a duty to carry out an annual assessment of the effectiveness of the IA function, and as part
of this assessment:
•
Determine whether it is satisfied that the quality, experience and expertise of the IA is appropriate for the business.
•
Review and monitor management’s responsiveness to the Internal Auditors’ findings and recommendations.
The assessment highlighted that the Committee considered that the IA function was highly effective and noted that,
going forward, the IA function should continue to cultivate relationships within the business to have more impact
and influence across the Group.
ANTI-BRIBERY AND BUSINESS ETHICS POLICY
The Committee considered the adequacy of the Group’s arrangements with regard to its anti-bribery and corruption and
business ethics processes, noting that as part of our annual legal and governance compliance programme, UK colleagues
undertook their mandatory refresher training module on anti-bribery and corruption during 2024.
The Committee reviewed the Anti-bribery and Business Ethics Policy which applies across the Group and concluded that
the policy remains adequate.
PRIORITIES FOR 2025
The Committee’s key priorities for 2025 include the following:
•
Continue to focus on the integrity, quality and compliance of the Group’s external reporting.
•
Provide challenge in respect of significant judgements and critical estimates that impact financial reporting.
•
Provide oversight and challenge of the UK ERP system implementation project as we move into the build phase of the
project during 2025.
•
Ensure that the required actions have been taken so that the Company is in compliance with the elements of the 2024 UK
Corporate Governance Code that are effective from 1 January 2025 and ensure that appropriate plans are in place to
enhance internal controls documentation and testing in light of the requirements under Provision 29 which will apply
to Bakkavor for reporting at the end of FY26.
•
Undertake detailed monitoring and challenge of the Group’s principal risks, including reviewing emerging risks.
•
Review the Group’s financial reporting relating to TCFD including the climate transition plan.
Jane Lodge
Chair, Audit and Risk Committee
3 March 2025
118
| Bakkavor Group plc | Annual Report & Accounts 2024
The Audit Committees and the External Audit: Minimum Standard
(“the Standard”) was published by the FRC in May 2023. The Company
and the Committee have applied the Standard during the year and
our application of the Standard is described within this report.
RESPONSIBILITIES
•
The Committee’s responsibilities are set out on page
110 and an overview of the Committee’s activities
during the year is set out in this report on page 111.
•
The Committee reports to the Board and members
of the Company on how it has discharged its
responsibilities with respect to External Audit.
•
Bakkavor has a non-audit policy under which it
manages non-audit relationships with audit firms,
as summarised on page 116. In addition to the robust
governance arrangements for non-audit services
provided by the incumbent External Auditors, non-
audit relationships with other audit firms are managed
to ensure a fair choice of suitable External Auditors
at the next tender.
•
The Committee Chair and members are available to
meet with major shareholders on request. There were
no requests from shareholders in 2024 for any specific
matters to be covered in the audit.
•
Bakkavor ensures that the External Auditors have full
access to company staff and records.
•
The Committee invites challenge by the External
Auditors, see page 116.
•
The Committee reviews and monitors the External
Auditors’ independence and objectivity, see page 117.
•
The Committee reviews the effectiveness of the
External Audit process, see page 116.
The Committee’s Terms of Reference can be found
on our website: bakkavor.com/en/governance.
TENDERING
•
Following a competitive tender carried out in 2018,
PwC have been the Group’s External Auditors since
the appointment in 2019. The next External Audit
tender will be undertaken by the end of 2028 in line
with mandatory retendering requirements.
•
During the year, the Committee approved an External
Audit Tendering Policy which sets out the External
Audit tendering process, which will be led by the
Committee and is aligned with the requirements
of the Standard.
OVERSIGHT OF AUDITORS AND AUDIT
•
The Committee is responsible for overseeing
and assessing the External Audit and the
External Auditors.
•
The Committee’s approach to reviewing the
effectiveness of the External Audit process and the
External Auditors’ independence and objectivity,
as discussed on page 116 and 117.
•
The Committee assessed the level of professional
scepticism and challenge provided by the External
Auditors on management’s assumptions and
judgements, see page 116.
•
There is open communication between the Committee
and the External Auditors, see page 115.
•
The Committee’s oversight of the External Auditors
is clearly documented in minutes of its meetings
throughout the year and set out in this report.
REPORTING
•
The work of the Committee is set out in this report,
including significant issues the Committee considered
in relation to the Financial Statements.
•
An explanation of the application of the Group’s
accounting policies is provided in the Notes to the
Financial Statements on Note 2 of the Financial
Statements.
Audit Committees and External Audit: Minimum Standard
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
The Committee has continued to
oversee Bakkavor’s progress against
its ESG objectives, particularly with
regard to food waste, emissions
reduction and sustainable sourcing.
Umran Beba
Chair of the ESG Committee
Committee purpose
The Committee recognises that our Group-wide commitment to reach net zero by 2040 across our
operations and science-based targets are a significant challenge that requires a multi-faceted approach
across our functions and operations, supported by financial investment. The Committee oversees the
work already underway to get a full and detailed understanding of where we stand, as well as what we
need to do in the years ahead to set and achieve our climate transition plan.
COMMITTEE MEETINGS
AND MEMBERSHIP
The Committee consists of four
Independent Non-executive Directors.
READ MORE
pg 86.
4
meetings were held
during the year.
MAIN DUTIES OF THE COMMITTEE
To have oversight of the Group’s
ESG strategy, Trusted Partner, and
its execution.
It also oversees the communication
of the Group’s ESG activities with its
stakeholders, and provides input
and advice to the Group Board and
its Committees on the Group’s
performance against ESG metrics,
as well as on the setting of ESG targets
linked to Executive remuneration and
other ESG matters, as required.
ESG COMMITTEE REPORT
The Committee discharges its
responsibilities through scheduled
meetings during the year. These are
linked to its Terms of Reference, which
are available on the Bakkavor website
(bakkavor.com/en/governance) and last
updated in February 2025. Following
each meeting, the Committee Chair,
who is also the designated Non-
executive Director for ESG matters,
reports to the Group Board on the
Committee’s activities and makes
recommendations as appropriate.
The Group General Counsel and
Company Secretary attends all
Committee meetings to record
minutes and provide advice to the
Directors. The CFO, who is the ESG
Group Board Sponsor, the Chief
People Officer (“CPO”) and the Head
of Group ESG Strategy are standing
attendees at the Committee meetings.
Details of members’ attendance at the meetings are set out below:
Member
Meetings attended/
Total meetings held
Umran Beba (Chair)
4/4
Sanjeevan Bala
4/4
Denis Hennequin
3/4
Jane Lodge
4/4
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| Bakkavor Group plc | Annual Report & Accounts 2024
The Committee’s 2024 activities
1
ESG report
Reviewed and signed off the Group’s 2023 ESG report for
publication on the Bakkavor website (bakkavor.com/en/esg/
esg-reporting).
Our dedicated ESG report contains a detailed overview
of our Trusted Partner strategy and progress against our
ESG objectives and activities throughout 2023.
2
TCFD report
The Committee reviewed the approved disclosures contained
within the TCFD report in response to the TCFD recommendations
and compliance with the FCA’s Listing Rule 9.8.6R (8).
3
Human Rights and Ethical Trade programme
Received an in-depth update and training on work to tackle
the issue of modern slavery and human rights risks, and
recommended Bakkavor’s Modern Slavery Statement to
the Group Board for approval.
4
ESG targets for the STIP and LTIP schemes
Approved the UK food waste and employee turnover targets
for the STIP, and carbon emissions targets which form part
of our LTIP.
5
Science Based Targets initiative (“SBTi”)
Provided oversight of the steps taken to prepare our net zero
delivery roadmap and validation of targets by the SBTi; net
zero across all scopes by 2050, including an interim target to
reduce net scope 1 and 2 emissions (Group-wide) and scope 3
emissions by 42% by 2030 (2021 baseline).
6
Climate transition planning
Received a dedicated training session on climate transition
plans and oversaw the steps taken to develop the Group’s plan.
7
Group Board and Committees’ performance review
The 2024 Group Board and Committees’ performance review
was internally facilitated during the year.
ESG COMMITTEE ACTIONS
The resulting report noted that the Committee should continue
the good work to further progress ESG objectives, particularly
with regard to UK food waste and carbon reduction. Further
training will be provided throughout the year focusing on
developing ESG regulation and climate transition planning.
DETAILS OF KEY ACTIVITIES
OVERSIGHT OF TRUSTED PARTNER
ESG STRATEGY
The Committee reviewed the Trusted
Partner ESG strategy and its three
focus areas of Responsible Sourcing,
Sustainability and Innovation, and
Engagement and Wellbeing. In
addition, progress on Bakkavor’s
three ESG strategic priority issues:
Climate and Net Zero, Food Waste
and Environmentally Sustainable
Sourcing were standing agenda
items for each Committee meeting.
Non-financial KPIs
The Committee received
updates from management on the
performance against each of the
following non-financial KPIs: UK
food waste; UK accidents; Group
net carbon emissions; and UK
employee turnover.
UK food waste and UK accidents
reduced in 2024. Group carbon
emissions were, however, up year-on-
year driven by an operational challenge
at one of our US sites. Net emissions
in the UK were stable (0.1% decrease)
and in China the salee of a bakery site
contributed to a emissions decrease
of 6.9%. Operational emissions have
decreased 20.9% against our baseline
year of 2021 and as such we are
approximately halfway to achieving
our near-term science-based target.
READ MORE
pg 64.
ENVIRONMENTAL
Science Based Targets initiative
(“SBTi”)
During the year, the Committee had
oversight of the steps taken to prepare
our business for net zero by developing
our delivery roadmap and embedding
net zero into our governance structures.
In 2024, we reached a significant
milestone with the validation of our
net zero aligned targets by the SBTi
which confirmed our commitment
to achieve net zero across all scopes
by 2050. This includes an interim
target to reduce net scope 1 and 2
emissions (Group-wide) and scope 3
emissions (from purchased goods
and services) by 42%, both by 2030
from a 2021 baseline.
Bakkavor Group plc | Annual Report & Accounts 2024 |
121
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ESG COMMITTEE REPORT
CONTINUED
Climate transition plan
The Committee continued to oversee
the development of the climate
transition plan.
The Committee also received a
dedicated training session, including
a benchmarking exercise and review
of the UK Transition Plan Taskforce
(“TPT”) framework. This informed
the Committee of the steps required
to develop a climate transition plan
and what we need to do in the years
ahead to set and achieve it, including
the key drivers and challenges to
be considered.
Responsible Sourcing and
Sustainability and Innovation
The Committee received regular
updates on our progress in this area
including. This covered supply chain
human rights and environmentally
sustainable sourcing, including
deforestation and biodiversity topics.
Bakkavor has committed to achieving
100% deforestation- and conversion-
free sourcing of palm oil, soy, beef
and wood pulp by the end of 2025 (UK,
2020 cut-off date
1
). This focuses on
food waste, resource efficiency and
emissions, impact of packaging and
product innovation.
We are pleased to report that in 2024,
food waste reduced to 6.0% of total
input, down from 6.6% in 2023.
We have also continued to make
progress towards achieving the UK
Plastics Pact’s 2025 industry goals
and in 2024 we removed 125m pieces
of plastic from our packaging formats.
READ MORE:
ESG: Trusted Partner pg 38.
ESG: TCFD pg 46.
SOCIAL
Engagement and Wellbeing
The Committee received updates
from the CPO and the Head of Group
ESG Strategy on the ESG impacts
on our Communities and Colleagues
stakeholder groups, including:
•
Updates on colleague safety,
wellbeing and engagement,
development and retention.
•
Succession planning.
•
Inclusion and Diversity initiatives and
activities undertaken at local sites.
Internal Human Rights and
Ethical Trade programme
During the year, the Committee received
an in-depth update on Bakkavor’s
Human Rights and Ethical Trade
programme which is built around the
UN’s Guiding Principles on Business
and Human Rights framework.
The Committee reviewed and
discussed Bakkavor’s programme
of work designed to tackle the issue
of modern slavery and human rights
risks and received training on the
progress monitoring tools used to
assess modern slavery risk in the
business and within Bakkavor’s
supply chain. This included Sedex
and Stronger Together’s (a multi-
stakeholder initiative working on the
issue of modern slavery) Progress
Monitoring Tools. The Committee is
pleased to report that Bakkavor’s
risk assessment scores have steadily
improved and we are the only large
business to hold Stronger Together’s
‘Advanced Verified’ Business
Partners status.
The Committee discussed the focus
areas of Bakkavor’s Modern Slavery
Action Plan and recommended
the Modern Slavery Statement for
approval by the Group Board.
The Modern Slavery Statement is
available on the Bakkavor website
(bakkavor.com/en/esg/esg-reporting).
Gender Pay Gap reporting
The Committee reviewed and
discussed initiatives and the work
of the I&D Committee to improve
Gender Pay Gap reporting.
Our gender pay gap report can
be found on page 79.
Ethnicity Pay Gap reporting
During the year, the Committee
had oversight of our ethnicity data
collection. As a result of initiatives at
site and Group level, ethnicity data
reporting has significantly improved
since last year, up to 82% (2023: 54%).
We will then turn our attention to
analysing the data to determine
if there are any pay gaps. As a
responsible employer, Bakkavor is
committed to taking action to close
any ethnicity pay gap evidenced by the
data analysis. Based on our timeline,
our current critical path means we
plan to publish our ethnicity pay gap
data in our FY25 Annual Report and
Accounts. Our EES results showcased
further improvement in I&D amongst
our colleagues, up 1.5%.
READ MORE
pg 109.
Governance
Throughout the year, the Committee
provided regular updates to the Group
Board on the execution of the Trusted
Partner ESG strategy and performance
against non-financial KPIs.
Looking ahead, the Committee
remains confident that our ESG
agenda strengthens and complements
Bakkavor’s business strategy,
supporting the Company to fulfil its
purpose and to grow in a positive
and sustainable way.
READ MORE:
ESG: TCFD pg 46.
ESG: Governance framework
pg 47.
Umran Beba
Chair, ESG Committee
3 March 2025
1
The cut-off date is based on the Accountability Framework Initiative definition. This means that clearance of natural forest after this date renders the affected area or production
unit, and the commodity produced there, non-compliant with no-deforestation or no-conversion commitments.
122
| Bakkavor Group plc | Annual Report & Accounts 2024
The Committee’s focus this year was
on implementing our new Directors’
Remuneration Policy and ensuring
senior executive pay was aligned with
performance. We also received and
considered feedback from colleagues
on remuneration via our workforce
engagement Non-executive Director.
Jill Caseberry
Chair of the Remuneration Committee
Committee purpose
The Remuneration Committee (“the Committee”) designs and implements the Directors’ Remuneration
Policy (“the Remuneration Policy” or “the Policy”), setting the framework and parameters within which
Directors are paid, and ensures payments are consistent with the Policy and that outcomes are in line
with the Group’s performance and aligned with the stakeholder experience.
4
scheduled meetings were
held during the year.
100%
meeting attendance by
all Committee members.
MAIN DUTIES OF THE COMMITTEE
The role of the Committee is to set
remuneration for the Executive
Directors, Chairman and key
management personnel, ensuring
that decisions are taken with a clear
understanding of the Company’s
wider remuneration principles and
practices. The Committee is key in
ensuring that the Group’s approach to
remuneration attracts and motivates
our Executives and aligns with the
long-term interests of shareholders.
DIRECTORS’
REMUNERATION REPORT
The Committee discharges its
responsibilities appropriately through
a series of scheduled meetings during
the year, linked to the Committee’s
Terms of Reference and Remuneration
Policy, which are available on the
Bakkavor website at bakkavor.com/en/
investors/annual-reports. The Terms
of Reference were last reviewed in
November 2024. The Remuneration
Policy in place during 2024 was
approved by shareholders at the
23 May 2024 AGM. Following each
Committee meeting, the Committee
Chair reports to the Group Board
on the activities of the Committee
as appropriate.
The Committee comprised three Independent Non-executive Directors (“NEDs”).
Member
Member since
Meetings attended/
Total meetings held
% of
meetings
attended
Jill Caseberry (Chair)
1 March 2021
4/4
100%
Umran Beba
1 September 2020
4/4
100%
Sanjeevan Bala
1 January 2023
4/4
100%
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123
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
SECTION 5: REMUNERATION
Key activities in 2024
1
Determined the CEO and CFO & Asia
CEO’s base salary increases, effective
1 January 2024, in the context of
performance and increases across
the wider Bakkavor workforce.
2
Reviewed performance against the
FY23 STIP and FY21 LTIP targets and
determined the respective payout and
vesting levels.
3
Determined the measures and
performance targets for the FY24
STIP and LTIP awards.
4
Agreed the terms of the new CFO’s
remuneration, upon his promotion from
UK Finance Director on 1 November 2024,
in line with the Remuneration Policy.
5
Agreed the terms of the outgoing CFO &
Asia CEO’s remuneration in line with the
Remuneration Policy.
6
Consideration of developments in market
trends, good practice and updated
investor and proxy agency guidance.
7
Received updates from the Chief People
Officer (“CPO”) on pay and benefits
across the wider workforce and how they
align with Bakkavor’s culture and those
applying to senior colleagues.
8
Received an update from Sanjeevan Bala
(our NED tasked with workforce
engagement and bringing colleague views
to the Group Board) following a Q&A
session at our Group Employee Forum
‘workforce engagement session’ in April
2024 on how Executive remuneration
aligns with Bakkavor’s wider pay policies.
Annual Statement
FY24 BUSINESS PERFORMANCE
Bakkavor delivered a strong performance in FY24,
with like-for-like revenue up 5.1% and adjusted operating
profit up 20.5% to £113.6m, ahead of market expectations.
Margin also improved, up 70 basis points to 5.0%
underpinned by our focus on efficiency.
The Group’s continued focus on financial discipline and
strong cash generation resulted in a £35.8m reduction in
debt year-on-year and leverage reduced from 1.5x to 1.1x,
at the bottom end of our target range. We continue to
operate with significant liquidity headroom against our
debt facilities.
The Group has also made progress on its ESG priorities.
UK food waste reduced from 6.6% to 6.0%, with our
continued focus on redistribution of surplus. Group net
carbon emissions were up 2.9% year-on-year, impacted
by engineering challenges related to refrigeration issues
at one of our US sites, only partially offset by emissions
reducing in the UK by 0.1% and in China by 6.9%. We
remain committed to reaching net zero in our Group
operations by 2040 and are almost halfway to our near-
term science-based target of a 42% reduction by 2030.
We have continued to invest in pay, wider benefits and
engagement initiatives, which has helped support a
730bps reduction in UK employee turnover to 18.9%.
READ MORE:
Chairman’s statement pg 10.
Chief Executive’s overview pg 12.
THIS REPORT COMPRISES:
Annual Statement:
a summary of the work of
the Committee during the year and our approach
to remuneration.
The Directors’ Remuneration Policy:
a summary
of the 2024 Policy which details the framework
and parameters within which Directors are paid.
READ MORE
pg 127.
Annual Report on Remuneration:
sets out the pay and
incentive outcomes for the year under review and how
the Remuneration Committee intends to implement
the Remuneration Policy in 2025.
READ MORE
pg 132.
There will be an advisory vote at the AGM on 22 May
2025 on this Directors’ Annual Remuneration Report,
excluding the Remuneration Policy.
124
| Bakkavor Group plc | Annual Report & Accounts 2024
REMUNERATION OUTCOMES FOR FY24
STIP
The STIP for FY24 was based on three measures which
were all met in full:
Element
Weighting Metric
Outcome
Financial
75%
Group adjusted
EBIT, also
referred to as
Group adjusted
operating profit
Met in full: FY24
Group adjusted
EBIT of £113.6m
versus maximum
of £108m
Non-financial 12.5%
Colleague
engagement
measured through
UK employee
turnover
Met in full: FY24 UK
employee turnover
of 18.9%, versus
threshold of 26.8%
and maximum
of 25.5%
Non-financial 12.5%
ESG measured
through food
waste
Met in full: FY24 UK
food waste of 6.0%,
versus threshold of
6.6% and maximum
of 6.3%
Reflecting the very strong profit delivery and performance
against both the employee turnover and food waste
measures, the Executive Directors’ STIP outcome for FY24
was 100% of the maximum opportunity.
The Committee carefully considered whether the level
of payment was appropriate or whether any adjustment
or use of negative discretion was required to reflect the
overall performance of the business and the impact on
broader stakeholders. On balance, the Committee felt that
an STIP outcome of 100% of the maximum was appropriate
given the strong financial and non-financial performance.
In arriving at this decision, the Committee took into
account the following factors:
•
The Group delivered a very strong financial performance,
achieving a 4% increase in reported revenue, a 2.6%
improvement in ROIC and margin progression despite
ongoing inflationary pressures.
•
The balance sheet remains robust, with leverage at its
lowest level since IPO and significant liquidity headroom
on debt facilities.
•
Total FY24 dividend of 8.00 pence per Ordinary share,
an increase of 10% on FY23.
•
Improvement in all KPIs for ESG, with the exception of
carbon emissions due to a localised issue in the US, as
well as a significant increase of 3.3% in employee
engagement from our 2024 Employee Engagement Survey.
•
The Bakkavor STIP applies to c.1,300 employees who will
all receive a maximum bonus for 2024 performance.
LTIP – performance share awards
Mike Edwards and Ben Waldron were granted performance
share awards on 13 April 2022. These awards were subject
to a relative total shareholder return (“TSR”) measure and
an adjusted earnings per share (“EPS”) condition, each with
a 50% weighting. Lee Miley was also granted performance
shares on 13 April 2022 in his prior role as UK Finance
Director before joining the Group Board.
An adjusted EPS of 12.3p reflects excellent year-on-year
progression, driven by the Group’s improved profitability,
and will result in this part of the award vesting at 37.5% of
the maximum. The continued strong relative performance
of the business meant that the TSR measure was just
below the upper quartile and this part will vest at 98.7% of
the maximum, reflecting the Group’s strengthened share
price and sustained progressive dividend policy. Overall,
this will result in 67.7% of the April 2022 award vesting.
The Committee believes the vesting outcome is reflective
of company and individual performance over the period
and therefore no discretion has been used to amend the
vesting outcome.
EXECUTIVE DIRECTOR TOTAL REMUNERATION IN FY24
728
32
22
910
817
390
19
12
488
671
£000s
Mike Edwards
Total remuneration
2,509
£000s
2024
2023
Base salary
728
700
Benefits
32
31
Pension entitlements
22
21
STIP
910
875
LTIP
1
817
883
Total
2,509
2,510
£000s
Ben Waldron
Total remuneration
1,580
£000s
2024
2
2023
Base salary
390
450
Benefits
19
23
Pension entitlements
12
14
STIP
488
562
LTIP
1
671
519
Total
1,580
1,568
67
4
2
83
120
£000s
Lee Miley
Total remuneration
276
£000s
2024
2
2023
Base salary
67
n/a
Benefits
4
n/a
Pension entitlements
2
n/a
STIP
83
n/a
LTIP
120
n/a
Total
276
n/a
1
Mike Edwards’ and Ben Waldron’s FY23 remuneration total includes values for both the Covid-delayed 2020 LTIP and the 2021 LTIP. The FY23 values have been updated from those
shown in last year’s report to reflect the actual share price on the relevant vesting dates and the full value of dividends that accrued over the vesting period.
2
Ben Waldron’s FY24 remuneration is pro-rated (excluding LTIP) to 31 October 2024 (10/12ths) being the date he stepped down from the Group Board as CFO & Asia CEO. Lee Miley’s
FY24 salary, benefits, pension and STIP are pro-rated from his appointment to CFO on 1 November 2024 (2/12ths). The value of his LTIP is shown in full.
Bakkavor Group plc | Annual Report & Accounts 2024 |
125
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
EXECUTIVE DIRECTOR CHANGES
On 5 September 2024, the Group announced that Ben
Waldron would be stepping down from the Board on
31 October 2024, but will remain with Bakkavor for a further
six months meaning he will leave the business at the end
of April 2025. Lee Miley, who previously held the role of UK
Finance Director and has been with Bakkavor for over 26
years, took up the role of CFO and Executive Director,
effective 1 November 2024.
Reflecting Ben’s long service with the Company, his role
in the development of the Group, and his decision to
relocate to Australia and not join a competing business,
in accordance with our Policy and the LTIP rules, the
Committee has used its discretion to treat Ben as a good
leaver. Accordingly, he is eligible to receive a pro-rated
bonus in respect of FY24 and will retain an interest in
outstanding LTIP share awards which will vest on their
normal vesting dates subject to performance and a time
pro-rata reduction for service in employment.
In his role as CFO and Executive Director, Lee Miley has
joined on a base salary of £400,000 per annum and this
will next be reviewed in January 2026. He participated
in the Executive Director bonus scheme for the final
two months of the financial year and will receive his
first LTIP award as an Executive Director in FY25.
Further details are set out in the Annual Report
on Remuneration later in this section.
HOW THE COMMITTEE WILL APPLY THE
REMUNERATION POLICY IN FY25
The Committee intends to operate the Remuneration
Policy for Executive Directors for FY25 as follows:
•
The CEO’s salary will increase by 3% to £749,840 which
is below the broader workforce rate average of 4.2%,
effective 1 January 2025. As set out above, the CFO’s
salary was set at £400,000 on appointment and will
next be reviewed in January 2026.
•
Executive Director employer pension contributions continue
to be aligned with the broader workforce rate at 3%.
•
STIP opportunities will remain at 125% of salary for the
CEO and CFO, which is below the overall Policy limit of
150% of salary. The STIP measures and weightings will
continue to be: Group adjusted EBIT (75%), UK employee
turnover (12.5%) and UK food waste (12.5%). These
criteria also apply to the broader workforce in the UK
who are eligible for the STIP, covering c.1,300 colleagues.
Regional profit performance is assessed where relevant
in the US and China.
•
It is expected that LTIP awards will be granted in FY25 at
150% of salary to the CEO and CFO, which is below the
overall Policy limit of 200% of salary. The measures will
be in line with the LTIP awards granted in FY24: 45% on
relative TSR, 40% on EPS targets and 15% on Group net
carbon emissions.
SUMMARY
The Remuneration Committee was pleased to note the
very high level of shareholder support for the 2024
Remuneration Policy and the 2023 remuneration report
at the 2024 AGM, with 99.99% of votes in favour.
The Committee is confident that the Remuneration Policy
has operated in FY24 as intended and remuneration and
company performance have been appropriately aligned.
As a result, the Committee has not made any discretionary
amendments to any remuneration outcomes.
The Committee is keen to take the views of employees on
pay into account when making decisions on the Directors’
Remuneration Policy and recognises this as an important
input into discussions. The Group Board operates with a
NED tasked with workforce engagement and for bringing
colleague views to the Group Board. Sanjeevan Bala, NED,
undertakes this role alongside his role as a member of
the Remuneration Committee. In FY24, an update and
Q&A session with Sanjeevan was convened at our Group
Employee Forum ‘workforce engagement session’. This
included a segment on how Executive remuneration aligns
with Bakkavor’s wider pay policies. Sanjeevan updated
the Committee on the discussions from the session and
this has helped inform our review of the Directors’
Remuneration Policy.
The Committee was also pleased to note significant
positive progression in all Employee Engagement Survey
questions relating to pay and benefits. As one of the
People Priorities, this reflects the step on in pay in 2024
alongside the investment in improving benefits such as the
enhancement of the staff shop provision and the roll-out
of a free healthcare benefit to all employees in the UK.
The 2024 remuneration report will be subject to the usual
advisory shareholder vote at the 2025 AGM and I hope you
will be supportive of this resolution.
Jill Caseberry
Chair, Remuneration Committee
3 March 2025
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| Bakkavor Group plc | Annual Report & Accounts 2024
The 2024 Directors’ Remuneration Policy
The Directors’ Remuneration Policy (“the Remuneration Policy” or “the Policy”) was approved by shareholders at the AGM
on 23 May 2024. The Committee will continue to operate the Policy in 2025. In this year’s remuneration report, we have set
out a summary of the 2024 Policy. A copy of the full Policy is available in the 2023 Annual Report and Accounts which can
be found on our website at: bakkavor.com/en/investors/annual-reports.
REMUNERATION POLICY TABLE SUMMARY
The table below sets out, for each element of compensation, a summary of how remuneration is structured and how
it supports the Company’s strategy.
Executive Directors
Purpose and link
to strategy
Operation
Maximum opportunity
Performance metrics
Base salary
To recruit and retain
Executives of the
highest calibre.
Normally reviewed annually. Changes
are generally effective from the start
of the financial year.
No prescribed maximum. Increases
will take into account prevailing
market and economic conditions
and the approach to colleague pay
throughout the organisation.
Executive Directors’
performance is a factor
considered when
determining salaries.
Benefits
Provided to assist
with retention and
recruitment.
The main benefits currently provided
include family private medical
insurance, life assurance, income
protection, health screening,
company car/car allowance and
travel insurance.
No maximum cap on the value
of benefits.
Not performance-related.
Pension
To provide a
contribution towards
life in retirement.
In the form of employer contributions
to the Company’s pension plan and/or
a salary supplement in lieu of pension.
Pension contributions in line
with the workforce rate (which
is currently 3% of base salary).
Not performance-related.
Short-Term Incentive Plan (“STIP”)
Rewards achievement
of stretching objectives
that support the
Group’s corporate
goals and delivery of
the business strategy.
Based on measures and targets
that are agreed by the Remuneration
Committee.
Two-thirds of the STIP is payable
in cash and one-third is deferred
in shares for three years.
Recovery and withholding
provisions apply.
Maximum opportunity is 150%
of salary.
FY25 opportunity is 125% of salary.
Performance measures
may vary from year to year
to ensure that they promote
business strategy and
shareholder value.
The majority will be based
on financial measures.
Long-Term Incentive Plan (“LTIP”)
Incentivises successful
execution of business
strategy over the longer
term and provides
long-term retention.
Awards granted annually in the form
of nil or nominal cost options that vest
according to performance conditions,
normally measured over three
financial years.
A two-year post-vesting holding
period applies and dividends
may accrue on vested awards.
Recovery and withholding
provisions apply.
Maximum opportunity is 200%
of base salary.
FY25 award level is 150%
of salary.
Vesting subject to achievement
of stretching targets which
may include relative TSR
and EPS, or other relevant
measures aligned with
delivering Group strategy.
Bakkavor Group plc | Annual Report & Accounts 2024 |
127
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Purpose and link
to strategy
Operation
Maximum opportunity
Performance metrics
All-colleague share schemes
Encourages colleague
share ownership
and alignment with
shareholders.
Tax-approved share plans may
be operated.
Subject to the limits set by HMRC
from time to time.
Not performance-related.
Share ownership guidelines
To build a meaningful
shareholding in the
Group to further align
their interests with
those of shareholders.
Requirement to retain at least half of
any share awards vesting (net of tax)
until required level of holding reached.
Shares owned, unvested deferred
STIP awards and vested LTIP awards
may count on a net of tax basis.
During employment: 200%
of base salary.
Post-employment: Lower of
shareholding at cessation and
200% of salary for two years.
Not performance-related.
Chairman and Non-executive Directors’ (“NEDs”) fees
To attract a Chairman
and NEDs who have a
broad range of
experience and skills.
NEDs may receive an annual basic
fee and additional fees for additional
responsibilities.
Fee levels take account of market
movements, responsibilities and
ongoing time commitments.
Not performance-related.
Remuneration scenarios for Executive Directors
The charts below show an estimate of the FY25 remuneration package for each Executive Director under four
performance scenarios, which are based on the Remuneration Policy set out above.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Max with growth
Maximum
On-target
Minimum
Max with growth
Maximum
On-target
Minimum
Long-term incentive
Annual bonus
Fixed
Share price growth
CEO
£000s
CFO
100%
£804
52%
£1,554
28%
£2,866
24%
30%
18%
33%
27%
39%
33%
16%
£3,429
100%
£436
52%
£836
28%
£1,536
24%
30%
18%
33%
27%
39%
33%
16%
£1,836
Assumptions:
Performance scenario
Minimum
Target
Maximum
Maximum with share price growth
Base salary
As at 1 January 2025
Benefits
Estimated value for 2025
based on 2024 actual value
Pension
3% of salary
STIP
0% of maximum
50% of maximum
100% of maximum
(being 125% of salary)
LTIP
0% of maximum
25% of maximum
100% of maximum
(being 150% of salary)
As per the maximum, plus a 50%
share price increase over three
years is assumed
128
| Bakkavor Group plc | Annual Report & Accounts 2024
RECRUITMENT POLICY
Where it is necessary to appoint or replace an Executive
Director, the Committee’s approach when considering the
overall remuneration arrangements in the recruitment of
a new Executive Director is to take account of the calibre,
expertise and responsibilities of the individual, his or her
remuneration package in their prior role, and market
rates. Remuneration will be in line with our Policy and the
Committee will not pay more than is necessary to facilitate
recruitment. The remuneration package for a new Executive
Director will be set in accordance with the terms of the
Company’s approved Remuneration Policy in force at the
time of appointment. Further details are provided below:
Base salary
The Committee will set a base salary appropriate to
the calibre, experience and responsibilities of the new
appointee. In arriving at a salary, the Committee may take
into account, amongst other things, the market rate for
the role, internal relativities and his or her salary level
prior to joining the Group Board.
The Committee has the flexibility to set the salary of a new
Executive Director at a lower level initially, with a series
of planned increases implemented over the following few
years to bring the salary to the desired positioning, subject
to individual performance.
In exceptional circumstances, the Committee has the
ability to set the salary of a new Executive Director at a rate
higher than the market level to reflect the criticality of the
role and the experience and performance of the individual.
Benefits
Benefits will normally be consistent with the principles
of the Policy set out in the Policy table. The Company may
award certain additional benefits and other allowances
including, but not limited to, those to assist with relocation
support, temporary living and transportation expenses,
educational costs for children and tax equalisation to allow
flexibility in employing an overseas national.
STIP
The maximum STIP opportunity is 150% of base salary.
LTIP
The maximum opportunity is 200% of base salary.
This may be used on recruitment and on an ongoing basis,
if appropriate.
Replacement awards
In addition to the above, the Committee may offer
additional cash and/or share-based elements in order to
‘buy out’ remuneration relinquished on leaving a former
employer. In the event of Bakkavor acquiring or merging
with a business, awards held at the former employer may
be rolled over into awards over Bakkavor shares.
In the event that such a buyout is necessary to secure the
services of an Executive Director, the structure of any award or
payment will mirror, as far as is possible, the arrangements in
place at the incoming Executive Director’s previous employer.
Any share awards made in this regard may have no
performance conditions, or different performance
conditions, or a shorter vesting period compared with
the Company’s existing plans, as appropriate.
Shareholders will be informed of any buyout arrangements
at the time of the Executive Director’s appointment.
Notice periods
Notice periods shall be up to 12 months.
Depending on the timing and responsibilities of the
appointment, it may be necessary to set different STIP
and/or LTIP performance measures and targets from
those applicable to other Executive Directors.
Any incentive awards granted to employees prior to their
promotion to the Group Board will be permitted to vest on
their original terms. The terms of appointment for a NED
would be in accordance with the Remuneration Policy for
NEDs, as set out in the Policy table.
TERMINATION AND LOSS-OF-OFFICE PAYMENTS
The Group’s policy on remuneration for Executive Directors
who leave the Group is consistent with general market
practice. The Committee will exercise its discretion when
determining amounts that should be paid to leavers, taking
into account the facts and circumstances of each case.
