Bakkavor Group Annual Report 2011

Bakkavor Group Annual Report 2011

WHAT WE DO AND HOW WE DO IT
MEETING CONSUMER DEMAND EFFICIENTLY
RUNNING THE BUSINESS WITH INTEGRITY INVESTING IN FUTURE GROWTH
AWARDS
7 Grocer Own Label Awards, UK
3 Quality Food Awards, UK
1 American National Restaurant Association
Award for Product Innovation, US
1 Innovafel Product Innovation Award,
Europe
1 European Supply Chain Excellence Award
for Innovation in Technology
4 Supplier recognition awards from
key customers
P.6
P.26
KEY DEVELOPMENTS
1
2
3
4
5
Maintained our market-leading position in our
core UK fresh prepared foods market
Invested in core category businesses to
support future growth and efficiency
Achieved inflation recovery target
Rationalised our UK Produce business
Developed our Rest of World business
P.12
P.36
P.18

Bakkavor Group is a leading manufacturer in
the fresh prepared foods market, specialising in
developing private label products for top global
grocery retailers and well-known international
foodservice operators. We have over 50
manufacturing facilities, employ over 18,000
employees and make over 6,000 products.
NET SALES
£1.64bn: 2010
ADJUSTED EBITDA*
£132.0m: 2010
FREE CASH FLOW
£62.3m: 2010
P.18
P.18
P.21
CONTENTS
FAST READ
Chairman and CEO’s address 2
Snapshot of Bakkavor 4
What we do and how we do it 6
Why we are in the right market 8
Our vision, strategy and risks 10
BUSINESS REVIEW
Market trends 14
Business review 18
Our responsibility 22
OUR GOVERNANCE
Our Board of Directors and Management Board 28
Corporate governance 30
Our risks 32
Directors’ Report 34
FINANCIAL STATEMENTS
Independent Auditor’s Report 38
Consolidated Income Statement 40
Consolidated Statement of Comprehensive Income 41
Consolidated Statement of Financial Position 42
Consolidated Statement of Changes in Equity 43
Consolidated Statement of Cash Flows 44
Notes to the Consolidated Financial Statements 45
Company Income Statement 100
Company Statement of Financial Position 101
Company Statement of Cash Flows 102
Notes to the Company Financial Statements 103
Corporate information 108
1
FAST READ

We have made great progress with our strategic objectives,
delivering growth in sales, inflation recovery in line with
targets, and the exit of certain non-core business. We have
achieved this in a tough year characterised by restricted
consumer budgets and intense cost inflation.
We remain focused on our strong, long-standing
relationships with key customers and we continue to drive
product innovation and quality whilst delivering further
operational efficiencies. We are confident that we have the
team and strategy in place to succeed in this environment.
2
SALES REVIEW
In a very challenging economic
environment, Bakkavor has maintained
market share and its market-leading
positions in its key categories. Once again
in 2011 we experienced the strongest
performance in our core business
segment, UK Prepared, bolstered by
encouraging sales growth in ready meals,
the largest category in which we operate.
The increase in sales over the year has
been predominantly driven by volume
growth, coming in part from our ongoing
participation in promotional activity and
successful product launches, together
with price increases.
INFLATION RECOVERY IN LINE WITH
GUIDANCE
Input inflation for the year was
£31.2 million across the Group, in line
with previous management guidance, and
resulted in a 190 basis point reduction to
Adjusted EBITDA margin. As expected, we
have recovered approximately two-thirds
of these costs through price increases to
our customers without threatening our
sales and market-leading positions in key
product categories. Further recovery was
achieved through product reconfiguration
and supply chain efficiencies.
Left
Ágúst Gudmundsson
Chief Executive Officer
Right
Lýdur Gudmundsson
Non-executive Chairman

PRODUCT INNOVATION
WINNER OF 12
Industry food
quality awards
CAPITAL EXPENDITURE ON TARGET
Throughout 2011 we have focused on a
series of capital projects to consolidate
our market-leading positions and support
our growth objectives. We have invested
in a wide array of targeted projects in the
UK, these included: a new frying facility
in our Katsouris business; a stone-baked
pizza oven at our site in Holbeach; and
a dedicated nut and sesame handling
factory at our Caledonian operation. In
North America, we also invested in our
houmous production lines. We retain a
high degree of flexibility in our capital
programme in order to be able to respond
to consumer demands and manage
the broader cash requirements of the
business.
SUCCESSFUL OVERHEAD COST FOCUS
Despite an increase of 6.0% in overheads
in the first half of the year through the
impact of inflation, good volume growth
and a number of specific initiatives, a
renewed focus in the second half of
2011 limited the overall increase in the
full year to only 3.4%. We continue to
drive efficiencies and expect further
improvements in 2012.
ONGOING REVIEW OF NON-CORE
OPERATIONS
NEW PRODUCT
LAUNCHES
The characteristics of the Produce industry
have changed markedly in recent times.
As a result, we embarked on a careful
review of our Produce operations resulting
in a significant remodelling over 2011.
We closed our Exotic Farm Produce
operation in the first half of 2011, as this
business had been loss-making for some
time, and rationalised our English Village
Salads business following a significant
reduction in volume arising from the loss
of a contract with a major customer in
May 2011. Since then, conditions have not
improved at English Village Salads and we
have commenced a period of consultation
with employee representatives to discuss
the ongoing viability of this business.
In September 2011, we completed the
disposal of Bakkavor Traiteur in France,
a non-core business specialising in the
production of fish-based products.
CONTINUED EXCELLENCE IN NEW
PRODUCT INNOVATION
During 2011, we launched over 1,400
new and improved products across the
Group demonstrating our ongoing support
of our key customers, our dedication
to stimulating consumer interest and
our focus on delivering growth through
incremental sales. Highlights included the
launch of a number of new lines including
nutritionally balanced, healthy-eating and
vegetarian products, a complete Mexican
range, premium salad options, a range of
fresh prepared foods into Canada and new
sandwich and salad lines in the Far East.
As testament to our innovative culture we
were delighted to receive 12 industry food
quality awards, four supplier recognition
awards from our customers, and a
European supply chain award.
FINANCING AND COVENANTS
In February 2011, the Group’s balance
sheet was strengthened through
refinancing our existing debt facilities.
Under these new arrangements, the
Group has placed all financing under
one funding structure, extended the
repayment profile and diversified its
funding base with the issuance of
a seven year £350 million listed bond,
and new bank facilities comprising
a £260 million term loan and a
£120 million revolving credit facility.
These bank facilities are subject to a
series of covenants set by the lenders.
At the date of this report, the Group
has complied in all respects with these
covenants and we also believe we are
adequately placed to manage future
covenant compliance successfully
despite the challenging macroeconomic
environment. In the event that conditions
worsen, the Group has the flexibility to
react by accessing additional working
capital arrangements that we have already
agreed with key retail customers. Further
actions available to management may
also include a reduction to our capital
expenditure programme and further
supply chain improvements.
EMPLOYEES
At Bakkavor, we continue to be
immensely proud of the calibre of our
employees and their passion and loyalty
to the Group and we would like to thank
them for their contribution. Management
remains focused on providing training to
‘grow our own’ people and enable them to
develop to the best of their abilities.
OUTLOOK
Early trading in 2012 suggests that market
conditions continue to be difficult and the
outlook for consumer spending remains
subdued. We expect inflation will continue
to affect our financial performance albeit
at a lower rate. Against this backdrop,
we will continue to prioritise our strong
relationships with our customers and
innovative product development as
well as strategic focus on our core
operations. This will enable us to maintain
our market-leading positions and drive
further sales growth.
Lýdur Gudmundsson
Non-executive Chairman
Ágúst Gudmundsson
Chief Executive Officer
P.10
For more detail
on our strategy
3
FAST READ

UNITED KINGDOM
We are market leader in 12 of
UK PREPARED our 16 product categories.
UK PRODUCE
KEY DEVELOPMENTS
• Maintained market share
• Received 10 industry awards and two customer awards
for product quality/innovation
• Invested in core category businesses
79% OF GROUP
KEY CUSTOMERS
Tesco, M&S, J Sainsbury, Waitrose, Asda, Morrisons, The Co-operative
Strategic business
remodelling.
• In line with our strategy we have remodelled our produce business
• Closed Exotic Farm Produce
• Rationalised English Village Salads
5%
31 FACILITIES
2 SALES FACILITIES
OF GROUP
SALES
FINANCIAL PERFORMANCE
PRODUCT CATEGORIES United Kingdom Continental Europe Rest of World
Ready
meals
•••
Ready to to
cook
cook meals
meals
•••
Dips
•••
4 Bakkavor Group Annual Report 2011
Pasta
•
Soups
•••
employer in the fresh prepared foods
market, specialising in developing private
label products for top global grocery
retailers and well-known international
foodservice operators. Our core
market is the UK – the largest fresh
prepared foods market in the world.
OUR GROUP We are a leading manufacturer and
18 PRODUCT
CATEGORIES
Prepared
vegetables
•••
Bakery
products
Pasta Soups Prepared
Sauces
•••
57 FACILITIES
UK PREPARED
UK PRODUCE
Like-for-like sales (£m) Adjusted EBITDA (£m) Like-for-like sales (£m)
Adjusted EBITDA (£m)
1,274
1,232
+4%
115
117
(14%)
09 * 09 * 09 * 09 *
1,323 101 85
10 11 10 11 10 11 10 11
*2009: 53 weeks
*2009: 53 weeks
*2009: 53 weeks
*2009: 53 weeks
• • •
156
108
(19%)
Sauces
•••
6.1
0.3
Sandwiches &
wraps
& wraps
••
(133%)
0
Fresh
produce
Fresh produce
•

GROUP
Like-for-like sales (£m) Adjusted EBITDA (£m) Number of employees
1,650
1,643
09 * 10 11 1,678
*2009: 53 weeks
CONTINENTAL EUROPE REST OF WORLD
Opportunities to grow by trading in new regions
and with new brands.
KEY DEVELOPMENTS
• Italian pizza business gained significant wins in new territories for 2012
• Awarded contract for Green Giant brand development in France and Spain
• Sold Bakkavor Traiteur – non-core French business
12%
+2%
137
132
09* 10 11
*2009: 53 weeks
(18%)
108 18,000
• Expanded US product range and customer base
• Entered Canadian grocery retail market
• Restructured and upgraded Chinese business
4%
8 FACILITIES
OF GROUP
16 SALES FACILITIES
OF GROUP
SALES
United Kingdom
14,850 80%
Continental Europe
1,530 8%
Rest of World
2,180 12%
Developing our foothold in the US, Canada and the Far East.
CONTINENTAL EUROPE REST OF WORLD
Like-for-like Sales (£m)
Adjusted EBITDA (£m) Like-for-like sales (£m)
Adjusted EBITDA (£m)
211
203
+1%
KEY CUSTOMERS
Ready
Ready to
Dips
Pasta
McDonalds, meals Albert Heijn, Intermarché, cook Leclerc, Auchan, Carrefour, Comigel
meals
Soups Prepared
Bakery
Sauces Sandwiches &
Yum! Brands, vegetables Costco, Woolworths products SA, Fresh & Easy, Trader Joes, wraps Loblaws Fresh produce
Prepared
Prepared
fruit fruit
•••
Ethnic
snacks
Ethnic
snacks
•
11
11
Leafy salads
Leafy
salads
•••
(52%)
Pizza
Pizza
•••
58
52
09 * 09 * 09 * 09 *
208
5 62
10 11 10 11 10 11 10 11
*2009: 53 weeks
*2009: 53 weeks
*2009: 53 weeks
*2009: 53 weeks
Desserts &
Desserts &
pastries pastries
•••
+10%
Stir fries
Stir fries
•
Smoothies
Smoothies
•
5
3
Convenience
Convenience
salads salads
•••
(52%)
2
Dressings
Dressings
•••
5
FAST READ

2
3
CASE STUDY
Our innovation
In 2011 we launched a successful new
range of soups under our ‘New York Soup
Company’ brand. These were developed by
our chefs, whose inspiration came from the
flavours they experienced in the delis and
soup bars of New York. Here we illustrate
the process in taking these soups from
idea to launch.
PROJECT APPROVAL
Putting together a business
plan and product brief. Is it a
commercial proposition? Can it
be made? And where?
DEVELOPING AND TESTING
Developing the product, selecting
ingredients and packaging, evaluating
food safety and quality.
• does it taste delicious?
• can it be made safely?
• to the required standard?
• to the required quantity?
• at the right cost?
6 Bakkavor Group Annual Report 2011
1
DISCOVERY
Gathering ideas from
sources all around the world:
restaurant menus, top chefs,
consumers, and market
research; not forgetting
flashes of inspiration.
4
PRESENT TO CUSTOMER
Present the concept to the
customer, agree on critical path,
launch plans, product tweaking,
re-presenting, approval.
Chicken Jambalaya Soup
TESTED ON
PRODUCTION LINE
PRODUCT
TWEAKS

INSTRUCTIONS
AND TESTS
OUR
APPROACH
We have a strong track
record of adapting quickly to
market conditions and developing
successful products in short lead
times. During 2011 we launched over
1,400 new products for our customers
to delight their consumers and
BACK TO
DISCOVERY
6
PRODUCT LAUNCH
Meanwhile. behind the scenes,
our commercial and marketing
teams have been working
with the customer on in-store
merchandising and category
plans ready for launch.
grow our business across
the Group.
5
FINAL APPROVAL
Factory products benchmarked,
tasted against kitchen samples,
tested on production line.
Cooking instructions, nutritional
info and shelf life checked and
packaging finalised.
PACKAGING
FINALISED
SUCCESS
7
DISTRIBUTION
All of our fresh products are shipped via
refrigerated trucks. We operate a justin-time
distribution model, delivering
over 35,000 pallets of our products each
week from all of our UK sites, up to four
times a day, to our customer depots.
P.18
8
PRODUCT PERFORMANCE
Is it selling? Who’s buying it?
Does it need improving? What
can we learn from the project?
For more detail
on our business
performance
AVAILABLE ON
SUPERMARKET
SHELVES
PURCHASED
AND EATEN BY
CUSTOMERS
7
FAST READ

LONG-TERM CONSUMER TRENDS
CHANGING DEMOGRAPHICS = CHANGING MEAL OCCASIONS
• Starting families later in life
• Ageing population
• Increase in single-person households
• Less traditional household structures
LIFE IS SPEEDING UP = QUICKER MEAL SOLUTIONS
• Faster pace of life
• 24/7 lifestyles
• Expect services and products
to be accessible ‘round the clock’
• Online connectivity
ANXIETY = AFFORDABLE REWARDS
• Feeling time-pressured
• Increasing concerns about the cost of living
and the global economy
• De-stressing with affordable treats (often food)
HEALTH CONCERNS = A FOCUS ON BODY AND MIND
• Global obesity
• Striving for a work/life balance
SUSTAINABILITY AND TRUST = FOOD PROVENANCE AND ASSURANCE
• Consumer ‘detectives’
• Online empowerment
• Concerns about environment and corporate responsibility
GROWTH IN EMERGING MARKETS = SHIFTING DIETS
• Fast-growing middle class
• Higher disposable incomes
• Shift towards Western diet
• Rapid urbanisation
Sources
IGD: Shopper Vista, UK Convenience forecasts to 2016, Feb 2012
Deloitte: Consumer 2020
Nielsen: Private Brands U.S Outlook 2011
Internetworldstats.com
8 Bakkavor Group Annual Report 2011
The fresh prepared foods market is
one of the most advanced, dynamic
and resilient food sectors in the world.
We have been operating in this market
for over 40 years and are excellently
positioned to benefit from the positive
long-term trends in our market place.
NEW CONSUMERS ARE
EXPECTED TO ENTER THE GLOBAL
MIDDLE CLASS EACH YEAR
REACHING 800m BY 2020
AGREE THAT PRIVATE
LABEL PRODUCTS ARE A
GOOD ALTERNATIVE TO
BRANDED EQUIVALENTS
AVERAGE NUMBER OF SHOPPING CHANNELS USED BY UK SHOPPERS
OVERWEIGHT ADULTS
IN THE WORLD
OF THESE ARE OBESE

CONVENIENCE STORE SALES
IN THE NEXT 5 YEARS
INTERNET USERS GLOBAL POPULATION
SINGLE PERSON
HOUSEHOLDS IN
CONSUMERS WANT TO KNOW
MORE ABOUT WHERE AND HOW
GROCERIES ARE PRODUCED
IN THE UK
World population up 21% by 2050
LONG-TERM RETAILER TRENDS
GLOBAL EXPANSION AND CONSOLIDATION
• Top global retailers continue to gain share
through consolidation and expansion
• Expanding into new geographic regions which offer
the most growth potential
STRATEGIC FOCUS ON PRIVATE LABEL BRANDS
• To build consumer loyalty
• To strengthen corporate brand
• To improve retailer margin
• This necessitates partnership approach
MULTI-CHANNEL INVESTMENT
P.14
• Focusing on delivering convenience and choice
through multi-channel retailing e.g.
• Convenience stores
• Online shopping
CORPORATE RESPONSIBILITY HIGH ON AGENDA
• Information required to uphold corporate
reputation and appease consumer demand
• Necessitates strong working relationships
with trusted suppliers
WHAT DOES THIS MEAN FOR BAKKAVOR?
These long-term consumer and retail
trends are promising for Bakkavor. Smaller
households, higher disposable incomes, rapid
urbanisation and faster-paced lives create a
demand for food that is quick and easy to buy
and prepare, such as fresh prepared foods.
On the retail side, our expertise in private
label, diversified product range, a partnership
approach and strategic geographical
investments mean that we are well placed to
benefit from future developments.
For more detail
on market trends
9
FAST READ

OUR STRATEGY IS TO DRIVE
PROFITABLE GROWTH
THROUGH:
1
2
3
4
HAVING NO. 1 POSITIONS IN HIGH
POTENTIAL, FAST-GROWING FRESH
PREPARED FOODS MARKETS
PRODUCTIVE, STRONG LONG-
TERM RELATIONSHIPS WITH
THE LEADING RETAILERS, IN
WHICH INNOVATIVE PRODUCT
DEVELOPMENT CAN FLOURISH
CONTINUED FOCUS ON GREATER
EFFICIENCY AND COST REDUCTION
FOCUS ON CASH FLOW AND DEBT
REDUCTION WHILST MAINTAINING
CAPITAL INVESTMENT
10 Bakkavor Group Annual Report 2011
OUR VISION
Our vision is to be
recognised and respected
as the world’s leading
fresh prepared foods
provider.
WHY WE ARE IN A STRONG POSITION TO
DELIVER OUR STRATEGY
1 Leading market positions in attractive markets
We are leaders in fresh prepared food market sectors,
which are set to grow more quickly than other areas
of the food industry.
2 Diversified and innovative product portfolio
We have over 6,000 products, across 18 different product
categories, with a range of diversified price points to suit
most budgets.
3 Well positioned for future growth in key markets
We have 13 operations in the key future growth regions
of North America and China.
4 Strong long-term relationships with key retailers
We trade with eight of the top 10 leading global retailers
and develop products hand-in-hand with them to help them
differentiate their brands.
5 In-depth understanding of our markets and consumers
We invest in detailed consumer research and information
about future market trends in order to develop and launch
products which fit consumer lifestyles.
6 Award-winning innovation and product development
Innovation is one of our core values and we appreciate third
party recognition of our achievements – in 2011 we won 17
awards for the quality of our products, innovative category
management and innovative processes.
7 High-quality, experienced management board
Our Management Board is comprised of industry experts
with over 150 years' experience in the food sector.
8 Well-invested, modern and efficient facilities
We have invested £180 million in our operating sites over
the last five years and are committed to further capital
expenditure to improve efficiency and allow expansion.

Our decentralised model empowers our management
to identify, evaluate and manage the risks they face
proactively. The management of principal risks is assigned
to key members of the Management Board. It is their
responsibility to report to the Board on a monthly basis
regarding the actions associated with each of those risks.
See Business Review
page [x] and Financial
Review page [x]
THE KEY RISKS WE NEED TO MANAGE IN ORDER TO ACHIEVE OUR STRATEGY
P.18
MARKET RISKS
CEO BAKKAVÖR UK AND EUROPE
P.6
P.14
See Business
review
COMMODITY
PRICE
INFLATION
CONSUMER
UNDERSTANDING
See What we do and
how we do it
See Market trends
OPERATIONAL RISKS
LOSS OF KEY
EMPLOYEES
CUSTOMER
RELATIONSHIPS
FOOD
SAFETY
INTEREST
RATES,
LIQUIDITY
AND CREDIT
GROUP TECHNICAL DIRECTOR
HEALTH
AND SAFETY
COVENANT
COMPLIANCE
CHIEF FINANCIAL OFFICER
FINANCIAL RISKS
P.32
P.22
P.18
For more detail
on our risks
See Our
responsibility
See Business
review
See Corporate
Responsibility
Report page [x]
11
FAST READ

In our 2011 Business Review we share
with you some of our market insights
into the key trends which are driving
consumer demand for fresh prepared
foods, our business performance
during the year and our corporate
social responsibility priorities.
Our UK Prepared
business segment
grew by
of consumers
expect to eat more
‘five a day’ in the
next months
of our waste in the
UK was diverted
from landfill
people were
recruited onto
our Accelerated
Management
Scheme
12 Bakkavor Group Annual Report 2011

Fatima is a team co-ordinator
at our Bakkavor Meals site in
Sutton Bridge, Lincolnshire,
which specialises in
manufacturing Indian ready
meals. The large industrial
ovens used to cook and cool the
meals are capable of handling
8,000 packs at any one time –
in 2011 we produced over 28
million packs.
13
BUSINESS REVIEW

CASE STUDY
Waitrose Essential soups
We launched ‘Essential Waitrose’ soups
in October 2011. The entire ‘Essential’
range has grown to be a £1 billion ‘brand’
for Waitrose.
14 Bakkavor Group Annual Report 2011
Today’s food trends
are influenced by people’s
attitudes and behaviour which are
ultimately shaped by a strong set of
global macroeconomic factors.
In this section we look at the way in
which some of these factors influence
our consumers and our retail
customers and how we have acted
upon them.
1
SMART SHOPPING
With ongoing economic uncertainty,
household budgets squeezed by higher
food and energy prices as well as wage
freezes, consumers are becoming
‘smarter shoppers’, spending more
cautiously and increasingly looking for
value for money.
The convenience and affordability of fresh
prepared foods means that consumers
already perceive our products as good
value (it is often cheaper to buy a prepared
meal than to cook one from scratch, for
example). In this highly competitive retail
climate, our customers will maintain a
keen focus on promotional activity and
the development of competitively-priced
private label ranges in order to stimulate
consumer spend.
Our action
We have made it our priority to ensure
demand for our products is maintained in
today’s tough climate. We work closely
with our retail customers to support
their value-for-money credentials, where
commercially viable, and we also use the
benefits of our scale to make our products
as cost-effectively as possible. We have a
strong track record of adapting quickly to
market conditions, developing successful
products in short lead times and supplying
large promotional volumes on demand.
CONVENIENCE
The convenience store sector is now worth
£33.6 billion in the UK and forecast to reach
£42.2 billion in 2016 (Source: IGD Jan 2012)
2
CONVENIENCE IS KING
Faced with the fast pace of modern
life, consumers are looking for products
and services that reduce complexity,
save time and are available when and
where they need them. Food purchasing,
preparation and cooking are no exception
to this rule.
Our retail customers have invested heavily
in delivering convenience to consumers
through different store formats, online
food shopping, home delivery services
and offering a wide variety of meal
solutions.
Our action
We make over 6,000 fresh semi-prepared
and fully-prepared foods which allow
consumers to be involved in preparing
and cooking food as little or as much as
they want. Many of our products feature
in ‘top-up shop’ baskets and people
are buying fresh prepared foods online
with increasing confidence. Our role is
to ensure that we continue to innovate
and launch products which cater for
consumer choice and that our products
are accessible to all consumers no matter
where and when they shop.
CASE STUDY
Our Tesco Finest Italian Chicken, Bacon
& Fontal Calzone was just one of our
products to win a ‘Gold’ at the 2011 Grocer
Own-Label Awards.