It is the Company’s policy that the period of notice for
Executive Directors will not normally exceed 12 months. In
the event of an Executive Director’s departure, a payment
in lieu of notice may be payable. The Company may pay the
value of the Executive Director’s base salary together with
accrued holiday entitlement.
The Company is unequivocally against rewards for failure;
the circumstances of any departure, including the
individual’s performance, would be taken into account in
every case. Statutory redundancy payments may be made,
as appropriate. Service agreements may be terminated
without notice and without payment in lieu of notice in
certain circumstances, such as gross misconduct. The
Company may require the Executive Director to work during
their notice period or may choose to place the individual on
garden leave; for example, to ensure the protection of the
Company’s and shareholders’ interests where the Executive
Director has access to commercially sensitive information.
Bakkavor Group plc | Annual Report & Accounts 2024 |
129
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
The Committee may agree payments it considers reasonable
in settlement of potential legal claims. This may include an
entitlement to compensation in respect of leavers’ statutory
rights under employment protection legislation in the UK or
in other jurisdictions.
Except in the case of gross misconduct or resignation, the
Company may, at its absolute discretion, reimburse for
reasonable professional fees relating to the termination
of employment and, where an Executive Director has been
required to relocate, to pay reasonable repatriation costs,
including possible tax exposure costs.
Ordinarily, Executive Directors have no entitlement to a
STIP payment in the event they cease to be employed by
the Group or are under notice of termination of employment
at the date that their STIP would otherwise be paid.
However, they may be considered for a STIP payment by the
Committee in ‘good leaver’ circumstances (i.e. death, injury,
disability, retirement, their employing company or the
business for which they work being sold out of the Group
or in other circumstances at the discretion of the
Remuneration Committee). Any such STIP payment would
ordinarily be subject to a pro-rata reduction based on the
period worked in the relevant year, and there would be no
requirement for any portion of such STIP payment to be
deferred into an award over shares under the Deferred
STIP. In the event of an Executive Director’s departure, any
outstanding share awards will be treated in accordance
with the plan rules as follows:
Deferred STIP (“DSTIP”)
As a general rule, a DSTIP award will lapse upon a
participant ceasing to hold employment or ceasing
to be a Director within the Group (where relevant).
In the event of a participant’s death, injury, disability,
retirement, their employing company or the business for
which they work being sold out of the Group or in other
circumstances at the discretion of the Remuneration
Committee, awards will not be forfeited but will instead
normally vest in full on the original vesting date (or on
the date of cessation if the Remuneration Committee so
determines) to such extent (which may include the full
extent of the award) as the Remuneration Committee
determines appropriate.
In exceptional circumstances, the Remuneration
Committee may allow the awards to vest on cessation
of the participant’s employment.
LTIP
As a general rule, an LTIP award will lapse upon a
participant ceasing to hold employment or ceasing
to be a Director within the Group (where relevant).
However, if the participant ceases to be an employee or
a Director within the Group because of their death, injury,
disability, retirement, their employing company or the
business for which they work being sold out of the Group
or in other circumstances at the discretion of the
Remuneration Committee, then their award will vest on
the date when it would have vested if they had not so
ceased. The extent to which an award will vest in these
situations will depend upon two factors:
•
The extent to which the performance conditions (if any)
have been satisfied at that time.
•
The pro-rating of the award by reference to the period
of time served in employment during the normal vesting
period, although the Remuneration Committee can
decide to reduce or eliminate the pro-rating of an award
if it regards it as appropriate to do so in the particular
circumstances.
Alternatively, if a participant ceases to be an employee or
Director in the Group for one of the ‘good leaver’ reasons
specified above (or in other circumstances at the discretion
of the Remuneration Committee), the Remuneration
Committee can decide that their award will vest on
cessation, subject to:
•
The performance conditions measured at that time.
•
Pro-rating by reference to the time of cessation, as
described above.
•
Such treatment shall also apply in the case of death.
In the event of a change of control, in accordance with the
relevant scheme rules:
•
Unvested DSTIP awards will vest on the date of a change
of control; and
•
Unvested LTIP awards will vest on the date of a change
of control, to the extent to which performance conditions
have been satisfied and after a pro-rata reduction for time
elapsed during the three-year vesting period although
the Remuneration Committee can decide to reduce or
eliminate the pro-rating of an award if it regards it as
appropriate to do so in the particular circumstances.
130
| Bakkavor Group plc | Annual Report & Accounts 2024
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
The Company does not have agreements with any
Director that would provide compensation for loss of
office or employment resulting from a takeover except
that provisions of the Company’s share schemes
and plans may cause options and awards granted to
colleagues under such schemes and plans to vest
on a takeover (see above). In accordance with long-
established policy, all Executive Directors have rolling
service agreements which may be terminated in
accordance with the terms of these agreements.
Directors’ service agreements are kept for inspection
by shareholders at the Company’s registered office.
Name
Date of joining
Bakkavor
Date of service
contract
Notice period
Mike Edwards
4 September
2001
28 September
2022
12 months
either party
Ben Waldron
1
1 June 2011
12 October
2020
12 months
either party
Lee Miley
1 July 1998
4 September
2024
12 months
either party
1
Ben Waldron stepped down from the Group Board and as CFO on 31 October 2024.
POLICY ON EXTERNAL APPOINTMENTS
The Group Board believes that it may be beneficial to the
Group for Executives to hold non-executive directorships
outside the Group. Any such appointments are subject to
approval by the Board and the Director may retain any
fees received at the discretion of the Board. No Executive
Director currently holds any external non-executive
directorships.
NED TERMS OF ENGAGEMENT
Each of the NEDs are engaged under a market-standard
NED appointment letter, which states that the appointment
will continue for a renewable three-year term provided
that the appointment must not continue for more than nine
years in total, unless exceptional circumstances apply.
In any event, each appointment is terminable by either
party on one month’s written notice with no other right
to compensation for loss of office. All NEDs are subject to
annual re-election at each AGM. The dates of appointment
of each of the NEDs holding office at the FY24 year-end
are summarised in the table below.
Non-executive Director
Date of joining
Bakkavor
Date of contract
or date of first
appointment
Simon Burke (Chairman) 1 December 2016
20 October 2017
Sanjeevan Bala
1 August 2021
5 July 2021
Umran Beba
1 September 2020 1 September 2020
Robert Berlin
16 January 2024
16 January 2024
Jill Caseberry
1 March 2021
24 February 2021
Agust Gudmundsson
1 August 1986
(founder)
28 September 2022
2
Lydur Gudmundsson
1 August 1986
(founder)
20 October 2017
Denis Hennequin
20 October 2016
20 October 2017
Jane Lodge
3 April 2018
3 April 2018
2
NED appointment effective from 1 November 2022.
Bakkavor Group plc | Annual Report & Accounts 2024 |
131
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Annual Report on Remuneration
This section of the report has been prepared in accordance with Part 3 of The Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 (as amended) and Rule 6.6.6 of the Listing Rules. The Annual Statement
and this Annual Report on Remuneration will be put to a single advisory shareholder vote at the AGM on 22 May 2025.
This part of the report comprises five sections:
A. Remuneration for FY24
B. Directors’ share ownership and share interests
C. Pay comparison
D. Remuneration Committee membership, governance and voting
E. Implementation of Remuneration Policy in 2025
A. Remuneration for FY24
SINGLE TOTAL FIGURE OF DIRECTORS’ REMUNERATION (AUDITED)
The total remuneration of the individual Directors who served during the financial year is shown below.
£000s
Base
salary/fee
Benefits
4
Pension
5
Total fixed
remuneration
STIP
LTIP
6
Total variable
remuneration
Total
remuneration
Executive Directors
Mike Edwards
2024
728
32
22
782
910
817
1,727
2,509
2023
700
31
21
752
875
883
1,758
2,510
Ben Waldron
1
2024
390
19
12
421
488
671
1,159
1,580
2023
450
23
14
487
562
519
1,081
1,568
Lee Miley
1
2024
67
4
2
73
83
120
203
276
2023
–
–
–
–
–
–
–
–
Non-executive Directors
Simon Burke
(Chairman)
2024
220
–
–
220
–
–
–
220
2023
211
–
–
211
–
–
–
211
Sanjeevan Bala
2024
77
1
–
78
–
–
–
78
2023
74
1
–
75
–
–
–
75
Umran Beba
2024
77
4
–
81
–
–
–
81
2023
74
6
–
80
–
–
–
80
Robert Berlin
1
2024
–
–
–
–
–
–
–
–
2023
–
–
–
–
–
–
–
–
Jill Caseberry
2024
77
1
–
78
–
–
–
78
2023
74
1
–
75
–
–
–
75
Patrick Cook
3
2024
–
–
–
–
–
–
–
–
2023
–
–
–
–
–
–
–
–
Agust Gudmundsson
2024
77
–
–
77
–
–
–
77
2023
74
3
–
77
–
–
–
77
Lydur Gudmundsson
2024
77
–
–
77
–
–
–
77
2023
74
–
–
74
–
–
–
74
Denis Hennequin
2024
77
–
–
77
–
–
–
77
2023
74
–
–
74
–
–
–
74
Jane Lodge
2024
77
4
–
81
–
–
–
81
2023
74
2
–
76
–
–
–
76
Total
2024
1,944
65
36
2,045
1,481
1,608
3,089
5,134
2023
1,879
67
35
1,981
1,437
1,402
2,839
4,820
Notes to the remuneration table:
1
For Ben Waldron and Lee Miley, values for 2024 for salary, benefits, pension and STIP are pro-rated to their respective time as CFO. LTIP (2022 award) values are shown in full.
2
Robert Berlin joined the Group Board on 16 January 2024 and does not receive a fee for his services.
3
Patrick Cook stepped off the Group Board on 16 January 2024 and did not receive a fee for his services.
4
Relates to taxable benefits. For Executive Directors, benefits comprised car allowance, fuel, benefit allowance and family private medical cover. For NEDs, benefits values (including
those grossed up for tax purposes) are for reasonable expenses related to business-related travel and accommodation only.
5
The amounts in the table above relate solely to pension contributions/pension cash allowance. In addition, Mike Edwards and Lee Miley are members of the Group’s UK defined
benefit scheme but no longer accrue any pension benefits under the scheme. The values of their legacy benefits are shown on page 134.
6
The April 2022 awards are included in the LTIP column for 2024. These awards will vest at 67.7% on 13 April 2025 and for Mike Edwards and Ben Waldron will be subject to a two-
year holding period. The total value of the award included in the LTIP column for Mike Edwards is £817,363 (of which £143,084 relates to dividend equivalent payments and of which
£174,598 is attributable to share price growth over the period from the date of grant to the vesting date) and for Ben Waldron is £671,317 (of which £117,517 relates to dividend
equivalent payments and of which £143,401 is attributable to share price growth over the period from the date of grant to the vesting date) and for Lee Miley is £119,504 (of which
£20,919 relates to dividend equivalent payments and of which £25,528 is attributable to share price growth over the period from the date of grant to the vesting date). For the purpose
of this table the values of the award have been calculated using an average share price over the three-month period from 29 September 2024 to 28 December 2024 of 146.28 pence.
21.3% of the values are attributable to share price growth. No discretion was applied by the Committee in determining the vesting outcomes. The 2023 values have been updated
from those shown in last year’s report to reflect the actual share price on the relevant vesting dates and the full value of dividends that accrued over the vesting period. No discretion
was applied by the Committee in determining the 2023 vesting outcomes.
132
| Bakkavor Group plc | Annual Report & Accounts 2024
2024 STIP OUTCOME (AUDITED)
In FY24, c.1,300 colleagues were eligible for the STIP, subject to meeting the same performance objectives, established at
the beginning of the financial year by reference to suitably challenging corporate goals over the 12-month period. In FY24,
the STIP targets and performance-related outcomes were as follows:
Metrics
Weighting
Threshold
(20%)
Maximum
(100%)
Actual
performance
% outcome
Group adjusted EBIT
75%
£98m
£108m
£113.6m
100%
UK employee turnover
12.5%
26.8%
25.5%
18.9%
100%
UK food waste
12.5%
6.6%
6.3%
6.0%
100%
Total (% of max)
100%
As set out in the Annual Statement, the Committee considered carefully whether the level of payment was appropriate or
whether any adjustment or use of negative discretion was required, but felt that a STIP outcome of 100% of the maximum was
appropriate. On balance, the Committee is confident that the 100% payout fairly reflects the strong performance across all
measures in what was a challenging FY24 and took into account the following factors in making its decision on the 2024 STIP:
•
The Group delivered an excellent financial performance, achieving a 4% increase in revenue, a 2.6% improvement in
ROIC and margin progression despite a challenging backdrop.
•
The balance sheet remains robust, with leverage at the bottom end of the target range and significant liquidity headroom
on debt facilities.
•
Total FY24 dividend of 8.00 pence per Ordinary share, an increase of 10% on FY23.
•
Improvement in our Group engagement score by 3.3% to 75.1% through our 2024 Employee Engagement Survey.
•
The plan measures apply to all c.1,300 eligible employees.
Maximum STIP opportunity
(% of salary)
STIP payout
(% of maximum)
STIP earned
(£000s)
Mike Edwards
125%
100%
910
Ben Waldron
1
125%
100%
488
Lee Miley
1
125%
100%
83
1
Ben Waldron’s STIP is pro-rated to 31 October 2024 (10/12ths) when he stepped down from the Group Board. Lee Miley’s STIP is pro-rated from 1 November 2024 (2/12ths) from
when he joined the Group Board.
For Mike Edwards and Lee Miley, two-thirds of the STIP earned will be paid in cash and the remaining one-third will be
deferred in shares under the DSTIP for three years. Ben Waldron’s STIP will be paid in cash in line with the Policy. There are
no performance conditions attached to the vesting of deferred shares and these awards vest subject to continued employment.
LTIP VESTING – 2022 AWARD (AUDITED)
On 13 April 2022, Mike Edwards was granted awards over 680,889 shares and Ben Waldron was granted awards over
559,228 shares which will vest on 13 April 2025. The performance shares were based on adjusted EPS and TSR performance
conditions, each with an equal weighting. The performance period for both measures ended in December 2024 and the
awards will ordinarily become exercisable on the third anniversary of grant, subject to continued service. These awards
are subject to a two-year holding period. Prior to his joining the Group Board, Lee Miley was granted awards over 99,552
performance shares with the same performance conditions. However, this award is not subject to any holding period.
Threshold
(25% vesting)
Maximum
(100% vesting)
Actual
performance
Vesting
(% of maximum)
Relative TSR
1
(50%)
Median rank
Upper quartile
rank or higher
41.8% TSR, ranked just
below upper quartile
97.9%
EPS (50%)
12.0p
13.8p or higher
12.3p
37.5%
1
TSR is measured over the three-year period commencing from the start of FY22 against the following companies: Associated British Foods, A.G. Barr, Britvic, Coca-Cola HBC,
Compass Group, Cranswick, Diageo, Domino’s Pizza Group, Fuller Smith & Turner, Greencore Group, Greggs, Hilton Food Group, JD Wetherspoon, J Sainsbury, Marston’s, Mitchells
& Butlers, Ocado Group, Premier Foods, SSP Group, Tate & Lyle, Tesco, Unilever and Whitbread.
In FY24, the Group delivered a strong performance with profit up significantly year-on-year, which in turn saw an improvement
in adjusted EPS, resulting in a vesting of 37.5% for this part. The Company’s TSR of 41.8% ranked it just below the upper quartile
of the comparator group and 97.9% will vest for this part. Overall, 67.7% of the total award will vest. As such, for Mike Edwards
the number of shares vesting will be 460,961 with an additional 97,817 dividend equivalents; for Ben Waldron it will be 378,597
with an additional 80,339 dividend equivalents; and for Lee Miley it will be 67,396 with an additional 14,301 dividend equivalents.
Awards for Mike Edwards and Ben Waldron are subject to a post-vesting holding period and shareholding guidelines as per the
Remuneration Policy. The vesting values shown in the single figure table are based on an average three-month share price to
28 December 2024 of 146.28 pence.
Bakkavor Group plc | Annual Report & Accounts 2024 |
133
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
LOSS OF OFFICE PAYMENTS (AUDITED)
Ben Waldron stepped down from the Group Board and as CFO on 31 October 2024 and he will remain an employee of the Group
until 30 April 2025. Until he ceases employment, he will receive his base salary, benefits and pension. He will not receive and
has waived his entitlement to a payment in lieu of notice for the remaining unexpired period of his 12-month notice and no other
payments for loss of office will be payable.
Given Ben’s tenure at Bakkavor, the business performance and share price growth during his time as both CFO and CFO &
Asia CEO, and his decision to relocate abroad and not join a competing business, the Remuneration Committee decided to
treat Ben as a ‘good leaver’ in respect of his incentives. For annual bonus, in line with the policy for good leavers, the 2024
bonus will be paid in cash and no part of the bonus will be deferred. His bonus in respect of qualifying services as a Director
is shown in the single figure table. In line with the LTIP rules, as a good leaver, he will retain unvested awards which will vest
on their normal vesting dates (being the third anniversary of their respective grant dates) subject to performance and a
reduction for time pro-rating and a two-year holding period will apply. This treatment is within the scope of the Remuneration
Policy, his service contract and the relevant incentive scheme rules. Ben will not receive a LTIP award in 2025.
PAYMENTS TO FORMER DIRECTORS (AUDITED)
Since stepping down from the Board on 31 October 2024 Ben Waldron has worked on a number of projects and has played an
important role in ensuring a smooth handover to the new CFO. In respect of the period from his stepping down from the Group Board
on 31 October 2024 to 28 December 2024, he continued to receive his salary, taxable benefits and pension cash allowance. For the
same period, in respect of the FY24 performance year, Ben will also receive a cash bonus payment which will be paid to him in March
2025. All these payments are in addition to those in respect of qualifying services as a Director as shown in the single figure table.
PENSIONS DISCLOSURE (AUDITED)
During FY24, Mike Edwards received a non-pensionable salary supplement equal to 3% of salary, in line with the broader
workforce rate. Ben Waldron and Lee Miley received a pension allowance equal to 3% of salary paid in part into a money
purchase pension plan with the balance as a pension cash allowance. Mike Edwards and Lee Miley are, in addition,
deferred members of the Bakkavor Pension Scheme (“the Scheme”) but no longer accrue a pension benefit under the
Scheme. The values of their legacy benefits are shown below:
Executive Director
Defined benefit pension accrued at
28 December 2024
Defined benefit pension accrued at
30 December 2023
Mike Edwards
£45,566
£43,183
Lee Miley
£26,800
£n/a
Accrued pensions ceased to be linked to salary from 31 March 2011 and now increase in line with the standard provisions
that apply to all deferred members in the Scheme. No additional amount is due in the event of early retirement. The normal
retirement age under the Scheme is 65.
B. Directors’ share ownership and share interests
LTIP AND DEFERRED STIP AWARDS GRANTED IN 2024 (AUDITED)
On 11 April 2024, the following awards, structured as nil-cost options, were made under the LTIP to Executive Directors:
Date of grant
Basis of award
(% of salary)
Face value of
awards at grant
1
Number of shares
under award
Date of
vesting
Mike Edwards
11 April 2024
150%
£1,091,999
972,135
11 April 2027
Ben Waldron
11 April 2024
150%
£702,000
624,944
11 April 2027
Lee Miley
2
11 April 2024
50% PSA
25% RSA
£130,000
£65,000
115,730
57,865
11 April 2027
1
Based on the three-day average share price of £1.1233 to 10 April 2024. 25% vests for delivering threshold performance.
2
Lee Miley was made both a performance share award (PSA) and a restricted share award (RSA) prior to his joining the Group Board.
The awards will ordinarily become exercisable on the third anniversary of grant subject to continued service and the extent to which
(for PSAs only) adjusted EPS, TSR and carbon emissions performance conditions are satisfied. The weightings and measures are
40% adjusted EPS, 45% TSR and 15% carbon emissions. The performance period for all measures ends on 27 December 2026.
Relative TSR
1
Earnings per share (for FY26)
Group net carbon emissions
Portion of award vesting
Below median
Less than 10.0p
Less than 11,100 tonnes
0%
Median
10.0p
11,100 tonnes
25%
Between median and upper quartile
Between 10.0p and 11.5p
Between 11,100 and
12,210 tonnes
Pro-rata on straight-line basis
between 25% and 100%
Upper quartile
11.5p
12,210 tonnes or more
100%
1
TSR is measured over the three-year period commencing from the start of FY24 against the following companies: Associated British Foods, A.G. Barr, Britvic, Coca-Cola HBC,
Compass Group, Cranswick, Diageo, Domino’s Pizza Group, Fuller Smith & Turner, Greencore Group, Greggs, Hilton Food Group, JD Wetherspoon, J Sainsbury, Marston’s, Mitchells
& Butlers, Ocado Group, Premier Foods, SSP Group, Tate & Lyle, Tesco, Unilever and Whitbread.
134
| Bakkavor Group plc | Annual Report & Accounts 2024
Awards for Mike Edwards and Ben Waldron will be subject to a two-year post-vesting holding period following vesting
as well as malus and clawback provisions.
On 11 April 2024, awards were granted under the Deferred STIP calculated as one-third of the FY23 STIP as follows:
Date of grant
Form of award
Face value of
awards at grant
1
Number of shares
under award
Date of
vesting
Mike Edwards
11 April 2024
Nil cost option
£291,667
259,651
11 April 2027
Ben Waldron
11 April 2024
Nil cost option
£187,500
166,918
11 April 2027
1
Based on the three-day average share price of £1.1233 to 10 April 2024.
Lee Miley was not an Executive Director during FY23 and, therefore, none of his FY23 bonus was deferred in shares.
OUTSTANDING LTIP AND DEFERRED STIP AWARDS (AUDITED)
Details of all outstanding performance share awards (“PSAs”), restricted share awards (“RSAs”) and Deferred STIP
(“DSTIP”) awards held by Executive Directors:
Award type
1
Ex.
price
Grant
date
Interest at
31 Dec
2023
Awards
granted
in year
Awards
vested
in year
Awards
exercised
in year
Awards
lapsed
in year
Dividend
equivalents
Interest at
28 Dec
2024
2
Date of
vesting
Mike
Edwards
LTIP 2017
£0
1 July 2017
600,000
–
–
600,000
–
–
–
1 April 2020
LTIP 2017
£0
1 July 2017
400,000
–
–
400,000
–
–
–
1 April 2022
LTIP 2018 RSA
£0
9 April 2018
81,385
–
–
86,533
–
5,148
–
9 April 2021
LTIP 2019 RSA
£0
9 April 2019
118,094
–
–
130,521
–
12,427
–
9 April 2022
LTIP 2020 PSA
£0
14 Oct 2020
460,121
–
-
554,314
–
94,193
–
14 Oct 2023
LTIP 2020 RSA
£0
14 Oct 2020
230,060
–
–
277,156
–
47,096
–
14 Oct 2023
LTIP 2021 PSA
£0
26 Apr 2021
545,872
–
272,936
– 272,936
55,874
328,810
26 Apr 2024
LTIP 2022 PSA
£0
13 Apr 2022
680,889
–
–
–
–
–
680,889
13 Apr 2025
DSTIP 2022
£0
13 Apr 2022
138,055
–
–
–
–
–
138,055
13 Apr 2025
LTIP 2023 PSA
£0
12 Apr 2023
1,034,482
–
–
–
–
–
1,034,482
12 Apr 2026
DSTIP 2023
£0
12 Apr 2023
54,249
–
–
–
–
–
54,249
12 Apr 2026
LTIP 2024 PSA
£0
11 Apr 2024
–
972,135
–
–
–
–
972,135
11 Apr 2027
DSTIP 2024
£0
11 Apr 2024
–
259,651
–
–
–
–
259,651
11 Apr 2027
Ben
Waldron
LTIP 2017
£0.764
1 July 2017
134,162
–
–
134,162
–
–
–
1 April 2020
LTIP 2020 PSA
£0
14 Oct 2020
208,333
–
–
250,981
–
42,648
–
14 Oct 2023
LTIP 2020 RSA
£0
14 Oct 2020
104,166
–
–
125,490
–
21,324
–
14 Oct 2023
LTIP 2021 PSA
£0
26 Apr 2021
419,818
–
209,909
– 209,909
42,971
252,880
26 Apr 2024
LTIP 2022 PSA
£0
13 Apr 2022
559,228
–
–
–
–
–
559,228
13 Apr 2025
DSTIP 2022
£0
13 Apr 2022
106,175
–
–
–
–
–
106,175
13 Apr 2025
LTIP 2023 PSA
£0
12 Apr 2023
665,024
–
–
–
–
–
665,024
12 Apr 2026
DSTIP 2023
£0
12 Apr 2023
42,042
–
–
–
–
–
42,042
12 Apr 2026
LTIP 2024 PSA
£0
11 Apr 2024
–
624,944
–
–
–
–
624,944
11 Apr 2027
DSTIP 2024
£0
11 Apr 2024
–
166,918
–
–
–
–
166,918
11 Apr 2027
Lee Miley
LTIP 2017
£0.764
1 July 2017
114,530
–
–
-
–
–
114,530
1 April 2020
LTIP 2020 PSA
£0
14 Oct 2020
152,712
–
–
183,974
–
31,262
–
14 Oct 2023
LTIP 2021 PSA
£0
26 Apr 2021
75,488
–
37,744
–
37,744
7,726
45,470
26 Apr 2024
LTIP 2022 PSA
£0
13 Apr 2022
99,552
–
–
–
–
–
99,552
13 Apr 2025
LTIP 2023 PSA
£0
12 Apr 2023
119,743
–
–
–
–
–
119,743
12 Apr 2026
LTIP 2023 RSA
£0 22 May 2023
61,576
–
–
–
–
–
61,576
22 May 2026
LTIP 2024 PSA
£0
11 Apr 2024
–
115,730
–
–
–
–
115,730
11 Apr 2027
LTIP 2024 RSA
£0
11 Apr 2024
–
57,865
–
–
–
–
57,865
11 Apr 2027
1
Ben Waldron and Mike Edwards received restricted share awards in their roles as Senior Executives prior to joining the Group Board.
2
Dividend equivalents added for all vested but unexercised LTIP awards (excluding 2017 pre-IPO LTIP) in ‘Interest at 28 December 2024’ column.
3
Mike Edwards exercised 2,048,524 nil cost options on 10 April 2024 at a share price of £1.135 and a market value of £2,325,075, retaining 1,085,717 shares net of tax and NICs. Ben
Waldron exercised 510,633 shares on 10 April 2024 at a share price of £1.135 and a market value gain of £477,103, retaining 222,772 shares net of tax and NICs. Of these, 134,162 had
an exercise price of 76.4p and the gain on exercise for these shares was £49,774. Lee Miley exercised 183,974 nil cost options on 10 April 2024 at a share price of £1.135 and a market
value of £208,810, retaining 97,506 shares net of tax and NICs.
Bakkavor Group plc | Annual Report & Accounts 2024 |
135
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (AUDITED)
The share interests of each Director as at 28 December 2024 (together with interests held by connected persons) are
set out in the table below. To align Executives with the interests of shareholders, the Remuneration Committee has
implemented shareholding guidelines for Executive Directors and key senior colleagues. The guidelines require that
Executive Directors build up and maintain an interest in the Ordinary shares of the Company that is 200% of their
annual base salary and retain half of any vested deferred STIP and post-IPO LTIP awards (net of any taxes due) until
this guideline is met. A two-year post-vesting holding period applies to LTIPs granted to Executive Directors. LTIPs
granted to Executive Directors prior to their appointment to the Board do not have a post-vesting holding requirement.
Shareholdings for Directors who have held office during the year ended 28 December 2024 are set out as a percentage
of salary or fees in the table below. During the period from 28 December 2024 to the publication of this report, there
have been no changes in the Directors’ share interests and none of the Directors hold any loans against their shares
or otherwise use their shares as collateral.
Beneficially
owned shares
28 December
2024
Beneficially
owned shares
30 December
2023
Vested but
unexercised
share awards
Unvested
share awards
– LTIP
Unvested
share awards
– DABP
Total interests
held at
28 December
2024
Shareholding
as a % of
salary
2
Executive Directors
Mike Edwards
1,085,717
–
328,810
2,687,506
451,955
4,553,988
193.1%
1
Ben Waldron
282,674
59,902
252,880
1,849,196
315,135
2,699,885
158.8%
1
Lee Miley
97,506
–
45,470
454,466
–
597,442
35.4%
Non-executive Directors
Simon Burke
(Chairman)
65,000
65,000
–
–
–
65,000
n/a
Sanjeevan Bala
–
–
–
–
–
–
–
Umran Beba
–
–
–
–
–
–
–
Jill Caseberry
–
–
–
–
–
–
–
Patrick Cook
–
–
–
–
–
–
–
Agust Gudmundsson
142,103,505
142,103,505
–
–
–
142,103,505
n/a
Lydur Gudmundsson
142,303,505
142,303,505
–
–
–
142,303,505
n/a
Denis Hennequin
–
–
–
–
–
–
–
Jane Lodge
50,000
50,000
–
–
–
50,000
n/a
1
Calculation based on share price of £1.45 as at 28 December 2024.
2
Shares owned outright by the Executive Director or a connected person are included. Unvested restricted share awards are excluded. Unvested shares or share options which are
subject to a performance condition do not count towards the in-employment guideline. Unvested deferred STIP shares and vested LTIP awards (excluding pre-IPO awards) which
remain unexercised are included on a net of tax basis and count towards the in-employment guideline. Post employment share ownership guidelines will apply to Ben Waldron.
136
| Bakkavor Group plc | Annual Report & Accounts 2024
C. Pay comparison
PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION VERSUS EMPLOYEE PAY
The table below shows the percentage change in salary, benefits and STIP earned between FY24 and the prior year for
the Group Board compared to the average earnings of all of the Group’s other UK colleagues. The change in remuneration
is also shown for the previous four years. Whilst the regulations require comparison against employees of the Company
(being Bakkavor Group plc), the Remuneration Committee chose the Group’s UK salaried colleagues for pay comparison
with the CEO as the most meaningful comparator group as the Company itself does not have any employees.
2024
2023
2022
2021
2020
Salary/
fees
Benefits
STIP
Salary/
fees
Benefits
STIP
Salary/
fees
Benefits
STIP
Salary/
fees
Benefits
STIP
Salary/
fees
Benefits
STIP
Mike Edwards
4%
3.2%
4%
32.3%
19.2% 430% 10.0% -16.1% -63.4%
n/a
n/a
n/a
n/a
n/a
n/a
Ben Waldron
-13.3% -21.7% -13.2%
9.8%
0% 340% 10.8%
91.7% -63.1%
n/a
n/a
n/a
n/a
n/a
n/a
Lee Miley
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Simon Burke
(Chairman)
4%
n/a
n/a
0%
-100%
n/a
2.75%
n/a
n/a 2.75% -100%
n/a
0%
n/a
n/a
Sanjeevan Bala
1
4%
0%
n/a
0%
100%
n/a 146.3%
0%
n/a
n/a
n/a
n/a
–
–
–
Umran Beba
1
4% -66.7%
n/a
0%
20%
n/a 2.75%
400%
n/a 2.75%
n/a
n/a
0%
n/a
n/a
Robert Berlin
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Jill Caseberry
1
4%
0%
n/a
0%
0%
n/a 23.2%
n/a
n/a
n/a
n/a
n/a
–
–
–
Agust
Gudmundsson
4%
-100%
n/a
0%
100%
n/a -12.7% 18.2% -71.4%
0% 1000%
n/a
0%
-75% -100%
Lydur
Gudmundsson
4%
n/a
n/a
0% -100%
n/a -72.3%
0%
n/a 2.75%
-50%
n/a
0%
-50%
n/a
Denis Hennequin
4%
n/a
n/a
0%
n/a
n/a 2.75%
n/a
n/a 2.75%
n/a
n/a
0%
n/a
n/a
Jane Lodge
4%
100%
n/a
0%
0%
n/a 2.75%
100%
n/a 2.75% -66.7%
n/a
0%
100%
n/a
Colleague
average
5.3%
n/a
4.0%
3.9%
n/a 300%
2.9%
0% -66.7% 2.75%
0% 200%
0%
n/a
61.3
1
NED fees in FY22 comparison are the standard NED fees however the year-on-year numbers vary due to pro-rata calculations using part-year figures from prior year.
CEO PAY RATIO
In line with the reporting regulations, set out below is the ratio of CEO pay compared to the pay of UK full-time equivalent
colleagues of the Group for the financial year ended 28 December 2024. We expect the pay ratio to vary from year to year,
driven largely by variability in incentive outcomes for the CEO, which will significantly outweigh any other general
employee pay changes at Bakkavor. Taking this into account, the Remuneration Committee is satisfied that the pay ratio
is reasonable and consistent with the Company’s wider policies on colleague pay, reward and progression.
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2024
Option B
90:1
81:1
74:1
2023
1
Option B
10:21
86:1
73:1
2022
Option B
49:1
40:1
40:1
2021
Option B
69:1
59:1
46:1
2020
Option B
41:1
34:1
28:1
2019
Option B
56:1
39:1
36:1
1
The CEO pay ratio for 2023 was elevated due to it including values for both the delayed 2020 and 2021 LTIPs.
The small decrease in pay ratio in 2024 is driven by 2023 including the value of two sets of LTIP awards, the delayed 2020
LTIP as well as the 2021 LTIP. In contrast the 2024 CEO figure includes only the 2022 LTIP. Bakkavor has calculated the
pay ratio using Option B alongside its gender pay data, as it involved the simplest method of calculation, given our large
number of colleagues.
The gender pay gap data from the pay date of 5 April 2024 was used to identify full-time colleagues at the 25th, 50th
and 75th percentiles (“P25”, “P50” and “P75” respectively). Data was analysed for a number of colleagues around each
quartile figure to ensure that there were no anomalies and to ensure an appropriate representation of P25, P50 and P75.
Remuneration for each of these individuals was then re-calculated for FY24, as at 28 December 2024, in line with the
methodology for calculating the CEO’s remuneration.
Bakkavor Group plc | Annual Report & Accounts 2024 |
137
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
The Remuneration Committee is satisfied that the resulting figures are reasonable and are appropriately representative
for the purposes of the CEO pay ratio calculations. Set out in the table below is the base salary and total pay and benefits
for each of the percentiles.
25th percentile
Median
75th percentile
Salary
£27,026
£29,961
£33,080
Total pay and benefits
£27,898
£30,856
£34,072
TSR AND CEO SINGLE FIGURE HISTORY
The chart below shows the Company’s TSR performance compared with that of the FTSE 250 Index (excluding investment
trusts) over the period from the date of the Company’s Admission to the London Stock Exchange to 28 December 2024. The
FTSE 250 Index is considered by the Group Board to be the most appropriate broad equity comparator index for Bakkavor.
TSR is defined as the return on investment obtained from holding a company’s shares over a period. It includes dividends
paid, the change in the capital value of the shares and any other payments made to or by shareholders within the period.
0
20
40
60
80
100
120
140
28 Dec
2024
30 Dec
2023
31 Dec
2022
25 Dec
2021
26 Dec
2020
28 Dec
2019
29 Dec
2018
30 Dec
2017
15 Nov
2017
FTSE 250 Ex Investment Trusts
Value (£) (rebased)
Bakkavor Group
Source: Datastream (an LSEG product).
CEO SINGLE FIGURE HISTORY
CEO
CEO single figure of total
remuneration £’000
Annual STIP payout as a
proportion of maximum
LTIP vesting as a proportion
of maximum
2024
Mike Edwards
2,509
100%
67.7%
2023
1
Mike Edwards
2,418
100%
100/50%
2022
2
Mike Edwards
161
25%
n/a
2022
2
Agust Gudmundsson
837
25%
n/a
2021
Agust Gudmundsson
1,278
75%
n/a
2020
Agust Gudmundsson
694
0%
n/a
2019
Agust Gudmundsson
987
12.4%
n/a
2018
Agust Gudmundsson
864
0%
n/a
1
The 2023 figure includes both the delayed 2020 and 2021 LTIPs for Mike Edwards which vested at 100% and 50% respectively.
2
The 2022 figures for Mike Edwards and Agust Gudmundsson are based on their respective periods in post as CEO during FY22. Agust Gudmundsson did not participate in the LTIP.
RELATIVE IMPORTANCE OF THE SPEND ON PAY
The following table shows the Company’s actual spend on pay for all Group colleagues relative to dividends:
2024
2023
% change
Staff costs
1
£623.6m
£591.9m
5.4%
Dividends
£43.8m
£40.8m
7.4%
1
Note 8 of the Consolidated Financial Statements.
138
| Bakkavor Group plc | Annual Report & Accounts 2024
D. Remuneration Committee membership, governance and voting
REMUNERATION COMMITTEE MEMBERSHIP
The Remuneration Committee in 2024 comprised Jill Caseberry as Chair of the Committee, Umran Beba and Sanjeevan
Bala, all independent NEDs. The Committee met four times during the year and all Committee members were present.
The biographies of the Remuneration Committee members are set out on page 87.
Members of management, including the CEO, CFO, CPO, Group Head of Reward and the independent adviser to the
Remuneration Committee, are invited to attend meetings where appropriate. The Group Company Secretary and General
Counsel is the secretary to the Remuneration Committee. Attendees are not involved in any decisions and are not present
for any discussions regarding their own remuneration. The Company Chairman may attend meetings but is not present
when his own remuneration arrangements are being decided.
INDEPENDENT ADVISERS
The Remuneration Committee takes account of information from both internal and independent sources, including FIT
Remuneration Consultants LLP (“FIT”) who act as the Remuneration Committee’s independent adviser. FIT was appointed
by the Remuneration Committee as a result of a tender process and advised the Remuneration Committee on all aspects
of Senior Executive remuneration, including remuneration trends and corporate governance best practice.
FIT is a founder member of the Remuneration Consultants’ Group and complies with its Code of Conduct, which sets out
guidelines to ensure that its advice is independent and free of undue influence. The Remuneration Committee reviews the
performance and independence of its advisers on an annual basis. The Remuneration Committee was satisfied that FIT’s
advice was independent and objective. Bakkavor incurred fees of £40,390 excluding VAT in FY24 relating to Remuneration
Committee advice. FIT billed on a time and materials basis and did not provide any other services other than share plan
implementation advice to Bakkavor during FY24.
SHAREHOLDER VOTING
The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where there
are substantial votes against resolutions in relation to Directors’ remuneration, the Company seeks to understand the
reasons for any such vote and will report any actions in response to it. The following table sets out actual voting at the
AGM on 23 May 2024 in respect of the Directors’ remuneration report for the year ended 26 December 2023 and at the
AGM on 23 May 2024 in respect of the current Remuneration Policy:
Remuneration report
At AGM 23 May 2024
Total number
of votes
% of
votes cast
For and Discretionary
1
556,747,334
99.92%
Against
440,095
0.08%
Total votes cast (excluding withheld votes)
557,187,429
100.0%
Total votes withheld
14,069
0.0%
Total votes cast (including withheld votes)
557,201,498
100.0%
1
There were no discretionary votes.
Remuneration Policy
At AGM 23 May 2024
Total number
of votes
% of
votes cast
For and Discretionary
1
557,116,484
99.99%
Against
70,788
0.01%
Total votes cast (excluding withheld votes)
557,187,272
100.0%
Total votes withheld
14,226
0.0%
Total votes cast (including withheld votes)
557,201,498
100.0%
1
There were no discretionary votes.
Bakkavor Group plc | Annual Report & Accounts 2024 |
139
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REMUNERATION REPORT
CONTINUED
E. Implementation of Remuneration Policy in 2025
Mike Edwards
Lee Miley
Annual base
salary
•
£749,840 (an increase of 3%).
•
£400,000 (on appointment from 1 November 2024).
•
The average 2025 increase for the UK salaried workforce is c.4.2% with typical increases ranging from
3% to 5%.
Benefits and
pension
•
Pension contribution is workforce aligned at 3% of salary.
•
Benefits are provided in line with the approved Remuneration Policy.
STIP
2025 STIP maximum is 125% of salary.
•
For 2025, the STIP for the Executive Directors will comprise three measures, namely Group adjusted EBIT
(75%), colleague engagement measured through employee turnover (12.5%) and UK food waste (12.5%).
•
Specific targets have not been disclosed in advance as this would give a clear indication of the Group’s
business objectives, which are commercially sensitive. Full details of the targets and performance
against them will be disclosed in the 2025 Annual Report and Accounts.
•
The bonus is subject to an underlying performance override. Malus and clawback provisions apply.
•
In line with the Remuneration Policy, one-third of any STIP earned will be deferred for three years,
conditional upon continued employment.
LTIP
•
The Remuneration Committee intends to grant awards of nil-cost options under the LTIP in April 2025
to the CEO and CFO in line with the Remuneration Policy.
•
Awards will have a face value of up to 150% of salary, with the exact number of shares to be granted to
be determined with reference to the prevailing share price around the date of grant.
•
The awards will be subject to EPS (40%), relative TSR (measured against a bespoke group of food and
drink companies) (45%) and carbon emissions (15%).
•
The adjusted EPS target requires a minimum performance in 2027 of 14.5p to trigger threshold vesting
(25% of that element) with performance of 16.0p to achieve maximum. For performance outcomes
between threshold and maximum, the vesting percentage will be determined on the basis of a straight-
line sliding scale. In setting these targets, the Committee took into account the Group’s strategic plan
and market expectations based on analyst forecasts and is confident that the targets are stretching for
the three-year performance period.
•
The relative TSR performance is assessed over the period FY25 to FY27, relative to the following bespoke
group of sector peers: Associated British Foods, A.G. Barr, Britvic, Coca-Cola HBC, Compass, Cranswick,
Diageo, Domino’s Pizza, Fuller Smith & Turner, Greencore, Greggs, Hilton Food Group, JD Wetherspoon,
J Sainsbury, Marks & Spencer, Marston’s, Mitchells & Butlers, Premier Foods, SSP, Tate & Lyle, Tesco,
Unilever (UK) and Whitbread. Performance will need to be median to trigger threshold vesting (25% of
that element) and at least upper quartile to trigger full vesting of that element. For performance
outcomes between threshold and maximum, the vesting percentage will be determined on the basis
of a straight-line sliding scale.
•
The Group net carbon emissions element of our LTIP requires a reduction of 14,250 tonnes to trigger
threshold vesting (25% of that element) with performance of a reduction of 15,675 tonnes to achieve
maximum. For performance outcomes between threshold and maximum, the vesting percentage will be
determined on the basis of a straight-line sliding scale. In setting these targets, the Committee took into
account the Group’s strategic plan for reductions in scope 1 and 2 emissions by the end of 2027 which is
aligned with the annual decrease required to meet our 2030 target which has been prepared in line with
recommendations from the Science Based Targets initiative (“SBTi”) and is confident that the targets are
stretching for the three-year performance period.
•
Before an award vests the Remuneration Committee must be satisfied that the underlying performance
of the Group is satisfactory. The Remuneration Committee believes that having a performance override
is an important feature of the plan as it mitigates the risk of unwarranted vesting outcomes.
•
Awards will be subject to a two-year holding period following vesting as well as malus and clawback.
140
| Bakkavor Group plc | Annual Report & Accounts 2024
NEDS’ FEES FOR 2024
Fees for the NEDs and Chairman have been increased for FY25 by 3% effective as of 1 January 2025 and are as follows:
Fee
Chairman
£226,185
Base Non-executive Director fee
£79,165
Notes:
Patrick Cook and Robert Berlin did not receive any fees for their roles as NED.
No additional fee is payable to any NEDs for additional responsibilities such as serving on a Committee of the Group
Board. Each NED is also entitled to reimbursement of reasonable expenses, including international travel expenses.
On behalf of the Group Board:
Jill Caseberry
Chair, Remuneration Committee
3 March 2025
Bakkavor Group plc | Annual Report & Accounts 2024 |
141
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
OUR DIRECTORS’ REPORT
The Directors present their report, together with the
audited Group Financial Statements, for the year ended
28 December 2024.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
Bakkavor Group plc produces fresh prepared food in its
three markets; UK, US and China. The Company employs
c.18,000 colleagues
1
worldwide and is headquartered in
London, UK.
DIRECTORS’ REPORT CONTENT
For the purposes of the Companies Act 2006, the
Strategic Report, the corporate governance report and the
Directors’ remuneration report are all incorporated by
reference into, and should be read as part of, this report.
REGISTERED OFFICE
Bakkavor Group plc is incorporated as a public limited
company and is registered in England with the number
10986940. Bakkavor Group plc’s registered office is Fitzroy
Place, 5th Floor, 8 Mortimer Street, London, England, W1T 3JJ.
Our registrars are Equiniti Limited, located at Aspect
House, Spencer Road, Lancing, West Sussex, BN99 6DA.
CORPORATE GOVERNANCE STATEMENT
In compliance with the Financial Conduct Authority’s
(“FCA”) Disclosure Guidance and Transparency Rules
(“DTRs”) Rule 7, the corporate governance statement,
Board Committees’ reports and Directors’ remuneration
report are included in this Directors’ report.
Our corporate governance statement sets out how the
Group complies with the 2018 UK Corporate Governance
Code (“the Code”). It also explains the composition and
operation of the Group Board and its Committees.
READ MORE:
Corporate governance compliance statement pg 84.
Group Board pg 86.
All required disclosures have been made and the Group has
complied with the Code throughout the accounting period.
ENGAGEMENT WITH SUPPLIERS, CUSTOMERS
AND OTHERS
In accordance with the Large and Medium-sized
Companies and Groups (Accounts and Report) Regulations
2008 (as amended by the Companies (Miscellaneous
Reporting) Regulations 2018), the Company’s statement
on engagement with, and having due regard to, the
interests of colleagues and key stakeholders is contained
within the Section 172 statement in the Strategic Report.
READ MORE
pg 7.
STRATEGIC REPORT
Section 414A of the Companies Act 2006 (“the Act”) requires
the Directors to present a Strategic Report in the Annual
Report and Accounts. The Directors are satisfied with the
Group’s net asset position as at 28 December 2024.
MANAGEMENT REPORT
For the purposes of DTR Rules 4.1.5R (2) and 4.1.8, the
Directors’ report and the Strategic Report comprise the
management report.
DISCLOSURES
This Directors’ corporate governance report fulfils the
requirements of the Directors’ report for the purposes
of the Act. The Strategic Report encompasses our ESG
strategy, Trusted Partner.
READ MORE
pg 2.
In line with the Regulations which implement the European
Union Accounting Directive (SI 2015/980), a complete list
of the Group’s subsidiaries has been included on page 210
to comply with Section 409 of the Act.
We have chosen, in accordance with the Act, to include
certain information in our Strategic Report or Financial
Statements that would otherwise be required in the
Directors’ report. The table below outlines where further
information on these topics can be found:
Page
Important events since the financial year end
204
Likely future developments in the business
24
Research and development
146
Use of financial instruments
191
Colleague engagement
7
Greenhouse gas emissions
56
Risks and risk management
66
Details of subsidiaries
210
1
Refers to the average throughout 2024.
142
| Bakkavor Group plc | Annual Report & Accounts 2024
UK LISTING RULE 6.6.1 DISCLOSURES
In accordance with UK Listing Rule 6.6.1 of the FCA’s UK
Listing Rules, the table below sets out the location of the
following sections/information within the Annual Report
and Accounts:
Listing
Rule
6.6.1
Required disclosure
Page reference
(1)
Interest capitalised and
tax relief
Note 11 to the Financial
Statements
(2)
Publication of unaudited
financial information
n/a
(3)
Details of long-term
incentive schemes
Note 32 to the Financial
Statements and pg 127 of
Directors’ remuneration report
(4)
Waiver of emoluments
by a Director
Pg 129 of Directors’
remuneration report
(5)
Waiver of future
emoluments by a Director
Pg 129 of Directors’
remuneration report
(6)
Non pre-emptive issues
of equity for cash
n/a
(7)
Non pre-emptive issues
of equity for cash by major
subsidiary undertakings
n/a
(8)
Parent participation
in a placing by a listed
subsidiary
n/a
(9)
Contracts of significance
involving a Director
Pg 145 of Directors’ report
(10)
Provision of services by
a controlling shareholder
Pg 145 of Directors’ report
(11)
Shareholder waivers
of dividends
Pg 145 of Directors’ report
(12)
Shareholder waivers
of future dividends
Pg 145 of Directors’ report
(13)
Compliance with
UK Listing Rule 6.2.3
Pg 145 of Directors’ report
RESULTS
READ MORE:
Financial review pg 58.
Consolidated income statement pg 160.
DIVIDEND
An interim dividend of 3.20p per Ordinary share was paid
on 11 October 2024 to shareholders whose names were
on the register of members as at 13 September 2024. The
Group Board will propose a final dividend of 4.80 pence
per Ordinary share at the Company’s AGM on 22 May
2025. This will result in a total dividend for the FY24 of
8.00 pence per Ordinary share. Subject to shareholder
approval, the final dividend declared at the AGM will
be paid on 28 May 2025 to shareholders on the register
of members as at close of business on 25 April 2025.
The Group’s profit after tax for the financial year amounts
to £55.7m.
BOARD OF DIRECTORS
The profiles of the Directors of the Company, who were
in office during the year and up to the date of signing the
Financial Statements, are set out in this report.
READ MORE
pg 86.
An agreed list of matters for the Directors’ consideration
is set out in the Schedule of Matters Reserved to the Group
Board, which is reviewed and updated annually and is
available on the Bakkavor website at bakkavor.com/en/
governance.
APPOINTMENT AND RETIREMENT OF DIRECTORS
The rules governing the appointment and replacement of
Directors can be found in the Articles, the Code, the Act and
related legislation. Under the Terms of Reference of the
Nomination Committee, the appointment of Directors must
be recommended by the Nomination Committee for
approval by the Group Board. The process for appointment
and removal of Directors is captured in the Terms of
Reference of the Nomination Committee. Pursuant to the
provisions of the Code, at each AGM, all Directors will retire
and stand for election or re-election to the Group Board.
READ MORE
pg 86.
Name
Role
Effective date of
first appointment
Sanjeevan Bala
Independent
Non-executive Director
1 August 2021
Simon Burke
Chairman
20 October 2017
Robert Berlin
Non-independent
Non-executive Director
16 January 2024
Umran Beba
Independent
Non-executive Director
1 September 2020
Jill Caseberry
Independent
Non-executive Director
1 March 2021
Patrick Cook
1
Non-independent
Non-executive Director
12 July 2018
Mike Edwards
Chief Executive Officer
27 December 2020
Agust
Gudmundsson
2
Non-independent
Non-executive Director
1 November 2022
Lydur
Gudmundsson
Non-independent
Non-executive Director
20 October 2017
Denis Hennequin
Independent
Non-executive Director
20 October 2017
Jane Lodge
Independent
Non-executive Officer
3 April 2018
Lee Miley
Chief Financial Officer
1 November 2024
Ben Waldron
3
Chief Financial Officer
and Asia CEO
27 December 2020
1
Patrick Cook stepped down from the Group Board on 16 January 2024.
2
Agust Gudmundsson was an Executive Director from 28 September 2017 to
1 November 2022.
3
Ben Waldron stepped down from the Group Board on 31 October 2024.
Subject to applicable law, the Articles and any directions
given by special resolution, the business of the Company
will be managed by the Group Board, which may exercise
all powers of the Company.
Bakkavor Group plc | Annual Report & Accounts 2024 |
143
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ INSURANCE AND INDEMNITIES
Bakkavor has made qualifying third-party indemnity
provisions (as defined in the Act) for the benefit of its
Directors. These provisions were in force throughout the
year and remain at the date of approval of this Annual
Report and Accounts. In accordance with the Articles,
and to the extent permitted by law, Bakkavor may
indemnify its Directors out of its own funds to cover
liabilities arising as a result of their office.
Bakkavor holds Directors’ and Officers’ liability insurance
cover for any claim brought against Directors or Officers
for wrongful acts in connection with their positions,
but the cover does not extend to claims arising from
dishonesty or fraud.
SERVICE CONTRACTS
The Company’s policy regarding Directors’ service
contracts and appointment terms takes account of market
practice and their notice periods are not excessive. No
Director has a service contract with a notice period in
excess of one year.
DIRECTORS’ INTERESTS IN COMPANY SHARES AT 3
MARCH 2025
The Directors’ interests in the shares of the Company are
set out on page 134 of Directors’ remuneration report.
The Directors have no beneficial interests in any of the
Group’s subsidiary or associated undertakings.
ARTICLES OF ASSOCIATION
The Company’s Articles of Association set out the objects
and powers of the Company. The Company’s Articles of
Association may be amended by a special resolution
passed by the shareholders at an AGM or EGM of the
Company. A copy of the Articles of Association can be
obtained from the Company’s website: bakkavor.com/en/
governance.
SHARE CAPITAL AND CAPITAL STRUCTURE
The Company’s issued share capital as at 28 December
2024 comprised a single class of shares divided into
Ordinary shares of 2 pence each. At the date of publication,
the Company’s issued share capital comprised
579,425,585 Ordinary shares. Details of the Company’s
issued share capital are also shown in Note 27 to the
Group Financial Statements.
Details of colleague share schemes are set out in Note 27
to the Group Financial Statements.
RESTRICTIONS ATTACHING TO SHARES
In line with the Articles of Association of the Company, the
Company has a single class of share which carries no right
to fixed income. Each share is non-redeemable, carries
equal voting rights and ranks equally for dividends and
capital distributions, whether on a winding up or otherwise.
There are no specific restrictions on the size of a holding
nor on the transfer of Ordinary shares, which are both
governed by the general provisions of the Articles and
prevailing legislation. The Company is not aware of any
agreements between holders of securities that may result
in restrictions on the transfer of securities or that may
result in restrictions on voting rights.
There are no persons who hold securities carrying special
rights regarding the control of the Company.
POWERS FOR THE COMPANY ISSUING OR BUYING
BACK SHARES
Under the Articles, the Group Board has general and
unconditional authority for each prescribed period to
exercise all the powers of the Company to allot shares
in the Company or to grant rights to subscribe for or
to convert any security into shares in the Company in
accordance with Section 551 of the Act.
The Company was given authority at the 2024 AGM to make
market purchases of up to 10% of its issued share capital
as permitted under the Articles. This standard authority is
renewable annually; the Directors will seek to renew this
authority at the AGM on 22 May 2025.
During the period ending 31 December 2022, the
Company began purchasing shares through an Employee
Benefit Trust called The Bakkavor Group plc Employee
Benefit Trust (“the Trust”). These shares are held to
satisfy share awards under the Group’s share scheme
plans. Own shares purchased are recorded at cost and
deducted from equity. The number of Ordinary shares
of £0.02 each held by the Trust at 28 December 2024
was 4,237,328 (30 December 2023: 4,567,073) and the
aggregate amount of the consideration paid by the
Company was £14.2m and as at the date of publication
of this report is £6.3m. This represents 0.7% of total
called up share capital at 28 December 2024 (31
December 2023: 0.8%). Total cash purchases made
through the Trust during the year amounted to £8.6m
(2023: £2.4m). No own shares held by the Company
were cancelled during the periods presented.
A special resolution will be proposed to renew the Directors’
authority to repurchase the Company’s shares within
certain limits and as permitted by the Articles at the AGM
on 22 May 2025.
DIRECTORS’ REPORT
CONTINUED
144
| Bakkavor Group plc | Annual Report & Accounts 2024
SIGNIFICANT AGREEMENTS AND RELATIONSHIPS
CHANGE OF CONTROL
There are a number of agreements that take effect, alter or
terminate upon a change of control of the Company, such as
commercial contracts, property lease arrangements and
colleague share plans. During the year under review, there
were no contracts of significance impacting on the business
of the Group as a whole involving a Director (except as
explained below).
The agreement that governs the Company’s Term Loan
and Revolving Credit Facility (“Facilities Agreement”)
provides that, on a change of control, any lender may
on notice cancel its commitments under the Facilities
Agreement. In the event of a takeover, the exercise by
the lenders under the Facilities Agreement of the right
to cancel could have a significant impact on the business
of the Group, as the outstanding amounts thereunder
would become immediately due and payable.
The Directors are not aware of any agreements between
the Company and its Directors or colleagues that provide
for compensation for loss of office or employment that
occurs because of a takeover bid.
There are no colleague share scheme rights with regard
to control of the Company.
SHAREHOLDER RELATIONSHIP AGREEMENTS
On 12 January 2024, BP-PE5 L.L.C. (an affiliate of the
Baupost Group, “Baupost”) sold its entire shareholding,
representing 20.1% of the share capital in the Company, to
LongRange Capital Fund I, L.P. and its affiliates (“LongRange
Capital”). Pursuant to this, the Company’s relationship
agreement with Baupost terminated. The Company entered
into a relationship agreement with LongRange Capital on 16
January 2024 (“the relationship agreement”) to regulate the
ongoing relationship between the Company and LongRange
Capital. The key terms of the relationship agreement are
available on the Company’s website at: bakkavor.com/en/
investors/shareholder-information – ‘Other information’.
CONTROLLING SHAREHOLDERS
The aggregate shareholding in the Company of Carrion
Enterprises Ltd (the corporate holding structure of Agust
Gudmundsson), Umbriel Ventures Ltd (the corporate
holding structure of Lydur Gudmundsson) and their concert
party group (the “controlling shareholders”) is 50.19%. The
Company is party to a relationship agreement with Carrion
Enterprises Ltd, Umbriel Ventures Ltd, the trustee(s) of The
A.G. Trust (which owns 100% of Carrion Enterprises Ltd)
and the trustee(s) of The L.G. Trust (which owns 100% of
Umbriel Ventures Ltd).
Lixaner Co Ltd (an entity which is a concert party of Carrion
Enterprises Ltd and Umbriel Ventures Ltd following its
acquisition of shares in the Company on 23 May 2019)
executed a Deed of Adherence to the relationship
agreement on 15 April 2020 and is duly bound by its terms.
In accordance with the requirements of UK Listing Rule
6.2.3, the Group Board confirms that the Company has
carried on the business independently from the controlling
shareholders at all times.
There were no contracts for the provision of services to the
Group by a controlling shareholder, other than under their
service contract or letter of appointment.
READ MORE
pg 123.
SHAREHOLDER WAIVER OF DIVIDENDS
Dividend rights are waived in relation to Ordinary shares
held in the Bakkavor Group plc Employee Benefit Trust.
The total number of dividend rights waived for the
reporting period ended 28 December 2024 was 1,917,903
Ordinary shares, relating to the interim dividend. Please
refer to Note 27 to the Group Financial Statements.
SUBSTANTIAL SHAREHOLDING
The Group has been notified in accordance with the Financial Conduct Authority’s (“FCA”) Disclosure Guidance and
Transparency Rules (“DTRs”), or was otherwise aware, that the following held, or were beneficially interested in, 20%
or more of Bakkavor’s issued Ordinary shares.
28 December 2024
Date of publication
Name
Nature of
holding
Number of
Ordinary shares
% of voting rights
Number of
Ordinary shares
% of voting rights
Carrion Enterprises Ltd
(corporate holding structure
of Agust Gudmundsson)
Indirect
142,103,505
24.52
142,103,505
24.52
Umbriel Ventures Ltd
(corporate holding structure
of Lydur Gudmundsson)
Indirect
142,303,505
24.56
142,303,505
24.56
LongRange Capital Fund I, L.P.
Indirect
116,468,928
20.10
116,468,928
20.10
FIL Limited
1
Indirect
56,617,750
9.77
56,884,885
9.82
Aberforth Partners LLP
Indirect
40,102,516
6.92
40,261,516
6.95
1
FIL Limited is the ultimate controlling entity for shares held by FIL Investment Advisors (UK) Limited and FIL Pensions Management.
Bakkavor Group plc | Annual Report & Accounts 2024 |
145
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CONTINUED
ENGAGEMENT WITH SHAREHOLDERS
In accordance with the Code and the UK Stewardship
Code, the Group Board promotes engagement and
interaction between the Group and its major shareholders.
Opportunities are created for investors and shareholders
to engage directly with the Chairman, Senior Independent
Director, Audit and Risk and Remuneration Committee
Chairs, CEO and CFO; including meetings following the
publication of full-year and half-year financial results,
and attending investor relations conferences and events.
AGM
Bakkavor’s AGM provides the Group Board with the
opportunity to communicate with private and institutional
investors, with time set aside at the meeting for shareholders
to ask questions.
At the AGM, the Chairman provides a brief summary of the
Company’s activities during the previous year. All resolutions
at the last AGM were duly passed. As recommended by the
Code, all resolutions were voted on separately and the final
voting results, which included all votes cast for, against and
withheld, were released to the London Stock Exchange as
soon as practicable after the meeting.
This year’s AGM will be held on 22 May 2025. Full details of
the 22 May 2025 AGM will be set out in the Notice of AGM
and will be available on the Company’s website in advance
of the meeting at: bakkavor.com/en/investors/
shareholder-information.
RESEARCH AND DEVELOPMENT
Developing innovative new products remains core to our
business. The Group uses insights gained through analysis
of consumer research and data, as well as knowledge of
food trends sourced from around the world, to build an
understanding of what consumers desire. Teams of chefs
and product development experts continuously create and
test recipes, and work collaboratively with the Group’s
commercial and marketing teams to ensure products
taste great, are commercially viable and reinforce the
Group’s market-leading position. We also leverage our
operational expertise to help inform new and innovative
manufacturing processes and, when applicable, look
to take advantage of tax benefits associated with our
research and development activities.
COLLEAGUES WITH DISABILITIES
Applications by candidates with disabilities are given full
and fair consideration with regard to their aptitudes and
abilities. Where existing colleagues develop a disability,
every effort is made to ensure that their employment with
Bakkavor continues, and any reasonable adjustments
are made to accommodate them. All adjustments are
considered on an individual basis, supported by medical
opinion, and include, but are not limited to: physical
changes to the workplace; phased return to work;
providing specific equipment to support their daily work
routine; allocating some duties to a co-worker; and
allowing paid time off work for rehabilitation, assessment
or treatment. Appropriate training is also provided.
It is the policy of the Group that the training, career
development and promotion of colleagues with disabilities
should, as far as possible, be the same as that of our
other colleagues.
COLLEAGUE ENGAGEMENT
Open and constructive communication allows us to hear
views from all levels of the business, keeping our over
c.18,000 colleagues informed and updated on economic and
financial factors. Regular updates are posted on the intranet
and engagement events are hosted with members of the
Senior Executive Team. Colleagues are provided with
information on matters of concern to them in their work
through regular briefing meetings and internal publications.
Colleagues have regular performance reviews, with their
goals aligned to supporting business performance and
their individual career development. Certain colleagues
are eligible to receive a bonus, which is typically linked
to Group or regional financial and non-financial metrics.
We perform a Group-wide Employee Engagement
Survey (“EES”) annually and our latest EES, completed
in September 2024, had a response rate of 89%. The 2024
EES provided valuable insights that were analysed at local,
site, business, function and Group level and have fed into
localised action plans and informed our colleague priorities.
Additionally, our UK Group Employee Forums (“GEF”)
and Site Employee Forums (“SEF”) create an open and
regular channel of communication between colleagues
and management. SEF representatives are elected by
peers and play a vital role in sharing best practices across
sites, supporting local causes and charities, providing
support and seeking advice. The GEF comprises SEF
representatives at Group level.
146
| Bakkavor Group plc | Annual Report & Accounts 2024
This year, Sanjeevan Bala, the Company’s designated
workforce engagement Non-executive Director, visited six
sites and presented to the GEF on Bakkavor’s Executive
compensation and framework. Colleagues provided
valuable feedback on areas such as transparency around
Executive pay and our long-term view to ensure ongoing
business success and sustainability. The feedback was
discussed with the Group Board and Sanjeevan provided
the GEF with an update at its November meeting.
The Directors engage with our colleagues regarding their
interests and the principal decisions taken by the Company
during the financial year can be found in the Section 172
statement.
READ MORE:
Key activities in 2024 pg 94.
ESG: Trusted Partner pg 38.
GREENHOUSE GAS EMISSIONS, ENERGY CONSUMPTION
AND ENERGY EFFICIENCY ACTION
We report our emissions, energy consumption and energy
efficiency action planning in accordance with the Task
Force on Climate-related Financial Disclosures (“TCFD”)
within our Strategic Report. All data shown is for the
calendar year and at a Group level, unless specified.
READ MORE
pg 46.
STREAMLINED ENERGY AND CARBON REPORTING
(“SECR”)
Bakkavor reports SECR data in the Strategic Report
as permitted under S.414(C) of the Companies Act 2006
including (i) emissions (pages 56 to 57), (ii) energy
consumption (pages 56 to 57) and (iii) energy efficiency
actions (page 55).
CHARITABLE DONATIONS
Bakkavor believes in giving back to the communities in
which we operate. Our Charity and Political Donations
Policy sets out ways to channel charitable giving through
monetary and product donations, supporting our colleagues
in their fundraising efforts and advocating skills and
volunteering events. We never use charitable donations as
a means to gain improper influence and all monies given
to charity in Bakkavor’s name are subject to due process.
As part of our corporate charity partnerships, in 2024,
Bakkavor Group donated over £130,000 to GroceryAid
and the Natasha Allergy Research Foundation.
READ MORE
pg 45.
POLITICAL DONATIONS
Bakkavor does not give financial donations nor support
to political individuals, representatives, parties or causes
in any country in which we operate. No political donations
were made during the financial year.
FINANCIAL INSTRUMENTS
Please refer to Note 26 to the Group Financial Statements.
FINANCIAL RISK MANAGEMENT
Please refer to Note 26 to the Group Financial Statements.
GOING CONCERN
The Directors have reviewed the historical trading
performance of the Group and the forecasts through
to March 2026.
The Directors, in their detailed consideration of going concern,
have reviewed the Group’s future revenue projections and
cash requirements, which they believe are based on prudent
interpretations of market data and past experience.
The Directors have also considered the Group’s level of
available liquidity under its financing facilities. The Directors
have carried out a robust assessment of the significant
risks currently facing the Group. This has included scenario
planning on the implications of further inflation and the
potential impact of lower sales volumes from reduced
consumer demand in response to increasing retail prices.
Having taken these factors into account under the
scenario, which is considered to be severe but plausible,
the Directors consider that adequate headroom is available
based on the forecasted cash requirements of the business.
At the date of this report, the Group has complied in all
respects with the terms of its borrowing agreements,
including its financial covenants, and forecasts to continue
to do so in the future.
Consequently, the Directors consider that the Company
and the Group have adequate resources to meet their
liabilities as they fall due for the foreseeable future.
For this reason, they continue to adopt the going concern
basis in preparing the Financial Statements.
READ MORE:
Risks and risk management pg 66.
Note 2 to the Group Financial Statements.
Bakkavor Group plc | Annual Report & Accounts 2024 |
147
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CONTINUED
VIABILITY STATEMENT
In line with Provision 31 of the Code, the Group Board
has carried out a thorough review of the prospects of the
Group and its ability to meet its liabilities through to,
at least, the end of December 2027 and considers that
the Group will be able to continue in operation over the
three-year period to the end of December 2027.
READ MORE
pg 75.
DIRECTORS’ STATEMENT AS TO THE DISCLOSURE
OF INFORMATION TO THE AUDITORS
So far as each person who was a Director at the date of
approving this report is aware, there is no relevant audit
information, being information needed by the Auditors
in connection with preparing their report, of which the
Auditors are unaware. Each Director has taken all the
steps that he or she is obliged to take as a Director in order
to make himself or herself aware of any relevant audit
information, and to establish that the Company’s Auditors
are aware of that information. This confirmation is given
pursuant to S.418 of the Act and should be interpreted in
accordance with and subject to these provisions.
SUBSEQUENT EVENTS
On 24 December 2024, a business transfer agreement was
signed for the sale of the trade and assets of the Hong Kong
business. The sale is anticipated to complete in April 2025.
Please refer to Note 35 to the Group Financial Statements
for full details.
The Directors’ report was approved by the Group Board
on 3 March 2025.
By order of the Group Board
ANNABEL TAGOE-BANNERMAN
Group General Counsel and Company Secretary
3 March 2025
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| Bakkavor Group plc | Annual Report & Accounts 2024
The Directors are responsible for preparing the Annual
Report and the Financial Statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the
Directors have prepared the Group Financial Statements
in accordance with UK-adopted International Accounting
Standards and the Company Financial Statements in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law).
Under company law, Directors must not approve the
Financial Statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group for
that period. In preparing the Financial Statements, the
Directors are required to:
•
Select suitable accounting policies and then apply
them consistently.
•
State whether applicable UK-adopted International
Accounting Standards have been followed for the Group
Financial Statements and United Kingdom Accounting
Standards, comprising FRS 101, have been followed
for the Company Financial Statements, subject to any
material departures disclosed and explained in the
Financial Statements.
•
Make judgements and accounting estimates that are
reasonable and prudent.
•
Prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for safeguarding the
assets of the Group and Company and, hence, for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with
reasonable accuracy, at any time, the financial position of
the Group and Company and enable them to ensure that
the Financial Statements and the Directors’ remuneration
report comply with the Companies Act 2006.
The Directors are responsible for the maintenance
and integrity of the Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of Financial Statements may differ from
legislation in other jurisdictions.
DIRECTORS’ CONFIRMATIONS
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s and Company’s position
and performance, business model and strategy.
Each of the Directors, whose names and functions are
listed in the Annual Report and Financial Statements,
confirm that, to the best of their knowledge:
•
The Group Financial Statements, which have been
prepared in accordance with UK-adopted International
Accounting Standards, give a true and fair view of the
assets, liabilities, financial position and profit of the Group.
•
The Company Financial Statements, which have been
prepared in accordance with United Kingdom Accounting
Standards, comprising FRS 101, give a true and fair view of
the assets, liabilities and financial position of the Company.
•
The Strategic Report and Directors’ report include a
fair review of the development and performance of the
business and the position of the Group and Company,
together with a description of the principal risks and
uncertainties that it faces.
In the case of each Director in office at the date the
Directors’ report is approved:
•
So far as the Director is aware, there is no relevant
audit information of which the Group’s and Company’s
Auditors are unaware.
•
They have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any
relevant audit information and to establish that the Group’s
and Company’s Auditors are aware of that information.
MIKE EDWARDS
LEE MILEY
Chief Executive Officer
Chief Financial Officer
3 March 2025
3 March 2025
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE FINANCIAL STATEMENTS
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Independent Auditors’ report
152
Consolidated income statement
160
Consolidated statement
of comprehensive income
161
Consolidated statement
of financial position
162
Consolidated statement
of changes in equity
163
Consolidated statement
of cash flows
164
Notes to the Consolidated
Financial Statements
165
Company statement
of financial position
208
Company statement
of changes in equity
208
Notes to the Company
Financial Statements
209
FINANCIAL
STATEMENTS
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In May 2024, we were excited to announce the acquisition
of Moorish, one of the UK’s most recognisable houmous
brands. Today, Moorish products are distributed across a
number of major supermarket outlets. This has broadened
and complemented our existing range of dips and gives us
an attractive opportunity to extend the Moorish brand into
a wider range of Mediterranean-style products.