HEALTH
46% of consumers expect
to eat more ‘5 a day’ in the
next months.
Source: IGD ShopperVista Dec 2011
3
HEALTHY BODY HEALTHY MIND
Striving for a healthy lifestyle has been
top of the consumer agenda for some
time through efforts to reduce obesity
and its associated illnesses. Government
campaigns have increased awareness of
the importance of a balanced diet, the
benefits of increased fruit and vegetable
consumption (‘5 a day’) and modest
portion sizes. With increasingly busy
lifestyles and anxiety about the future,
consumers are looking at ways to reduce
stress by taking control of their personal
well-being as a whole – the mind, body
and spirit.
Our action
As the majority of products we make are
for retailer private label ranges we are
focused on supporting our customers
to deliver their health and well-being
targets. This includes for example, using
store cupboard ingredients, significantly
reducing salt and saturated fat, providing
clear nutritional information on pack and
of course, developing tasty recipes that
offer the right balance of ingredients for a
healthy diet. In 2011 we were pleased to
win a Quality Award for one of our healthy
products – our Marks and Spencer omega
3 boost salad bar.
The global macroeconomic factors
below are not short-term factors; they
will evolve and continue to influence
people’s lives over the longer term:
• Economic uncertainty
• The cost of living
• Technological advances
• Demographic shifts
• Urbanisation
• Health issues
• Concern for the
environment
CASE STUDY
P.10
For more detail
on our vision
and strategy
Ranges with healthy benefits
Our customers have invested considerably in the development,
branding and communication of ranges with healthy benefits.
Recipes have been specifically developed to encourage fruit and
vegetable consumption as well as naturally balanced diets with
ranges in the UK such as Marks & Spencer’s “Simply Fuller Longer”
and Waitrose’s “Love Life”.
15
BUSINESS REVIEW

CASE STUDY
Ready for a night in
Our new Mexican range includes products
such as chipotle chicken fajitas, paprikaroasted
potatoes with chorizo, and mini
corn bread.
16 Bakkavor Group Annual Report 2011
At Bakkavor, we pride ourselves on knowing
our markets, customers and consumers in
depth and using this knowledge to develop
and launch successful products – giving us
market-leading positions and a recognised
reputation for innovation.
4
ENJOYMENT AND INDULGENCE
With tighter household budgets to
manage, in-home entertainment has
become increasingly popular. For such
occasions, ready-made food favourites
and foods designed specifically to share
give consumers the opportunity to treat
themselves, families and friends within
an affordable budget and with little
preparation.
Whether people are looking to share
an Indian, Italian or Oriental meal or a
ready-made pizza, fresh prepared foods
offer an extensive choice for a night in.
Our retail customers have taken this trend
on board by promoting in-home dining
through ‘meal deals’ offering for example,
a choice of starters, main courses, side
dishes, and desserts at a set price. Our
customers are also keen to provide
consumers with products that match the
latest cuisines and restaurant trends as
part of this in-home dining experience.
Our action
We participate regularly in ‘meal deal’
promotions and, given our extensive
range of fresh prepared foods, often with
several products at one time.
As a perfect treat to share whilst eating
in we developed and launched a new
Mexican range for one of our retail
customers in 2011. These are being
produced across our different sites and
include meals, sharing kits, side dishes,
breads and dips.
5
NOSTALGIA WITH A TWIST
When times get tough consumers often
look back to the past for comfort and
reassurance. This has translated into
a renewed interest in classic dishes,
ingredients and techniques. With
consumers more willing to experiment
with foods, the ‘classics’ are being reinvented
with modern twists.
In response to this trend our customers
have focused on providing a strong range
of classic dishes. Classic British chilled
ready meals are now the third largest
range in the UK, worth over £300 million a
year, and with sales growing by 9% these
‘classics’ are outpacing the total ready
meals market.
Our action
As part of our extensive range of fresh
prepared foods we make a number of
classic recipes in categories such as
ready meals, side dishes and desserts.
These include ‘bubble and squeak’ mash,
Lancashire hotpot and luxury trifle to
name just a few.

SUSTAINABILITY
Over 75% of our packaging can be recycled
or is made from recyclable materials
6
SUSTAINABILITY
Consumers are striving to incorporate
‘sustainability’ into their lifestyles with
actions such as recycling and choosing
brands with sustainable credentials fast
becoming part of normal routines.
Our retail customers are successfully
integrating social and environmental
issues into their private label strategies,
communicating them publicly and
encouraging people to ‘shop with their
feet’. Whilst interest in sustainable
products is growing, retailers are mindful
that the success of such products still
depends on their simplicity, convenience
and affordability.
Our action
At Bakkavor we understand the
sustainability issues in the food chain and
are committed to focusing on these. We
are actively minimising waste and energy
usage, ensuring our food packaging
is recyclable or made from recyclable
materials and evaluating our logistics
arrangements from an environmental
perspective.
CONSUMER RECOMMENDATION
of online consumers worldwide trust
recommendations from people they know,
while 70% trust consumer opinions posted
online. (Source: Nielsen Global Online
Consumer Survey Q3 2011)
7
TRANSPARENCY AND PROVENANCE
With over two billion consumers
connected online and four billion mobile
phone users, people have access to vast
amounts of information and the popularity
of social media means that news
travels fast. This has boosted consumer
empowerment as there are now many
ways to research, compare and review
key interests such as information on
businesses and their practices often
with the added benefit of online
anonymity. As a result consumers are
increasingly confident in sharing the
information they have found as well
as their personal views.
This trend has resulted in our retail
customers placing more emphasis on
being open about how they work at a
consumer and corporate level to protect
their reputation and build consumer
loyalty and trust. In turn this means there
is greater pressure on their suppliers
for proof of corporate responsibility and
provenance - particularly for private label
products bearing the retailers’ names.
Our action
For Bakkavor, this means we must
demonstrate actively that we are ‘doing
things right’ – operating to high standards
of food safety, working closely with
our customers and suppliers to ensure
we have robust product traceability
systems in place, sourcing raw materials
responsibly and providing consumers
with detailed and accurate information
on pack. We aim to ensure our customers
and consumers have confidence in the
products we make.
P.23
CASE STUDY
For more detailed
information please
refer to Our Corporate
Responsibility Report
Affordable treats
Cheesecakes are a popular dessert choice
and now come in a number of different
flavours. Our passionfruit, mango and
raspberry cheesecake made for Tesco’s
Finest range was the winner of the ‘Other
Seasonal Occasions’ category at the 2011
Quality Food Awards in the UK.
17
BUSINESS REVIEW

TRADING OVERVIEW
Our positioning within the fastestgrowing
segment of the retail food
market, coupled with further new
business wins and our support of
retailers’ pricing initiatives and promotion
campaigns, meant that we saw continued
good volume growth in 2011 despite
subdued consumer spending. However,
participation in such competitive
initiatives has impacted our price margins
and increased our promotional costs,
putting downward pressure on our profit
performance.
Input inflation also had a significant impact
on our profit for 2011 as we experienced
substantial rises in raw material costs
across all of our key commodities.
Double-digit increases were seen in
ingredients such as meats, flour and sugar
and we were also impacted by a rise in
the cost of many vegetables due to poor
weather conditions. In addition, dairy
costs remained high throughout the year
which, combined with wheat and sugar
price rises, led to increased purchasing
costs particularly in our pizza, bread and
desserts businesses.
We were successful in recovering
two-thirds of our 2011 inflationary costs
through price negotiation with customers
and took the opportunity to hedge against
future positions where possible which
helped contain the cost of inflation. We
are starting to see more stability in raw
material costs but remain wary and do
not foresee a significant easing in this
inflationary environment in the immediate
future. We remain committed to driving
operational efficiencies and performance
across all our businesses in order to offset
these impacts on our profit margin.
18 Bakkavor Group Annual Report 2011
GROUP SALES
We continued to achieve good underlying
sales growth for the year despite tough
trading conditions, with sales for the
Group increasing by 2.1%, underpinned
by sound growth in our UK Prepared
business segment. Group sales
were £1,677.7 for 2011, compared with
£1,643.2 million the previous year, an
increase of £34.5 million. In line with
expectations, sales in our UK Produce
segment declined due to the closure of
our Exotic Farm Produce business and
reduced volume through our English
Village Salads business. The Group
manages its business through four
segments. The sales performance of each
business segment is on page 19.
GROSS PROFIT
In 2011, the Group reviewed the
accounting for direct and indirect
costs and as a result has changed its
measure of gross profit. The effect of
this review was to reclassify certain
indirect overheads from cost of sales
to administrative expenses. In the
Directors’ view, this provides a more
accurate representation of the Group’s
performance and also provides the
external markets with a more comparable
measure to our competitor peer group. As
a consequence of this reclassification, the
Group has restated the 2010 gross profit
margin from 14.4% to 27.3%.
The gross profit margin for 2011 was
26.1%, a decline of 1.2% from the
restated 2010 gross profit margin. Further
details are provided in the next section.
ADJUSTED EBITDA 2
The Adjusted EBITDA for the Group was
£107.7 million in 2011, compared with
£132.0 million in 2010, a decrease of
£24.3 million or 18.4%. Adjusted EBITDA
margin fell by 160 basis points from
8.0% in 2010 to 6.4% in 2011.
We experienced another year of sound
underlying sales growth in our key markets in
2011, with performance underpinned by good
sales uplifts in our core UK Prepared business.
The inflation effect on our raw materials
of £31.5 million, would alone have
created a 190 basis points reduction to
full year margin. Adjusted EBITDA was
also impacted by the wider economic
environment which restricted
consumer budgets and increased
promotional activity.
Reconciliation to Adjusted EBITDA 2
FY 2011 FY 2010
£m £m
Operating (loss)/profit (18.3) 79.4
Add:
Depreciation 43.9 44.3
Amortisation 9.4 9.4
Impairment of assets 76.9 -
Exceptional items (7.2) (12.7)
Loss on disposal of property,
plant and equipment 0.3 0.3
Loss on disposal of subsidiary
and associate 2.6 -
Bakkavor Group ehf.
management/royalty charge 1.2 12.3
Share of results of associates (1.1) (1.0)
Adjusted EBITDA 107.7 132.0
Throughout the year, management
implemented actions to reduce the effect
of these pressures through a combination
of increasing prices, reconfiguring our
products, hedging against further raw
material price increases where possible
and reducing the Group’s overhead
base. The effect of these actions was
particularly apparent in the final quarter of
2011, when compared to the same period
in 2010, margins reduced by only
30 basis points against the full year
margin reduction of 160 basis points.
The effects outlined were apparent across
all the segments of the Group. In addition,
the results for the UK Produce and Rest
of World segments were further reduced
by the closure of Exotic Farm Produce and
additional start-up costs for our Canadian
operations respectively.

NET SALES ADJUSTED EBITDA 2 TURNOVER BY BUSINESS SEGMENT
£1.64bn: 2010 £132.0m: 2010
SALES BY BUSINESS SEGMENT
UNITED KINGDOM
UK Prepared
Our core sales derive from the UK
Prepared business which primarily
supplies private label products to all the
major grocery retailers in the UK. UK
sales in this segment amounted to
£1,323 million in the full year. A like-forlike¹
increase of 3.9% on 2010 with strong
performances achieved in ready meals,
ready to cook meals, soups, wraps and
the prepared fruit categories.
As part of our constant drive for innovation
to stimulate consumer interest and sales,
we developed and launched over 700 new
CONTINENTAL EUROPE
We have operations in France, Spain, Italy,
Belgium and the Czech Republic, which
manufacture a variety of fresh prepared
foods for grocery retailers and foodservice
operators in mainland Europe and, in the
case of our Italian pizza business, across
the world. Sales in the full year amounted
to £208.0 million, up by £5.1 million
compared with 2010, with like-for-like 1
sales increasing by 1%. We saw good
sales growth across our prepared foods
businesses in Belgium, Italy and France;
however reduced sales prices, increased
competition and tighter margins within our
French leafy salads business continued
to dampen sales growth in the region.
In September 2011 we sold Bakkavor
Traiteur, a non-core fish spreads business
based in France.
products into the UK market over the year.
In addition, in recognition of the quality of
our products, we won 10 UK industry food
awards and received two supplier awards
for our market-leading work in the ready
meals and leafy salads categories.
REST OF WORLD
The Rest of World segment represents
sales to retail and foodservice customers
in North America and the Far East.
Combined like-for-like 1 sales growth
increased by 10% in the full year with
combined sales rising from £57.8 million
in 2010 to £62.3 million. Sales growth
in the Group’s US business remained
strong in 2011, benefiting from sales to
new and existing customers and new
product launches. We also entered
the Canadian retail market in the year,
producing a range of fresh prepared foods
for Canada’s leading retailer from a new
1 Like-for-like sales
Defined as statutory sales plus share of revenue
generated by associates less those sales from
business closed in the prior year, and is on a
'constant currency' basis.
79% UK Prepared
5% UK Produce
4% Rest of World
12% Continental
Europe
UK Produce
This business segment sells fresh produce
to retail customers in the UK. Our likefor-like
1 UK Produce sales declined by
19% in 2011 in line with our expectations.
Sales dropped from £108.5 million in
2010 to £84.9 million in 2011, reflecting
the closure of Exotic Farm Produce in
May 2011 and reduced sales volumes
at our English Village Salads site due to
a contract loss with a major customer
in May 2011. As conditions have not
improved at English Village Salads we
have commenced a period of consultation
with employee representatives to discuss
the ongoing viability of the business.
site based in Ontario. Whilst our operation
in Canada remains in the start-up phase,
expanding our fresh prepared food range
into further stores is already ongoing as
we move into 2012. In Asia, after a weak
start to the year sales showed signs of
improvement in the second half with
increased volumes and a slight easing in
raw material costs. In December 2011,
we announced the acquisition of the
remaining shares in Gastro Primo, a food
and beverage supplier in Hong Kong in
which we have held a minority share
since 2008.
2 Adjusted EBITDA
Excludes restructuring costs, asset impairments
and those additional charges or credits that are a
one-off in nature and significance.
19
BUSINESS REVIEW