AWARD-WINNING HOUMOUS
BRAND ACQUIRED
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GOVERNANCE
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF BAKKAVOR GROUP PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
In our opinion:
•
Bakkavor Group plc’s Group Financial Statements
and Company Financial Statements (“the Financial
Statements”) give a true and fair view of the state of the
Group’s and of the Company’s affairs as at 28 December
2024 and of the Group’s profit and the Group’s cash
flows for the 52-week period then ended.
•
The Group Financial Statements have been properly
prepared in accordance with UK-adopted International
Accounting Standards as applied in accordance with the
provisions of the Companies Act 2006.
•
The Company Financial Statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure
Framework”, and applicable law).
•
The Financial Statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the Financial Statements, included within
the 2024 Annual Report and Accounts (“the Annual Report”),
which comprise: the Consolidated statement of financial
position and the Company statement of financial position as
at 28 December 2024; the Consolidated income statement,
the Consolidated statement of comprehensive income, the
Consolidated statement of cash flows, the Consolidated
statement of changes in equity and the Company statement
of changes in equity for the period then ended; and the notes
to the Financial Statements, comprising material accounting
policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit and
Risk Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities for the audit of
the Financial Statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
INDEPENDENCE
We remained independent of the Group in accordance
with the ethical requirements that are relevant to our audit
of the Financial Statements in the UK, which includes
the FRC’s Ethical Standard, as applicable to listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare
that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in the Audit and Risk Committee
report, we have provided no non-audit services to the
Company or its controlled undertakings in the period
under audit.
Our audit approach
OVERVIEW
Audit scope
•
Full-scope audit procedures were performed over the
complete financial information of two components and
audit of specific financial statement line items over a
further eleven components.
•
Central audit procedures were performed by the Group
Audit team which included the audit of recoverability
of goodwill, shares in Group undertaking and loans to
Group undertakings, the audit of current and deferred
income taxes, the presentation of exceptional items,
UK payroll, and the defined benefit pension scheme.
•
Full-scope audit procedures were also performed over
the Company financial information.
Key audit matters
•
Recoverability of goodwill in the US Cash Generating
Unit (“CGU”) (Group).
•
Recoverability of shares in Group undertakings and
loans to Group undertakings (Company).
Materiality
•
Overall Group materiality: £11,500,000 (2023: £6,700,000)
based on 0.5% of revenue.
•
Overall Company materiality: £4,000,000 (2023: £4,000,000)
based on 1% of total assets.
•
Performance materiality: £8,600,000 (2023: £5,000,000)
(Group) and £3,000,000 (2023: 3,000,000) (Company).
THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
Financial Statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in the Auditors’
professional judgement, were of most significance in the
audit of the Financial Statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the
Auditors, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the Engagement team.
These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context
of our audit of the Financial Statements as a whole, and in
forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
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The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Recoverability of goodwill in the US CGU (Group)
Refer to the accounting policies in Note 2, the key sources
of estimation uncertainty in Note 3 and Note 13 of the
Group Financial Statements.
At the planning stage of the audit, we assessed the design and
implementation of controls over the impairment review process.
Goodwill must be tested for impairment on at least an
annual basis. The determination of recoverable amount,
being the higher of value-in-use (“VIU”) and fair value less
costs of disposal (“FVLCD”), requires estimation by the
Directors in both identifying and then valuing the relevant
Group’s CGUs.
We focused on the goodwill allocated to the US as this
was determined to be a significant risk in the current year.
Judgement and estimation is required to establish the
recoverable amount using a VIU model. This includes
judgement in the selection of assumptions used to forecast
future cash flows such as revenue growth, earnings before
interest, tax, depreciation and amortisation (“EBITDA”)
margin, climate change impacts and capital expenditure,
and in the selection of appropriate discount rates and
long-term growth rates (“LTGRs”).
We focused on the goodwill allocated to the US CGU as the
key assumptions within the models are subjective and
susceptible to management bias. Refer to the Audit and Risk
Committee report for discussion of this key audit matter.
As part of our audit of management’s impairment assessment
we performed the following procedures.
•
We tested the technical and arithmetic accuracy to ensure that this had
been prepared in line with IAS 36.
•
We reviewed the climate-related estimates in the model, to confirm
if they were consistent with the Group’s net zero commitments.
•
We used internal valuations experts to determine whether the discount
rate and LTGR for the CGU were reasonable.
•
We identified significant cash flow forecast assumptions to which the US
model was sensitive and focused our efforts on these assumptions. We
reviewed and challenged these key assumptions and forecasts used in
the model, focusing on revenue growth and EBITDA margin assumptions.
Procedures performed included, but were not limited to:
–
Agreeing forecasts to Board approved budgets and three year plan.
–
Reviewing management’s historical accuracy of forecasting.
–
Obtaining a revenue and EBITDA bridge from FY24 to FY25 forecast and
assessing key elements of this bridge, obtaining supporting evidence
where applicable and comparing to historic performance.
–
Reviewing actual performance of the US CGU in 2024 and 2025 to the
end of January and weekly performance of February 2025.
•
We reviewed other less significant assumptions in the model including
forecast capital expenditure and allocation of central costs.
•
We reperformed management’s sensitivity analysis by reducing operational
cash flows estimated by EBITDA to simulate downside scenarios and failure
to achieve forecast growth, and separately sensitised the discount rate
and long-term growth rates to understand the impact that possible
changes could have. We confirmed these are mathematically accurate.
We challenged management on the disclosures in order to appropriately
reflect the risk surrounding estimation and concluded that the current
disclosures are acceptable.
•
We performed independent sensitivities on the US CGU in the form of stress
tests to assess the deviation from budget that the CGU could withstand
before an impairment would be necessary. These were focused on adjusting
those assumptions which involve greater estimation such as sales growth
and EBITDA margin improvement. We also compared the downsides in
management’s going concern model for consistency.
Based on the procedures performed, we concluded that no impairment
charge is required. We concur with the disclosures included in the Group
Financial Statements.
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FINANCIAL STATEMENTS
Key audit matter
How our audit addressed the key audit matter
Recoverability of shares in Group undertakings
and loans to Group undertakings (Company)
Refer to the accounting policies in Note 2, Note 4 and
Note 8 of the Company Financial Statements.
To address the risk identified:
•
We obtained a schedule of shares in Group undertakings and ensured this
reconciled to the Financial Statements.
•
We challenged management’s assertion that no impairment triggers were
identified that would necessitate a full impairment review to be performed.
•
We performed a review of net assets of the subsidiary entity against the
carrying value, considered the external market and economic factors and,
with respect to the US and UK, also considered our review of the discounted
cash flow models prepared for the purpose of testing goodwill for
impairment. Based on these procedures, we concluded that there were
no triggers that would indicate the Directors were required to perform a
full impairment test of the shares in Group undertakings carrying value.
•
We performed a reconciliation of the loans to Group undertakings amount
and ensured this agrees with the counterparty.
•
We reviewed the application of management’s impairment methodology in
assessing the recoverability of intercompany receivables and the level of
related expected credit loss provisions. We have reviewed the terms for the
loans to Group undertakings and assessed the nature of the counterparty’s
liquid assets and have concluded that there is no indication of material
impairment to the receivable balances.
We also assessed the adequacy of the disclosure provided in Note 2,
Note 4 and Note 8 of the Company Financial Statements.
We found no exceptions as a result of our testing and consider the
recoverability of shares in Group undertakings and loans to Group
undertakings to be appropriate.
The carrying value of the shares in Group undertakings
and loans to Group undertakings is significant to the
Company-only balance sheet.
HOW WE TAILORED THE AUDIT SCOPE
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Financial
Statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and
controls, and the industry in which they operate.
The Group is structured according to manufacturing sites, each of which is a component and which maintains separate
accounting records and controls. The Group Financial Statements are a consolidation of reporting units, comprising the
manufacturing sites and centralised functions.
In establishing the overall approach to the Group Audit, we determined the type of work that needed to be performed at
each component. Five reporting components were determined to be significant due to size as a result of their relative
contribution to revenue. Full-scope audit procedures were performed on two of these components due to either holding a
significantly larger proportion of revenue relative to other components or due to holding a larger concentration of balance
sheet items. Audit procedures over specific Financial Statement line items were performed for the remaining three
components. One reporting component was determined to be significant due to risk. Audit procedures over specific
financial line items were performed for this component.
The Company was also subject to a full-scope audit by the Group Audit team and identified as a non-significant component.
In addition, we identified a further seven non-significant components which, in our view, required audit procedures over
specific Financial Statement line items in order to ensure that we had sufficient audit coverage. We selected line items
for testing based on their relative size and proportion of the total Group Financial Statement line item, in order to obtain
sufficient appropriate audit evidence.
The consolidation, Financial Statement disclosures and a number of centralised areas were audited by the Group Audit team.
These included the audit of the recoverability of goodwill, shares in Group undertakings and loans to Group undertakings, the
audit of current and deferred income taxes, presentation of exceptional items, UK payroll and the defined benefit pension scheme.
We supplemented our Group-wide audit evidence and coverage through performing analytical procedures over all
components other than those where we performed a full-scope audit or those that were deemed inconsequential, to identify
whether any further audit evidence was needed. Analytical procedures resulted in no additional substantive testing.
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BAKKAVOR GROUP PLC
CONTINUED
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THE IMPACT OF CLIMATE RISK ON OUR AUDIT
As part of our audit we made enquiries of management to understand the process management adopted to assess the
extent of the potential impact of climate risk on the Group Financial Statements and support the disclosures made within
the Strategic Report.
We challenged the completeness of management’s climate risk assessment by:
•
Reading external reporting made by management to the Carbon Disclosure Project.
•
Reviewing internal climate plans and board minutes.
•
Reading the Company’s website for details of climate related commitments and impacts.
Management have made a commitment to reach net zero emissions across Group operations by 2040. Management
have submitted a Carbon Reduction Commitments Plan that has been externally validated by the Science Based Targets
initiative (“SBTi”) and have modelled their current best view of the impact, which we have reviewed.
The key area of the Group Financial Statements where management evaluated that climate risk has a potentially significant
impact is in determining the VIU of its CGUs for the assessment of the recoverability of goodwill in relation to the UK and
US and non-current assets, where decarbonisation costs relating to climate credits is an assumption.
Our audit response in respect of the US CGU is included in the key audit matter above. We also considered the consistency
of the disclosures in relation to climate change (including the disclosures in the Task Force on Climate-related Financial
Disclosures (“TCFD”) section) within the Annual Report with the Financial Statements and our knowledge obtained from
our audit. We have no matters to report as a result of these procedures.
MATERIALITY
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual Financial Statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the Financial Statements as a whole.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Financial Statements – Group
Financial Statements – Company
Overall materiality
£11,500,000 (2023: £6,700,000).
£4,000,000 (2023: £4,000,000).
How we determined it
0.5% of Revenue
1% of total assets
Rationale for
benchmark applied
We consider this is the most relevant measure of the ongoing
performance of the Group as used by key stakeholders. In the prior year,
materiality was calculated using 1% of revenue and was capped at 10%
of profit before tax of underlying activities, however we have re-assessed
this in the current year and have reduced the percentage, but not applied
this cap in order to reduce volatility in materiality.
We believe that total assets are
an appropriate benchmark for a
holding Company
For each component in the scope of our Group Audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was between £1,500,000 and £10,300,000.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for
example in determining sample sizes. Our performance materiality was 75% (2023: 75%) of overall materiality, amounting
to £8,600,000 (2023: £5,000,000) for the Group Financial Statements and £3,000,000 (2023: 3,000,000) for the Company
Financial Statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end
of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit
above £573,000 (Group Audit) (2023: £337,335) and £200,000 (Company Audit) (2023: £202,486) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
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FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BAKKAVOR GROUP PLC
CONTINUED
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going
concern basis of accounting included:
•
Reviewing management’s paper that supports the Group Board’s assessment and conclusions with respect to the
disclosures provided around going concern and viability.
•
Understanding the assumptions applied in the going concern assessment so we could understand and challenge the
rationale for those assumptions, using our knowledge of the business and the sector. We verified key assumptions to
supporting documentation and wider market trends wherever applicable.
•
Reviewing monthly trading results to January 2025 and weekly trading results thereafter, comparing to budget, and
considering the impact of these actual results on the future forecast period.
•
Reviewing management’s severe but plausible downside sensitivity scenario. We assessed the availability of liquid
resources under the base case and downside scenarios modelled by management, and the associated covenant tests
applied. We reviewed management’s identified mitigating actions, albeit we note that no significant mitigations are required.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going
concern for a period of at least twelve months from when the Financial Statements are authorised for issue.
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the Financial Statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s
and the Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the Financial Statements about whether
the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the Financial Statements and
our Auditors’ Report thereon. The Directors are responsible for the other information. Our opinion on the Financial
Statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the
extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or
material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of
the Financial Statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
STRATEGIC REPORT AND DIRECTORS’ REPORT
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report
and Directors’ report for the period ended 28 December 2024 is consistent with the Financial Statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course
of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ report.
DIRECTORS’ REMUNERATION
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
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Corporate governance statement
The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that
part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate
Governance Code (“the Code”) specified for our review. Our additional responsibilities with respect to the corporate
governance statement as other information are described in the reporting on other information sections of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement, included within the Governance section, is materially consistent with the Financial Statements and
our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:
•
The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks.
•
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated.
•
The Directors’ statement in the Financial Statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s
ability to continue to do so over a period of at least twelve months from the date of approval of the Financial Statements;
•
The Directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment
covers and why the period is appropriate.
•
The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term viability of the Group and Company was substantially
less in scope than an audit and only consisted of making enquiries and considering the Directors’ process supporting their
statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code;
and considering whether the statement is consistent with the Financial statements and our knowledge and understanding
of the Group and Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the Financial Statements and our knowledge obtained
during the audit:
•
The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the Group’s and Company’s position, performance,
business model and strategy.
•
The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems.
•
The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the Auditors.
Responsibilities for the Financial Statements and the audit
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS
As explained more fully in the Statement of Directors’ Responsibilities in respect of the Financial Statements, the
Directors are responsible for the preparation of the Financial Statements in accordance with the applicable framework
and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as
they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement,
whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
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FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BAKKAVOR GROUP PLC
CONTINUED
AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an Auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these Financial Statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to pensions legislation, employment regulation, health and safety legislation and other legislation
specific to the industry in which the Group operates (including food safety legislation), and we considered the extent to
which non-compliance might have a material effect on the Financial Statements. We also considered those laws and
regulations that have a direct impact on the Financial Statements such as tax legislation and the Companies Act 2006. We
evaluated management’s incentives and opportunities for fraudulent manipulation of the Financial Statements (including
the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal
entries to increase financial performance and management bias in accounting estimates. Audit procedures performed
by the engagement team included:
•
Discussions with management, Internal Audit and the Group’s legal counsel, including consideration of known
or suspected instances of non-compliance with laws and regulation and fraud.
•
Evaluation of management’s controls designed to prevent and detect irregularities.
•
Assessment of matters reported on the Group’s whistleblowing helpline, and the results of management’s investigation
of such matters.
•
Review of minutes of meetings of those charged with governance.
•
Review of Internal Audit reports.
•
Review of key correspondence with regulatory authorities.
•
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular
in relation to recoverability assessment for US goodwill (see related key audit matters).
•
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations which
impact revenue, expenses or EBIT, which could manipulate the financial performance of the business.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the Financial
Statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors’ report.
USE OF THIS REPORT
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands
it may come save where expressly agreed by our prior consent in writing.
158
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Other required reporting
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
We have not obtained all the information and explanations we require for our audit.
•
Adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us.
•
Certain disclosures of Directors’ remuneration specified by law are not made.
•
The Company Financial Statements and the part of the Directors’ remuneration report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 23 May 2019
to audit the Financial Statements for the year ended 28 December 2019 and subsequent financial periods. The period
of total uninterrupted engagement is six years, covering the years ended 28 December 2019 to 28 December 2024.
Other matter
The Company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include
these Financial Statements in an Annual Financial Report prepared under the structured digital format required by
DTR 4.1.15R – 4.1.18R and filed on the National Storage Mechanism of the Financial Conduct Authority. This Auditors’
report provides no assurance over whether the structured digital format Annual Financial Report has been prepared
in accordance with those requirements.
Sarah Phillips (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
3 March 2025
Bakkavor Group plc | Annual Report & Accounts 2024 |
159
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
52 WEEKS ENDED 28 DECEMBER 2024
£m
Note
52 weeks ended 28 December 2024
52 weeks ended 30 December 2023
Underlying
activities
Exceptional
items
1
Total
Underlying
activities
Exceptional
items
1
Total
Continuing operations
Revenue
4,5
2,292.7
–
2,203.8
–
Cost of sales
(1,657.4)
–
(1,657.4 )
(1,614.4)
–
(1,614.4 )
Gross profit
635.3
–
589.4
–
Distribution costs
(87.1)
–
(87.1 )
(85.1)
–
(85.1 )
Other administrative (costs)/income
(434.6)
(20.2)
(454.8 )
(409.9)
1.3
(408.6 )
(Loss)/profit on disposal of property, plant and equipment
–
–
(0.1)
1.5
Operating profit
113.6
(20.2)
94.3
2.8
Finance costs
9
(26.4)
(0.6)
(27.0 )
(27.4)
–
(27.4 )
Finance income
9
0.5
–
0.6
–
Other gains
10
1.7
–
–
–
Profit before tax
6
89.4
(20.8)
67.5
2.8
Tax (charge)/credit
11
(18.3)
5.4
(12.9 )
(16.4)
–
(16.4 )
Profit for the period
71.1
(15.4)
51.1
2.8
Earnings per share
Basic
12
Diluted
12
1
The Group presents its income statement with three columns. The Directors consider that the underlying activities are more representative of the ongoing operations and key metrics of
the Group. Details of exceptional items can be found in Note 7 and include material items that are non-recurring or significant in nature, and are important to users in understanding the
business. This may include, but is not limited to, restructuring costs, impairment of assets, profits or losses on sale of operations and associated transaction costs, and transformation
projects. In addition, the Group uses further Alternative Performance Measures which can be found in Note 37.
The Notes to the Consolidated Financial Statements form an integral part of the Consolidated Financial Statements.
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CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
52 WEEKS ENDED 28 DECEMBER 2024
£m
Note
52 weeks ended
28 December
2024
52 weeks ended
30 December
2023
Profit for the period
Other comprehensive income/(expense)
Items that will not be reclassified subsequently to profit or loss:
Actuarial gain/(loss) on defined benefit pension schemes
33
(2.9 )
Tax relating to components of other comprehensive income
11
(1.2 )
(2.2 )
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
(11.7 )
(Loss)/gain on cash flow hedges
(3.0 )
(4.4 )
Hedging (gains) reclassified to profit or loss
(2.8 )
(6.8 )
Tax relating to components of other comprehensive income
11
(4.3 )
(20.1 )
Total other comprehensive (expense) net of tax
(0.6 )
(22.3 )
Total comprehensive income
The Notes to the Consolidated Financial statements form an integral part of the Consolidated Financial Statements.
Bakkavor Group plc | Annual Report & Accounts 2024 |
161
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 28 DECEMBER 2024
£m
Note
28 December
2024
30 December
2023
Non-current assets
Goodwill
13
Other intangible assets
14
Property, plant and equipment
15
Other investments
Deferred tax asset
22
Retirement benefit asset
33
Derivative financial instruments
21
Current assets
Assets held for sale
15
Inventories
17
Trade and other receivables
18
Cash and cash equivalents
19
Derivative financial instruments
21
Total assets
Current liabilities
Liabilities held for sale
15
(3.0 )
Trade and other payables
24
(492.7 )
(447.6 )
Current tax liabilities
(1.7 )
(3.4 )
Borrowings
20
(6.9 )
(25.4 )
Lease liabilities
23
(12.1 )
(11.6 )
Provisions
25
(15.9 )
(10.4 )
Derivative financial instruments
21
(2.1 )
(0.5 )
(534.4 )
(498.9 )
Non-current liabilities
Borrowings
20
(215.4 )
(240.0 )
Lease liabilities
23
(72.2 )
(78.9 )
Provisions
25
(18.3 )
(15.7 )
Derivative financial instruments
21
(0.8 )
Deferred tax liabilities
22
(42.2 )
(38.4 )
(348.1 )
(373.8 )
Total liabilities
(882.5 )
(872.7 )
Net assets
Equity
Called up share capital
27
Own shares held
27
(6.3 )
(4.4 )
Merger reserve
27
(130.9 )
(130.9 )
Hedging reserve
27
(0.5 )
Translation reserve
27
Retained earnings
Total equity
The Financial Statements of Bakkavor Group plc and the accompanying Notes, which form an integral part of the
Consolidated Financial Statements, were approved by the Board of Directors on 3 March 2025. They were signed
on behalf of the Board of Directors by:
Mike Edwards
Lee Miley
Chief Executive Officer
Chief Financial Officer
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CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
52 WEEKS ENDED 28 DECEMBER 2024
£m
Note
Called up
share
capital
Own
shares
held
Merger
reserve
Hedging
reserve
Translation
reserve
Retained
earnings
Total
equity
Balance at 1 January 2023
(3.1 )
(130.9 )
Profit for the period
Other comprehensive expense for the period
(8.4 )
(11.7 )
(2.2 )
(22.3 )
Total comprehensive (expense)/income for the period
(8.4 )
(11.7 )
Purchase of own shares
27
(2.4 )
(2.4 )
Dividends
27
(40.8 )
(40.8 )
Credit for share-based payments
Proceeds from exercise of share options
27
Equity-settlement of share-based payments
32
(1.1 )
Deferred tax
11,22
(0.8 )
(0.8 )
Balance at 30 December 2023
(4.4 )
(130.9 )
Profit for the period
Other comprehensive (expense)/income for the period
(5.2 )
(0.6 )
Total comprehensive (expense)/income for the period
(5.2 )
Reclassification to inventory
Purchase of own shares
27
(8.6 )
(8.6 )
Dividends
27
(43.8 )
(43.8 )
Credit for share-based payments
Proceeds from exercise of share options
27
Equity-settlement of share-based payments
27
(6.7 )
Deferred tax
11,22
(0.6 )
(0.6 )
Balance at 28 December 2024
(6.3 )
(130.9 )
(0.5 )
The Notes to the Consolidated Financial Statements form an integral part of the Consolidated Financial Statements.
Bakkavor Group plc | Annual Report & Accounts 2024 |
163
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
52 WEEKS ENDED 28 DECEMBER 2024
£m
Note
52 weeks ended
28 December
2024
52 weeks ended
30 December
2023
Net cash generated from operating activities
30
Investing activities:
Interest received
Dividends received from associates
Purchases of property, plant and equipment
(49.3 )
(40.4 )
Proceeds on disposal of property, plant and equipment
Purchase of intangibles
(7.0 )
(3.5 )
Acquisition of subsidiary
29
(1.8 )
Proceeds on disposal of subsidiary
28
Proceeds on disposal of associate
Net cash used in investing activities
(50.5 )
(36.9 )
Financing activities:
Dividends paid
27
(43.8 )
(40.8 )
Own shares purchased
27
(8.6 )
(2.4 )
Proceeds from exercise of share options
Increase in borrowings
Repayment of borrowings
(237.4 )
(69.1 )
Principal elements of lease payments
23
(12.1 )
(12.3 )
Net cash used in financing activities
(106.5 )
(113.3 )
Net decrease in cash and cash equivalents
(6.7 )
(2.5 )
Cash and cash equivalents at beginning of period
Effect of foreign exchange rate changes
(1.1 )
Cash and cash equivalents at end of period
The Notes to the Consolidated Financial Statements form an integral part of the Consolidated Financial Statements.
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165
Bakkavor Group plc | Annual Report & Accounts 2024 |
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
52 WEEKS ENDED 28 DECEMBER 2024
NOTES TO THE CONSOLIDATED
(Company number: 10986940, registered office: Fitzroy Place, 5th Floor, 8 Mortimer Street, London, England, W1T 3JJ).
The Company’s Ordinary shares are traded on the London Stock Exchange.
The principal activities of the Company and its subsidiaries (the “Group”) comprise the manufacture of fresh prepared
The Consolidated Financial Statements of the Bakkavor Group plc group have been prepared in accordance with UK-
adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006 and the
Disclosure Guidance and Transparency rules sourcebook of the United Kingdom’s Financial Conduct Authority.
The Consolidated Financial Statements comprise the Financial Statements of the parent undertaking and its subsidiary
undertakings (the “Group”), comprising a 52- or 53-week period ending on the Saturday of or immediately before
31 December. Where the fiscal year 2024 is quoted in these Financial Statements this relates to the 52-week period
ended 28 December 2024. The fiscal year 2023 relates to the 52-week period ended 30 December 2023.
These Financial Statements are presented in Pounds Sterling because that is the currency of the primary economic
environment in which the Group operates. Foreign operations are included in accordance with the foreign currency
policy set out below.
The Group considers the impact of climate-related factors in the preparation of the Financial Statements and discloses
any material impact in the relevant Notes.
The Financial Statements have been prepared on the historical cost basis, except for the revaluation of financial
AMENDMENTS TO IAS 12 ‘INCOME TAXES’ – PILLAR TWO INCOME TAXES
The Organisation for Economic Co-operation & Development (“OECD”) has published proposals for a global corporate
minimum tax rate of 15% (“Pillar Two”). On 20 June 2023, legislation in respect of Pillar Two was substantively enacted
in the UK, Finance (No.2) Act 2023, for financial years beginning on or after 31 December 2023. Taxation balances are
adjusted for a change in tax law if the change has been substantively enacted by the balance sheet date. However, the
IASB issued narrow-scope amendments to IAS 12 ‘Income Taxes’ Pillar Two which provide a temporary exemption, which
can be applied immediately, from the requirement to recognise and disclose deferred taxes arising from enacted or
substantively enacted tax law that implements Pillar Two model rules. These amendments were approved for adoption
by the UK Endorsement Board and adopted on 19 July 2023. The Group has applied this exception.
The Group has not applied any standards, interpretations and amendments that have been issued but are not yet effective.
The impact of the following is still to be assessed:
•
IFRS 18, ‘Presentation and disclosure in Financial Statements’ which will become effective in the Consolidated Group
Financial Statements for the financial year ended 30 December 2028.
The impact of the following is not expected to have a material impact on the Consolidated Group Financial Statements.
•
Amendments to IAS 1, ‘Presentation of Financial Statements’ – Classifications of liabilities as current or non-current
and non-current liabilities with covenants.
•
Amendments to IFRS 16, ‘Leases’ – Lease liability in a sale and leaseback.
•
Amendments to IAS 7, ‘Statement of cashflows’ and IFRS 7, ‘Financial instruments: disclosures’ – Supplier finance
arrangements.
•
IFRS S1, ‘General requirements for disclosure of sustainability-related financial information’.
•
IFRS S2, ‘Climate-related disclosures’.
•
Annual Improvements to IFRS Accounting Standards – Amendments to IFRS 7, IFRS 9, IFRS 10 and IAS 7.
•
Amendments to IAS 21, ‘The effects of changes in foreign exchange rates’ – Lack of exchangeability.
•
Amendments to IFRS 9, ‘Financial instruments’ and IFRS 7, ‘Financial instruments: disclosures’ – Financial assets
with ESG-linked features.
All principal accounting policies adopted have been applied consistently and are set out below.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2. Significant accounting policies
continued
The Directors have reviewed the historical trading performance of the Group and the forecasts through to March 2026.
The Directors, in their detailed consideration of going concern, have reviewed the Group’s future revenue projections
and cash requirements, which they believe are based on prudent interpretations of market data and past experience.
The Directors have also considered the Group’s level of available liquidity under its financing facilities. On 25 July 2024,
the Group completed a refinancing of its debt facilities with a new £350m corporate loan facility. The initial maturity is
four years from the signing date (July 2028), with options to request two one year extensions. The agreement comprised
revolving credit facilities of £200m and a Term Loan of £150m. In addition, at the end of 2024 the Group had £29 million
of other debt facilities that will be repaid on an amortising basis by March 2028.
The Directors have carried out a robust assessment of the significant risks currently facing the Group. This has included
scenario planning on the implications of the potential impact of lower sales volumes and the associated impact on factory
performance, along with the potential impact of further cost inflation on the Group’s performance.
Having taken these factors into account under the scenario, which is considered to be severe but plausible, the Directors
consider that adequate headroom is available based on the forecasted cash requirements of the business. At the date
of this report, the Group has complied in all respects with the terms of its borrowing agreements, including its financial
covenants, and forecasts to continue to do so in the future.
Consequently, the Directors consider that the Group has adequate resources to meet its liabilities as they fall due for the
Subsidiary undertakings are included in the Consolidated Financial Statements from the date on which control is achieved
and cease to be consolidated from the date on which control is transferred out of the Group. Control is achieved when
the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. The Group reassesses whether or not it controls an investee when
facts and circumstances indicate that there are changes to one or more of the elements of control.
When the Group has less than a majority of the voting rights of an investee, it considers all relevant facts and circumstances
in assessing whether or not it has power over the investee to direct the relevant activities of the investee unilaterally.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-
controlling shareholders are measured at the non-controlling interests’ proportionate share of the fair value of the acquiree’s
identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those
interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive
income is attributed to non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity
transactions. The carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect
the changes in their relative interests in the subsidiaries.
Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the
Business acquisitions from third parties are accounted for using the acquisition method. The cost of the acquisition is
measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree’s identifiable assets,
liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair
value at the acquisition date.
Goodwill arising on business combinations is recognised as an asset and initially measured at cost, being the excess of
the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities recognised. If, after the reassessment, the Group’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is
recognised immediately in the income statement.
When the consideration in a business combination includes an asset or liability resulting from a contingent consideration
arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the
consideration transferred. Changes in the fair value of the contingent consideration that qualify as measurement period
adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. The subsequent accounting
for changes in fair value of the contingent consideration that do not qualify as measurement period adjustments depends
on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured
at subsequent reporting dates. Contingent consideration that is classified as an asset or a liability is remeasured at
subsequent reporting dates in accordance with IAS 39 or IAS 37, as appropriate.
Bakkavor Group plc | Annual Report & Accounts 2024 |
167
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are
remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss,
Goodwill is initially recognised and measured as set out above in ‘Business combinations’.
Goodwill is assumed to have an indefinite life as the acquired business is expected to trade for the foreseeable future
and therefore goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment
testing, goodwill is allocated to each of the cash-generating units (“CGUs”) or groups of CGUs expected to benefit from the
synergies of the combination. The CGUs identified by the Group are the three operating regions: the UK, the US and China.
This is the lowest level at which goodwill is monitored. CGUs or groups of CGUs to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first
to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on
the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed
in a subsequent period. Please refer to Note 13 for details of the goodwill impairment assessment.
On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the profit
The Group sells fresh prepared foods and fresh produce, and revenue is recognised as the performance obligation to deliver
goods to customers is satisfied and is recorded based on the amount of consideration expected to be received in exchange for
satisfying the performance obligation. Revenue on the sale of goods is recognised when control of the goods has passed to the
buyer upon delivery to the customer and represents the value of sales to customers net of customer deductions and discounts,
VAT and other sales-related taxes. The Group recognises revenue net of customer deductions and discounts in the period in
which the arrangement applies only when it is highly probable a significant reversal in the cumulative amount of revenue will
not occur. The Group does not expect to have any contracts where the period between transfer of the promised goods to the
customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction
CUSTOMER DEDUCTIONS
Consistent with standard industry practice, the Group has arrangements with its customers providing volume-related
rebates, marketing and promotional funding contributions, discounts or lump sum incentives. These costs are recognised
as a reduction to revenue, as they are considered to be an adjustment to the selling price for the Group’s products.
Sometimes the payment of this support is subject to the Group’s customers performing specified actions or satisfying
certain performance conditions associated with the purchase of products from the Group. These include achieving agreed
purchase volume targets and providing promotional marketing materials/activities. Whilst there is no standard definition,
these amounts payable to customers are generally termed ‘customer deductions’.
Volume-based rebates, which are calculated on the Group’s estimate of rebates, are expected to be paid to customers
using the ‘most likely amount’ in line with IFRS 15 requirements, whereas fixed rebates are accounted for as a reduction
in revenue over the life of the contract. When the Group has satisfied its performance obligations, the customer will make
payment in line with agreed payment terms.
The Group recognises these costs as a deduction from revenue based upon the terms of the relevant arrangement in
place. Amounts payable relating to customer deduction arrangements are recognised within accruals except in cases
where the Group has a legal right of set-off and intends to offset against amounts due from that customer.
IFRS 16 determines whether a contract contains a lease on the basis of whether the customer has the right to control the
use of an identified asset for a period of time in exchange for consideration. The Group has applied the definition of a lease
and related guidance set out in IFRS 16 to all lease contracts entered into or modified on or after 30 December 2018.
Under IFRS 16, all leases (except as noted below) are accounted for as follows:
•
Recognise the right-of-use assets and lease liabilities in the Consolidated statement of financial position, initially
measured at the present value of future lease payments. Future lease payments are discounted at the Group’s weighted
average incremental borrowing rate;
•
Use the lease term specified in the contract. Where there are termination options in the contract it is assumed that these
will not be exercised; and
•
Recognise depreciation of right-of-use assets and interest on lease liabilities in the Consolidated income statement.
Lease incentives (e.g. rent-free period) are recognised as part of the measurement of the right-of-use assets and lease
liabilities, whereas under IAS 17 they resulted in the recognition of a lease incentive liability, amortised as a reduction of
rental expense on a straight-line basis.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2. Significant accounting policies
continued
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 ‘Impairment of Assets’ and any
impairment is provided for by writing down the asset value.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and
office furniture), the Group has opted to recognise a lease expense on a straight-line basis over the lease term as permitted
by IFRS 16 paragraph 6. This expense is presented within other expenses in the Consolidated income statement.
In the statement of cash flows, the Group as a lessee will classify:
•
Cash payments for the principal portion of the lease liability within financing activities;
•
Cash payments for the interest portion of the lease liability within interest paid, in line with the policy for other types
of interest; and
•
Short-term lease payments, payments for leases of low-value assets and variable lease payments not included
environment in which it operates (its functional currency). For the purpose of the Consolidated Financial Statements,
the results and financial position of each Group company are expressed in Pounds Sterling, being the functional currency
In preparing the Financial Statements of the individual companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.
At each statement of financial position date, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the statement of financial position date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are
included in the income statement for the period. Exchange differences arising on the retranslation of non-monetary items
carried at fair value are included in the income statement for the period.
For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the statement of financial position date. Income and expense
items are translated at the annual average rate, unless exchange rates fluctuate significantly during that period, in which
case the exchange rates at the dates of transactions are used. Exchange differences arising, if any, are recognised in
other comprehensive income and accumulated in the Group’s translation reserve.
On the disposal of a foreign operation, all of the accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to the income statement. However, a partial disposal of a foreign operation
where the Group does not lose control results in the proportionate share of accumulated exchange differences being
re-attributed to non-controlling interests and is not recognised in the income statement.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
Research and development costs comprise all directly attributable costs necessary to create and produce new and
updated products. Expenditure on research and development, where development costs do not meet the recognition
Exceptional items are those that, in management’s judgement, should be disclosed by virtue of their nature or amount.