EXCEPTIONAL ITEMS
Exceptional items are those that, in
management’s judgement, should be
disclosed by virtue of their nature or
amount. Exceptional items comprised:
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Defined benefit pension
scheme credit 12.0 15.8
Restructuring costs (7.9) (3.7)
Fire insurance claim – 0.6
Legal settlement 3.1 –
7.2 12.7
The exceptional non-cash credit of £12.0
million in 2011 (2010: £15.8 million),
relates to the defined benefit pension
scheme. This has arisen due to changes to
the scheme regarding future discretionary
increases in 2010 and the closure of the
Group’s scheme to future accrual in
March 2011.
During the year, the Group incurred
certain one-off costs as part of a
restructuring programme to improve longterm
operating performance. The costs
incurred to implement this restructuring
amounted to £7.9 million, of which
the majority (£6.8 million) comprised
redundancy costs.
Finally, the Group received £3.1 million
following the conclusion of a legal
settlement in respect of a trading dispute.
20 Bakkavor Group Annual Report 2011
IMPAIRMENT
Each year the Group is required to assess
the appropriateness of its goodwill
carrying value by comparing asset values
with the future cash flows expected
to be generated from those assets.
An impairment charge of £71.2 million,
representing an impairment of less
than 10% of our goodwill carrying
value, has been recognised due to the
combination of adverse trading conditions
and management's decision to exit
certain low-margin businesses. A further
impairment charge of £5.7 million has
also been recognised in respect of certain
tangible and intangible fixed assets. The
Directors are confident that the carrying
value of the remaining goodwill and other
assets are appropriately stated.
OPERATING LOSS
The company incurred an operating
loss of £18.3 million (2010: profit of
£79.4million). This loss has been driven by
our lower adjusted EBITDA and the oneoff
impairment charge to fixed assets of
£76.9 million. Further losses were incurred
from the restructure of certain overseas
operations as outlined in the Corporate
Activity section on page 21.
NET DEBT AND INTEREST
The Group’s net debt increased
marginally in the year to £591.4 million
(2010: £585.4 million). This increase was
mostly driven by costs of £19.1 million
associated with the Group’s refinancing,
which has achieved a simplified funding
structure with extended maturity dates.
For further details please refer to the
Refinancing section.
Net finance costs have reduced from
£67.8 million in 2010 to £65.2 million in
2011. The comparative charge is impacted
by an accelerated amortisation of
capitalised refinancing costs of
£11.8 million. Adjusting for this item,
net finance costs have risen during the
year as a consequence of increased
interest rates under the new
financing arrangements.
TAX
Our loss before tax of £77.4 million
was predominantly driven by a one-off
impairment charge to fixed assets of
£76.9 million. Such an impairment is a
non-deductible expense for tax purposes
and so the Group’s tax credit for the year
is £2.4 million (2010: £14.2 million charge).
REFINANCING
At the end of 2010, the Group had bank
debt of £605.6 million which was due to
mature in 2012. During early 2011, the
Group completed a refinancing exercise to
diversify its funding sources and extend
its repayment profile. The Company issued
on 7 February 2011 £350 million of 8.25%
Senior Secured Notes due in 2018.
Both the Notes and the bank debt are
secured by fixed and floating charges over
the assets of Bakkavor Finance (2) plc and
its significant subsidiaries.
The Company has also significantly
extended the maturity of its bank debt
by securing a £260 million term loan and
a £120 million Revolving Credit Facility
(RCF) in February 2011; both facilities
mature in June 2014. As at 31 December
2011, the term loan was fully drawn whilst
only £13.7 million of the RCF was drawn.
The bank facilities are subject to a series
of covenants set by the lenders. Financial
covenants are measured quarterly and
include an assessment of leverage (the
ratio of net debt to EBITDA); cash flow
cover (the ratio of finance charges to cash
generated from operations); interest cover
(the ratio of finance charges to EBITDA)
and capital expenditure limits.
At the date of this report, the Group has
complied in all respects with the terms
of its borrowing agreements, including
these financial covenants. In completing
an assessment of our going concern, we
naturally consider our future compliance
with covenants. Please refer to the
Going Concern section on page 34 of our
Directors' Report for further details.

NET CAPITAL EXPENDITURE
£20.8m: 2010
PENSIONS
At 31 December 2011, the IAS 19
net retirement benefit surplus was
£9.3 million (2010: £11.8 million
surplus). The market value of scheme
assets decreased by £9.1 million due
to a reduction in the scheme’s asset
performance. Despite this, the present
value of the scheme liabilities has fallen
by £6.6 million, predominantly due to the
closure of the scheme to future accrual.
The effect of this change to scheme
liabilities has been recognised as an
exceptional item in the income statement.
CASH FLOW
FY 2011 FY 2010
Free cash flow 3 £m £m
Adjusted EBITDA 107.7 132.0
Working capital 4.9 11.8
Pensions (cash and non-cash) (4.4) (0.3)
Interest paid (44.3) (57.8)
Tax paid (3.4) (2.6)
Capital expenditure (net) (39.9) (20.8)
Free cash flow 20.6 62.3
Refinancing costs (19.1) (1.6)
Acquisitions and disposals (2.2) (16.7)
Exceptional items (4.5) (3.6)
Net movement in cash before
financing activities (5.2) 40.4
3 Free Cash Flow
The amount of cash generated by the business,
after meeting all its obligations for interest and
tax, and after investments in tangible assets.
FREE CASH GENERATION FROM
OPERATIONS
The reduction in free cash generation
in the year is attributable to an increase
in capital expenditure and a lower profit
performance. Offsetting this was a
reduction in interest payments arising
from the payment profile attached to the
Senior Secured Notes. These notes were
launched in February 2011 and interest
is payable semi-annually each year in
February and August. Therefore in the year
of issue only one semi-annual interest
payment was made. The significant
improvements in working capital achieved
in 2010 were sustained in 2011.
CAPITAL EXPENDITURE
We have maintained our focus on capital
projects with net expenditure totalling
£39.9 million, which will support our
growth objectives and strengthen our
market-leading positions within the
sector. In line with this strategy we
have continued to invest in a broad
range of projects primarily within our UK
businesses. We retain flexibility in our
discretionary capital spend in order to
respond to the economic environment and
manage the broader cash requirements of
the business as a whole.
DIVIDENDS
The Directors do not recommend a final
dividend to ordinary shareholders. This
with the interim dividend of nil pence
makes a total of nil pence for the period
(2010: nil pence).
CORPORATE ACTIVITY
P.40
For more detail on
our financials
On 7 April 2011, the Group acquired the
remaining 10% of Italpizza Srl as required
under the initial purchase agreement.
On 7 September 2011, the Group
disposed of its interest in Bakkavor
Traiteur.
The Group made two small acquisitions
in the Far East. On 3 November 2011,
the Group acquired the minority interest
of Bakkavor China Limited. On 21
December 2011, the Group acquired the
remaining 52% share of Gastro Primo
Limited in Hong Kong.
In addition to the above transactions,
the Group closed the operations of
Exotic Farm Produce and commenced
a period of employee consultation with
English Village Salads to discuss its
ongoing viability.
21
BUSINESS REVIEW

Our three identified areas of Corporate Social Responsibility (CSR).
1 2 3
THE PLACE TO WORK THE PARTNER OF CHOICE CARING FOR OUR COMMUNITY
We are committed to providing a safe
working environment and rewarding our
employees for their commitment.
MANAGING OUR CSR
Our framework ensures compliance
with the legislation relevant to our global
operations and, where appropriate for
our business, we look for opportunities
within our CSR framework to create
competitive advantage.
Our Group Technical Director, Ann Savage,
is responsible for the Group’s CSR policies
22
We aim to be the partner of choice for
all who deal with us.
and performance and reports monthly to
the Management Board. She is supported
by the Group CSR Manager and Group
SHE Auditor whose roles are to embed
and monitor sound CSR practices across
the business.
We take a continuous improvement
approach to the development and sharing
of good practice across the business
through conferences, workshops and our
GROUP SAFETY, HEALTH
AND ENVIRONMENT AUDITOR
Monitors and reports business
unit compliance
GROUP TECHNICAL DIRECTOR
GROUP CSR MANAGER
(HEALTH AND SAFETY, ENVIRONMENT)
Left
Ann Savage
Group Technical Director
Responsible for Bakkavor’s Corporate
Social Responsibility.
We focus on reducing our direct
environmental impact and supporting
our local communities.
Group Employee Forum. On a day-today
basis, we co-ordinate the activity of
various Action Teams (e.g. Energy, Waste
and Health and Safety Action Teams) who
focus on providing solutions and testing
new technologies and practices for wider
application across the business. These
teams are typically made up of a variety
of internal key stakeholders and, when
required, selected external experts.
ACTION TEAMS
Specialised teams focusing on
key improvement areas (e.g.
energy, waste, and H&S) who
embed CSR in the businesses
Management Board member reports
monthly to Board on CSR progress
and priorities
Responsible for implementing CSR
strategy and co-ordinating improvement
activity across the Group

At Bakkavor we focus on doing things the right way: ensuring we
consider the needs of those that matter to us – our employees,
customers, consumers, suppliers, local communities, our
shareholders and lenders – as well as reducing our environmental
impact where we have direct control. We have values and systems
in place to ensure we do this right and keep doing it right. In this
section we update you on our progress during the year.
Ann Savage
Group Technical Director
1 THE PLACE TO WORK
HEALTH AND SAFETY (H&S)
Our responsibility is to take every
reasonable step to secure and protect
the Health and Safety of our employees
across the Group.
In 2011 our total number of accidents
reduced by 17% from 2010. Although we
did not achieve our stretching target of
a 20% year-on-year reduction our major
accident rate was 37% better than the
Health and Safety Executive’s industry
average. Our targets remain in place
for 2012.
Our objective is to develop a pro-active
accident prevention culture within the
Group and we are committed to focusing
on our five identified H&S priority areas,
drawing on external expertise to help
us address the root causes of accidents
and implement leading-edge solutions to
prevent them.
EMPLOYEE RETENTION
Our aim is to nurture a dynamic,
inclusive and values-led working
environment which recognises, rewards
and promotes our employees fairly.
We are committed to ‘growing our
own’ people and, alongside established
appraisal and self-development systems,
we have wide-ranging training and
development programmes.
For the second year in a row we beat
our target of filling at least 50% of our
vacancies internally.
Employee retention is a key measure
and we have set ourselves a retention
target of 90% for managers and 75% for
our site-graded employees. For the second
year in a row we have hit or exceeded our
targets, achieving retention rates of 90%
for managers and 91% for site-graded
employees in 2011.
TRAINING AND DEVELOPMENT
We have an established two year
Accelerated Management Scheme
(AMS) – a fast-track programme for
new graduates and current employees,
giving them hands-on experience in
jobs alongside trainers and mentors.
AMS participants specialise in one of
six core areas of strategic importance
to the business: Manufacturing, Product
Development, Technical (food safety),
Produce (procurement), Purchasing, and
Finance. We recruited 16 people onto the
Scheme in 2011.
Following a successful pilot in 2011
we will be implementing the Bakkavor
Apprenticeship Scheme (BAS) later in
2012. We aim initially to train over 20
A-level leavers across three functions:
Manufacturing, Technical
and Development.
Bakkavor is one of the first
manufacturers to pioneer Food
Technical and Development
apprenticeships in the UK.
DIVERSITY
We are proud of our multi-cultural
workforce. We aim to nurture an inclusive
working culture by complementing our
existing policies with the launch of a
‘Better Together’ self-audit tool in 2012.
Disabled employees
Bakkavor Group gives full and fair
consideration to employment applications
made by people with disabilities. We
offer equal opportunity to all disabled
candidates and employees who have
a disability or who become disabled
during the course of their employment.
A full assessment of the individual’s
needs is undertaken and reasonable
adjustments are made to the work
environment and/or practices in order
to assist those with disabilities.
Equal opportunities
Bakkavor Group is an equal opportunities
employer. Equal opportunities are offered
to all regardless of race, colour, nationality,
ethnic origin, sex (including gender
reassignment), marital or civil partnership
status, disability, religion, belief, sexual
orientation, pregnancy and maternity, age
or trade union membership. All candidates
and employees are treated equally in
respect of recruitment, promotion,
training, pay and other employment
policies and conditions. All decisions are
based on relevant merit and abilities.
EMPLOYEE INVOLVEMENT
One of the biggest challenges as a
large, decentralised food company is
ensuring we communicate effectively and
encourage employee engagement across,
and within, our businesses.
We provide open channels of
communication between employees
and management through regular
Site Employee Forums (SEFs) and the
annual Group Employee Forum (GEF)
where matters of common concern are
discussed and learnings, best practice
and ideas are shared. This enables
positive policy development and the
communication and discussion of
operational changes. We also publish
a quarterly Group newsletter which
updates all employees on activities
across the Group.
TEMPORARY LABOUR
We have seasonal requirements for
additional temporary resource and, in
the UK, we work closely with a selected
group of temporary labour providers all of
whom are fully accredited and licensed.
All UK temporary workers are subject to
UK legislation.
23
BUSINESS REVIEW