Exceptional items include material items that are non-recurring or significant in nature and are important to users in
understanding the business. This may include, but is not limited to, restructuring costs, impairment of assets, profits
Defined contribution pension plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity,
which then invests the contributions to buy annuities for the pension liabilities as they become due based on the value
of the fund, and hence the Group has no legal or constructive obligations to pay further contributions. Obligations for
contributions to defined contribution pension plans are recognised as an expense in the income statement as employee
service is received. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available. Payments made to state-managed retirement benefit schemes are dealt with as payments
to defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising in a
defined contribution retirement benefit scheme.
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169
Defined benefit pension plans
A defined benefit plan is a pension plan that defines the amount of pension benefit that an employee will receive
on retirement, usually dependent on factors such as age, years of service and compensation.
For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with
actuarial valuations being carried out at each statement of financial position date. Remeasurement, comprising actuarial
gains and losses, the effect of changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest),
are recognised outside of the income statement and presented in the statement of comprehensive income.
Defined benefit costs are categorised as follows:
•
Service cost (including current service cost, past service cost, as well as gains and losses on curtailments
and settlements);
•
Net interest expense or income; and
•
Remeasurement.
Past service costs are recognised in the income statement on the earlier of:
•
The date of the plan amendment or curtailment; and
•
The date that the Group recognises restructuring-related costs or termination benefits.
The Group recognises the first two components of defined benefit costs in the income statement.
The retirement benefit recognised in the statement of financial position represents the present value of the defined benefit
obligation as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present
An expense is recognised for goods or services acquired in a share-based transaction when the goods are obtained or
the service received. The credit is booked as either a liability or in equity, depending on the type of share-based payment.
Equity-settled share-based payment transactions are transactions where Group shares are issued as consideration for
goods or services. They are measured in the income statement at the fair value of the equity instrument granted at the
date of grant with the corresponding amount booked to equity. The fair value determined at the grant date of equity-settled
share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
shares that will eventually vest. The fair value calculation should reflect market-based performance conditions. The total
expense will be reduced by estimates of options that will not vest (due to leavers or not meeting non-market-based
performance criteria). Estimates of non-vesting are to be recalculated at each measurement date. For grants of equity
instruments with market conditions, the entity shall recognise the goods and services from a counterparty who satisfies
other vesting conditions, regardless of whether that market condition is satisfied.
During 2022, the Company began purchasing its own Ordinary shares from the market through an Employee Benefit Trust
called the Bakkavor Group plc Employee Benefit Trust. These shares are held to satisfy share awards under the Group’s
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense that are taxable or deductible in other periods, and
it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the statement of financial position date.
Tax returns are prepared to adhere to tax rules and regulations and with all transactions being fully disclosed to the tax
authorities. However, the complex nature of tax sometimes means that the legislation is open to interpretation. In such
cases, judgement is required to quantify the tax liability to be reflected in the Financial Statements. If there is a reasonable
possibility that tax authorities may take a different view from the position taken in the filed returns, then this will be
reflected in the Financial Statements in the form of a tax provision. In such cases, this provision will represent the full
amount of any potential liability until the matter is agreed with the tax authorities.
and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit and
is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary
differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill, or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2. Significant accounting policies
continued
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, except where the Group is able to control the reversal of the temporary difference, and it is probable that the
temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed
at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited
directly to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities, and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Where current and deferred tax arises from the initial accounting for a business combination, the tax effect is included
All property, plant and equipment is stated in the statement of financial position at cost less any subsequent accumulated
depreciation and impairment losses.
The useful economic lives are determined based on a review of a combination of factors, including the asset ownership
rights and the nature of the overall product lifecycle.
over their estimated useful lives, using the straight-line method, on the following bases:
•
Buildings – maximum period of 50 years
•
Plant and machinery – 1 to 20 years
•
Fixtures and equipment – 3 to 5 years
Assets purchased through a lease agreement are recognised in property, plant and equipment and depreciated over
their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease.
Right-of-use assets are depreciated over the term of the relevant lease.
Some fixtures and equipment, that comprise improvements or additions to an existing building, may be depreciated over
the same period as the related building, which could be longer than five years.
Reviews of the estimated remaining useful lives and residual values of individual productive assets are performed annually,
taking account of commercial and technological obsolescence as well as normal wear and tear. All items of property, plant
and equipment are reviewed for impairment when there are indications that the carrying value may not be recoverable. If
any impairment is required, this will be recognised in ‘Other administrative costs’ within the Consolidated income statement.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale
Borrowing costs incurred in financing the construction of qualifying assets such as property, plant and equipment are
capitalised up to the date at which the relevant asset is substantially complete. Borrowing costs are calculated using the
Group’s weighted average cost of borrowing during the period of capitalisation. All other borrowing costs are recognised
Other intangible assets which include brands, customer relationships and software have finite useful lives which are
determined based on a review of a combination of factors, including the asset ownership rights and the nature of the
overall product lifecycle. The assets are amortised on a straight-line basis over their determined useful life.
The amortisation charge for brands, customer relationships and customer contracts is recognised as an expense over
ten years and is charged to ‘Other administrative costs’ in the income statement.
Software-as-a-Service (“SaaS”) arrangements are service contracts providing the Group with the right to access the
cloud provider’s application software over the contract period.
Costs incurred to configure or customise, and the ongoing fees to obtain access to the cloud provider’s application
software, are recognised as operating expenses when the services are received, unless the configuration and
customisation activities significantly modify or customise the cloud software, in which case the costs are expensed
over the SaaS contract term.
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171
When they meet the definition of and recognition criteria for an intangible asset, cost incurred relating to the development
of software code that enhance or modify existing on-premise systems are recognised as intangible assets.
The amortisation charge for software, source code, licences and development is recognised as an expense over the term
of the software contract up to a maximum of ten years and is charged to ‘Other administrative costs’ in the Consolidated
Intangible assets and property, plant and equipment are tested for impairment when an event that might affect asset
values has occurred. Examples of such triggering events include: significant planned restructuring, a major change in
market conditions or technology, expectations of future operating losses, or a significant reduction in cash flows.
An impairment loss is recognised, in the income statement, to the extent that the carrying amount cannot be recovered
either by selling the asset or by the discounted future earnings from operating the assets in accordance with IAS 36
‘Impairment of Assets’. Any such impairment will be recognised in ‘Other administrative costs’ within the Consolidated
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and
condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price
Classification
The Group classifies its financial assets in the following measurement categories:
•
Those to be measured subsequently at fair value (either through other comprehensive income (“OCI”) or through profit
or loss); and
•
Those to be measured at amortised cost.
For assets measured at fair value, gains and losses are recorded either in profit or loss or in OCI.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Subsequent measurement depends on the cash flow characteristics of the asset. There are three measurement
categories into which the Group classifies its debt instruments:
•
Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost. Impairment losses are presented as a separate line
item in the income statement.
•
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’
cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying
amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign
exchange gains and losses, which are recognised in the income statement.
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. Any fair value movement
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. The Group classifies its trade receivable balances dependent on its objectives with respect to the collection
of contractual cash flows. The Group operates non-recourse debtor factoring arrangements with four of its significant
customers. Receivables generated from goods sold to these customers are subsequently measured at fair value through
the income statement, as the objective of management is to sell the receivables (Held to sell business model). All other
trade receivables are held with the objective of collecting the contractual cash flows, and so these are measured
subsequently at amortised cost using the effective interest method (Held to collect business model).
Other receivables that have fixed or determinable payments that are not quoted in an active market are classified as
financial assets and are measured at amortised cost using the effective interest method, less any impairment. Interest
income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of
interest would be immaterial.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2. Significant accounting policies
continued
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Impairment
The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables. The expected loss rates are based on the payment
profiles of sales before 28 December 2024 or 30 December 2023 respectively and the corresponding historical credit
losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking
information on macro-economic factors affecting the ability of the customers to settle the receivables.
Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment
plan with the Group, and a failure to make contractual payments for a period of greater than 90 days past due.
Impairment losses on trade receivables and contract assets are presented in ‘Other administrative costs’ within operating
Financial liabilities held by the Group are classified as other financial liabilities at amortised cost and derivatives at FVPL.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other
financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis.
Effective interest method
Finance costs are recognised on an effective interest basis for debt instruments other than those financial liabilities
designated as at FVPL. The effective interest method is a method of both calculating the amortised cost of a debt
instrument and allocating finance costs over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life
of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Financial instruments that are measured subsequent to initial recognition at fair value are grouped into levels 1 to 3 based
on the degree to which fair value is observable:
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities;
•
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
•
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or
it transfers the financial asset, and substantially all the risks and rewards of ownership of the asset, to another entity.
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest
rates. The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign exchange rate risks, including foreign exchange forward contracts and interest rate swaps. Further details of
derivative financial instruments are disclosed in Notes 21 and 26. The Group does not use derivative financial instruments
for speculative purposes. The use of financial derivatives is governed by the Group’s policies, approved by the Board of
Directors, which provide written principles on the use of financial derivatives.
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately
unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in
profit or loss depends on the nature of the hedge relationship.
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GOVERNANCE
FINANCIAL STATEMENTS
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173
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is
recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally
enforceable right and intention to offset. A derivative is presented as a non-current asset or a non-current liability if the
remaining maturity of the instrument is more than 12 months and it is not due to be realised or settled within 12 months.
Other derivatives are presented as current assets or current liabilities.
The Group designates interest rate swap derivatives as hedging instruments in respect of interest rate risk in cash flow
hedges. The Group has designated all new forward foreign exchange contracts as cash flow hedges and hedge accounting
is applied to these instruments.
The hedging relationship is documented at inception. This documentation identifies the hedging instrument, the hedged
item or transaction, the nature of the risk being hedged and how hedge effectiveness will be measured throughout their
duration. These hedges have been designated as cash flow hedges and are expected, at inception and on an ongoing basis,
to be highly effective in offsetting changes in the cash flows of hedged items.
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are
designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the
heading of ‘hedging reserve’, limited to the cumulative change in fair value of the hedged item from inception of the hedge.
The gain or loss relating to the ineffective portion is recognised immediately in profit or loss and is included in the ‘Other
gains and losses’ line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit
or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the
qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised.
The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and
accumulated in the hedging reserve at that time remains in equity and is reclassified to profit or loss when the forecast
transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount
of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
the statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Where
a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present
value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be
received and the amount of the receivable can be measured reliably.
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and
has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan
or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the
direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the
restructuring and not associated with the ongoing activities of the entity. Charges/credits in relation to restructuring
provisions are recognised in ‘Other administrative costs’ within the Consolidated income statement.
Present obligations arising from onerous contracts are recognised and measured as provisions. An onerous contract
is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be received under it. Where a lease contract is onerous, the onerous
provision is calculated as the costs of meeting the obligations under the contract excluding lease rentals that are included
A contingent liability is a possible obligation that arises from past events and the existence of which will only be confirmed
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or
the amount of the obligation cannot be measured reliably. A contingent liability is disclosed in the Notes to the Financial
Statements and is not recognised when the possibility of an outflow is more than remote. When an outflow becomes
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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The following are areas of particular significance to the Group’s Financial Statements and include the application
of judgement, which is fundamental to the compilation of a set of Financial Statements:
CRITICAL JUDGEMENTS IN APPLYING THE GROUP’S ACCOUNTING POLICIES
Presentation of exceptional items
The Group’s financial performance is analysed in two ways: underlying performance (which does not include exceptional
items) and exceptional items that are material and not expected to reoccur. Judgement is required as to whether items
should be presented as exceptional or underlying. Exceptional items include material items that are significant in nature
or non-recurring and are important to users in understanding the business. Where disclosed, items have been considered
by management to meet this definition. For further details please see Note 7.
KEY SOURCES OF ESTIMATION UNCERTAINTY
Pension obligations
The Group maintains a defined benefit pension plan for which it has recorded a pension asset. The obligations included
within the overall pension asset are based on an actuarial valuation that requires a number of assumptions including
discount rate, inflation rate, mortality rates and actual return on plan assets that may necessitate material adjustments to
this asset/liability in the future. The assumptions used by the Group are the best estimates based on historical trends and
the composition of the workforce. Details of the principal actuarial assumptions used in calculating the recognised asset/
liability for the defined benefit plan, and the sensitivity of reported amounts to changes in those assumptions, are given in
Note 33.
IMPAIRMENT OF GOODWILL
The recoverable amount of the US CGU is determined based on the higher of fair value less costs to sell and value-in-use
calculations. The carrying amount of the US CGU is £49.3m (2023: £48.7m). The assumptions used to calculate the
recoverable amount are considered to be a key source of estimation uncertainty. The key assumptions that can impact the
value-in-use calculation are changes to the growth rates and operating margins applied to derive a three-year forecast.
The Group has considered the impact of the assumptions used in the US CGU calculation and has conducted sensitivity
The chief operating decision-maker (“CODM”) has been defined as the Senior Executive Team headed by the Chief
Executive Officer. They review the Group’s internal reporting to assess performance and allocate resources. Management
has determined the segments based on these reports.
As at the statement of financial position date, the Group is organised into three regions, the UK, the US and China, and
manufactures fresh prepared foods and produce in each region.
The Group manages the performance of its businesses through the use of ‘adjusted operating profit’, as defined in Note 37.
Measures of total assets are provided to the Senior Executive Team; however, cash and cash equivalents, short-term
deposits and some other central assets are not allocated to individual segments. Measures of segment liabilities are
not provided to the Senior Executive Team.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
175
The following table provides an analysis of the Group’s segmental information for the period to 28 December 2024:
£m | Note | UK | US | China | Un-allocated | Total |
Revenue | 1,948.5 | 227.7 | 116.5 | – | 2,292.7 | |
Adjusted EBITDA | 37 | 160.7 | 21.6 | 4.3 | – | 186.6 |
Depreciation | (48.8) | (11.3) | (5.8) | – | (65.9) | |
Amortisation | (2.7) | (0.2) | – | – | (2.9) | |
Share scheme charges | (4.0) | (0.2) | – | – | (4.2) | |
Adjusted operating profit/(loss) | 37 | 105.2 | 9.9 | (1.5) | – | 113.6 |
Exceptional items | 7 | (21.5) | (0.6) | 1.9 | – | (20.2) |
Operating profit | 83.7 | 9.3 | 0.4 | – | 93.4 | |
Finance costs | 9 | (27.0) | ||||
Finance income | 0.5 | |||||
Other gains | 1.7 | |||||
Profit before tax | 68.6 | |||||
Tax | (12.9) | |||||
Profit for the period | 55.7 | |||||
Other segment information | ||||||
Capital additions 1 | 54.6 | 6.4 | 4.3 | – | 65.3 | |
Total assets | 1,225.5 | 185.1 | 56.9 | 31.1 | 1,498.6 | |
Non-current assets | 994.4 | 156.6 | 36.3 | – | 1,187.3 |
1
In 2024, Capital additions include additions for ‘Property, plant and equipment’ (£58.3m) and ‘Other intangible assets’ (£7.0m).
The following table provides an analysis of the Group’s segmental information for the period to 30 December 2023:
£m | Note | UK | US | China | Un-allocated | Total |
Revenue | 1,852.7 | 229.4 | 121.7 | – | 2,203.8 | |
Adjusted EBITDA | 37 | 149.2 | 15.0 | 3.9 | – | 168.1 |
Depreciation | (51.4) | (10.6) | (6.7) | – | (68.7) | |
Amortisation | (2.0) | (1.0) | – | – | (3.0) | |
Share scheme charges | (2.0) | – | – | – | (2.0) | |
Profit on disposal of property, plant and equipment | 0.1 | – | (0.2) | – | (0.1) | |
Adjusted operating profit/(loss) | 37 | 93.9 | 3.4 | (3.0) | – | 94.3 |
Exceptional items | 7 | 2.8 | (2.9) | 2.9 | – | 2.8 |
Operating profit/(loss) | 96.7 | 0.5 | (0.1) | – | 97.1 | |
Finance costs | (27.4) | |||||
Finance income | 0.6 | |||||
Other gains and (losses), net | – | |||||
Profit before tax | 70.3 | |||||
Tax | (16.4) | |||||
Profit for the period | 53.9 | |||||
Other segment information | ||||||
Capital additions 1 | 31.3 | 14.2 | 1.7 | – | 47.2 | |
Total assets | 1,190.7 | 185.0 | 65.9 | 38.7 | 1,480.3 | |
Non-current assets | 995.6 | 159.2 | 42.9 | 0.9 | 1,198.6 |
1
In 2023 Capital additions include comprise Property, Plant and Equipment additions only. There was £3.4m of ‘Other intangible asset additions’ (UK £3.0m, US £0.4m, China £nil).
All of the Group’s revenue is derived from the sale of goods in 2024 and 2023. There were no inter-segment revenues.
The un-allocated assets of £31.1m (2023: £38.7m) relate to cash and cash equivalents and derivative financial instruments
which cannot be readily allocated because of the Group cash-pooling arrangements that are in place to provide funds to
businesses across the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
4. Segmental information
continued
176
| Bakkavor Group plc | Annual Report & Accounts 2024
MAJOR CUSTOMERS
In 2024, the Group’s four largest customers accounted for 74.5% (2023: 73.9%) of the Group’s total revenue from
continuing operations. These customers accounted for 87.7% (2023: 88.0%) of total UK revenue from continuing
operations. The Group does not enter into long-term contracts with its retail customers.
Each of these four customers accounts for a significant amount of the Group’s revenue and are all in the UK segment.
The percentage of Group revenue from these customers is as follows:
2024 | 2023 | |
Customer A | 31.5% | 32.4% |
Customer B | 22.0% | 21.5% |
Customer C | 14.4% | 13.1% |
Customer D | 6.6% | 6.9% |
£m | 2024 | 2023 |
Continuing operations | ||
UK | 1,948.5 | 1,852.7 |
US | 227.7 | 229.4 |
China | 116.5 | 121.7 |
2,292.7 | 2,203.8 |
Upon completion of delivery (the performance obligation), the terms of the order allow 30 to 75 days (2023: 30 to 75 days)
for payment, dependent on the relevant customers’ payment terms. The Group has in place trade receivable factoring
arrangements. These are non-recourse arrangements which were applicable to 70.3% (2023: 69.4%) of the Group’s total
sales. These arrangements allow the Group to choose to factor the receivable for approved invoices and receive payment
Profit before tax for the period has been arrived at after charging/(crediting):
£m | Note | 2024 | 2023 |
Depreciation of property, plant and equipment: | |||
– Owned | 54.3 | 56.4 | |
– Leased | 11.6 | 12.3 | |
Research and development costs | 10.8 | 9.1 | |
Cost of inventory recognised as an expense | 1,032.4 | 1,029.1 | |
Amortisation of intangible assets | 14 | 2.9 | 3.0 |
Exceptional items | 7 | 20.8 | (2.8) |
Loss on disposal of property, plant and equipment | – | 0.1 | |
Share scheme charges | 32 | 4.2 | 2.0 |
Foreign exchange gains | 10 | (1.7) | – |
Staff costs | 8 | 623.6 | 591.9 |
£m | 2024 | 2023 |
The audit of the Company’s Consolidated Financial Statements | 0.5 | 0.4 |
The audit of the Company’s subsidiaries pursuant to legislation | 1.0 | 0.8 |
Total audit fees | 1.5 | 1.2 |
Non-audit fees of £59,000 (2023: £45,000) were paid to the Group’s Auditors for permitted audit-related assurance and
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
177
The Group’s financial performance is analysed in two ways: review of underlying performance (which does not include
exceptional items) and separate review of exceptional items that are material and not expected to reoccur. The Directors
consider that the underlying performance, which is reported as our ‘Adjusted’ measures, is more representative of the
ongoing operations and key metrics of the Group.
Exceptional items are those that, in management’s judgement, should be disclosed by virtue of their nature or amount.
Exceptional items include material items that are non-recurring or significant in nature, and are important to users in
understanding the business. This may include, but is not limited to, restructuring costs, impairment of assets, profits
or losses on sale of operations and associated transaction costs, and transformation projects:
£m |
Note |
2024 |
2023 |
China: Net profit on disposal or impairment arising from operations |
1.9 |
2.9 |
|
UK: Restructuring and site closures (accruals)/releases |
|||
– Closure costs |
(7.9) |
2.2 |
|
– Impairment charge |
(12.9) |
0.6 |
|
UK: ERP transformation costs |
(0.7) |
– |
|
US: Asset impairment charge |
(0.6) |
(3.5) |
|
US: Customer contractual dispute impairment |
– |
0.6 |
|
Total exceptional items included in operating profit |
(20.2) |
2.8 |
|
Exceptional finance costs |
9 |
(0.6) |
– |
Total exceptional items before tax |
(20.8) |
2.8 |
|
Tax on exceptional items |
5.4 |
– |
|
Total exceptional items after tax |
(15.4) |
2.8 |
2024
The Group recognised £20.8m of net exceptional expense for the year (before tax). This includes the following:
•
£1.9m of profit on disposal or impairment arising from our China operations. This includes £4.0m profit on disposal from
the 100% owned subsidiary Bakkavor (Taicang) Baking Company Limited on 28 March 2024 and a further £1.1m of net
profit arising from the sale of our Hong Kong associate in 2023 due to a provision no longer being required (with £1.4m of
exceptional income recognised in 2023). Offsetting this is a £3.2m charge relating to our Hong Kong operations which are
held for sale at 28 December 2024 (of which £2.2m impairment and £1.0m costs to sell);
•
£20.8m net charge of which £21.4m relates to the closure of one of our UK sites by the end of Q1 2025 (announced in
September 2024). Of this, £12.9m relates to an impairment of assets (£12.4m fixed assets and £0.5m inventory), and £8.5m
cash costs of closure, which includes redundancy payments. The majority of the cash impact will be recognised in 2025.
There is £0.6m release of provisions which are no longer required in relation to the UK restructuring implemented in 2022.
•
£0.7m related to our UK ERP transformation. In 2024, the Group commenced a multi-year project to replace its legacy UK
ERP systems with a new ERP system which is a cloud-based solution. The total project cost is expected to be c.£40m and be
incurred over four years, with c.£20m to be expensed and recognised within exceptional items and the balance to be capital
spend. The Group recognised a charge of £0.7m in respect of work carried out in 2024, along with £3.0m of capital spend;
•
£0.6m additional impairment charge in the US relating to equipment that was partially written down in 2023 that is no
longer in use (see below); and
•
£0.6m charge relating to accelerated amortisation of refinancing fees. See Note 9 for further details.
A tax credit of £5.4m has been recognised in relation to these exceptional charges.
2023
The Group recognised £2.8m of exceptional income for the year (before tax). This included the following:
•
£2.9m of profit on disposal arising from our China operations. This includes £1.5m profit on disposal of property, plant
and equipment following the sale and leaseback of one of the properties the Group operates from within the China
segment, and £1.4m profit on disposal of associates, following the sale of its 45% share in two associate companies,
La Rose Noire Limited and Patisserie et Chocolat Limited, on 8 May 2023.
•
£2.8m release of 2022 UK closure cost provisions following the sites closing earlier in 2023 than originally planned
and the release of an impairment associated with these sites that is no longer required.
•
£3.5m impairment charge for fixed assets that will now no longer have any value to the US business.
•
£0.6m release of impairment charge on assets for the US business that are no longer required.
The total net cash inflow during the financial year in respect of exceptional charges was £3.5m (2023: outflow £4.4m).
This included £6.6m cash receipts from the disposal of our China subsidiary less £0.3m tax deducted at source, and
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
178
| Bakkavor Group plc | Annual Report & Accounts 2024
The average monthly number of employees (including Executive Directors) during the period was:
2024 | 2023 | |
number | number | |
Production | 14,675 | 14,906 |
Management and administration | 2,321 | 2,345 |
Sales and distribution | 893 | 885 |
17,889 | 18,136 |
Their aggregate remuneration comprised:
£m | Note | 2024 | 2023 |
Wages and salaries | 544.4 | 515.7 | |
Social security and other costs | 66.4 | 63.1 | |
Other pension costs | 33 | 12.8 | 13.1 |
623.6 | 591.9 |
£m | Note | 2024 | 2023 |
Interest on borrowings | (15.7) | (16.4) | |
Interest on non-recourse receivables financing | (6.7) | (7.1) | |
Interest on lease liabilities | (2.7) | (3.0) | |
Unwinding of discount on provisions | 25 | (1.3) | (0.9) |
Total finance costs pre exceptionals | (26.4) | (27.4) | |
Exceptional finance costs | 7 | (0.6) | – |
Total finance costs | (27.0) | (27.4) |
£m | 2024 | 2023 |
Interest received on bank deposits | 0.5 | 0.6 |
Exceptional finance costs of £0.6m wholly relate to the accelerated amortisation of refinancing fees relating to the Group’s
refinancing of its core debt facilities, with the process having launched on 7 June 2024 and completed on 25 July 2024.
£m | Note | 2024 | 2023 |
Foreign exchange gains | 26 | 1.7 | – |
1.7 | – |
£m | Note | 2024 | 2023 |
Current tax: | |||
Current period | 13.6 | 14.3 | |
Prior period adjustment | 0.4 | (1.2) | |
Total current tax charge (pre-exceptional items) | 14.0 | 13.1 | |
Deferred tax: | |||
Deferred tax relating to the origination and reversal of temporary differences in the period | 7.0 | 0.9 | |
Deferred tax relating to changes in tax rates | – | 0.2 | |
Prior period adjustment | (2.7) | 2.2 | |
Total deferred tax charge (pre-exceptional items) | 22 | 4.3 | 3.3 |
Tax on exceptional items: | |||
Current tax | (2.2) | 0.6 | |
Deferred tax | (3.2) | (0.6) | |
Total tax credit on exceptional items | (5.4) | 0.0 | |
Total tax charge for the period | 12.9 | 16.4 |
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
179
The Group tax charge for the period was £12.9m (2023: £16.4m) which represents an effective tax rate of 18.8% (2023: 23.4%)
on profit before tax of £68.6m (2023: £70.3m). Tax is calculated using prevailing statutory rates in the territories in which we
operate, however, most of the Group’s profits are earned in the UK, where the statutory rate is 25% for FY24. The effective
tax rate is 6.2% lower (2023: 0.1% lower) than the UK statutory tax rate as detailed in the table below.
Excluding exceptional items and other adjusting items the adjusted tax rate on underlying activities was 20.5% (2023:
24.4%) (see Note 37).
The charge for the period can be reconciled to the profit per the Consolidated income statement as follows:
2024 |
2024 |
2023 |
2023 |
|
£m |
% |
£m |
% |
|
Profit before tax: |
68.6 |
100.0 |
70.3 |
100.0 |
Tax charge at the UK corporation tax rate of 25% (2023: 23.5%) |
17.2 |
25.0 |
16.5 |
23.5 |
Net non-deductible expenses/(non-taxable income) |
(2.1) |
(3.0) |
(1.5) |
(2.1) |
Prior period adjustment |
(2.3) |
(3.3) |
1.0 |
1.4 |
Tax effect of losses carried forward not recognised |
0.1 |
0.1 |
1.0 |
1.4 |
Unprovided deferred tax assets now recognised |
– |
– |
(0.4) |
(0.5) |
Overseas taxes at different rates |
0.2 |
0.3 |
0.3 |
0.4 |
Deferred tax rate differential |
– |
– |
0.2 |
0.3 |
Exceptional non-taxable income/expense |
(0.2) |
(0.3) |
(0.7) |
(1.0) |
Tax charge and effective tax rate for the period |
12.9 |
18.8 |
16.4 |
23.4 |
In addition to amounts charged to the Consolidated income statement, the following amounts in respect of tax were
charged/(credited) to the Consolidated statement of comprehensive income and equity:
£m |
2024 |
2023 |
Tax relating to components of other comprehensive income/(expense): |
||
Deferred tax: |
||
Remeasurements on defined benefit pension scheme actuarial gain/(loss) |
1.2 |
(0.7) |
Deferred tax rate change on defined benefit pension scheme actuarial gain/(loss) |
– |
– |
Cash flow hedges and cost of hedging |
(0.6) |
(2.8) |
Deferred tax on share schemes |
0.6 |
0.8 |
1.2 |
(2.7) |
|
Tax relating to components of other comprehensive income/(expense): |
0.6 |
(3.5) |
Tax relating to share-based payments recognised directly in equity: |
0.6 |
0.8 |
1.2 |
(2.7) |
HMRC had previously raised an enquiry into the structure used to fund our overseas investment in the US business. Although
a number of earlier years have been agreed, there is uncertainty for some years in connection with the applicability of the
UK tax rules to the structure which could lead to additional UK tax payable. This was a complex area with a range of possible
outcomes and judgement was used in calculating the provision. During 2024 the Group reviewed its assumptions in this
regard and following a European Court of Justice case in September 2024 concluded that the most likely outcome was the
position filed with the tax authorities and accordingly the uncertain tax provision, which is immaterial, has been released
to reflect this.
In addition, at the end of 2024, the Group holds a tax risk provision of £1.1m (2023: £1.0m) because it is considered likely
that additional liabilities will become due to the tax authorities.
OTHER FACTORS AFFECTING FUTURE TAX CHARGES
The Organisation for Economic Cooperation & Development (“OECD”) has published proposals for a global corporate
minimum tax rate of 15%. The UK implementation of these rules (“Pillar Two”) will be effective for accounting periods
commencing on or after 31 December 2023 and will therefore impact the Group in the accounting period ending December
2024. During 2023 the Group undertook an initial impact assessment of the UK rules based on FY 2022 Country by Country
Reporting (“CbCR”) data. This assessment concluded that, provided that the CbCR report is prepared in accordance with
OECD guidelines, all jurisdictions in which the Group operates are expected to meet at least one of the transitional CbCR
safe harbour tests (which potentially apply up to the year ended December 2026) which results in no top-up taxes being
due. In addition, the Group updated this initial impact assessment to take account of 2024 CbCR data, and the Group
continues to meet the transitional CbCR safe harbour tests. The rules are complex and the Group will continue to evaluate
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
180
| Bakkavor Group plc | Annual Report & Accounts 2024
The calculation of earnings per Ordinary share is based on earnings after tax and the weighted average number
of Ordinary shares in issue during the period, excluding own shares held.
For diluted earnings per share, the weighted average number of Ordinary shares in issue is adjusted to assume
conversion of all potentially dilutive Ordinary shares.
The calculation of the basic and diluted earnings per share is based on the following data:
£m |
2024 |
2023 |
Profit for the period |
55.7 |
53.9 |
Number of shares ‘000 |
2024 |
2023 |
Weighted average number of Ordinary shares |
578,881 |
576,129 |
Effect of potentially dilutive Ordinary shares |
9,057 |
12,576 |
Weighted average number of Ordinary shares including dilution |
587,938 |
588,705 |
2024 |
2023 |
|
Basic earnings per share |
9.6p |
9.4p |
Diluted earnings per share |
9.5p |
9.2p |
£m |
|
Cost |
|
At 1 January 2023 |
708.6 |
Exchange differences |
(4.0) |
At 30 December 2023 |
704.6 |
Exchange differences |
0.5 |
At 28 December 2024 |
705.1 |
Accumulated impairment losses |
|
At 1 January 2023 |
(53.5) |
Exchange differences |
1.4 |
At 30 December 2023 |
(52.1) |
Exchange differences |
0.1 |
At 28 December 2024 |
(52.0) |
Carrying amount |
|
At 28 December 2024 |
653.1 |
At 30 December 2023 |
652.5 |
Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs or group of CGUs that are expected
to benefit from that business combination. The carrying value of goodwill has been allocated to CGU groupings as follows:
28 December |
30 December |
|
£m |
2024 |
2023 |
UK |
603.8 |
603.8 |
US |
49.3 |
48.7 |
China |
– |
– |
653.1 |
652.5 |
The recoverable amounts of the CGUs or groups of CGUs are determined based on value-in-use calculations. There was
no impairment recognised during the period (2023: £nil).
The key assumptions used in the impairment reviews for the CGUs that held goodwill at 28 December 2024 and 30
December 2023 were as follows:
•
Cash flow forecasts: Cash flow forecasts are based on the most recent financial budget approved by the Group Board;
the FY25 budget and a three-year plan (2023: three years). Revenue growth rates are based on management growth
forecasts based on industry experience, and changes in selling prices. Direct costs are based on past practices and
expectations of future changes in the market. The forecasts also take account of the current risks faced by the business
including cost inflation and associated price recovery leading to a potential impact on consumer demand. The cash flows
also include an assumption on maintenance capital expenditure required by the business over the forecast period.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
181
As the Group is committed to achieving net zero carbon emissions across our Group operations by 2040, an estimate of
the future costs and capital expenditure required to meet this commitment has been included in the forecast value-in-
use calculations and sensitivity analysis. The Group defines operating cash flows for the value-in-use calculations as
adjusted EBITDA, after deducting maintenance capital expenditure for the relevant CGUs.
•
Long-term growth rates: For periods beyond the three-year plan, the cash flows are extrapolated using a perpetuity
growth rate of 2.0% (2023: 2.0%) for the UK and 2.1% for the US (2023: 2.1%). The terminal values include an estimate
of carbon costs from 2040.
•
Discount rates: Management uses pre-tax rates that reflect current market assessments of the time value of money
and the risks specific to the CGUs. The present value of the future cash flows is calculated using a pre-tax discount rate
of 10.7% (2023: 9.3%) for the UK and 10.5% for the US (2023: 9.2%). The pre-tax discount rates are based on the Group’s
weighted average cost of capital.
The headroom for each CGU based on the impairment review as at 28 December 2024 is as follows:
£m |
UK |
US |
Headroom of impairment test based on management assumptions |
434.8 |
117.9 |
The Group has conducted a sensitivity analysis on the impairment test of each CGU’s carrying value using the following
assumptions under three scenarios, none of which indicate an impairment is likely: (i) a 10% reduction in EBITDA, (ii) nil
sales growth from 2025 and EBITDA margin flat, and (iii) a combination of reduction in sales, unrecovered inflation and
reduced factory performance.
Specifically in the US CGU, which has lower levels of headroom, the US operating cash flows are primarily driven by
adjusted EBITDA. This could be negatively impacted by loss of revenue or from lower operating margins. If operating
cash flows were 35% lower and no mitigating actions were taken, this would result in no headroom.
Customer |
|||||
£m |
Note |
Brands |
relationships |
Software |
Total |
Cost |
|||||
At 1 January 2023 |
– |
89.6 |
16.4 |
106.0 |
|
Reclassified from property, plant and equipment |
15 |
– |
– |
2.2 |
2.2 |
Additions |
– |
– |
3.4 |
3.4 |
|
Exchange differences |
– |
(0.4) |
– |
(0.4) |
|
At 30 December 2023 |
– |
89.2 |
22.0 |
111.2 |
|
Reclassified to property, plant and equipment |
15 |
– |
– |
(0.8) |
(0.8) |
Acquired on acquisition of subsidiary |
29 |
1.9 |
– |
– |
1.9 |
Additions |
– |
– |
7.0 |
7.0 |
|
Exchange differences |
– |
0.1 |
– |
0.1 |
|
At 28 December 2024 |
1.9 |
89.3 |
28.2 |
119.4 |
|
Accumulated amortisation and impairment |
|||||
At 1 January 2023 |
– |
(88.4) |
(8.8) |
(97.2) |
|
Charge for the period |
– |
(0.9) |
(2.1) |
(3.0) |
|
Reclassified from property, plant and equipment |
15 |
– |
– |
(0.8) |
(0.8) |
Exchange differences |
– |
0.3 |
– |
0.3 |
|
At 30 December 2023 |
– |
(89.0) |
(11.7) |
(100.7) |
|
Charge for the period |
(0.1) |
(0.1) |
(2.7) |
(2.9) |
|
Reclassified to property, plant and equipment |
15 |
– |
– |
0.3 |
0.3 |
At 28 December 2024 |
(0.1) |
(89.1) |
(14.1) |
(103.3) |
|
Carrying amount |
|||||
At 28 December 2024 |
1.8 |
0.2 |
14.1 |
16.1 |
|
At 30 December 2023 |
– |
0.2 |
10.3 |
10.5 |
Software in the table above includes internally generated costs of £9.1m and accumulated amortisation of £5.6m, with a
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
182
| Bakkavor Group plc | Annual Report & Accounts 2024
Land and |
Plant and |
Fixtures and |
|||
£m |
Note |
buildings |
machinery |
equipment |
Total |
Cost |
|||||
At 1 January 2023 |
390.8 |
703.2 |
113.7 |
1,207.7 |
|
Additions |
11.0 |
31.1 |
5.1 |
47.2 |
|
Disposals |
(5.5) |
(17.3) |
(1.8) |
(24.6) |
|
Reclassified to intangible assets |
14 |
– |
(1.9) |
(0.3) |
(2.2) |
Exchange differences |
(7.3) |
(6.2) |
(1.1) |
(14.6) |
|
At 30 December 2023 |
389.0 |
708.9 |
115.6 |
1,213.5 |
|
Additions |
6.9 |
39.7 |
11.7 |
58.3 |
|
Disposals |
(0.2) |
(25.6) |
(2.9) |
(28.7) |
|
Disposals related to sale of business |
– |
(3.4) |
(0.7) |
(4.1) |
|
Reclassified from intangible assets |
14 |
– |
– |
0.8 |
0.8 |
Reclassified as held for sale |
(3.5) |
(2.1) |
(4.3) |
(9.9) |
|
Exchange differences |
0.6 |
0.4 |
(0.1) |
0.9 |
|
At 28 December 2024 |
392.8 |
717.9 |
120.1 |
1,230.8 |
|
Accumulated depreciation and impairment |
|||||
At 1 January 2023 |
(155.4) |
(438.6) |
(65.6) |
(659.6) |
|
Charge for the period |
(20.9) |
(35.5) |
(12.3) |
(68.7) |
|
Impairment |
– |
(2.9) |
– |
(2.9) |
|
Disposals |
0.6 |
16.7 |
1.8 |
19.1 |
|
Reclassified to intangible assets |
14 |
– |
0.6 |
0.2 |
0.8 |
Exchange differences |
2.5 |
2.5 |
0.7 |
5.7 |
|
At 30 December 2023 |
(173.2) |
(457.2) |
(75.2) |
(705.6) |
|
Charge for the period |
(20.3) |
(34.1) |
(11.5) |
(65.9) |
|
Impairment |
(1.5) |
(12.2) |
(1.8) |
(15.5) |
|
Disposals |
0.1 |
25.2 |
2.9 |
28.2 |
|
Disposals related to sale of business |
– |
1.6 |
0.3 |
1.9 |
|
Reclassified from intangible assets |
14 |
– |
– |
(0.3) |
(0.3) |
Reclassified as held for sale |
3.5 |
2.1 |
4.3 |
9.9 |
|
Exchange differences |
(0.3) |
(0.2) |
– |
(0.5) |
|
At 28 December 2024 |
(191.7) |
(474.8) |
(81.3) |
(747.8) |
|
Carrying amount |
|||||
At 28 December 2024 |
201.1 |
243.1 |
38.8 |
483.0 |
|
At 30 December 2023 |
215.8 |
251.7 |
40.4 |
507.9 |
Included within land and buildings is freehold land held at historic cost of £11.5m (2023: £11.5m). Freehold land
is not depreciated.
The carrying value of the Group’s plant and machinery includes an amount of £nil (2023: £0.1m) in respect of assets
held under leases previously recognised as finance leases before the introduction of IFRS 16.
The carrying value of the Group’s land and buildings and plant and machinery includes an amount of £73.8m (2023: £79.5m)
in respect of assets held under IFRS 16 Leases. Further details of these leases are disclosed in Note 23.
The carrying value of the Group’s plant and machinery includes an amount of £31.2m (2023: £35.9m) in respect of assets
held as security under Asset Finance Facilities. Further details of these facilities are disclosed in Note 20. At 28 December
2024, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting
to £10.4m (2023: £4.2m).
Assets are not depreciated until they are brought into use. At 28 December 2024, a total of £44.1m (2023: £31.7m) of other
assets were in progress and had not been brought into use.
During 2024 there was a net book value £0.5m of ‘Intangible assets’ that was reclassified to ‘Property, plant and equipment’.
In 2023, there was a net book value £1.4m of ‘Intangible assets’ that was reclassified from ‘Property, plant and equipment’.
In 2024, the Group incurred an impairment charge of £15.5m which is included in ‘Other administrative costs’ within the
income statement. Of this, £15.2m is recognised as an exceptional cost (see Note 7) comprising: £12.4m impairment of
assets at a UK site planned to close, £2.2m impairment of Hong Kong assets (see detail below) and £0.6m related to the
impairment of a US asset.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
183
On 24 December 2024, a business transfer agreement was signed for the sale of the trade and assets of the Hong Kong
business, the ‘disposal group’. The assets and liabilities of the disposal group were consequently presented as held for
sale at 28 December 2024 and measured at the lower of the carrying amount and fair value less costs to sell, resulting
in the recognition of a £2.2m impairment (see Note 7). This results in £2.3m of assets held for sale and £3.0m of liabilities
held for sale.
When reviewing for impairment, the Group has assessed the current and forecast profit and cash flows for each CGU
which includes an assessment of an estimate of the potential impact of the Group’s net zero commitment in terms of
capital costs of decarbonisation or purchasing carbon credits. In the Asia CGU, headroom exists when reviewing for
impairment, but the estimation of the future costs of carbon credits is subject to uncertainty and is a material cost input
to the model.
During 2023, an impairment charge of £2.9m was recognised on plant and machinery. This related to an impairment
charge of £3.5m in the US sector relating to 2023, net of the reversal of a £0.6m impairment that was recognised in the
The Group consists of a Parent Company, Bakkavor Group plc, incorporated in the UK, and a number of subsidiaries held
directly and indirectly by Bakkavor Group plc. Note 5 to the Company’s separate Financial Statements provides details of
28 December |
30 December |
|
£m |
2024 |
2023 |
Raw materials, packaging and consumables |
68.3 |
60.1 |
Work-in-progress |
3.6 |
2.6 |
Finished goods |
10.6 |
8.6 |
82.5 |
71.3 |
28 December |
30 December |
|
£m |
2024 |
2023 |
Amounts receivable from trade customers |
159.5 |
142.6 |
Expected credit loss |
(2.5) |
(1.3) |
Net amounts receivable from trade customers |
157.0 |
141.3 |
Other receivables |
22.8 |
17.0 |
Prepayments |
15.6 |
13.4 |
195.4 |
171.7 |
During the period, the Group has continued to operate trade receivable factoring arrangements. These are non-recourse
arrangements and therefore amounts are de-recognised from trade receivables. At 28 December 2024, £138.3m was drawn
under factoring facilities (2023: £145.2m) representing cash collected before it was contractually due from the customer.
As at 28 December 2024, the Group’s ‘Amounts receivable from trade customers’ includes £83.7m (2023: £72.8m) which
could be factored under the non-recourse trade receivable factoring arrangement.
The average credit period taken on sales of goods is 25 days (2023: 23 days). An expected credit loss allowance has been
made for estimated irrecoverable amounts from the sale of goods of £2.5m (2023: £1.3m). Expected credit loss allowances
against receivables are made on a specific basis based on objective evidence and previous default experience as well as with
reference to assumptions about the risk of default and expected future loss rates. Receivables are therefore deemed past
due but not impaired when the contractual obligation to pay has been exceeded, but as yet no objective evidence or previous
default experience indicates this debt will be irrecoverable, while assumptions about the risk of default remain unchanged.
The Directors consider that the carrying amount of trade and other receivables from customers approximates to their fair
value due to their short-term nature.
The ‘Other receivables’ amount mainly relates to non-specific amounts, the largest of which is recoverable VAT.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
18. Trade and other receivables
continued
184
| Bakkavor Group plc | Annual Report & Accounts 2024
The following table is an ageing analysis of net trade receivables from customers:
28 December |
30 December |
|
£m |
2024 |
2023 |
Not past due |
149.0 |
133.8 |
Past due by 1 – 30 days |
6.0 |
6.2 |
Past due by 31 – 60 days |
1.2 |
0.9 |
Past due by 61 – 90 days |
0.8 |
0.4 |
Past due by more than 90 days |
– |
– |
157.0 |
141.3 |
There was no impact from trade receivables renegotiated in 2024 that would have otherwise been past due or impaired
(2023: no impact).
The four major customers of the Group, representing 74.5% (2023: 73.9%) of the Group’s revenue from continuing
operations, hold favourable credit ratings. On this basis, the Group does not see any need to charge interest or seek
collateral or credit enhancements to secure any of its trade receivables due to their short-term nature. The Group does
not consider that it is exposed to any significant credit risk other than that provided against and therefore the carrying
amount of trade receivables represents the expected recoverable amount and there is no further credit risk exposure.
The following table is an analysis of the movement of the expected credit loss for the Group’s trade receivables:
£m |
2024 |
2023 |
Balance at beginning of the period |
(1.3) |
(3.6) |
Allowances recognised against receivables |
(3.4) |
(1.7) |
Amounts written off as uncollectible during the period |
1.8 |
2.8 |
Amounts recovered during the period |
0.4 |
0.7 |
Allowance reversed |
– |
0.5 |
Balance at end of the period |
(2.5) |
(1.3) |
28 December |
30 December |
|
£m |
2024 |
2023 |
Cash and cash equivalents |
29.9 |
36.6 |
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity
of three months or less, which are readily convertible to a known amount of cash and are subject to an insignificant risk
of change in value.
The interest rates and currency profile of the Group’s borrowings at 28 December 2024 were as follows:
Amount drawn |
|||||
Facility amount |
down at year end |
||||
Currency |
£m |
£m |
Interest rate |
Maturity date |
|
Term Loan |
GBP |
150.0 |
150.0 |
SONIA plus a margin of 1.85% |
Jul 2028 |
Revolving Credit Facility (“RCF”) |
GBP |
200.0 |
45.0 |
SONIA plus a margin of 1.85% |
Jul 2028 |
Asset Finance Facility |
GBP |
14.3 |
14.3 |
Fixed interest rate |
Aug 2027 |
Asset Finance Facility |
GBP |
14.3 |
14.3 |
Fixed interest rate |
Aug 2028 |
Total |
378.6 |
223.6 1 |
1
£223.6m represents the committed facilities of the Group. The Group’s Consolidated Statement of financial position discloses £222.3m which includes local overdraft facilities,
unamortised fees and interest accrued.
On 25 July 2024, the Group completed a refinancing of its core debt facilities through a new Term Loan and Revolving
Credit Facility totalling £350.0m. These new facilities will mature in July 2028 with the option of two one-year extensions.
The Group’s total banking facilities amount to £350.0m (2023: £455.0m), comprising:
•
£150.0m Term Loan (2023: £225.0m Term Loan) maturing in July 2028; and
•
£200.0m Revolving Credit Facility (“RCF”) (2023: £230.0m RCF), which includes an overdraft and money market facility
of £12.0m (2023: £20.0m) and further ancillary facilities of £3.0m (2023: £13.3m). The RCF matures in July 2028. The
bank facilities are unsecured and are subject to covenant agreements including the Group maintaining a minimum
interest cover of 4.0x and not exceeding an adjusted leverage of 3.0x.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
185
The Asset Finance Facility is made up of two separate facilities which are secured against specific items of plant and
machinery as follows:
•
£25.0m facility, which could be drawn against up to August 2020, of which the Group initially drew down £24.9m with
£14.3m outstanding at the end of 2024. No further draw down can be made against this facility. The facility has been
drawn in tranches, with each tranche being repaid on a quarterly basis over a period of seven years, and the weighted
average interest rate for the facility as at 28 December 2024 was 2.41% (2023: 2.41%). The interest rate is fixed at the
prevailing rate on commencement of the loan tranche.
•
£13.1m drawn down during 2021 and £9.9m during 2023 under separate asset financing facilities with £14.3m
outstanding at the end of 2024. No further draw down can be made against these facilities. The facilities have been
drawn in tranches, with each tranche being repaid on a monthly basis over a period of five or seven years, and the
weighted average interest rate for the facility at 28 December 2024 is 4.63% (2023: 4.61%). The interest rate is fixed
at the prevailing rate on commencement of the loan tranche.
In addition, the Group has access to £10.7m (2023: £10.7m) of local overdraft facilities in the US and China which are
uncommitted and unsecured. One of the Group’s UK subsidiary companies, Bakkavor Finance (2) Limited, has provided
Corporate Guarantees totalling $8m for the US local overdraft facility and RMB 40m for the China local overdraft facility.
28 December |
30 December |
|
£m |
2024 |
2023 |
Bank overdrafts |
– |
3.4 |
Bank loans |
222.3 |
262.0 |
222.3 |
265.4 |
|
Borrowings repayable as follows: |
||
On demand or within one year |
6.9 |
25.4 |
In the second year |
6.2 |
5.7 |
In the third to fifth years inclusive |
209.2 |
234.3 |
Over five years |
– |
– |
222.3 |
265.4 |
|
Analysed as: |
||
Amount due for settlement within 12 months (shown within current liabilities) |
6.9 |
25.4 |
Amount due for settlement after 12 months |
215.4 |
240.0 |
222.3 |
265.4 |
2024 |
2023 |
|
% |
% |
|
The weighted average interest rates paid excluding interest swap benefits were as follows: |
||
Bank loans and overdrafts |
6.59 |
6.38 |
Apart from the Asset Finance Facilities, interest on the Group’s Term Loan and other borrowings are at floating rates, thus
exposing the Group to cash flow interest rate risk. This risk is mitigated using interest rate swaps as set out in Note 26.
The fair value of the Group’s borrowings is as follows:
28 December |
30 December |
|
£m |
2024 |
2023 |
Fair value of the Group’s borrowings |
223.6 |
266.1 |
Net debt is the net of cash and cash equivalents, prepaid fees to be amortised over the term of outstanding borrowings,
interest accrued on borrowings and lease liabilities and is as follows:
28 December |
30 December |
|
£m |
2024 |
2023 |
Analysis of net debt |
||
Cash and cash equivalents |
29.9 |
36.6 |
Borrowings |
(6.4) |
(25.5) |
Interest accrual |
(1.2) |
(0.5) |
Unamortised fees |
0.7 |
0.6 |
Lease liabilities |
(12.1) |
(11.6) |
Debt due within one year |
(19.0) |
(37.0) |
Borrowings |
(217.2) |
(240.5) |
Unamortised fees |
1.8 |
0.5 |
Lease liabilities |
(72.2) |
(78.9) |
Debt due after one year |
(287.6) |
(318.9) |
Group net debt |
(276.7) |
(319.3) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
186
| Bakkavor Group plc | Annual Report & Accounts 2024
28 December |
30 December |
|
£m |
2024 |
2023 |
Designated in a hedging relationship: |
||
Foreign currency contracts |
– |
0.1 |
Interest rate contracts |
– |
0.8 |
Included in non-current assets |
– |
0.9 |
Foreign currency contracts |
0.2 |
0.3 |
Interest rate contracts |
1.0 |
1.8 |
Included in current assets |
1.2 |
2.1 |
Foreign currency contracts |
(2.1) |
(0.5) |
Interest rate contracts |
– |
– |
Included in current liabilities |
(2.1) |
(0.5) |
Foreign currency contracts |
– |
(0.1) |
Interest rate contracts |
– |
(0.7) |
Included in non-current liabilities |
– |
(0.8) |
Total |
(0.9) |
1.7 |
Derivative financial instruments are subject to enforceable master netting agreements. However, they are not set off on
the balance sheet. Under the terms of these arrangements, only where certain credit events occur (such as default), will
the net position owing/receivable to a single counterparty in the same currency be taken as owing and all the relevant
arrangements terminated.
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the
current and prior reporting period.
Retirement |
|||||||
Accelerated |
benefit |
Overseas tax |
|||||
tax |
Fair value |
obligations and |
losses and |
US |
|||
£m |
depreciation 1 |
gains |
Provisions |
share schemes |
accrued interest |
goodwill |
Total |
At 1 January 2023 |
(42.3) |
(3.1) |
0.9 |
(1.7) |
33.6 |
(10.2) |
(22.8) |
(Charge)/credit to income |
(4.8) |
– |
– |
(0.3) |
2.4 |
(0.6) |
(3.3) |
Credit to income on exceptional items |
0.6 |
– |
– |
– |
– |
– |
0.6 |
Exchange differences |
0.2 |
– |
– |
– |
(1.8) |
0.6 |
(1.0) |
Credit/(charge) to equity and other comprehensive income |
– |
2.8 |
– |
– |
– |
– |
2.8 |
At 30 December 2023 |
(46.3) |
(0.3) |
0.9 |
(2.0) |
34.2 |
(10.2) |
(23.7) |
(Charge)/credit to income |
(6.3) |
– |
0.6 |
0.3 |
1.5 |
(0.4) |
(4.3) |
Credit to income on exceptional items |
3.1 |
– |
– |
– |
0.1 |
– |
3.2 |
Exchange differences |
(0.1) |
– |
– |
– |
0.2 |
(0.1) |
– |
Credit/(charge) to equity and other comprehensive income |
– |
0.6 |
– |
(1.8) |
– |
– |
(1.2) |
At 28 December 2024 |
(49.6) |
0.3 |
1.5 |
(3.5) |
36.0 |
(10.7) |
(26.0) |
1 IAS 23 ‘Capitalised interest’ and ‘Intangibles deferred tax balances’ are shown within the Accelerated tax depreciation values above.
Certain deferred tax assets and liabilities have been offset where the Group has a legally enforceable right to do so.
The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
28 December |
30 December |
|
£m |
2024 |
2023 |
Deferred tax asset |
16.2 |
14.7 |
Deferred tax liability |
(42.2) |
(38.4) |
(26.0) |
(23.7) |
Within the deferred tax asset above, £3.2m (2023: £3.7m) is expected to reverse no more than 12 months after the reporting
period and £13.0m (2023: £11.0m) more than 12 months after the reporting period.
Included in the above are deferred tax assets of £35.4m (2023: £33.6m) in connection with US tax losses and accrued
interest amounts which will be deductible in future accounting periods. These deferred tax assets are offset by liabilities
for which there is a legally enforceable right to do so. The US tax losses and accrued interest amounts can be carried
forward indefinitely and used against future US taxable profits.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
187
The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
In evaluating whether it is probable that sufficient taxable profits will be earned in future accounting periods, all
available evidence has been considered by management including forecasts and business plans. These forecasts are
consistent with those prepared and used internally for business planning and impairment testing purposes. Following this
evaluation, management determined there would be sufficient taxable profits generated to continue to recognise these
deferred tax assets in full.
Deferred tax assets in respect of some capital losses as well as trading losses have not been recognised as their future
recovery is uncertain or not currently anticipated. The total gross deferred tax assets not recognised are as follows:
28 December |
30 December |
|
£m |
2024 |
2023 |
Capital losses |
5.0 |
5.0 |
Trading losses |
15.8 |
19.3 |
20.8 |
24.3 |
The capital losses arose in the UK and are available to carry forward indefinitely but can only be offset against future
capital gains. The trading losses are non-UK losses and are available to offset against future taxable profits. These losses
are timebound and £14.4m (2023: £17.8m) will expire after five years if unused.
There are no deferred tax liabilities associated with undistributed earnings of subsidiaries due to the availability of tax
credits against such liabilities or the exemption from UK tax on such dividends.
The Group leases assets including land and buildings and plant and machinery that are held within property, plant and
equipment. Information about leases for which the Group is a lessee is presented below.
ANALYSIS OF PROPERTY, PLANT AND EQUIPMENT RELATING TO LEASES
The Group has split the net book value of property, plant and equipment relating to leases between amounts previously
recognised as finance leases under IAS 17 and amounts recognised as right-of-use assets under IFRS 16. This allows
management to review performance excluding IFRS 16, as set out in Note 37, Alternative performance measures.
28 December |
30 December |
|
£m |
2024 |
2023 |
Net book value of leased property, plant and equipment excluding right-of-use assets |
0.1 |
0.2 |
Net book value of right-of-use assets |
73.8 |
79.5 |
73.9 |
79.7 |
Land and |
Plant and |
||
£m |
buildings |
machinery |
Total |
At 1 January 2023 |
85.0 |
1.7 |
86.7 |
Additions |
10.6 |
0.4 |
11.0 |
Disposals |
(4.8) |
– |
(4.8) |
Depreciation charge |
(11.2) |
(0.9) |
(12.1) |
Exchange differences |
(1.3) |
– |
(1.3) |
At 30 December 2023 |
78.3 |
1.2 |
79.5 |
Additions |
4.1 |
2.2 |
6.3 |
Depreciation charge |
(10.9) |
(0.7) |
(11.6) |
Impairment |
(0.7) |
– |
(0.7) |
Exchange differences |
0.2 |
0.1 |
0.3 |
At 28 December 2024 |
71.0 |
2.8 |
73.8 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
23. Lease liabilities
continued
188
| Bakkavor Group plc | Annual Report & Accounts 2024
LEASE LIABILITIES
Present value of
minimum lease payments
28 December |
30 December |
|
£m |
2024 |
2023 |
Amounts payable under leases: |
||
Within one year |
12.1 |
11.6 |
In the second to fifth years inclusive |
27.9 |
32.1 |
Over five years |
44.3 |
46.8 |
Present value of lease obligations |
84.3 |
90.5 |
Analysed as: |
||
Amount due for settlement within 12 months |
12.1 |
11.6 |
Amount due for settlement after 12 months |
72.2 |
78.9 |
84.3 |
90.5 |
The Group has split the lease liabilities between liabilities previously recognised as finance leases under IAS 17 and
liabilities recognised under IFRS 16. This allows management to review both the Group net debt, as set out in Note 20,
Borrowings, and the Group operational net debt as set out in Note 37, Alternative performance measures.
28 December |
30 December |
|
£m |
2024 |
2023 |
Lease liabilities relating to leases previously recognised under IAS 17 |
0.1 |
0.2 |
Lease liabilities relating to leases recognised under IFRS 16 |
84.2 |
90.3 |
84.3 |
90.5 |
The weighted average lease term outstanding is 13.7 years (2023: 13.0 years). For 2024, the weighted average incremental
borrowing rate was 3.5% (2023: 3.2%). Interest rates are fixed at the contract date. All leases are on a fixed repayment
basis and no arrangements have been entered into for contingent rental payments.
The Group’s lease obligations are secured by the lessors’ rights over the leased assets.
The Group utilises the exemption from capitalising short-term and low-value leases where the relevant criteria are met.
The expenses relating to these lease types are disclosed below.
AMOUNTS RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT
£m |
2024 |
2023 |
Interest on lease liabilities recognised under IFRS 16 |
2.7 |
3.0 |
Expenses relating to low-value leases |
2.2 |
3.3 |
Expenses relating to short-term leases |
1.4 |
1.6 |
6.3 |
7.9 |
AMOUNTS RECOGNISED IN THE STATEMENT OF CASH FLOWS
£m |
2024 |
2023 |
Cash outflow for lease principal payments |
12.1 |
12.3 |
Cash outflow for lease interest payments |
2.7 |
3.0 |
Total cash outflow for leases |
14.8 |
15.3 |
28 December |
30 December |
|
£m |
2024 |
2023 |
Trade payables |
297.9 |
262.4 |
Other taxation |
2.3 |
2.2 |
Other payables |
28.0 |
26.7 |
Accruals and deferred income |
164.5 |
156.3 |
Trade and other payables due within one year |
492.7 |
447.6 |
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The
average credit period taken for trade purchases is 65 days (2023: 64 days). No interest is incurred against trade payables.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
189
During the year, the Group has continued to operate an arrangement which provides financing for the Group’s suppliers.
This is a voluntary programme that potentially gives suppliers earlier access to cash. At 28 December 2024, trade
payables amounting to £51.2m (2023: £42.7m) were subject to these arrangements. These balances are classified as trade
payables, and the related payments as cash flows from operating activities, since the original obligation to the supplier
remains and has not been replaced with a new obligation to the bank.
Onerous |
Dilapidation |
Legal and other |
Restructuring |
||
£m |
contracts |
provisions |
provisions |
provisions |
Total |
At 1 January 2023 |
1.7 |
19.3 |
1.2 |
14.8 |
37.0 |
Utilisation of provision |
– |
– |
– |
(9.7) |
(9.7) |
Additional provision in the year |
– |
0.4 |
1.0 |
– |
1.4 |
Release of provision |
– |
(0.3) |
(1.0) |
(2.2) |
(3.5) |
Unwinding of discount |
0.2 |
0.7 |
– |
– |
0.9 |
Exchange differences |
– |
– |
– |
– |
– |
At 30 December 2023 |
1.9 |
20.1 |
1.2 |
2.9 |
26.1 |
Included in current liabilities |
0.4 |
5.9 |
1.2 |
2.9 |
10.4 |
Included in non-current liabilities |
1.5 |
14.2 |
– |
– |
15.7 |
At 31 December 2023 |
1.9 |
20.1 |
1.2 |
2.9 |
26.1 |
Utilisation of provision |
– |
– |
(0.2) |
(2.1) |
(2.3) |
Additional provision in the year |
– |
– |
2.4 |
8.5 |
10.9 |
Release of provision |
– |
– |
(1.2) |
(0.6) |
(1.8) |
Unwinding of discount |
0.3 |
1.0 |
– |
– |
1.3 |
Exchange differences |
– |
– |
– |
– |
– |
At 28 December 2024 |
2.2 |
21.1 |
2.2 |
8.7 |
34.2 |
Included in current liabilities |
0.4 |
4.6 |
2.2 |
8.7 |
15.9 |
Included in non-current liabilities |
1.8 |
16.5 |
– |
– |
18.3 |
Onerous contracts provisions relate to the Group’s leased vacant properties. The onerous contract provision has been
calculated as the discounted total expected costs for occupying the properties (including service charges but excluding
lease rentals and rates) through to the break clause. The provisions will be utilised over the term of the individual leases
to which they relate. These leases expire within 15 years.
Dilapidation provisions relate to estimated obligations under various property leases to ensure that, at the end of the
leases, the buildings are in the condition agreed with the landlords. The provisions will be utilised at the end of the
individual lease terms to which they relate, which range from 1 to 26 years.
The legal and other provisions, which are expected to be settled within 12 months, are assessed by utilising Group
experience, legal and professional advice and other commercial factors to reasonably estimate present obligations across
the Group. These obligations are varied and depend on future events which are by their nature uncertain. The Group has
taken this uncertainty into account and considers the provision to be reasonable in the circumstances.
During 2024, a restructuring provision was recognised for the closure of one of our UK sites; £8.5m of closure costs were
provided (see Note 7), with the cash outflow expected in 2025.
During 2022, a restructuring provision was recognised for the closure of two of our UK sites and the costs of a corporate
restructuring. At 30 December 2023, £2.9m of these provisions remained and all but £0.2m of these provisions have been
190
| Bakkavor Group plc | Annual Report & Accounts 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern, while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure
of the Group consists of borrowings, as disclosed in Note 20, and cash equivalents and equity attributable to owners
of the parent, comprising issued capital, reserves and retained earnings.
The Group manages its capital by collating timely and reliable information to produce various internal reports such as
capital expenditure and weekly net debt reports, which enable the Board of Directors to assess the Group’s capital and
manage that capital effectively and in line with the Group’s objectives. The gearing of the Group is constantly monitored
and managed to ensure that the ratio between debt and equity is at an acceptable level of less than 50%. This enables
GEARING RATIO
The gearing ratio at the period end was as follows:
28 December | 30 December | |
£m | 2024 | 2023 |
Debt (excluding IFRS 16 lease liabilities) | 222.4 | 265.6 |
Cash and cash equivalents | (29.9) | (36.6) |
Net debt | 192.5 | 229.0 |
Equity | 616.1 | 607.6 |
Net debt to net debt plus equity | 23.8% | 27.4% |
Debt is defined as long- and short-term borrowings, as disclosed in Note 20, and lease liabilities payable in Note 23
(excluding IFRS 16 lease liabilities: £84.2m at 28 December 2024, £90.3m at 30 December 2023).
28 December | 30 December | |
£m | 2024 | 2023 |
Financial assets | ||
Fair value through profit and loss: | ||
Trade receivables | 83.7 | 72.8 |
Derivative financial instruments | 1.2 | 3.0 |
Measured at amortised cost: | ||
Trade receivables | 73.3 | 68.5 |
Other receivables | 8.7 | 5.4 |
Cash and cash equivalents | 29.9 | 36.6 |
196.8 | 186.3 |
28 December | 30 December | |
£m | 2024 | 2023 |
Financial liabilities | ||
Fair value through profit and loss: | ||
Derivative financial instruments | 2.1 | 1.3 |
Other financial liabilities at amortised cost: | ||
Trade payables | 297.9 | 262.4 |
Other payables | 13.3 | 15.0 |
Accruals | 163.7 | 155.3 |
Borrowings | 222.3 | 265.4 |
Lease liabilities | 84.3 | 90.5 |
783.6 | 789.9 |
Fair values for the derivative financial instruments have been determined as level 2 under IFRS 7 Financial Instruments:
Disclosures. Quoted prices are not available for the derivative financial instruments and so valuation models are used to
estimate fair value. The models calculate the expected cash flows under the terms of each specific contract and then
discount these values back to a present value. These models use as their basis independently sourced market parameters
including, for example, interest rate yield curves and currency rates.
The fair value of other financial liabilities at amortised cost approximates to their carrying value. The trade and other
payables approximate to their fair value due to the short-term nature of the payables. The lease liabilities’ fair value
approximates to the carrying value based on discounted future cash flows.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
191
The Group is exposed to a number of financial risks such as access to and cost of funding, interest rate exposure, currency
exposure and working capital management. The Group seeks to minimise and mitigate against these risks where
possible, and does this by constantly monitoring and using a range of measures including derivative financial instruments.
Use of financial instruments is governed by Group policies which are approved by the Board. The Treasury function does
not operate as a profit centre, makes no speculative transactions and only enters into or trades financial instruments to
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest
rates. The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and
foreign currency risk, including:
•
Interest rate swaps to mitigate the risk of rising interest rates; and
•
Forward foreign exchange contracts to hedge the exchange rate risk arising on purchases in foreign currencies.
Market risk exposures are supplemented by sensitivity analysis. There has been no change in the Group’s exposure
FOREIGN CURRENCY RISK MANAGEMENT
Foreign currency risk management occurs at a transactional level on purchases in foreign currencies and at a translational
level in relation to the translation of overseas operations. All transactional risks, cash flow forecasts and related hedges are
reviewed by the Group Hedging Committee and Group Treasury, at least quarterly, to monitor foreign exchange rates and
confirm the appropriateness of the Group’s hedged cover.
The Group’s main foreign exchange risk is to the Euro and US dollar.
During the 52-week period to 28 December 2024, the Euro weakened against Sterling by 4.7% (2023: 52-week period
weakened by 2.0%), with the closing rate at €1.2060 compared with €1.1518 at the prior period end. The average rate for
the 52-week period to 28 December 2024 was €1.1814 (2023: 52-week period at €1.1503), a 2.7% weakening (2023: 1.9%
strengthening) of the Euro versus the prior period.
In the same period, the US dollar strengthened against Sterling by 1.3% (2023: weakened by 5.5%), with the closing rate at
$1.2571 compared with $1.2739 at the prior period end. The average rate for the 52-week period to 28 December 2024 was
$1.2778 (2023: $1.2441), a 2.7% weakening (2023: 0.5% weakening) of the US dollar versus the prior period.
The net foreign exchange impact on profit from transactions was a £1.7m gain (2023: £nil) – see Note 10.
FOREIGN CURRENCY SENSITIVITY ANALYSIS
A sensitivity analysis has been performed on the financial assets and liabilities to a sensitivity of 10% increase/decrease
in the exchange rates. A 10% increase/decrease has been used as it represents management’s assessment of the
reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.
The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the
denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number below
indicates an increase in profit/equity where Sterling strengthens 10% against the relevant currency.
Profit or (loss) |
Profit or (loss) |
|||
10% strengthening in currency |
10% weakening in currency |
|||
£m |
2024 |
2023 |
2024 |
2023 |
Euro |
2.6 |
2.6 |
(3.2) |
(3.1) |
USD |
1.8 |
2.9 |
(2.2) |
(3.6) |
HKD |
(0.1) |
(0.2) |
0.1 |
0.2 |
RMB |
(0.7) |
(0.8) |
0.8 |
1.0 |
FOREIGN EXCHANGE CONTRACTS
It is the policy of the Group to enter into foreign exchange contracts to cover specific foreign currency payments and
receipts. The Group also enters into foreign exchange contracts to manage the risk and cash flow exposures associated
with anticipated purchase transactions.
The Group has applied hedge accounting to its forward contracts that were put in place on or after 27 December 2020.
The transactions and forward contracts are designated with a hedge ratio of 1:1. The fair value of forward contracts at
the reporting date is determined by the difference between foreign currency spot rate and strike rate of the contract,
discounted to present value. Sources of hedge ineffectiveness are a reduction or modification in the hedged item or a
material change in the credit risk of contract counterparties.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
26. Financial instruments
continued
192
| Bakkavor Group plc | Annual Report & Accounts 2024
The following table details Sterling foreign currency contracts outstanding as at 28 December 2024, which were entered
into on or after 27 December 2020, for which hedge accounting is applied:
Foreign currency (m) | Average exchange rate | Contract value (£m) | Fair value movement (£m) | |||||
Outstanding contracts | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
Net Euros: | ||||||||
3 months or less | 34.1 | 33.5 | 1.18 | 1.14 | 29.3 | 29.2 | (0.9) | (0.1) |
3 to 6 months | 39.3 | 37.4 | 1.18 | 1.14 | 33.5 | 32.7 | (0.8) | (0.1) |
6 to 12 months | 32.2 | 43.3 | 1.18 | 1.14 | 27.4 | 37.9 | (0.3) | 0.1 |
Over 12 months | – | 5.0 | – | 1.15 | – | 4.4 | – | – |
Net US dollars: | ||||||||
3 months or less | 15.6 | 6.2 | 1.27 | 1.25 | 12.3 | 5.0 | 0.1 | (0.1) |
3 to 6 months | 0.7 | 4.3 | 1.29 | 1.27 | 0.5 | 3.4 | – | – |
6 to 12 months | 0.9 | 4.4 | 1.30 | 1.26 | 0.7 | 3.5 | – | (0.1) |
Over 12 months | – | 0.4 | – | 1.28 | – | 0.3 | – | – |
103.7 | 116.4 | (1.9) | (0.3) | |||||
The following tables detail various information regarding forward contracts, for which hedge accounting is applied,
outstanding at the end of the reporting period and their related hedged items.