In 2011 we received four awards
from our major retail customers
for: Outstanding Category
Management in Meal Solutions,
Innovation in the leafy salads
category, Leadership in the
Community, and Environmental
Stewardship.
24 Bakkavor Group Annual Report 2011
2 THE PARTNER OF CHOICE
OUR CUSTOMERS
Food safety
Millions of people eat our products every
day. We have a duty to make food that is
safe for people to eat. We have a clear
Food Safety Policy and the Bakkavor
Management Board is accountable for its
effective implementation.
Partnership approach
We are committed to providing our
customers with outstanding service,
quality, innovation and value.
We commission regular consumer
research to ensure we stay ahead of
emerging trends and we build strong
relationships with customers across
all levels of the business so that we
can develop and make innovative and
commercially viable products.
In 2011, our innovation was recognised
and rewarded externally with 12 food
industry food quality awards.
We work closely with our customers and
industry bodies to promote sustainable
development throughout the supply
chain. Our Group Technical Director sits
on the Institute of Grocery Distribution
(IGD)’s Industry Sustainability Group and
three UK retailer-led working groups.
Current projects under review include
water stewardship and energy reduction
solutions within the supply chain.
We work collaboratively with both
suppliers and customers to support
specific initiatives as set out in
our customers’ Corporate
Responsibility agendas.
Being on the Manufacturing AMS has
given me a diverse understanding across
the business, including production,
planning, development and technical. It
has helped my management skills and
my ability to deliver decisions in a fastmoving
environment.
Gillian Warnock
Manufacturing AMS participant
OUR SUPPLIERS
We have developed the most successful
relationships with our suppliers who
understand customer service, food
safety excellence, a quest for continuous
improvement and the importance of
innovative, forward thinking. These
criteria form part of our supplier selection
process and are essential in meeting our
long-term needs.
Ethical auditing
Bakkavor supports the United Nations’
Universal Declaration of Human
Rights and the core conventions of the
International Labour Organisation. We,
and our suppliers, are required to comply
with all local and national laws covering
working hours and conditions, Health &
Safety, rates of pay, terms of employment
and minimum age of employment.
We carry out ethical audits on our
suppliers based on risk-assessment and
customer specifications.
OUR SHAREHOLDERS AND LENDERS
We are committed to open
communication with all stakeholders,
whilst being conscious of the need to
respect commercial sensitivities.
POOLING OUR NEW
PRODUCT DEVELOPMENT
RESOURCES
In September 2011, we launched a
new range of 20 Mexican products for
one of our customers, demonstrating
our ability to develop complementary
products around the Group and our
commitment to innovation and
customer service.

WASTE
tonne reduction in landfill waste in 2011
3 CARING FOR OUR COMMUNITY
OUR ENVIRONMENT
We are committed to complying with
relevant legislation and managing the
direct impacts of our businesses on the
environment. We focus on five key areas
over which we have immediate control:
Energy, Water, Waste, Packaging
and Transport.
Waste
We have exceeded our targets to divert
waste from landfill ahead of schedule
for two years running, achieving better
than 90% and 98% in 2010 and 2011
respectively. This was achieved through
a focus on innovative waste segregation,
recycling initiatives and increased food
waste destined for anaerobic digestion.
In 2011 we reduced the absolute
quantity of waste sent to landfill by
20,000 tonnes, beating our 2012 target
ahead of schedule.
Transport
In 2011 we won the ‘Innovation in use
of Technology’ category at the European
supply chain excellence awards for
pioneering a bespoke web portal to
manage movements of materials in
‘real time’, enabling more efficient
haulage planning.
CASE STUDY
Zero waste to landfill at Isleport Foods,
Highbridge, UK
In 2011 Isleport Foods achieved a 100% success
rate for recycling food waste, cardboard, factory
waste, tins, plastics and effluent solid waste.
A Dissolved-Air Flotation Plant to treat waste
water has been installed and a new system of
waste segregation introduced so that waste
is recycled or used for energy via the local bio
digestion plant.
OUR COMMUNITIES
We expect our local management teams
to understand the issues facing their
communities and we encourage them
to support local initiatives. At the annual
Group Employee Forum we reward sites
that have made the most positive impacts
in their local communities.
At the 2011 Forum our Good Neighbour
Award was presented to our Bakkavor
Pizza site based in Holbeach St. Marks,
Lincolnshire. This site has forged a strong
relationship with its local community and
offers 24-hour child care facilities as well
as a community gym at the site.
In 2011, the Group donated £158,000 to
charitable organisations. (2010: £123,000)
In 2011 we sponsored the University
of Nottingham’s Summer School in
Food Sciences.
CASE STUDY
Bakkavor Spalding raised over £70,000 for
local causes and employee events
Over 40 charities and local clubs benefited from
the proceeds of Bakkavor Spalding’s staff shop
in 2011 including Cancer Research, the Royal
Hospital for Neuro-Disability and the Gedney
Royal British Legion. Employees were also
rewarded throughout the year with a day out to
Newmarket Races, a festive Christmas night out
to see the pantomime production of ‘Aladdin’ and
a subsidised trip to London.
P.32
OUR VALUES
For more information
please see Risk
Management
1. CUSTOMER CARE
2. CAN DO
3. TEAMWORK
4. INNOVATION
5. GETTING IT RIGHT / KEEPING IT RIGHT
In 2012 we are relaunching our company
values across the Group to ensure they
remain ‘alive’ within our business.
25
BUSINESS REVIEW

Edit is a Production Operative
at our Bakkavor Spalding site
in Lincolnshire. She is holding
one of the 3.5 million white
cabbages we use annually to
make coleslaw and stir fry mixes
for our UK customers. We buy
our white cabbages from local
farmers with whom we have
long-term relationships.
26 Bakkavor Group Annual Report 2011

The Group has built its leading
position in fresh prepared foods
over four decades. It success is
underpinned by strong principles
and high standards regarding food
safety, customer service, consumer
understanding and innovation.
core values which define
our approach to all aspects
of our business:
Customer care, Can do,
Teamwork, Innovation,
Getting it right / Keeping
it right.
principal risks to the
business identified. How
we aim to mitigate these
can by found on page 32.
combined years of
experience in the food
industry – the members
of our Management Board
team are food experts in
their own right.
27
OUR GOVERNANCE

BOARD OF DIRECTORS
Ágúst Gudmundsson
Chief Executive Officer
Ágúst founded Bakkavor Group ehf.
with his brother Lýdur in 1986 and has
served on the Board of Directors since
the Company’s founding. He has served
as Chief Executive Officer of Bakkavor
Group ehf. since 2006, having previously
served as the company’s Executive
Chairman between 1986 and 2006. Ágúst
was educated at the College of Ármúli in
Reykjavík, Iceland.
Bjarni Th. Bjarnason
Non-executive Director
Bjarni was elected to Bakkavor Group
ehf.’s Board of Directors in May 2010.
He is Chairman of Arctica Finance hf.,
an Icelandic advisory firm, and serves as
an independent consultant. Bjarni has
held various corporate advisory positions
in Icelandic banks and the financial sector.
He is a member of the Board of Árvakur
hf., Byrjun hf., and Arctica Finance hf..
Bjarni holds a BSc degree in Mechanical
Engineering from the University of
Iceland and an MBA from the Southern
Methodist University.
28 Bakkavor Group Annual Report 2011
Lýdur Gudmundsson
Non-executive Chairman
Lýdur founded Bakkavor Group with his
brother Ágúst and has served on its Board
of Directors since its founding. He served
as Chief Executive Officer of Bakkavor
Group ehf. from 1986 to 2006, and has
served as the Chairman of the Board of
Directors since 2006. Lýdur was educated
at the Commercial College of Iceland.
Halldór B. Lúdvígsson
Non-executive Director
Halldór was elected to Bakkavor Group
ehf.’s Board of Directors in May 2010.
He serves as a Managing Director
of Arion Bank’s corporate finance
division, previously having served as
Chief Executive Officer of Maritech, an
international technology company. Halldór
is a member of the Board of Atorka hf.,
Klakki hf., Eingabjarg ehr., Landey ehf.,
Reiknistofa Bankanna hf., and Interbulk
plc. He holds a Masters degree in
Mechanical Engineering and a BSc in
Computer Science.
P.34
To read our
Directors’ Report
Ásgeir Thoroddsen
Non-executive Director
Ásgeir has served on Bakkavor Group
ehf.’s Board of Directors since 2000.
He is a lawyer and has been a partner
in a Reykjavík law firm since 1977 and an
attorney to the Supreme Court of Iceland.
He is also Chairman of Intrum Iceland hf.,
Frjálsi lífeyrissjóðurinn and Íshestar ehf.
Ásgeir holds a Cand. Juris degree from
the University of Iceland and a degree
in Public Administration from New
York University.

MANAGEMENT BOARD
As of March 2011, the Management Board was enlarged to include all members of the
Senior Management Team and UK sector Managing Directors.
Mike Edwards
Sector Managing Director
Mike is Managing Director of the Meals
Solutions sector in the UK. He joined
Bakkavor in 2001 as a Manufacturing
Manager and has held various general
and senior management roles within the
Group before taking his current position.
Prior to joining Bakkavor Mike worked in
general management at Heinz. He has a
BA (Hons) in Business Studies from the
University of Portsmouth.
9
John Gorman
President – Bakkavor USA Inc.
John took up his current position in
January 2012, prior to which he worked
as the Group’s Business Director of Fresh
Meal Solutions in the UK. John has over
30 years experience in chilled food, 22 of
which have been at Bakkavor and Geest.
He has held senior roles in Operations,
Technical and New Product Development
and senior offices with a number of UK
Food and Drink research organisations and
associations. John studied Food Technology
at Manchester Metropolitan University.
Peter Gates
Chief Financial Officer
Peter was appointed Chief Financial
Officer of Bakkavor Group in November
2010. He has worked in a number of
international companies, including Saatchi
& Saatchi Co. plc and Avis Europe plc.
Peter spent much of 2009 at Bakkavor as
Interim Group Treasurer. He is a Chartered
Accountant and a member of the
Association of Corporate Treasurers. Peter
has a BSc (Hons) degree in Economics
from the University of Southampton.
Ann Savage
Group Technical Director
Ann was appointed Group Technical
Director in 2004. She is responsible
for Food Safety, Health and Safety
management, Manufacturing Excellence
and Environmental management at
Bakkavor. Ann has more than 30 years
of experience in technical, research and
development and manufacturing roles
within the retail and food industry. She
studied at the Open University and has
a Postgraduate Diploma in Management
Studies from Nottingham University.
Gordon Pates
Chief Executive Officer Bakkavor
UK and Europe
Gordon was appointed Chief Executive
Officer of Bakkavor UK in 2009 and Chief
Executive Officer of Bakkavor Europe in
January 2011, and is responsible for our
operations in the United Kingdom and
Continental Europe. Gordon joined the
horticulture division of Geest in 1969
and spent 10 years in the produce
business before moving into the prepared
produce and prepared food businesses in
the late 1990s.
Steve Broadbent
Sector Managing Director
Steve is Managing Director of the
Convenience Foods sector in the UK.
He joined Bakkavor in 1997 as a
General Manager and held various
roles in manufacturing, general and
senior management before taking his
current position. He entered the food
industry in 1982 as a Graduate Trainee
(Manufacturing) at Express Dairy UK Ltd
(later a part of Northern Foods) and has a
BSc (Hons) in Applied Biochemistry from
Brunel University.
9
Ivan Clingan
Sector Managing Director
Ivan is Managing Director of the Prepared
Produce sector in the UK. Since joining
Bakkavor in 1990 Ivan has worked in
various financial, general and senior
management roles before taking his
current position. Prior to Bakkavor he
worked at Nestlé. Ivan has a BA (Joint
Hons) in Finance and Economics from the
University of Stirling and is a Qualified
Accountant (CIMA).
Einar Gustafsson
Managing Director – Bakkavor Asia
Einar was appointed Managing Director
for Bakkavor Asia in 2005 and has served
within the Group for six years. He began
his career at Deloitte Consulting, after
which he successfully turned around
two businesses in the seafood industry.
Einar has a BSc degree in Business
Administration from the University of
Southern California and an MBA from
Columbia Business School.
29
OUR GOVERNANCE