Change in fair value used | ||||||||
Carrying amount of the hedging | for calculating hedge | |||||||
Average contracted | Contract value | instrument assets/(liabilities) | ineffectiveness | |||||
exchange rate | (£m) | (£m) | (£m) | |||||
Hedging instruments | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
Forward contracts – EUR | 1.18 | 1.14 | 90.2 | 104.2 | (2.0) | (0.1) | (5.4) | (4.1) |
Forward contracts – USD | 1.27 | 1.26 | 13.5 | 12.2 | 0.1 | (0.1) | 0.1 | (0.1) |
Balance in cash flow hedge | ||||||||
reserve arising from hedging | ||||||||
Nominal amount of the | Change in value used for | Balance in cash flow hedge | relationships for which hedge | |||||
hedge item (liabilities) | calculating hedge | reserve for continuing hedges | accounting is no longer applied | |||||
(Foreign currency m) | ineffectiveness (£m) | (£m) | (£m) | |||||
Hedging items | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
Foreign currency purchases – EUR | 105.6 | 119.2 | 2.0 | 0.1 | (2.0) | (0.1) | – | – |
Foreign currency purchases – USD | 17.2 | 15.3 | (0.1) | 0.1 | 0.1 | (0.1) | – | – |
The following table details the effectiveness of the hedging relationship and the amounts reclassified from hedging reserve:
Amount of hedge | Due to hedged future cash | |||||||
Current period hedging | ineffectiveness recognised | Line item in the income | flows being no longer | Line item in | ||||
losses recognised in OCI | in profit or loss | statement in which hedge | expected to occur | which adjustment | ||||
| (£m) | (£m) | ineffectiveness is included | (£m) | is included | ||||
Hedged items | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||
Foreign currency purchases | (5.3) | (4.2) | – | – | Other gains and losses | – | – | Inventory |
INTEREST RATE RISK MANAGEMENT
The Group is exposed to interest rate risk on borrowings. The risk is managed by maintaining an appropriate mix between
fixed and floating rate borrowings, and by the use of derivative financial instruments such as interest rate swaps and caps
to minimise the risk associated with variable interest rates. Hedging activities are evaluated regularly to align with
interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. Use of
interest rate derivatives is governed by Group policies which are approved by the Board.
INTEREST RATE SENSITIVITY ANALYSIS
Interest rate sensitivity analysis has been performed on borrowings as set out in Note 20, net of existing interest rate
swaps, to illustrate the impact on Group profits and equity if interest rates increased/decreased. This analysis assumes
the liabilities outstanding at the period end were outstanding for the whole period. A 100 basis points increase or decrease
has been used as this is management’s assessment of reasonably possible changes in interest rates.
(Loss)/profit | (Loss)/profit | |
£m | 2024 | 2023 |
Effects of 100 basis points increase in interest rate | (0.7) | (0.8) |
Effects of 100 basis points decrease in interest rate | 0.7 | 0.8 |
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
193
It is assumed that all other variables remain the same when preparing the interest rate sensitivity analysis. In addition,
interest rate sensitivity analysis has been performed on amounts owed under the Group’s trade receivables factoring
arrangement. A 100 basis points increase or decrease has been used as this is management’s assessment of reasonably
possible changes in interest rates.
(Loss)/profit |
(Loss)/profit |
|
£m |
2024 |
2023 |
Effects of 100 basis points increase in interest rate |
(1.4) |
(1.4) |
Effects of 100 basis points decrease in interest rate |
1.4 |
1.4 |
Credit risk refers to the risk of financial loss to the Group if a counterparty defaults on its contractual obligations of the
financial assets measured at amortised cost held in the statement of financial position.
The Group’s main credit risk is attributable to its trade receivables. The Group’s top four customers, all leading UK
retailers, represent more than 74.5% (2023: 73.9%) of the Group’s revenue from continuing operations. These customers
have favourable credit ratings and consequently reduce the credit risk for the Group’s overall trade receivables.
Processes are in place to manage receivables and overdue debt and to ensure that appropriate action is taken to resolve
issues on a timely basis. Credit control operating procedures are in place to review all new customers. Existing customers
are reviewed as management become aware of changes of circumstances for specific customers. The amounts presented
in the statement of financial position are net of appropriate allowance for doubtful trade receivables, specific customer
risk and assessment of the current economic environment. The carrying amount of financial assets recorded in the
Financial Statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with
good credit ratings assigned by international credit rating agencies. Group policy dictates that Group deposits are shared
between banks that are counterparties in the Group’s committed bank facilities to spread the risk. The Group’s current
bank facilities comprise a £150m Term Loan (2023: £225.0m) and a £200m RCF facility (2023: £230.0m), through a bank
syndicate. Coöperatieve Rabobank U.A. is the syndicate agent of this facility and it manages the syndicate and
participation with other counterparties.
The maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region of origin was:
28 December |
30 December |
|
£m |
2024 |
2023 |
UK |
149.9 |
126.6 |
US |
15.1 |
14.1 |
China |
15.7 |
17.6 |
180.7 |
158.3 |
The expected credit losses on trade receivables are calculated locally by financial teams. These allowances are based on
assumptions about the risk of default (when it is reasonably probable that no future economic benefit will arise from the
financial asset) and expected loss rates. The Group uses judgement in making these assumptions with regards to customer
credit ratings, credit risk characteristics and the days past due based on the Group’s history and existing market conditions.
Generally, the expected credit loss becomes 100% of the trade receivable once it is past due by 91 days; as at 28 December
2024 there were £2.2m (2023: £0.9m) of trade receivables past due by 91 days. This figure has been included in the expected
credit loss of £2.5m (2023: £1.3m). The Group will generally write-off any trade receivables relating to customers that are
INTEREST RATE SWAP CONTRACTS
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed- and floating-rate interest
amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the cash flow
exposures on the issued variable rate debt held. The fair value of interest rate swaps at the reporting date is determined
by discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract is
disclosed below. The average interest rate is based on the outstanding balances at the end of the financial year. £150m of
the floating debt is designated with quarterly interest payment dates and is offset by an interest rate swap with the same
critical terms, with a designated hedge ratio of 1:1. Sources of hedge ineffectiveness are a reduction or modification in the
hedged item or a material change in the credit risk of swap counterparties.
As the critical terms of the interest rate swap contracts and their corresponding hedged items are the same, the Group
performs a qualitative assessment of effectiveness and it is expected that the value of the interest rate swap contracts
and the value of the corresponding hedged items will systematically change in the opposite direction in response to
movements in the underlying interest rates.
26. Financial instruments
continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
194
| Bakkavor Group plc | Annual Report & Accounts 2024
The following tables detail various information regarding interest rate swap contracts outstanding at the end of the
reporting period and their related hedged items.
Change in fair value used |
||||||||
Average contracted |
Carrying amount of the |
for calculating hedge |
||||||
fixed interest rate |
Notional principal value |
hedging instrument assets |
ineffectiveness |
|||||
(%) |
(£m) |
(£m) |
(£m) |
|||||
Hedging instruments |
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
Interest rate swaps maturing 13 March 2024 |
– |
0.4 |
– |
150.0 |
– |
1.8 |
(1.8) |
(5.6) |
Interest rate swaps commencing 13 March 2024 |
||||||||
maturing 13 March 2026 |
3.7 |
3.7 |
130.0 |
130.0 |
1.0 |
0.1 |
0.9 |
(0.9) |
Balance in cash flow hedge | ||||||||
Change in value used | reserve arising from hedging | |||||||
Nominal amount of the | for calculating hedge | Balance in cash flow hedge | relationships for which hedge | |||||
hedged item (liabilities) | ineffectiveness | reserve for continuing hedges | accounting is no longer applied | |||||
(£m) | (£m) | (£m) | (£m) | |||||
Hedging items | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
Variable rate borrowings | (130.0) | (280.0) | (0.9) | (6.5) | 1.0 | 1.9 | – | – |
The following table details the effectiveness of the hedging relationship and the amounts reclassified from hedging
reserve to income statement:
Amount reclassified to income |
||||||||
Current period hedging |
Amount of hedge |
statement due to hedged |
Line item in income |
|||||
(losses) recognised |
ineffectiveness recognised |
Line item in the income |
future cash flows being no |
statement in which |
||||
in OCI |
in profit or loss |
statement in which hedge |
longer expected to occur |
reclassification |
||||
(£m) |
(£m) |
ineffectiveness is included |
(£m) |
adjustment is included |
||||
Hedged items |
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
||
Variable rate borrowings |
(0.9) |
(6.5) |
– |
– |
Other gains and losses |
– |
– |
Finance costs |
When interest amounts are paid or received on its interest rate swap contracts, the Group recognises the expenses or
income in the income statement. During 2024, the net amount received and recognised against expenses in finance costs
was £3.2m (2023: £6.8m). After payment or receipt the hedge is revalued and movements are recognised as a movement
in the hedging reserve.
COMMODITY RISK MANAGEMENT
The Group acquires substantial quantities of raw materials for its operations. The Group is therefore exposed to
commodity price and supply risks for these raw materials. The Group takes action to reduce overall material costs and
exposure to price fluctuations by sourcing raw materials from suppliers all over the world, thereby decreasing geographic
risk. It also frequently tenders to benchmark market prices. In general, requirements are managed using contracts for
periods of between 3-12 months forward. The Group also manages any local currency exposure in line with agreed
contracts. As at 28 December 2024, the Group had purchase commitments for the next 12 months to guarantee supply
and price of raw materials of £180.4m (2023: £200.0m).
Liquidity risk refers to the risk that the Group may not be able to fund the day-to-day running of the Group. The Group
manages liquidity risk by monitoring actual and forecast cash flows to ensure that adequate liquidity is available to meet
the maturity profiles of financial liabilities. The Group also monitors the drawdown of borrowings against the available
banking facilities and reviews the level of reserves. Liquidity risk management ensures sufficient funding is available for
the Group’s day-to-day needs. The Group maintains reasonable headroom of unused committed bank facilities in a range
of maturities at least 12 months beyond the period end. As at 28 December 2024, the Group has undrawn borrowing
facilities, including cash, available totalling £185m (2023: £263.0m). Please see Note 20 for further information regarding
the Group’s borrowings. The Group also has access to a trade factoring arrangement which provides additional liquidity
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
195
MATURITY PROFILE OF FINANCIAL LIABILITIES
The following table illustrates the Group’s undiscounted contractual maturity for its undiscounted financial liabilities when
they fall due.
28 December |
30 December |
|
£m |
2024 |
2023 |
Non-derivatives due within one year: |
||
Trade payables |
297.9 |
262.4 |
Other payables |
13.3 |
15.0 |
Accruals |
163.7 |
155.3 |
Borrowings 1 |
21.1 |
32.2 |
Lease liabilities |
14.9 |
14.2 |
Total non-derivatives due within one year |
510.9 |
479.1 |
Non-derivatives due in the second to fifth years inclusive: |
||
Borrowings 1 |
250.2 |
265.3 |
Lease liabilities |
35.9 |
41.4 |
Total non-derivatives due in the second to fifth years |
286.1 |
306.7 |
Non-derivatives due after five years: |
||
Borrowings 1 |
– |
– |
Lease liabilities |
56.0 |
60.4 |
Total non-derivatives due after five years |
56.0 |
60.4 |
1
Borrowings’ future interest costs have been calculated excluding any benefit from fixed rate interest rate swaps.
The weighted average interest rates for the Group’s borrowings are found in Note 20 and in Note 23 for lease liabilities. The
following table illustrates the Group’s contractual maturity for derivative financial instrument liabilities when they fall due.
28 December |
30 December |
|
£m |
2024 |
2023 |
Derivative financial liabilities |
||
Due within one year |
2.1 |
0.5 |
Due in the second to fifth years inclusive |
– |
0.8 |
Total |
2.1 |
1.3 |
ITEMS OF INCOME, EXPENSE, GAINS OR LOSSES
The following table provides an analysis of the Group’s finance costs and changes in fair values by category of financial instrument:
£m |
2024 |
2023 |
Finance costs and income |
||
On financial liabilities held at amortised cost |
(26.4) |
(27.4) |
Exceptional finance costs |
(0.6) |
– |
Finance income |
0.5 |
0.6 |
Changes in fair values recognised in ‘Other gains and (losses)’ |
||
On financial liabilities held at fair value through profit and loss |
1.7 |
– |
28 December |
30 December |
|
£m |
2024 |
2023 |
Issued and fully paid: |
||
579,425,585 (2023: 579,425,585) Ordinary shares of £0.02 each |
11.6 |
11.6 |
All Ordinary shares of £0.02 each are non-redeemable and carry equal voting rights and rank for dividends and capital
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
27. Called up share capital, dividends and reserves
continued
196
| Bakkavor Group plc | Annual Report & Accounts 2024
During the prior and current period, the Company purchased shares through an Employee Benefit Trust called the Bakkavor
Group plc Employee Benefit Trust (the “Trust”). Own shares purchased are recorded at cost and deducted from equity.
The own shares held represents the cost of shares in Bakkavor Group plc purchased in the market and held by the Trust
to satisfy share awards under the Group’s share scheme plans (refer to Note 32).
The number of Ordinary shares held by the Trust at 28 December 2024 was 4,237,328 (30 December 2023: 4,567,073).
This represents 0.7% of total called up share capital at 28 December 2024 (30 December 2023: 0.8%).
Number of |
||
shares |
£m |
|
Balance at 31 December 2023 |
4,567,073 |
4.4 |
Acquisition of shares by the Trust |
6,287,335 |
8.6 |
Distribution of shares under share scheme plans |
(6,617,080) |
(6.7) |
Balance at 28 December 2024 |
4,237,328 |
6.3 |
No own shares held of Bakkavor Group plc were cancelled during the periods presented.
The table below shows amounts included in the Consolidated statement of cash flows in relation to own shares purchased
for share schemes:
£m |
2024 |
2023 |
Cash paid to purchase own shares |
(8.6) |
(2.4) |
Cash received from distribution of shares under share scheme plans |
0.4 |
0.2 |
Included in financing activities cash flows |
(8.2) |
(2.2) |
Number of |
|||||
Dividend per |
dividend rights |
||||
Reporting period ended |
share |
Declared |
Date paid |
waived 1 |
Amount paid |
28 December 2024 |
|||||
Interim dividend |
3.20p |
September 2024 |
11 October 2024 |
1,917,903 |
£18,480,246 |
30 December 2023 |
|||||
Final dividend |
4.37p |
May 2024 |
29 May 2024 |
1,065,145 |
£25,274,351 |
Interim dividend |
2.91p |
September 2023 |
13 October 2023 |
3,264,816 |
£16,766,278 |
31 December 2022 |
|||||
Final dividend |
4.16p |
May 2023 |
5 June 2023 |
2,886,522 |
£23,984,025 |
1
MERGER RESERVE
The merger reserve was created as a result of the acquisition of Bakkavor Holdings Limited and represents the difference
between the carrying values of the net assets of Bakkavor Holdings Limited and the value of the share capital and share
premium arising on the share-for-share exchange that resulted in Bakkavor Group plc acquiring Bakkavor Holdings Limited.
In 2007, a corporate reorganisation was completed to establish Bakkavor Holdings Limited as an intermediate holding
company of the Group. This was accounted for using the principles of merger accounting.
In 2017, the merger reserve was debited by £185.8m as a result of the acquisition of Bakkavor Holdings Limited and the
elimination of the historical capital reserve which related to the previous Group structure.
HEDGING RESERVE
The hedging reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective
in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in profit or loss only
when the hedged transaction impacts the profit or loss, or is included directly in the initial cost or other carrying amount
of the hedged non-financial items (basis adjustment).
TRANSLATION RESERVE
The translation reserve represents foreign exchange rate differences arising on the consolidation of the Group’s foreign
operations. The assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on
the statement of financial position date. Income and expense items are translated at the average exchange rates for the
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
197
The Group sold its 100% owned subsidiary Bakkavor (Taicang) Baking Company Limited on 28 March 2024. The Group
On 17 May 2024, the Group completed the acquisition of 100% of the issued share capital of Moorish Limited (“Moorish”)
for a total cash consideration of £1.8m. The primary reason for the acquisition was to acquire the brand under which
Moorish sells a variety of houmous products. The amounts recognised in respect of the fair value of the identifiable assets
and liabilities assumed on acquisition are as set out in the table below:
£m |
17 May 2024 |
Other intangible assets |
1.9 |
Trade and other receivables |
0.2 |
Trade and other payables |
(0.3) |
Net assets acquired |
1.8 |
Goodwill |
– |
Total cash outflow on acquisition |
1.8 |
The net cash outflow arising on acquisition was:
£m |
17 May 2024 |
Cash consideration for share capital |
1.8 |
Cash and cash equivalents acquired on acquisition |
– |
Cash outflow on acquisition of business |
1.8 |
Acquisition-related costs of £0.1m were incurred and are included in ‘Other administrative costs’ in the Consolidated
income statement. The results of Moorish have been consolidated in the Group’s Consolidated income statement from
17 May 2024 and contributed £1.0m of revenue and a profit of £nil to the Group’s profit for the period. If the acquisition
of Moorish had been completed on the first day of the financial year, Group revenues for the period would have been
£2,293.3m and Group profit would have been £55.0m. All of the intangible assets acquired relate to the brand. There are
£m |
2024 |
2023 |
Operating profit |
93.4 |
97.1 |
Adjustments for: |
||
Depreciation of property, plant and equipment |
65.9 |
68.7 |
Amortisation of intangible assets |
2.9 |
3.0 |
(Profit) on disposal of property, plant and equipment |
– |
(1.4) |
(Profit) on disposal of subsidiary |
(4.0) |
– |
(Profit) on disposal of associate |
(1.1) |
(1.4) |
Impairment of assets |
15.5 |
2.9 |
Share scheme charges |
2.4 |
2.0 |
Net retirement benefits charge less contributions |
(1.9) |
(2.1) |
Operating cash flows before movements in operating assets and liabilities |
173.1 |
168.8 |
(Increase)/decrease in inventories |
(12.3) |
16.3 |
Increase in receivables |
(27.1) |
(8.1) |
Increase in payables |
47.6 |
18.9 |
Increase/(decrease) in provisions |
1.1 |
(0.1) |
Increase/(decrease) in exceptional provisions |
7.3 |
(11.9) |
Cash generated by operations |
189.7 |
183.9 |
Income taxes paid |
(13.3) |
(11.0) |
Interest paid |
(26.1) |
(25.2) |
Net cash generated from operating activities |
150.3 |
147.7 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
30. Net cash generated from operating activities
continued
198
| Bakkavor Group plc | Annual Report & Accounts 2024
31 December |
Lease additions |
Exchange |
Other non-cash |
28 December |
||
£m |
2023 |
Cash flow |
(net) |
movements |
movements 1 |
2024 |
Borrowings |
(265.4) |
42.4 |
– |
– |
0.7 |
(222.3) |
Lease liabilities |
(90.5) |
12.1 |
(6.3) |
(0.3) |
0.7 |
(84.3) |
Total liabilities from financing activities |
(355.9) |
54.5 |
(6.3) |
(0.3) |
1.4 |
(306.6) |
Cash and cash equivalents |
36.6 |
(6.7) |
– |
– |
– |
29.9 |
Net debt |
(319.3) |
47.8 |
(6.3) |
(0.3) |
1.4 |
(276.7) |
1 January | Lease additions | Exchange | Other non-cash | 30 December | ||
£m | 2023 | Cash flow | (net) | movements | movements 1 | 2023 |
Borrowings | (322.3) | 58.0 | – | 0.5 | (1.6) | (265.4) |
Lease liabilities | (97.2) | 12.3 | (6.2) | 0.6 | – | (90.5) |
Total liabilities from financing activities | (419.5) | 70.3 | (6.2) | 1.1 | (1.6) | (355.9) |
Cash and cash equivalents | 40.2 | (2.5) | – | (1.1) | – | 36.6 |
Net debt | (379.3) | 67.8 | (6.2) | – | (1.6) | (319.3) |
1
Includes accrued interest at 28 December 2024 of £1.2m (2023: £0.5m) and prepaid bank fees of £2.5m (2023: £1.1m). The net increase in these balances in the period of £0.7m (2023:
net reduction of £1.6m) is shown in the table above as ‘Other non-cash movements’ in Borrowings. Also included in non-cash movements is the transfer of £0.7m of lease liabilities
counterparties. The Group regularly reviews all of these claims to determine any possible financial loss to the Group.
In addition, there are a number of legal claims or potential claims against the Group – see Note 25 for further details
The Group has the following amounts of letters of credit issued:
£m | 2024 | 2023 |
Letters of credit | 5.6 | 4.9 |
The Company has a share option scheme for selected employees of the Group. Options granted under the scheme are
exercisable at a discount to the estimated price of the Company’s shares on the date of grant. Options expire if they remain
unexercised after a period of 5 or 10 years from the date of grant, dependent on the award year. Options may be forfeited if
the employee leaves the Group before the options vest.
Details of the share options outstanding during the year were as follows:
Number of share options | Weighted average exercise price | |||
2024 | 2023 | 2024 | 2023 | |
Outstanding at the beginning of the period | 22,988,025 | 18,761,203 | £0.04 | £0.05 |
Granted during the period | 5,985,087 | 6,143,820 | – | – |
Granted in lieu of dividends during the period | 359,104 | 1,192,085 | – | – |
Exercised during the period | (8,335,549) | (1,003,194) | £0.06 | £0.18 |
Forfeited during the period | _ | (1,436,608) | – | – |
Expired and lapsed during the period | (1,785,390) | (669,281) | – | – |
Outstanding at the end of the period | 19,211,277 | 22,988,025 | £0.01 | £0.04 |
Exercisable at the end of the period | 2,422,852 | 8,648,087 | £0.11 | £0.05 |
In addition, 767,090 were outstanding at 28 December 2024 (30 December 2023: 340,521) in respect of options granted
to Directors in respect of their Deferred Annual Bonus entitlement.
The average share price on the date options were exercised during the period was £1.22 (2023: £0.90).
The options outstanding at 28 December 2024 had a weighted average exercise price of £0.01 (2023: £0.04), and a weighted
average remaining contractual life of 7.2 years (2023: 5.4 years).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
199
Range of exercise prices for the share options:
Number of share options | Weighted average exercise price | |||
28 December | 30 December | 28 December | 30 December | |
2024 | 2023 | 2024 | 2023 | |
£nil | 18,848,008 | 20,922,569 | _ | – |
£0.01 – £1.00 | 363,269 | 2,065,456 | £0.76 | £0.40 |
Outstanding at the end of the period | 19,211,277 | 22,988,025 | £0.01 | £0.04 |
Exercisable at the end of the period | 2,422,852 | 8,648,087 | £0.11 | £0.05 |
2024
5,222,474 options were granted on 11 April 2024 and 102,406 were granted on 3 October 2024. These options granted had
the following performance conditions for vesting:
•
265,264 vest provided the individual is an employee in April 2027.
•
The remaining 4,957,210 and 102,406 vest provided the individual is an employee in April 2027 and October 2027
respectively and are subject to the following performance conditions for vesting:
–
Provided the first condition is met, 11.25% of the remaining options vest provided the Group’s TSR national rank versus
a bespoke peer group of 23 companies three years after the date of grant is at the median level. This increases up to
45% of the remaining options based on a sliding scale if the Group’s TSR rank three years after the date of grant is at
the upper quartile level.
–
Provided that the first condition is met, 10% of the remaining options vest provided the Group’s adjusted EPS for FY26
is 10.0 pence, increasing up to 40% of the remaining options vesting on a sliding scale if the Group’s adjusted EPS is
between 10.0 pence and 11.5 pence for that year.
–
Provided that the first condition is met, 3.75% of the remaining options vest provided the Group’s greenhouse gas
emissions reduce by 11,100 tonnes over the three-year period. This increases up to 15% of the remaining options
based on a sliding scale if the reduction in greenhouse gas emissions is 12,210 tonnes or greater.
660,207 options were granted on 11 April 2024. These options granted had the following performance conditions for vesting:
•
220,068 vest provided that the individual is an employee in April 2027.
•
The remaining 440,139 vest provided the individual is an employee in April 2027 and are subject to the following
performance conditions for vesting:
–
Provided that the first condition is met, 25% of the remaining options vest provided the Bakkavor US adjusted EBIT
margin percentage for FY26 is 6.0%, with up to a further 100% of the remaining options vesting on a sliding scale if
the Bakkavor US adjusted EBIT margin percentage is between 6.0% and 8.0% for that year.
2023
5,107,894 options were granted on 12 April 2023, 61,576 on 22 May 2023 and 236,316 were granted on 12 October 2023.
These options granted had the following performance conditions for vesting:
•
282,276 vest provided the individual is an employee in April 2026.
–
Provided that the first condition is met, 50% of the remaining options vest provided the Group’s TSR national rank
versus a bespoke peer group of 26 companies three years after the date of grant is at the median level. This increases
up to 50% of the remaining options based on a sliding scale if the Group’s TSR rank three years after the date of grant
is at the upper quartile level.
–
Provided that the first condition is met, 25% of the remaining options vest provided the Group’s adjusted EPS for FY25
is 10.0 pence, with up to a further 50% of the remaining options vesting on a sliding scale if the Group’s adjusted EPS
is between 10.0 pence and 11.5 pence for that year.
479,445 options were granted on 12 April 2023 and 258,589 were granted on 12 October 2023. These options granted had
the following performance conditions for vesting:
•
159,814 and 86,196 vest provided that the individual is an employee in April 2026 and October 2026 respectively.
–
Provided that the first condition is met, 25% of the remaining options vest provided the Bakkavor US adjusted EBIT
margin percentage for FY25 is 6.0%, with up to a further 100% of the remaining options vesting on a sliding scale if
the Bakkavor US adjusted EBIT margin percentage is between 6.0% and 8.0% for that year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
32. Share-based payments
continued
200
| Bakkavor Group plc | Annual Report & Accounts 2024
The aggregate of the estimated fair values of the options granted during 2024 is £29.0m (2023: £20.1m). The following table
summarises the options granted by the Company:
Number of |
||||||||
options |
Contractual |
Expected life |
||||||
originally |
life remaining |
Share price at |
Expected |
remaining |
Expected |
Fair value |
||
Date of grant |
granted |
(years) |
date of grant |
volatility |
(years) |
Risk-free rate |
dividend yield |
per option |
11 April 2024 |
1,512,059 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£0.84 |
11 April 2024 |
1,344,052 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
11 April 2024 |
504,020 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
11 April 2024 |
718,686 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£0.84 |
11 April 2024 |
638,832 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
11 April 2024 |
239,562 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
11 April 2024 |
440,139 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
11 April 2024 |
265,264 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
11 April 2024 |
220,068 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
11 April 2024 |
426,569 |
9.3 |
£1.15 |
41.0% |
2.28 |
4.40% |
0.00% |
£1.15 |
3 October 2024 |
46,083 |
9.8 |
£1.56 |
37.9% |
2.76 |
3.74% |
0.00% |
£1.32 |
3 October 2024 |
40,962 |
9.8 |
£1.56 |
37.9% |
2.76 |
3.74% |
0.00% |
£1.56 |
3 October 2024 |
15,361 |
9.8 |
£1.56 |
37.9% |
2.76 |
3.74% |
0.00% |
£1.56 |
The Group has used the Monte Carlo model to value its share awards. The exercise price used in the model for share
options granted in 2024 is £nil (2023: £nil). The fair value of awards, which have a TSR performance condition, takes
account of the likelihood of meeting these targets.
The expected volatility is a measure of the amount by which a share price is expected to fluctuate during the period.
It is typically calculated based on statistical analysis of daily share prices over the length of the award period.
The Group recognised total expenses of £4.2m (2023: £2.0m) related to equity-settled share-based payment transactions
The Group operates a number of pension schemes in the UK and overseas. These schemes are either trust- or contract-
based and have been set up in accordance with appropriate legislation. The assets of each of the pension schemes are
held separately from the assets of the Company.
In the UK, the two main schemes are a defined contribution scheme, which is open to all UK employees joining the Group
(full or part-time), and the Bakkavor Pension Scheme (“the Scheme”), which is a funded defined benefit scheme that
provides benefits on a final salary basis and was closed to future accrual in March 2011.
UK pensions are regulated by the Pensions Regulator whose statutory objectives and regulatory powers are described
on its website www.thepensionsregulator.gov.uk. Although the Company bears the financial cost of the plan, the Trustees
Directors are responsible for the overall management and governance of the scheme, including compliance with all
applicable legislation and regulations. The Trustees Directors are required by law to act in the interests of all relevant
beneficiaries and to set certain policies; to manage the day-to-day administration of the benefits; and to set the plan’s
investment strategy following consultation with the Parent Company.
Pension costs charged in arriving at profit on ordinary activities before taxation were:
£m |
2024 |
2023 |
UK defined contribution scheme net charge |
12.2 |
12.7 |
UK defined benefit scheme net charge |
0.6 |
0.4 |
Total charge |
12.8 |
13.1 |
DEFINED CONTRIBUTION SCHEMES
The total cost charged to income of £12.2m (2023: £12.7m) represents contributions payable to these schemes by the
Group at rates advised by the Group to all employees, subject to the minimum requirements set out in legislation. Included
in accruals was £2.7m at the period-end for the defined contribution schemes’ gross contributions (2023: £2.2m).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
201
DEFINED BENEFIT SCHEMES
In June 2023, the UK High Court (Virgin Media Limited v NTL Pension Trustees II Limited) ruled that certain historical
amendments for contracted out defined benefit schemes were invalid if they were not accompanied by the correct
actuarial confirmation. Following a hearing in June 2024, the UK Court of Appeal issued a judgement on 25 July 2024
upholding this ruling. The Company has worked with the pension scheme Trustees to review this development and
consider the implications, if any, for the UK defined benefit pension fund and the Group’s financial statements. At this
stage, due to the legal and actuarial uncertainty regarding the potential impact of the case the Trustees are not in a
position to determine any impacts on Bakkavor’s scheme and the position remains under review.
An actuarial valuation of Scheme assets and the present value of the defined benefit obligation for funding purposes was
carried out as at 31 March 2022. The results from this valuation were updated for IAS 19 Employee Benefits purposes
to 28 December 2024 by a qualified independent actuary with Willis Towers Watson. The projected unit cost method was
used to value the liabilities.
The principal assumptions used in this IAS 19 valuation were:
£m | 2024 | 2023 |
Future pension increases for in-payment benefits (majority of liabilities) | 3.10% | 3.00% |
Discount rate applied to Scheme liabilities | 5.55% | 4.50% |
Inflation assumption (CPI) | 2.80% | 2.65% |
The 2024 mortality table is based on scheme-specific postcode-fitted SAPS 3 tables with a 107% multiplier for male
members and a 110% multiplier for female members. Future improvements are in line with the CMI core 2018
improvements model with an initial addition to improvements of 0.5% p.a. and a 1.25% p.a. long-term trend from 2013
onwards, giving life expectancies as follows:
Females’ | Females’ | |||
Males’ expected | Males’ expected | expected future | expected future | |
future lifetime | future lifetime | lifetime | lifetime | |
2024 | 2023 | 2024 | 2023 | |
Member aged 45 | 22.8 | 22.7 | 25.1 | 25.1 |
Member aged 65 | 21.5 | 21.4 | 23.7 | 23.6 |
The IAS 19 calculations, which are based on an approximate update of the results of the actuarial valuation of the Scheme
which was carried out as at 31 March 2022, are particularly sensitive to some assumptions: for example, the discount rate,
the level of assumed price inflation and the life expectancy assumption. As such, a broad indication of the sensitivity of the
liabilities to each assumption is shown. The sensitivities display ‘reasonably possible’ changes in actuarial assumptions.
The sensitivities regarding the principal assumptions used to measure the Scheme liabilities are set out below:
Assumption | Change in assumption | Approximate impact on scheme liabilities |
Discount rate | Increase/decrease by 1.0% | Decrease £17.9m/increase £22.0m |
Rate of inflation | Increase/decrease by 0.5% | Increase £6.8m/decrease £6.7m |
Life expectancy | Members assumed to be one year younger than their actual age | Increase £4.3m |
Amounts recognised in income in respect of these defined benefit schemes are as follows:
£m | 2024 | 2023 |
Past service cost | – | – |
Net interest (income) on net defined benefit asset/liability | (0.6) | (0.7) |
Administration costs incurred during the period | 1.2 | 1.1 |
Total charge | 0.6 | 0.4 |
All of the charges for each period presented have been included in total administrative expenses. The actuarial gain
of £4.9m (2023: £2.9m loss) has been reported in other comprehensive income.
The actual return on Scheme assets was a decrease of £7.8m (2023: £10.1m increase).
The amount included in the statement of financial position arising from the Group’s obligations in respect of its defined
benefit retirement benefit schemes is as follows:
28 December | 30 December | |
£m | 2024 | 2023 |
Fair value of Scheme assets | 175.9 | 190.0 |
Present value of defined benefit obligations | (157.1) | (178.0) |
Scheme surplus | 18.8 | 12.0 |
Related deferred taxation liability | (4.7) | (3.0) |
14.1 | 9.0 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
33. Retirement benefit schemes
continued
202
| Bakkavor Group plc | Annual Report & Accounts 2024
The assumptions used are the best estimates chosen from a range of possible actuarial assumptions which, due to the
timescale covered, may not necessarily be borne out in practice.
The Scheme surplus in 2024 is recognised in accordance with IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction, as the Scheme’s terms and conditions allow the Group to have
an unconditional right to a refund of contributions when economic benefits are available.
The amounts recognised in the balance sheet and the movements in the fair value of Scheme assets and the present value
of defined benefit obligation (“DBO”) are as follows:
Present value | Fair value of | ||
£m | of DBO | Scheme assets | Net amount |
At 1 January 2023 | (173.1) | 185.9 | 12.8 |
Past service cost – plan amendments | – | – | – |
Interest (expense cost on the DBO)/income on Scheme assets | (8.1) | 8.8 | 0.7 |
Administrative costs paid | – | (1.1) | (1.1) |
Total amount recognised in the Consolidated income statement | (8.1) | 7.7 | (0.4) |
Return on Scheme assets greater/(less) than discount rate | – | 1.3 | 1.3 |
Actuarial gain – experience | 1.9 | – | 1.9 |
Actuarial loss – financial assumptions | (6.1) | – | (6.1) |
Total amount recognised in other comprehensive income | (4.2) | 1.3 | (2.9) |
Contributions from the sponsoring companies | – | 2.5 | 2.5 |
Benefits paid from Scheme assets | 7.4 | (7.4) | – |
At 30 December 2023 | (178.0) | 190.0 | 12.0 |
Past service cost – plan amendments | – | – | – |
Interest (cost on the DBO)/income on Scheme assets | (7.8) | 8.4 | 0.6 |
Administrative costs paid | – | (1.2) | (1.2) |
Total amount recognised in the Consolidated income statement | (7.8) | 7.2 | (0.6) |
Return on Scheme assets (less)/greater than discount rate | – | (16.2) | (16.2) |
Actuarial gain – experience | (0.2) | – | (0.2) |
Actuarial loss – financial assumptions | 21.3 | – | 21.3 |
Total amount recognised in other comprehensive income | 21.1 | (16.2) | 4.9 |
Contributions from the sponsoring companies | – | 2.5 | 2.5 |
Benefits paid from Scheme assets | 7.6 | (7.6) | – |
At 28 December 2024 | (157.1) | 175.9 | 18.8 |
The analysis of the Scheme assets at the statement of financial position date was as follows:
Fair value of assets | ||
28 December | 30 December | |
£m | 2024 | 2023 1 |
Structured UK equity | 0.4 | 0.2 |
Overseas equity | 9.0 | 12.3 |
High yield bonds | 11.5 | 6.5 |
Corporate bonds | 54.7 | 45.4 |
Government bonds | 76.3 | 97.9 |
Cash | 5.9 | 8.9 |
Other | 18.1 | 18.8 |
175.9 | 190.0 | |
1
Restated 2023 to reflect the correct split between UK and Overseas equity.
The fair values of the equity and bonds have been determined as level 2 instruments under IFRS 7 Financial Instruments:
Disclosures. Index-linked government bonds, which have quoted prices in active markets, are classed as level 1.
Structured UK equity provides exposure to UK equities but is a derivative-based solution and not a direct investment in
equities. A proportion of the index-linked government bonds are held as collateral against the structured UK equity product.
The Scheme assets also include swaps to hedge liability inflation and interest rate risks. The swap value has been
included in the value of the gilt securities used as collateral for the swaps. Corporate bonds and cash are also used
as collateral for the swaps in place.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
203
The Scheme invests in four multi-asset funds, which invest in a wide range of assets including alternative asset classes.
In the summary above, the multi-asset funds have been split into the relevant constituent asset classes.
The Bakkavor Pension Scheme operates under trust law and is managed and administered by the Trustees on behalf of the members
in accordance with the terms of the Trust Deed and Rules and relevant legislation. The Scheme is subject to Scheme-specific
funding requirements, as outlined in UK legislation. The most recent Scheme-specific funding valuation was as at 31 March 2022.
The Group and the Trustees work closely in matters concerning the Bakkavor Pension Scheme. Regular meetings and
correspondence on matters concerning the Scheme are shared in an open manner between both parties.
The Bakkavor Pension Scheme’s current investment strategy adopts a policy of investing broadly 60% in growth-seeking
assets and 40% in liability-matching assets, although the proportions can vary significantly in order to allow for advanced
liability hedging techniques, opportunistic allocation of assets and the ‘structured equity’ component of the strategy
increases the notional allocation to return-seeking assets to 95%. A large proportion of both interest and inflation risk is
hedged. This strategy is intended to reduce the risk of significant changes to the funding level by hedging key risks, while
retaining a proportion of return-seeking assets to minimise long-term costs by maximising return within an acceptable
level of risk. The Scheme’s assets are held separately from those of the Group.
The weighted average duration of the Bakkavor Pension Scheme is approximately 13 years (2023: 15 years).
Employer contributions, except for deficit reduction contributions, ceased in March 2011 when the Scheme closed to
future accrual. Employee contributions also ceased at this date.
Following the closure of the Scheme to future accrual in March 2011, the Group and the Trustees agreed that members who
were active members of the Scheme at the date of closure would remain entitled to access early retirement on preferential
terms as long as they remained in employment within the Group. The value of members accessing these preferential terms
is not included in the defined benefit obligation as this benefit is not funded for in advance. If members choose to access this
benefit an employer contribution is made to the Scheme to reflect the increase in expected future pension costs. In 2024, no
augmentation was made in respect of this benefit (2023: £nil).
The current deficit reduction contributions were agreed between the Group and the Trustee as part of the 2022 triennial valuation.
The deficit contributions will be paid over a recovery period ending on 31 March 2025. The recovery contributions are paid monthly
and the agreed rates are £2.5m per annum. Contributions could continue through to 31 August 2025 at the rate of £2.5m per annum
if the Scheme is in deficit on a technical provisions basis at 31 December 2024 and 31 January 2025. As the Scheme was in surplus
at December 2024 and January 2025, recovery contributions will cease in March 2025. £2.5m was paid in the period to 28 December
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, $20,060 was paid to LongRange Capital for advisory work in relation to the US business. Outside of this,
Group companies did not enter into any transactions with related parties who are not members of the Group.
The remuneration of the Directors and Senior Management, who are the key management personnel of the Company,
is set out below for each of the categories specified in IAS 24 Related Party Disclosures.
| 2024 |
2023 |
|||||
Senior |
Senior |
|||||
£m |
Directors |
Management |
Total |
Directors |
Management |
Total |
Short-term employee benefits |
3.5 |
3.0 |
6.5 |
3.4 |
2.7 |
6.1 |
Post-employment benefits 1 |
– |
– |
– |
– |
– |
– |
Share-based payments 2 |
0.8 |
0.4 |
1.2 |
0.4 |
0.3 |
0.7 |
4.3 |
3.4 |
7.7 |
3.8 |
3.0 |
6.8 |
|
1
The Directors’ post-employment benefits show contributions made to pension schemes. The pension entitlements disclosed in the Directors’ remuneration report on page 132
included cash contributions paid in lieu of pension contributions.
2
This is the income statement charge for the year which represents the fair value of the share-based payments to the Directors and Senior Management. Details of the share-based
payments are set out in Note 32.
The highest paid Director received aggregate remuneration (including pension entitlements) of £1.7m (2023: £1.6m).
For the period ended 28 December 2024, three Directors (2023: two Directors) received contributions to their pension
schemes from the Group.
For the period ended 28 December 2024, three Directors (2023: two Directors) received share options. Three Directors
(2023: no Directors) exercised share options during the period. Three Directors (2023: nil) exercised share options during
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
204
| Bakkavor Group plc | Annual Report & Accounts 2024
On 24 December 2024, a business transfer agreement was signed for the sale of the trade and assets of the Hong Kong
business, the ‘disposal group’. The assets and liabilities of the disposal group were consequently presented as held for
sale at 28 December 2024 and measured at the lower of the carrying amount and fair value less costs to sell, resulting
in the recognition of a £2.2m impairment. Combined with a £1.0m provision for costs to sell, the total exceptional charge
These Financial Statements are the largest Consolidated Financial Statements in which the Company has been included.
Two of the Company’s Directors, Agust Gudmundsson and Lydur Gudmundsson, hold shares in the Company through their
beneficial ownership of Carrion Enterprises Limited (the corporate holding structure of Agust Gudmundsson) and Umbriel
Ventures Limited (the corporate holding structure of Lydur Gudmundsson). Umbriel Ventures Limited holds 142,303,505
ordinary shares (representing 24.56% of the issued share capital of the Company) and Carrion Enterprises Limited holds
142,103,505 ordinary shares (representing 24.52% of the issued share capital of the Company).
Lixaner Co Limited, a company owned and controlled by Sigurdur Valtysson, who runs the family office for Agust and
Lydur Gudmundsson, holds 6,457,750 ordinary shares (representing 1.11% of the issued share capital of the Company).
Given the close relationship between the parties, Sigurdur Valtysson is to be considered as acting in concert with Agust
and Lydur Gudmundsson for the purposes of the definition in the Takeover Code and the parties are controlling
shareholders of the Company. The aggregate shareholding in the Company of Carrion Enterprises Limited and Umbriel
Ventures Limited and their concert party group (Lixaner Co Limited) is 290,864,760 ordinary shares (representing 50.20%
The Group uses various non-IFRS financial measures to evaluate growth trends, assess operational performance and
monitor cash performance. The Directors consider that these measures enable investors to understand the ongoing
operations of the business. They are used by management to monitor financial performance as it is considered to aid
comparability of the financial performance of the Group from year to year.
LIKE-FOR-LIKE REVENUE
The Group defines like-for-like revenue as revenue from continuing operations adjusted for the revenue generated from
businesses closed or sold in the current and prior year, revenue generated from businesses acquired in the current and
prior period, the effect of foreign currency movements and revenues. In addition, revenues for week 53 are taken out in
the relevant financial years to ensure that like-for-like revenue is shown on a 52-week basis each year.
The following table provides the information used to calculate like-for-like revenue for the Group.
£m | 2024 | 2023 | Change % |
Statutory revenue | 2,292.7 | 2,203.8 | 4.0% |
Effect of currency movements | 11.0 | – | |
Revenue from sold business | (2.8) | (15.3) | |
Like-for-like revenue | 2,300.9 | 2,188.5 | 5.1% |
The following tables provide the information used to calculate like-for-like revenue for each segment.
UK
£m | 2024 | 2023 | Change % |
Statutory and like-for-like revenue | 1,948.5 | 1,852.7 | 5.2% |
US
£m | 2024 | 2023 | Change % |
Statutory revenue | 227.7 | 229.4 | (0.7%) |
Effect of currency movements | 6.3 | – | |
Like-for-like revenue | 234.0 | 229.4 | 2.0% |
CHINA
£m | 2024 | 2023 | Change % |
Statutory revenue | 116.5 | 121.7 | (4.3%) |
Effect of currency movements | 4.7 | – | |
Revenue from sold business | (2.8) | (15.3) | |
Like-for-like revenue | 118.4 | 106.4 | 11.3% |
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
205
ADJUSTED EBITDA AND ADJUSTED OPERATING PROFIT
The Group manages the performance of its businesses through the use of ‘adjusted EBITDA’ and ‘adjusted operating profit’,
as these measures exclude the impact of items that hinder comparison of profitability year-on-year. In calculating adjusted
operating profit, we exclude restructuring costs, asset impairments, and those additional charges or credits that are
considered significant or one-off in nature. In addition, for adjusted EBITDA we exclude depreciation, amortisation, the share
of results of associates after tax and share scheme charges, as these are non-cash amounts. Adjusted operating profit
margin is used as an additional profit measure that assesses profitability relative to the revenues generated by the relevant
segment; it is calculated by dividing the adjusted operating profit by the statutory revenue for the relevant segment.
The Group calculates adjusted EBITDA on a pre-IFRS 16 basis for the purposes of determining covenants under its
financing agreements.
The following table provides a reconciliation from the Group’s operating profit to adjusted operating profit and adjusted EBITDA.
£m | Note | 2024 | 2023 |
Operating profit | 93.4 | 97.1 | |
Exceptional items | 7 | 20.2 | (2.8) |
Adjusted operating profit | 113.6 | 94.3 | |
Depreciation | 65.9 | 68.7 | |
Amortisation | 2.9 | 3.0 | |
Share scheme charges | 4.2 | 2.0 | |
Loss on disposal of property, plant and equipment | – | 0.1 | |
Adjusted EBITDA post IFRS 16 | 186.6 | 168.1 | |
Less IFRS 16 impact | (14.6) | (14.0) | |
Adjusted EBITDA pre IFRS 16 1 | 172.0 | 154.1 | |
Covenant adjustments | 0.6 | 0.4 | |
Adjusted EBITDA (pre IFRS 16 and including covenant adjustments) | 172.6 | 154.5 |
1
Excludes the impact of IFRS 16 as the Group’s bank facility agreement definition of adjusted EBITDA excludes the impact of this standard.
Adjusted EBITDA and Adjusted operating profit by segment are reconciled to operating profit in Note 4.
OPERATIONAL NET DEBT AND LEVERAGE
Operational net debt excludes the impact of non-cash items on the Group’s net debt. The Directors use this measure as it
reflects actual net borrowings at the relevant reporting date and is most comparable with the Group’s free cash flow and
aligns with the definition of net debt in the Group’s bank facility agreements which exclude the impact of IFRS 16. The
following table sets out the reconciliation from the Group’s net debt to the Group’s operational net debt.
£m | Note | 2024 | 2023 |
Group net debt | 20 | (276.7) | (319.3) |
Unamortised fees | (2.5) | (1.1) | |
Interest accrual | 1.2 | 0.5 | |
Lease liabilities recognised under IFRS 16 | 84.2 | 90.3 | |
Group operational net debt | (193.8) | (229.6) | |
Adjusted EBITDA (pre IFRS 16 and including covenant adjustments) | 172.6 | 154.5 | |
Leverage (operational net debt/adjusted EBITDA pre IFRS 16 and including covenant adjustments) | 1.1 | 1.5 |
FREE CASH FLOW
The Group defines free cash flow as the amount of cash generated by the Group after meeting all of its obligations for
interest, tax and pensions, and after purchases of property, plant and equipment (excluding development projects), but
before payments of refinancing fees and other exceptional or significant non-recurring cash flows. Free cash flow has
benefited from non-recourse factoring of receivables as set out in Note 18 and the extension of payment terms for certain
suppliers as described in Note 24. The Directors view free cash flow as a key liquidity measure, and the purpose of
presenting free cash flow is to indicate the underlying cash available to pay dividends, repay debt or make further
investments in the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
37. Alternative performance measures
continued
206
| Bakkavor Group plc | Annual Report & Accounts 2024
The definition of free cash flow was amended during the prior year to be after IFRS 16 capital lease payments to simplify
our cash reporting. The following table provides a reconciliation from net cash generated from operating activities to free
cash flow.
£m | 2024 | 2023 |
Net cash generated from operating activities | 150.3 | 147.7 |
Interest received | 0.5 | 0.6 |
Dividends received from associates | – | 1.6 |
Proceeds on disposal of subsidiary | 6.6 | – |
Proceeds on disposal of associates | – | 3.2 |
Purchases of property, plant and equipment | (49.3) | (40.4) |
Proceeds on disposal of property, plant and equipment | 0.5 | 1.6 |
Purchase of intangibles | (7.0) | (3.5) |
Cash impact of exceptional items | (3.5) | 4.4 |
Refinancing fees | 2.6 | – |
IFRS 16 capital lease payments | (12.0) | (12.0) |
Free cash flow | 88.7 | 103.2 |
ADJUSTED EARNINGS PER SHARE
The Group calculates adjusted basic earnings per Ordinary share by dividing adjusted earnings by the weighted average
number of Ordinary shares in issue during the year. Adjusted earnings is calculated as profit for the period adjusted to
exclude exceptional items and the change in value of derivative financial instruments. The following table reconciles profit
for the period to adjusted earnings.
For adjusted diluted earnings per share, the weighted average number of Ordinary shares in issue is adjusted to assume
conversion of all potentially dilutive Ordinary shares.
£m | Note | 2024 | 2023 |
Profit for the period | 55.7 | 53.9 | |
Exceptional items | 7 | 20.8 | (2.8) |
Change in fair value of derivative financial instruments | – | – | |
Tax on the above items | (5.4) | – | |
Adjusted earnings | 71.1 | 51.1 | |
Add back: Tax on adjusted profit before tax | 18.3 | 16.4 | |
Adjusted profit before tax | 89.4 | 67.5 | |
Effective tax rate on underlying activities | |||
(Tax on adjusted profit before tax/adjusted profit before tax) | 20.5% | 24.4% |
Number of shares ‘000 | 2024 | 2023 |
Weighted average number of Ordinary shares | 578,881 | 576,129 |
Effect of dilutive Ordinary shares | 9,057 | 12,576 |
Weighted average number of diluted Ordinary shares | 587,938 | 588,705 |
2024 | 2023 | |
Adjusted basic earnings per share | 12.3p | 8.8p |
Adjusted diluted earnings per share | 12.1p | 8.7p |
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Bakkavor Group plc | Annual Report & Accounts 2024 |
207
RETURN ON INVESTED CAPITAL (“ROIC”)
The Group defines ROIC as adjusted operating profit after tax divided by the average invested capital for the year. Adjusted
operating profit after tax is defined as operating profit excluding the impact of exceptional items less tax at the Group’s
effective tax rate. Invested capital is defined as total assets less total liabilities excluding net debt at the period end,
pension assets and liabilities (net of deferred tax) and fair values for derivatives not designated in a hedging relationship.
The Group utilises ROIC to measure how effectively it uses invested capital. Average invested capital is the simple average
of invested capital at the beginning and end of the period.
The Directors believe that ROIC is a useful indicator of the amount returned as a percentage of shareholders’ invested
capital and that ROIC can help analysts, investors and stakeholders to evaluate the Group’s profitability and the efficiency
with which its invested capital is employed.
The following table sets out the calculations of adjusted operating profit after tax and invested capital used in the
calculation of ROIC.
£m | Note | 2024 | 2023 |
Operating profit | 93.4 | 97.1 | |
Exceptional items | 7 | 20.2 | (2.8) |
Adjusted operating profit | 113.6 | 94.3 | |
Taxation at the underlying effective rate | (23.3) | (23.0) | |
Adjusted operating profit after tax | 90.3 | 71.3 | |
Invested capital | |||
Total assets | 1,498.6 | 1,480.3 | |
Total liabilities | (882.5) | (872.7) | |
Net debt at period end | 276.7 | 319.3 | |
Retirement benefit scheme surplus | (18.8) | (12.0) | |
Deferred tax liability on retirement benefit scheme | 4.7 | 3.0 | |
Invested capital | 878.7 | 917.9 | |
Average invested capital for ROIC calculation | 898.3 | 952.7 | |
ROIC (%) | 10.1% | 7.5% |
AS AT 28 DECEMBER 2024
28 December | 30 December | ||
£m | Note | 2024 | 2023 |
Non-current assets | |||
Shares in Group undertakings | 4 | 313.7 | 309.5 |
Current assets | |||
Loans to Group undertakings | 6 | 86.8 | 95.5 |
Deferred tax assets | 0.9 | 0.1 | |
Cash and cash equivalents | 0.1 | – | |
87.8 | 95.6 | ||
Total assets | 401.5 | 405.1 | |
Current liabilities | |||
Loans from Group undertakings | 6 | (5.6) | (2.5) |
Current tax liabilities | (0.9) | – | |
Total liabilities | (6.5) | (2.5) | |
Net assets | 395.0 | 402.6 | |
Equity | |||
Called up share capital | 7 | 11.6 | 11.6 |
Own shares held | 7 | (6.3) | (4.4) |
Merger reserve | 7 | 23.8 | 23.8 |
Retained earnings | 365.9 | 371.6 | |
Total equity | 395.0 | 402.6 |
In accordance with the exemptions allowed by Section 408 of Companies Act 2006, the Company has not presented its own
income statement or statement of comprehensive income. The profit for the period was £42.6m (2023: £40.0m).
The Financial Statements of Bakkavor Group plc, Company number 10986940, and the accompanying Notes, which form
an integral part of the Company Financial Statements, were approved by the Board of Directors on 3 March 2025. They
were signed on behalf of the Board of Directors by:
Mike Edwards
Lee Miley
Chief Executive Officer
Chief Financial Officer
COMPANY STATEMENT OF CHANGES IN EQUITY
52 WEEKS ENDED 28 DECEMBER 2024
Called up | Own | Merger | Retained | Total | ||
£m | Note | share capital | shares held | reserve | earnings | equity |
Balance at 1 January 2023 | 11.6 | (3.1) | 23.8 | 372.1 | 404.4 | |
Profit for the period | – | – | – | 40.0 | 40.0 | |
Purchase of own shares | 7 | – | (2.4) | – | – | (2.4) |
Dividends | 7 | – | – | – | (40.8) | (40.8) |
Credit for share-based payments | – | – | – | 2.0 | 2.0 | |
Proceeds from exercise of share options | – | – | – | 0.2 | 0.2 | |
Equity-settlement of share-based payments | – | 1.1 | – | (1.1) | – | |
Deferred tax | – | – | – | (0.8) | (0.8) | |
At 30 December 2023 | 11.6 | (4.4) | 23.8 | 371.6 | 402.6 | |
Profit for the period | – | – | – | 42.6 | 42.6 | |
Purchase of own shares | 7 | – | (8.6) | – | – | (8.6) |
Dividends | 7 | – | – | – | (43.8) | (43.8) |
Credit for share-based payments | – | – | – | 2.4 | 2.4 | |
Proceeds from exercise of share options | – | – | – | 0.4 | 0.4 | |
Equity-settlement of share-based payments | 7 | – | 6.7 | – | (6.7) | – |
Deferred tax | – | – | – | (0.6) | (0.6) | |
At 28 December 2024 | 11.6 | (6.3) | 23.8 | 365.9 | 395.0 |
208
| Bakkavor Group plc | Annual Report & Accounts 2024
1. General information
Bakkavor Group plc is a public company, limited by shares, incorporated and domiciled in England, United Kingdom
(Company number: 10986940, registered office: Fitzroy Place, 5th Floor, 8 Mortimer Street, London, England, W1T 3JJ).
The Company’s Ordinary shares are traded on the London Stock Exchange.
The principal activities of the Company are those of a holding company. The principal activities of the Company’s
subsidiaries are described within Note 1 of the Consolidated Financial Statements.
2. Significant accounting policies
The Company Financial Statements have been prepared in accordance with the Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS 101”) and the Companies Act 2006 as applicable to companies using FRS 101 and under the
historical cost convention.
The Company Financial Statements are prepared on the going concern basis as set out in Note 2 to the Consolidated
Financial Statements.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
a. The requirement of IFRS 7, ‘Financial instruments’ – Disclosures.
b. The requirements of paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’.
c. The requirement in paragraph 38 of IAS 1, ‘Presentation of Financial Statements’ to present comparative information in
respect of: paragraph 79(a) (iv) of IAS 1, ‘Presentation of Financial Statements’; and paragraph 73(e) of IAS 16, ‘Property,
plant and equipment’; and paragraph 118(e) of IAS 38, ‘Intangible assets’.
d. The requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A-D, 111 and 134–136 of IAS 1, ‘Presentation of
Financial Statements’;
e. The requirement of IAS 7, ‘Statement of cash flows’.
f.
The requirements of paragraphs 30 and 31 of IAS 8, ‘Accounting policies, changes in accounting estimates and errors’.
g. The requirements of paragraphs 17 and 18A of IAS 24, ‘Related party disclosures’.
h. The requirements in IAS 24, ‘Related party disclosures’, to disclose related party transactions entered into between two
or more members of a group.
i.
The requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d)-134(f) and 135(c)-135(e) of IAS 36 ‘Impairment of assets’.
j.
The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’.
The principal accounting policies adopted have been applied consistently and are the same as those set out in Note 2
to the Consolidated Financial Statements except as set out below.
In assessing impairment, judgement is required to establish whether there have been any indicators of impairment, either
internal or external. Where there is a need to determine the recoverable value of an investment, this requires judgements
and assumptions related to the expected future cash flows to be derived from the investment.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Amounts due from other Group companies are initially recognised at fair value and subsequently carried at amortised cost
net of allowance for expected credit losses. An allowance is made when there is objective evidence that the Company will be
unable to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.
The Company’s amounts due from other Group companies at 28 December 2024 amounted to £86.8m (2023: £95.5m).
None of these balances include an allowance for expected credit losses and all amounts are expected to be recoverable in full.
3. Employees’, Directors’ and Auditors’ remuneration
Fees payable of £0.1m (2023: £0.1m) to the Company’s Auditors in respect of the audit of the Company’s Financial
Statements for the periods ended 28 December 2024 and 30 December 2023 have been borne by fellow Group company
Bakkavor Foods Limited.
The Company has 12 Directors (2023: 11 Directors) and no further employees. Payments to the Directors for the periods
ended 28 December 2024 and 30 December 2023 have been borne by fellow Group company Bakkavor Foods Limited.
Details of Directors’ remuneration is disclosed within Note 34 of the Consolidated Financial Statements.
NOTES TO THE COMPANY
FINANCIAL STATEMENTS
52 WEEKS ENDED 28 DECEMBER 2024
Bakkavor Group plc | Annual Report & Accounts 2024 |
209
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
4. Shares in Group undertakings
£m
28 December
2024
30 December
2023
Investment in Group companies
Balance at 30 December 2023
309.5
309.5
Capital contributions
4.2
–
Balance at 28 December 2024
313.7
309.5
Capital contributions relate to equity settled share-based payments expense recognised during the period for key
management employed by subsidiary companies. In prior periods, the share-based payments expense was recharged
through intercompany.
5. Subsidiaries
As at 28 December 2024, Bakkavor Group plc held investments in the share capital of the following companies:
Name
Place of
registration and
operation
Principal activity
% of voting
shares as at
28 December
2024
% of voting
shares as at
30 December
2023
Directly held investments:
Bakkavor Holdings Limited
1,^
UK
Holding company
100%
100%
Indirectly held investments:
Bakkavor Finance (2) Limited
1
UK
Holding company
100%
100%
Bakkavor Limited
1,^
UK
Holding company
100%
100%
Bakkavor USA Inc
2
US
Holding company
100%
100%
Bakkavor USA Limited
1,^
UK
Holding company
100%
100%
Bakkavor Foods USA Inc
2
US
Manufacture of fresh prepared meals
and bakery products
100%
100%
Bakkavor China Limited
1,^
UK
Holding company
100%
100%
Bakkavor Bakery Holdings Limited
3
Hong Kong
Holding company
100%
100%
Bakkavor Hong Kong Limited
3
Hong Kong
Preparation and marketing of fresh prepared foods
100%
100%
Bakkavor China Holdings Limited
3
Hong Kong
Holding company
100%
100%
Wuhan Bakkavor Agricultural Product Processing
Company Limited
4
China
Manufacture of salad products
100%
100%
Jiangsu Bakkavor Food Company Limited
5
China
Manufacture of salad products
100%
100%
Beijing Bakkavor Food Company Limited
6
China
Manufacture of salad products
100%
100%
Guangzhou Bakkavor Food Company Limited
7
China
Manufacture of salad products
100%
100%
Bakkavor (Shanghai) Management Company Limited
8
China
Holding company
100%
100%
Shaanxi Bakkavor Agriculture Processing
Company Limited
9
China
Manufacture of salad products
100%
100%
Fujian Bakkavor Food Company Limited
10
China
Manufacture of salad products
100%
100%
Chengdu Bakkavor Foods Company Limited
11
China
Manufacture of salad products
100%
100%
Bakkavor Foods Limited
1
UK
Manufacture of fresh prepared foods
100%
100%
Bakkavor Estates Limited
1
UK
Property management
100%
100%
Bakkavor Pension Trustees Limited
1
UK
Pension trustee holding company
100%
100%
Bakkavor European Marketing BV
12
Netherlands
Holding company
100%
100%
NV Bakkavor Belgium BV
13
Belgium Non-trading
100%
100%
BV Restaurant Group Limited
1,^
UK
Production and distribution of fresh prepared foods
100%
100%
Bakkavor Iberica S.L.U.
14
Spain Distribution
100%
100%
Moorish Limited
1
UK
Manufacture of fresh prepared foods
100%
–
Dormant companies
Bakkavor Dormant Holdings Limited
1
*
UK
Holding company
100%
100%
Bakkavor Finance (1) Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Finance (3) Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Acquisitions (2008) Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Invest Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor (Acquisitions) Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Asia Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Overseas Holdings Limited
1
*
UK
Dormant non-trading company
100%
100%
NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
210
| Bakkavor Group plc | Annual Report & Accounts 2024
Name
Place of
registration and
operation
Principal activity
% of voting
shares as at
28 December
2024
% of voting
shares as at
30 December
2023
Bakkavor (London) Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Finance Limited
1
*
UK
Dormant non-trading company
100%
100%
BV Foodservice Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Desserts Leicester Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Fresh Cook Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Central Finance Limited
1
*
UK
Dormant non-trading company
100%
100%
English Village Salads Limited
1
*
UK
Dormant non-trading company
100%
100%
Notsallow 256 Limited
1
*
UK
Dormant non-trading company
100%
100%
Kent Salads Limited
1
*
UK
Dormant non-trading company
100%
100%
Laurens Patisseries Limited
1
*
UK
Dormant non-trading company
100%
100%
Hitchen Foods Limited
1
*
UK
Dormant non-trading company
100%
100%
Bakkavor Brothers Limited
1
*
UK
Dormant non-trading company
100%
100%
Cucina Sano Limited
1
*
UK
Dormant non-trading company
100%
100%
Butterdean Products Limited
1
*
UK
Dormant non-trading company
100%
100%
Exotic Farm Prepared Limited
1
*
UK
Dormant non-trading company
100%
100%
Exotic Farm Produce Limited
1
*
UK
Dormant non-trading company
100%
100%
1
The registered address of all these companies is Fitzroy Place, 5th Floor, 8 Mortimer Street, London, England, W1T 3JJ.
2
The registered address of these companies is 2700 Westinghouse Boulevard, Charlotte, NC 28273, USA.
3
The registered address of these companies is Units 1902-1912, 19/F., Eight Commercial Tower, No 8 Sun Yip Street, Chai Wan, Hong Kong.
4
The registered address of this company is No. 127 Jingdong Avenue, Yangluo Street, Changjiang New District, Wuhan, Hubei Province, China.
5
The registered address of this company is No. 200, Group 3, Zhongnan Village Changle Town, Haimen City, Jiangsu Province, China.
6
The registered address of this company is South Xitai Road, Da Sun Gezhuang Town, Shunyi District, Beijing, China.
7
The registered address of this company is No. 55 Banyutang Road, High Tech Development Area, Guangzhou, China.
8
The registered address of this company is Room 01, 3A Floor, Number 16 Lane 1977, Jinshajiang Road, Putuo District, Shanghai, China.
9
The registered address of this company is No. 1289 Jinggan 1st Street, Yongle Town Jinghe new city, Xixian new district, Shaanxi province.
10 The registered address of this company is Jiulong Industry Park of Hua an Economic Development Zone, China.
11 The registered address of this company is No. 520 Tongtai Avenue, Cross-Straits Science & Technology Industry Development Park, Wenjiang District, Chengdu, Sichuan Province, China.
12 The registered address of this company is Prins Bernhardplein 200, 1097 JB Amsterdam, The Netherlands.
13 The registered address of this company is Lammerdries-Zuid 16F, 2250 Olen, Belgium.
14 The registered address of this company is Calle Cartagena 57, 1º D Torre Pacheco, Murcia CP 30700, Spain.
* These companies are UK dormant companies who file dormant accounts which are exempt from audit by virtue of s479A of Companies Act 2006.
^ These companies were entitled to exemption from audit (see below). Company numbers: Bakkavor Holdings Limited 06215286, Bakkavor Limited 02017961, Bakkavor USA Limited
06458503, BV Restaurant Group Limited 09689333, Bakkavor China Limited 05661425.
For the year ending 28 December 2024, the above companies marked with a ‘^’ were entitled to exemption from audit under
section 479A of the Companies Act 2006 relating to subsidiary companies. The Directors acknowledge their responsibilities
for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.
6. Financial instruments
FOREIGN CURRENCY RISK
The Company is not exposed to any significant foreign currency risk as principally all its balances are in Pounds Sterling.
INTEREST RATE RISK MANAGEMENT
The Company has intercompany loan receivables. There are no interest-bearing balances and therefore the Company
is not exposed to any interest rate risk.
CATEGORIES OF FINANCIAL INSTRUMENTS
£m
28 December
2024
30 December
2023
Financial assets and liabilities
Measured at amortised cost:
Loans to Group undertakings
86.8
95.5
Loans from Group undertakings
(5.6)
(2.5)
Bakkavor Group plc | Annual Report & Accounts 2024 |
211
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
7. Called up share capital and reserves
CALLED UP SHARE CAPITAL
£m
28 December
2024
30 December
2023
Issued and fully paid:
579,425,585 (2023: 579,425,585) Ordinary shares of £0.02 each
11.6
11.6
All Ordinary shares of £0.02 (2023: £0.02) each are non-redeemable and carry equal voting rights and rank for dividends
and capital distributions, whether on a winding up or otherwise.
OWN SHARES HELD
During the period ending 31 December 2022, the Company began purchasing shares through an Employee Benefit Trust
called the Bakkavor Group plc Employee Benefit Trust (the “Trust”). Own shares purchased are recorded at cost and
deducted from equity.
The number of Ordinary shares held by the Trust at 28 December 2024 was 4,237,328 (30 December 2023: 4,567,073).
This represents 0.7% of total called up share capital at 28 December 2024 (30 December 2023: 0.8%).
Total cash purchases made through the EBT during the year amounted to £8.6m (2023: £2.4m).
Number of
shares
£m
Balance at 31 December 2023
4,567,073
4.4
Acquisition of shares by the Trust
6,287,335
8.6
Distribution of shares under share scheme plans
(6,617,080)
(6.7)
Balance at 28 December 2024
4,237,328
6.3
No own shares held of Bakkavor Group plc were cancelled during the period.
DIVIDENDS
Reporting period ended
Dividend per share
Declared
Date paid
Number of dividend
rights waived
1
Amount paid
28 December 2024
Interim dividend
3.20p
September 2024
11 October 2024
1,917,903
£18,480,246
30 December 2023
Final dividend
4.37p
May 2024
29 May 2024
1,065,145
£25,274,351
Interim dividend
2.91p
September 2023
13 October 2023
3,264,816
£16,766,278
31 December 2022
Final dividend
4.16p
May 2023
5 June 2023
2,886,522
£23,984,025
1
Dividend rights waived in relation to Ordinary shares held in the Bakkavor Group plc Employee Benefit Trust.
MERGER RESERVE
The merger reserve was created as a result of the acquisition of Bakkavor Holdings Limited and represents the difference
between the carrying values of the net assets of Bakkavor Holdings Limited and the value of the share capital and share
premium arising on the share-for-share exchange that resulted in Bakkavor Group plc acquiring Bakkavor Holdings Limited.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
212
| Bakkavor Group plc | Annual Report & Accounts 2024
8. Related party transactions
During the period, the Company entered into the following transactions with related parties:
£m
28 December
2024
30 December
2023
Loans to Group undertakings
86.8
95.5
Loans from Group undertakings
(5.6)
(2.5)
Loans to Group undertakings relate to corporate loans of £86.8m (2023: £95.5m) due from Bakkavor Finance (2) Limited.
These amounts are unsecured and will be settled in cash. The loans are repayable within 60 days of being given notice
by the lender. No guarantees have been given or received. No provisions have been made for expected credit losses in
respect of the amounts owed by related parties.
Amounts are denominated in Sterling. All related party receivables are held at amortised cost.
Loans to Group undertakings do not carry interest on the outstanding corporate loan balances.
Loans from Group undertakings relate to a corporate loans: £4.1m due from Bakkavor Foods Limited and £1.5m due
from Bakkavor Finance (2) Limited (2023: £1.3m and £1.2m) respectively.
Loans from Group undertakings do not carry interest on the outstanding corporate loan balances.
The Company purchases its own shares through an Employee Benefit Trust. See Note 7.
9. Events after the statement of financial position date
On 24 December 2024, a business transfer agreement was signed for the sale of the trade and assets of Bakkavor
Hong Kong Limited, an indirect subsidiary of the Company. See Note 35 of the Group Consolidated financial statements.
10. Controlling party
The controlling party of the Company and its subsidiaries are described within Note 36 of the Consolidated
Financial Statements.
Bakkavor Group plc | Annual Report & Accounts 2024 |
213
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
GENERAL COUNSEL AND COMPANY SECRETARY
Annabel Tagoe-Bannerman
REGISTERED OFFICE
Fitzroy Place, 5th Floor
8 Mortimer Street
London
England
W1T 3JJ
COMPANY NUMBER
10986940
REGISTRAR
Equiniti Limited
Aspect House
Spencer Road
Lancing
BN99 6DA
BANKERS
Barclays Bank PLC
Multinational Corporates
One Churchill Place
London
E14 5HP
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
One Chamberlain Square
Birmingham
B3 3AX
BROKERS
Citigroup Global Markets Limited
Citigroup Centre
33 Canada Square
London
E14 5LB
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
SOLICITORS
Freshfields LLP
100 Bishopsgate
London
EC2P 2SR
This report is available at: bakkavor.com
ADVISERS AND REGISTERED OFFICE
214
| Bakkavor Group plc | Annual Report & Accounts 2024
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Bakkavor Group plc
Fitzroy Place, 5th Floor,
8 Mortimer Street,
London, England, W1T 3JJ
Bakkavor Group plc. Company No: 10986940
Bakkavor
Bakkavor_Group
facebook.com/Bakkavor
@Bakkavor