INTRODUCTION
The current economic and business
environment underscores the need for
continued high standards of Corporate
Governance. In order to ensure these are
observed, the Company operates within a
Governance Framework which we believe
identifies all the elements of a sound
approach to governance and responsibility.
OUR FRAMEWORK
There are three elements to Bakkavor’s Governance
Framework as outlined below:
Controls and compliance
Policies and procedures to mitigate Bakkavor’s
portfolio of risk. The Board is responsible for
the overall system of internal control and for
reviewing the effectiveness of the system. The
Management Board carries out its duties through
the use of the company’s Internal Audit Function.
Risk management
Process by which our key risks are identified
and addressed.
Governance
Our approach to overseeing the Group’s risk and
compliance programme.
30 Bakkavor Group Annual Report 2011
The Board, together with its senior
management team, collectively known
as the ‘Management Board’, uses this
framework to set and monitor governance
and responsibility objectives, identify
improvement opportunities and ensure
that activities align with business
strategy. Through this Framework we
provide assurance to all our stakeholders
that Bakkavor is a well-managed,
responsible company.
FINANCIAL
RISKS
OPERATIONAL
RISKS
GOVERNANCE
GOVERNANCE
For Bakkavor, Governance is about making
sure that:
• we have assessed our strategic options
and we are taking the business in the
right strategic direction;
• the Management Board leads and
manages effectively and is accountable
in their actions;
• the Group has appropriate controls;
• we are considering the interests of all
our stakeholders in making executive
decisions.
CONTROLS AND COMPLIANCE
MARKET
RISKS

Our Board remains committed to practising
good Corporate Governance and to setting
high standards throughout the Group.
How do we make this happen?
At Bakkavor, we believe that effective
governance is realised through leadership
and collaboration. The Management Board
sets the strategic objectives of the Group,
determines investment policies, agrees
on performance criteria and delegates to
management the detailed planning and
implementation of those objectives and
policies in accordance with appropriate
risk parameters. The Management Board
monitors compliance with policies and
achievement against objectives by holding
management accountable for its activities
through monthly performance reporting
and budget updates. In addition, the
Management Board receives regular
presentations from directors of key group
functions (for example; marketing, human
resources and legal) enabling it to explore
specific issues and developments in
greater detail.
The Governance Framework adopted
by the Board is cascaded down the
organisation through our five core values,
which define our approach to all aspects
of our business. Our values are: Customer
care, Can do, Teamwork, Innovation and
Getting it right/ Keeping it right.
RISK MANAGEMENT
Our decentralised model empowers
the management of our businesses to
identify, evaluate and manage the risks
they face on a timely basis. Key risks and
internal control procedures are reviewed
at Group level by the Management
Board and the management of principal
risks is assigned to key members of
the Management Board. It is their
responsibility to report to the Board on
a monthly basis regarding the actions
associated with each of those risks. For a
summary of our risks, refer to page 32.
CONTROLS AND COMPLIANCE
The Board conducts an annual review of
the Group’s systems of internal control.
The internal control systems provide
an ongoing process that identifies,
evaluates and manages the risks that are
significant in relation to the fulfilment
of the Group’s business objectives. The
system also supports management’s
decision-making, improves the reliability
of business performance, and assists
in the preparation of the Company’s
consolidated accounts.
The Board has delegated authority to the
Audit Committee to regularly monitor
internal controls and conduct an annual
review. Each year the Audit Committee
meets to discuss and approve the nature
and scope of the audit programme for
the year. The Audit Committee then
instructs the Internal Audit Function to
undertake the agreed schedule of audits
during which the effectiveness of the
controls operating within the business
are reviewed. The Group’s Internal
Audit Function, which comprises both
employees and resources provided by
RSM Tenon, has the skills and
experience relevant to the operation of
each business.
In addition to our Internal Audit Function,
the completion of comprehensive internal
control questionnaires is required from
all Financial Controllers within each
business unit. These self-assessment
representations are designed to ensure
that any material control breakdowns
are highlighted and the operation of
internal controls is addressed within the
respective business units. The results
of these representations are initially
reviewed by Internal Audit before being
reported to the Audit Committee.
AUDITOR
The Audit Committee is also responsible
for the appointment of the Company’s
auditor. On an annual basis the
Committee reviews the relationships
the Company has with our auditor and
considers the level of non-audit services
provided by the auditor. For 2011, the
Group’s auditor is Deloitte LLP. The
engagement of Deloitte LLP for
non-audit services requires approval
from the Group Financial Controller. If
non-audit services exceed £100,000 or
P.32
impede on the auditor independence, the
Audit Committee reviews these services
to ensure the objectivity of the external
auditor is not impaired. A list of non-audit
services provided by Deloitte LLP in
2011 and the associated fees has been
provided in Note 6 of the Group’s financial
statements.
DISCLOSURE OF INFORMATION
TO AUDITOR
For more detail
on our risks
Each of the persons who is a Director at
the date of approval of this Annual Report
confirms that:
• so far as the Director is aware, there is
no relevant audit information of which
the Company’s auditor is unaware; and
• the Director has taken all the steps that
he ought to have taken as a Director
in order to make himself aware of
any relevant audit information and to
establish that the Company’s auditor is
aware of that information.
This confirmation is given and should
be interpreted in accordance with the
provisions of s418(2) of the Companies
Act 2006.
Deloitte LLP has expressed its willingness
to continue in office as auditor and a
resolution to reappoint them will be
proposed at the Company’s Annual
General Meeting.
31
OUR GOVERNANCE

FINANCIAL RISKS MARKET RISKS OPERATIONAL RISKS
1
2
3
4
5
6
7
8
KEY RISK AREAS
FOOD
SAFETY
HEALTH AND
SAFETY
LOSS OF KEY
EMPLOYEES
CUSTOMER
RELATIONSHIPS
CONSUMER
UNDERSTANDING
COMMODITY
PRICE INFLATION
COVENANT
COMPLIANCE
INTEREST RATES,
LIQUIDITY AND
CREDIT
32 Bakkavor Group Annual Report 2011
WHY THIS RISK AFFECTS US
Millions of people eat our products every
day. We have a duty to make food that is
safe for people to eat.
We have a duty of care to take every
reasonable step to secure and protect the
Health and Safety of our employees across
the Group. A relatively high proportion of
our employees (over 80%) work in fastmoving
manufacturing environments.
We have a highly experienced senior
management team which is passionate
about the business and whom we
consider to be a key competitive strength.
We work with a concentrated number
of some of the largest food retailers and
foodservice providers in the world and we
aim to be their supplier of choice.
Our diverse and innovative product range
is critical to developing customer relations
and future growth.
Bakkavor spends over £800 million on
ingredients and packaging every year and
may be exposed to fluctuating prices in
significant areas of expenditure.
We are subject to banking covenants as
part of our term loan agreement.
We are a relatively highly leveraged
company and therefore exposed to the
external risk of interest rate fluctuations
and the market’s view of our credit rating.
In 2010 Bakkavor Group formally identified 28 risks
to its business. Of these, eight are considered
to be key risks, the successful mitigation of
which is paramount to the day-to-day running of
our business and the achievement of our longterm
vision. We share these with you below.
WHAT MAY HAPPEN IF WE GET IT WRONG
Failing to make safe products would
damage our reputation in the industry
and could also, ultimately, jeopardise the
industry’s long-term prospects.
Compromising on the Health and Safety of
our 18,000 employees would damage our
reputation within the industry.
We would be unable to fulfil our strategic
growth objectives without the recruitment,
development and retention of talented and
loyal people who understand and respect
our values.
Given the size and relatively small number
of customers, any major customer loss
would have a significantly negative impact
on our turnover, manufacturing efficiency
and profit.
Investing in product areas which fail
or under perform is costly in terms of
resource, profitability and our reputation
with our customers.
In the short term, increases in cost
prices adversely affect individual product
margins. In the longer term, the inability
to pass on significant commodity cost
increases within a reasonable timeframe
would impact the Group’s profit negatively.
In order to achieve our growth objectives,
we require a strong financial platform.
Breaching any covenant would destabilise
our platform for growth and impair our
ability to secure future financing.
In order to achieve our growth objectives,
we require a strong financial platform.
An inability to repay interest rates or a
downgrading in the Group’s credit rating
would impair our ability to secure
future financing.

HOW WE AIM TO MITIGATE OUR RISKS WHO MANAGES THIS RISK
We use Hazard Analysis Critical Control Point (HACCP) principles to identify the food safety controls
required in our businesses. All operational staff are trained in food safety using documented
procedures derived from the HACCP plan. We ensure compliance through audit of our sites and our
suppliers of key raw materials, using a combination of internal and external food safety experts.
Our Group Technical Director is accountable for H&S management across the Group and reports
monthly to the Management Board on agreed H&S KPIs. The senior management teams are
responsible for H&S on their sites. A H&S Champion sits on the site executive management team
and manages a H&S professional who is responsible for reporting H&S matters to the executive
management team and putting into action site-specific H&S plans. We employ a CSR Manager who
ensures continuous improvement through coaching and support, and compliance. The Group SHE
Auditor reports on and monitors business unit compliance on behalf of the CSR Manager.
We train all operational employees in Health and Safety.
We communicate our values internally in order to provide our employees with a cohesive framework.
We recruit, appraise, reward and develop our employees against these values. We are committed to
‘growing our own’ people and provide relevant training to help our employees reach their potential.
We have developed a ‘talent bank’ of employees based on performance and potential and we identify
opportunities for them to grow within the business.
Customer care is one of our five values. We invest in significant resource to manage and develop
deep and long-lasting relationships with our customers, ensuring that our customers have access
to dedicated Bakkavor employees at all levels of the decision-making process. At a senior management
level we appoint Customer Champions to manage customer relations and long-term strategic
account planning.
We regularly commission consumer research and communicate its results to our marketing and product
development teams. Market trends and Bakkavor’s market share performance are discussed at each
Bakkavor Management Board meeting.
Through its central procurement team the Group aims to leverage its scale and strong supplier
relationships to achieve the requisite balance between price, quality, availability and service levels.
Where possible it is the Group’s policy to pass on commodity price increases. Equally, it seeks to
reduce costs and make products as efficiently as possible in order to offset time lags and other barriers
to achieving price increases.
Bakkavor Group reviews its projections and covenant position at least monthly. The Group believes it
is adequately placed to manage this risk successfully despite the current uncertain economic outlook
and challenging macroeconomic conditions. Mitigating actions in 2011 included successful price
negotiations, cost reduction programmes and enhanced working capital policies, all of which will
continue into 2012. The Directors consider that the Group has the flexibility to weather any further
deteriorating market conditions through implementing previously agreed early settlement arrangements
with our core customers and reducing our capital expenditure programme. Further actions available to
management include supply chain improvements and additional cuts to discretionary spend.
These risks are actively managed by the Group’s Treasury Department. The Treasury function operates
within the framework of strict Board-approved policies and procedures which are explained further in
Note 29 of the Group Financial Statements.
Ann Savage
Group Technical Director.
Reports monthly to
the Management Board.
Gordon Pates
Chief Executive Officer
Bakkavor UK & Europe.
Reports monthly to
the Management Board.
Peter Gates
Chief Financial Officer.
Reports monthly to
the Management Board.
33
OUR GOVERNANCE

PRINCIPAL ACTIVITIES
The Group is a leading provider of fresh
prepared food products in the United
Kingdom. Our customers include some of
the United Kingdom’s most reputable and
well-known grocery retailers, including
Tesco, Marks & Spencer, J Sainsbury,
Waitrose, Asda and Morrisons, which
sell our products to their customers
predominately under their respective
private labels. We have also established
a significant presence in development
markets for fresh prepared and private
label food products, including Europe, the
United States and China. Our industry
expertise and relationships with eight of
the world’s ten leading grocery retailers in
these geographical regions have us well
positioned to lead the growth in the fresh
prepared and private label food markets.
The subsidiaries principally affecting the
profits or net assets of the Group in the
period are listed in Note 8 to the Company
only financial statements.
RESULTS FOR THE YEAR
The loss for the year after taxation and
exceptional items was £75.0 million
(2010: profit after tax of £7.2 million).
Exceptional items for the year included
an impairment charge against the Group’s
assets, predominantly goodwill, of
£76.9 million. Further details of the
Group’s financial performance are outlined
in the Business Review.
GOING CONCERN
The Directors, in their detailed
consideration of going concern, have
reviewed the Group’s future cash
forecasts and revenue projections, which
they believe are based on prudent market
data and past experience, and believe,
based on those forecasts and projections,
that it is appropriate to prepare the
financial statements of the Group on
a going concern basis.
34 Bakkavor Group Annual Report 2011
In arriving at this conclusion the
Directors considered the Group’s financing
arrangements, which comprise £380
million of bank facilities committed to
June 2014 and £350 million of seven year
listed bonds issued in February 2011.
Importantly, the Group’s liquidity remains
particularly strong with £106.3 million of
facilities undrawn as at 31 December 2011.
The bank facilities are subject to a series
of covenants set by the lenders. Financial
covenants are measured quarterly and
include an assessment of leverage
(the ratio of net debt to EBITDA, being
earnings before interest, tax, depreciation
and amortisation); cash flow cover (the
ratio of finance charges to cash generated
from operations); interest cover (the
ratio of finance charges to EBITDA); and
capital expenditure limits. The key financial
covenant is leverage, which must be less
than 5.75 times at 31 December 2011
and less than 5.0 times at 31 December
2012. At 31 December 2011 the leverage
ratio of net debt to EBITDA was 5.5 times.
At the date of this report the Group has
complied in all respects with the terms
of its borrowing agreements, including its
financial covenants.
The Group believes it is adequately
placed to manage covenant compliance
successfully despite the challenging
macroeconomic environment. In the
event that conditions worsen, the Group
has the flexibility to react by accessing
additional working capital arrangements
that we have already agreed with key
stakeholders. Further actions available
to management may include a reduction
to our capital expenditure programme
and further supply chain improvements.
Should this situation change, we believe
that constructive discussions with our
lenders would enable the covenant to
be reset, although we recognise that
this could result in increased costs to
the business.
The Directors present their annual report on
the affairs of the Bakkavor Finance (2) plc
Group (the ‘Group’), together with the financial
statements and auditor's report, for the 52
weeks ended 31 December 2011. Comparatives
are for the 52 weeks ended 1 January 2011.
Consequently the Directors have a
reasonable expectation that the Company
and the Group have adequate resources
to comply with these covenants and
meet their liabilities as they fall due for a
period of at least 12 months from the date
of approval of the financial statements.
For this reason, they continue to adopt
the going concern basis in preparing the
financial statements.
RESEARCH AND DEVELOPMENT
The main focus of the Group’s research
and development expenditure is product
innovation. Further information on the
Group’s developments is contained in the
Fast Read section called What we do and
how we do it.
FUTURE DEVELOPMENTS
As we enter the new financial year, the
ongoing macroeconomic pressures on
consumers and retailers combined with
increased commodity prices remain a
challenge for the business. Despite this,
the Directors are of the opinion that
the strategic actions implemented in
2011, coupled with the significant capital
investment across the Group, leave
the Company in a stronger position to
compete with these economic pressures.
Further detail on future prospects is
outlined in the Chairman and CEO's
Address and the Business Review.
DIRECTORS AND THEIR INTERESTS
The Directors, who served throughout the
period and to the date of this report, were
as follows:
Director Appointed
A Gudmundsson
L Gudmundsson
A Thoroddsen
B Bjarnason
H Lúðvígsson
21 January 2011
7 March 2011
7 March 2011
7 March 2011
7 March 2011

INDEX TO PRINCIPAL DIRECTORS' REPORT DISCLOSURES
Information required to be disclosed in the Directors' Report can be
found on the following pages:
Information Page number(s) Information Page number(s)
Auditors
Board of Directors
Charitable donations
Creditor payment policy
Directors’ responsibilities
Disclosure of information to auditor
Employee involvement
As part of the Group’s refinancing, the
Company, Bakkavor Finance (2) plc, was
incorporated as a holding company of
the Group. Both A Gudmundsson and
P Gates were appointed Directors on the
date of incorporation, 21 January 2011. On
completion of the refinancing agreement,
being 7 March 2011, P Gates resigned
from the Board of Directors to allow for
the Directors of the Company’s parent,
Bakkavor Group ehf, to be appointed.
The Company has made qualifying third
party indemnity provisions for the benefit
of Directors which remain in force at the
date of this report.
DIVIDENDS
The Directors do not propose payment
of a dividend for the year ended 31
December 2011 (2010: £nil).
FINANCIAL RISK MANAGEMENT
POLICIES AND OBJECTIVES
Information on the Group’s financial risk
management objectives and policies and
on the exposure of the Group to relevant
risks in respect of financial instruments is
set out in the Our Risks section.
SUPPLIER PAYMENT POLICY
31
28
35
35
35
31
23
The Company’s policy, which is also
applied by the Group, is to settle on
appropriate terms of payment with
suppliers when agreeing the terms of
each transaction, and to ensure that
suppliers are made aware of those terms
of payment and subsequently comply with
those terms. Trade creditors of the Group
at 31 December 2011 were equivalent
to 60 (2010: 53) days’ purchases, based
on the average daily amount invoiced by
suppliers during the year.
Employees with disabilities
Equal opportunities
Going concern
Political donations
Principal activities and Business review
Profit and dividends
CHARITABLE AND POLITICAL
CONTRIBUTIONS
During the period the Group made
charitable donations of £158,168,
principally to local charities serving the
communities in which the Group operates
(2010: £123,000).
No political donations were made during
the period (2010: nil).
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
The Directors are responsible for
preparing the Annual Report and the
financial statements in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law the
Directors have elected to prepare the
financial statements in accordance
with International Financial Reporting
Standards (IFRSs) as adopted by the
European Union. Under Company law the
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 Company and the Group
and of the profit or loss of the Group for
that period. In preparing these financial
statements, International Accounting
Standard 1 requires that Directors:
• properly select and apply accounting
policies;
• present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
• provide additional disclosures
when compliance with the specific
requirements in IFRSs are insufficient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity's financial
position and financial performance; and
• make an assessment of the Group’s
ability to continue as a going concern.
23
23
34
35
18
35
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s
transactions and disclose with reasonable
accuracy at any time the financial position
of the Company and the Group and
enable them to ensure that the financial
statements comply with the Companies
Act 2006. They are also responsible for
safeguarding the assets of the Group and
hence for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
By order of the Board
Ágúst Gudmundsson
Director
27 February 2012
35
OUR GOVERNANCE

We have maintained market share
and market-leading positions in a
period marked by reduced consumer
spending and high input inflation.
Despite these tough conditions we
have made strategic investments
in our businesses to support future
growth and efficiency, achieved our
inflation recovery target and won 12
awards for product innovation.
PACKS ON PROMOTION IN OUR
MARKETS AT ANY ONE TIME
Promotions are part and parcel of doing
business in the current economic climate.
By actively supporting our customers we
aim to control our promotional mix to drive
volume growth, stimulate consumer spend
and manage the impact on margins.
INPUT INFLATION COSTS RECOVERED
Our Adjusted EBITDA was impacted
by high input inflation in 2011. We have
recovered approximately two-thirds of
these costs through price increases,
product reconfiguration and supply
chain initiatives.
CAPITAL INVESTMENT
We are focused on investing in our
‘Centres of Excellence’ – specific
businesses that we have identified to
bolster our future competitive advantage.
36 Bakkavor Group Annual Report 2011

Trevor has worked at Bakkavor
for over 15 years and is one of our
Executive Development Chefs.
Prior to joining us, Trevor worked
in some of the finest restaurants
in Australia, Europe and the UK,
including the Michelin-starred
Inverlochy Castle in Scotland.
Trevor mentors and works with
development teams across the
Group and is passionate about
bringing culinary excellence to
the business.
37
FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT
To the members of Bakkavor Finance (2) plc
We have audited the financial statements of Bakkavor Finance (2) plc for the 52 weeks ended 31 December 2011
(‘period’) which comprise the consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement
of cash flows, and the related notes 1 to 39, Company income statement, Company statement of changes in
equity, Company statement of financial position, Company statement of cash flows, and the related notes 1 to
13. The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
(APB’s) Ethical Standards for Auditor.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s
and the parent Company’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the
financial statements. In addition, we read all the financial and non financial information in the annual report to
identify material inconsistencies with the audited financial statements. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications of our report
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Group’s and the parent Company’s affairs as at 31 December 2011
and of the Group’s loss and Company’s loss for the period then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
38 Bakkavor Group Annual Report 2011

Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 2 to the financial statements, the Group in addition to applying IFRSs as adopted by the
European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Christopher Robertson (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Birmingham, UK
27 February 2012
39
FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT
52 WEEKS ENDED 31 DECEMBER 2011
*Restated
52 weeks ended 31 December 52 weeks ended 1 January
2011 2011
Before Before
non- Non- non- Non-
recurring recurring recurring recurring
£m Notes items items Total items items Total
Continuing operations
Revenue 4 1,677.7 – 1,677.7 1,643.2 – 1,643.2
Cost of sales* (1,239.8) – (1,239.8) (1,193.9) – (1,193.9)
Gross profit 437.9 – 437.9 449.3 – 449.3
Distribution costs* (85.5) – (85.5) (83.4) – (83.4)
Other administrative costs* (298.3) – (298.3) (287.9) – (287.9)
Exceptional items (net) 7 – 7.2 7.2 – 12.7 12.7
Bakkavor Group ehf management/royalty charge (1.2) – (1.2) (12.3) – (12.3)
Impairment of assets 8 – (76.9) (76.9) – – –
Total administrative costs (385.0) (69.7) (454.7) (383.6) 12.7 (370.9)
Loss on disposal of subsidiary 31 – (1.0) (1.0) – – –
Loss on disposal of associate 32 – (1.6) (1.6) – – –
Share of results of associates after tax 17 1.1 – 1.1 1.0 – 1.0
Operating profit/(loss) 6 54.0 (72.3) (18.3) 66.7 12.7 79.4
Investment revenue 10 0.1 – 0.1 0.1 – 0.1
Finance costs 12 (65.2) – (65.2) (67.8) – (67.8)
Other gains (net) 11 6.0 – 6.0 9.7 – 9.7
(Loss)/profit before tax (5.1) (72.3) (77.4) 8.7 12.7 21.4
Tax 13 3.2 (0.8) 2.4 (10.6) (3.6) (14.2)
(Loss)/profit for the period (1.9) (73.1) (75.0) (1.9) 9.1 7.2
Attributable to:
Equity holders of the parent (0.4) (73.1) (73.5) (2.3) 9.1 6.8
Non-controlling interests (1.5) – (1.5) 0.4 – 0.4
40 Bakkavor Group Annual Report 2011
(1.9) (73.1) (75.0) (1.9) 9.1 7.2
*Cost of sales, distribution costs and other administrative costs have been restated for the 52 weeks ended 1 January 2011. Refer to note 5 for
the impact of this restatement.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
52 WEEKS ENDED 31 DECEMBER 2011
52 weeks 52 weeks
ended ended
31 December 1 January
£m Notes 2011 2011
(Loss)/profit for the period (75.0) 7.2
Other comprehensive (expense)/income
Exchange differences on translation of foreign operations (2.1) (0.1)
Net exchange gains recycled to income statement on disposal of subsidiary 31 (0.4) -
Actuarial (loss)/gain on defined benefit pension schemes 36 (18.9) 8.9
Tax relating to components of other comprehensive income 13 5.0 (2.5)
(16.4) 6.3
Total comprehensive (expense)/income (91.4) 13.5
Attributable to:
Equity holders of the parent (89.9) 13.1
Non-controlling interests (1.5) 0.4
(91.4) 13.5
41
FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2011
£m Notes 31 December 2011 1 January 2011
Non-current assets
Goodwill 14 667.1 739.9
Other intangible assets 15 35.7 49.2
Property, plant and equipment 16 307.7 314.6
Interests in associates 17 10.0 12.2
Other investments 18 0.1 0.1
Trade and other receivables 20 – 0.3
Retirement benefit asset 36 9.3 11.8
1,029.9 1,128.1
Current assets
Inventories 19 62.5 56.6
Trade and other receivables 20 190.1 189.7
Assets classified as held for sale 21 – 7.9
Derivative financial instruments 24 0.4 1.0
Cash and cash equivalents 22 30.1 40.8
283.1 296.0
Total assets 1,313.0 1,424.1
Current liabilities
Trade and other payables 27 (315.2) (311.3)
Current tax liabilities (17.3) (17.9)
Borrowings 23 (32.6) (56.1)
Obligations under finance leases 26 (0.8) (2.8)
Provisions 28 (1.8) (1.8)
Derivative financial instruments 24 (17.9) (24.8)
(385.6) (414.7)
Non-current liabilities
Trade and other payables 27 (0.3) (0.2)
Borrowings 23 (586.3) (564.3)
Obligations under finance leases 26 (1.8) (3.0)
Provisions 28 (10.6) (12.7)
Deferred tax liabilities 25 (27.1) (36.5)
Amounts due to other group companies 37 – (205.0)
(626.1) (821.7)
Total liabilities (1,011.7) (1,236.4)
Net assets 301.3 187.7
Equity
Share capital 30 0.1 0.1
Share premium 30 302.4 96.6
Merger reserve 30 45.2 45.2
Capital reserve 30 4.0 4.0
Translation reserve 30 23.7 26.2
Retained earnings (75.3) 12.1
Equity attributable to equity holders of the parent 300.1 184.2
Non-controlling interests 1.2 3.5
Total equity 301.3 187.7
The financial statements of Bakkavor Finance (2) plc and the accompanying notes, which form an integral part of the
consolidated financial statements, were approved by the Board of Directors on 27 February 2012. They were signed on behalf
of the Board of Directors by:
A Gudmundsson
Director
42 Bakkavor Group Annual Report 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
52 WEEKS ENDED 31 DECEMBER 2011
Equity attributable to equity holders of the Company
Share Share Merger Capital Translation Retained
Non
controlling Total
£m capital premium reserve reserve reserve earnings Total interests equity
Balance at 2 January 2010 0.1 96.6 45.2 4.0 26.3 (2.1) 170.1 2.8 172.9
Profit for the period – – – – – 6.8 6.8 0.4 7.2
Other comprehensive
income for the period – – – – (0.1) 6.4 6.3 – 6.3
Total comprehensive
income for the period – – – – (0.1) 13.2 13.1 0.4 13.5
Acquisition of subsidiary – – – – – 1.0 1.0 0.7 1.7
Dividends paid – – – – – – – (0.4) (0.4)
Balance at 1 January 2011 0.1 96.6 45.2 4.0 26.2 12.1 184.2 3.5 187.7
Loss for the period – – – – – (73.5) (73.5) (1.5) (75.0)
Other comprehensive
income for the period – – – – (2.5) (13.9) (16.4) – (16.4)
Total comprehensive
income for the period – – – – (2.5) (87.4) (89.9) (1.5) (91.4)
Acquisition of subsidiary – – – – – – – (0.8) (0.8)
New shares issued – 205.8 – – – – 205.8 – 205.8
Balance at 31 December 2011 0.1 302.4 45.2 4.0 23.7 (75.3) 300.1 1.2 301.3
43
FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS
52 WEEKS ENDED 31 DECEMBER 2011
52 weeks 52 weeks
ended ended
31 December 1 January
£m Notes 2011 2011
Net cash generated from operating activities 33 35.8 76.5
Investing activities:
Interest received 0.1 0.1
Dividends received from associates 1.0 1.3
Purchases of property, plant and equipment (41.8) (20.9)
Proceeds from disposals of property, plant and equipment 1.9 0.1
Payment of contingent consideration 32 – (9.9)
Payment of deferred consideration 32 (4.6) (6.8)
Acquisition of subsidiary net of cash acquired 32 (0.2) –
Disposal of subsidiary net of cash disposed of 31 2.6 –
Net cash used in investing activities (41.0) (36.1)
Financing activities:
Dividends paid to non-controlling interests – (0.4)
Increase in borrowings 352.2 –
Repayments of borrowings (354.5) (32.2)
Repayments of obligations under finance leases (2.9) (4.3)
Net cash used in financing activities (5.2) (36.9)
Net (decrease)/increase in cash and cash equivalents (10.4) 3.5
Cash and cash equivalents at beginning of period 40.8 37.4
Effect of foreign exchange rate changes (0.3) (0.1)
Cash and cash equivalents at end of period 30.1 40.8
44 Bakkavor Group Annual Report 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
General information
Bakkavor Finance (2) plc (the “Company”) was incorporated in the United Kingdom under the Companies Act
2006 on 21 January 2011 as a Limited Liability Company for the purpose of becoming an intermediate holding
Company of the group previously headed by Bakkavor Holdings Limited and being the issuing Company of senior
secured notes. On 4 February 2011 the Company was registered as a Public Limited Company and issued 50,000
£1 ordinary shares to Bakkavor Finance (1) Ltd. On 7 February 2011 the Company issued a seven year £350 million
listed bond and refinanced the existing bank facilities through a term loan and RCF facility of £380 million that will
expire on 30 June 2014. The Company’s ultimate parent Company and controlling party is Bakkavor Group ehf, a
Company registered in Iceland. The address of the registered office is given on page 108. The principal activities of
the Company and its subsidiaries (the “Group”) comprise preparation and marketing of fresh prepared foods and
the marketing and distribution of fresh produce. These activities are undertaken in the UK, Continental Europe,
Asia and the US and products are primarily sold through high street supermarkets.
In the current year, the Group has adopted the following interpretations with no material impact on the financial
statements of the Group:
IFRS 1 (Revised) First Time Adoption of IFRSs – Improvements to IFRSs
IFRS 7 (Revised) Financial Instruments: Disclosures – Improvements to IFRSs
IAS 1 (Revised) Presentation of Financial Statements – Improvements to IFRSs
IAS 24 (Revised) Related Party Disclosures – Definition of Related Parties
IAS 27 (Revised) Consolidated and Separate Financial Statements – Improvements to IFRSs
IAS 32 (Revised) Financial Instruments: Presentation – Classification of Rights Issue
IAS 34 (Revised) Interim Financial Reporting – Improvements to IFRSs
IFRIC 13 Customer Loyalty Programmes
IFRIC 14
IFRIC 14 (Nov 2009)
IAS 19 – the Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
45
FINANCIAL STATEMENTS

1
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
General information continued
At the date of authorisation of these financial statements, the following Standards and Interpretations which have
not been applied in these financial statements were in issue but not yet effective (and in some cases have not yet
been adopted by the EU):
IFRS 1 (Revised) First Time Adoption of IFRSs – Fixed Dates for certain exceptions with
Date of Transition to IFRSs
IFRS 7 (Revised) Financial Instruments: Disclosures – Transfers of Financial Assets
IFRS 9 (Revised) Financial Instruments: Classification and Measurement
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 1 (Revised) Presentation of Financial Statements – Comprehensive Income
IAS 12 (Revised) Income Taxes – Recovery of Underlying Assets
IAS 19 (Revised) Employee Benefits – Post Employment and Termination Benefits Project
IAS 27 (Revised) Separate Financial Statements
IAS 28 (Revised)
Amendments to IAS 32 (Dec 2011)
Amendments to IFRS 7 (Dec 2011)
Amendments to IFRS 1 (Dec 2010)
IAS 24 (revised Nov 2009)
Amendment to IAS 32 (Oct 2009)
IFRIC 20
Investments in Associates and Joint Ventures
With the exception of IFRS 9 Financial Instruments, the Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact on the financial statements of the Group. The
adoption of IFRS 9 Financial Instruments which the Group plans to adopt for the year beginning on 30 December
2012 will impact both the measurement and disclosures of Financial Instruments. It is not practical to quantify the
future impact of the application of IFRS 9.
Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).
The financial statements have also been prepared in accordance with IFRSs adopted by the European Union.
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 financial statements have been prepared on the historical cost basis, except for the revaluation of financial
instruments. The principal accounting policies adopted are set out below.
46 Bakkavor Group Annual Report 2011

2
Significant accounting policies continued
Corporate Reorganisation
In February 2011 a corporate reorganisation was completed in order to establish Bakkavor Finance (2) plc as an
intermediate holding Company of the Group and was accounted for using the principles of merger accounting. As
the corporate reorganisation did not have a direct result on the Group and the underlying business has operated
for all periods, the Board of Directors have prepared the financial statements to present all years on a comparative
basis as if the Company had existed for all periods. Therefore the comparative figures and the first 20 days of
January 2011 relate to its indirect parent, Bakkavor Holdings Limited.
Going Concern
The Directors have reviewed the historical trading performance of the Group and the forecasts through to March
2013, to assess the level of finance required across the Group. Refer to page 34, for the Directors’ consideration
of going concern.
Basis of consolidation
The Group financial statements comprise the financial statements of the parent undertaking and its subsidiary
undertakings, together with the Group’s share of the results of associated undertakings made up to a 53 or 52
week period ending on the Saturday nearest to 31 December. Where the fiscal year 2011 is quoted in these
financial statements this relates to the 52 week period ending 31 December 2011. The fiscal year 2010 relates to
the 52 week period ending 1 January 2011.
Subsidiaries
Subsidiary undertakings are included in the Group financial statements from the date on which control over
the operating and financial policies is obtained, and cease to be consolidated from the date on which control is
transferred out of the Group. Control exists when the Group has the power directly, or indirectly, to govern the
financial and operating policies of an entity so as to obtain economic benefits from its activities.
Associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control
or joint control, through participation in the financial and operating policy decisions of the investee. Significant
influence is the power to participate in the financial and operating policy decisions of the investee but is not
control or joint control over those policies. The results and assets and liabilities of associates are incorporated
in these financial statements using the equity method of accounting. Investments in associates are carried in
the balance sheet at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the
associate, less any impairment in the value of individual investments.
Goodwill within the associate is separately identifiable at the date of acquisition. Any negative goodwill is credited
in profit or loss in the period of acquisition.
Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent
of the Group’s interest in the relevant associate. Losses may provide evidence of an impairment of the asset
transferred in which case appropriate provision is made for impairment.
47
FINANCIAL STATEMENTS

2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Significant accounting policies continued
Business combinations
Business acquisitions with third parties are accounted for using the purchase 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 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 profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net
fair value of the assets, liabilities and contingent liabilities recognised.
Where a business combination is achieved in stages, the Group’s previously-held interests in the acquired entity
are re-measured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain
or loss, if any, is recognised in profit or loss.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the
fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date
of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any
accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least
annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected
to benefit from the synergies of the combination. Cash-generating units 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 cash-generating unit 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.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
Other intangible assets
Intangible assets have finite useful lives over which the assets are amortised on a straight line basis. The
amortisation charge for each period is recognised as an expense on the following basis:
• Customer relationships and customer contracts – 10 years.
48 Bakkavor Group Annual Report 2011

2
Significant accounting policies continued
Property, plant and equipment
All property, plant and equipment is stated in the statement of financial position at cost less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under
construction, over their estimated useful lives, using the straight-line method, on the following bases:
Buildings 2% – 5%
Fixtures and equipment 5% – 33%
Freehold land is not depreciated.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets or, where shorter, over the term of the relevant lease.
Reviews of the estimated remaining useful lives of and residual values of individual productive assets are
performed annually, taking account of commercial and technological obscelence 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.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in the income statement.
Impairment
The useful economic lives of intangible assets are determined based on a review of a combination of factors
including the asset ownership rights and the nature of the overall product life cycle.
Intangible assets and property, plant and equipment are tested for impairment when an event that might affect
asset values has occurred. 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”.
Goodwill is tested annually for impairment. Any impairment losses are written off immediately.
Inventories
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 less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
49
FINANCIAL STATEMENTS

2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Significant accounting policies continued
Assets held under leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Finance leases
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the
present value of the minimum lease payments, each determined at the inception of the lease. The corresponding
liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease
payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. The interest element of the finance cost is
charged to the Income Statement over the lease period. Assets held under finance leases are depreciated over
the shorter of the their expected useful lives or the lease term, taking into account the time period over which
benefits from the leased assets are expected to accrue to the Group.
Operating leases
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the
relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on
a straight-line basis over the lease term. Income earned from operating leases is credited to the income statement
when earned.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
receivable for goods provided in the normal course of business, net of discounts, VAT and other sales-related
taxes.
The Group sells fresh prepared foods and fresh produce. Revenue from the sales of these goods is recognised
when all of the following conditions are satisfied:
• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
• the Group retains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow into the entity;
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.
As a result, revenue for the sale of these goods is generally recognised upon delivery to the customer.
50 Bakkavor Group Annual Report 2011

2
Significant accounting policies continued
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary
economic 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, which is
the functional currency of the Company, and the presentation currency for the consolidated financial statements.
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. Nonmonetary
items carried at fair value that are denominated in foreign currencies are translated at the rates
prevailing at 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 profit or loss for the period. Exchange differences arising on the retranslation of non-monetary
items carried at fair value are included in profit or loss for the period except for differences arising on the
retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For
such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.
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 date of transactions are used. Exchange differences arising, if
any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are
recognised as income or as expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
of the foreign entity and translated at the closing rate.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received.
Government grants towards staff re-training costs are recognised as income over the periods necessary to match
them with the related costs and are deducted in reporting the related expense.
Government grants relating to property, plant and equipment are treated as deferred income and released to profit
or loss over the expected useful lives of the assets concerned.
Research and development
Research and developments costs comprise all directly attributable costs necessary to create and produce new
products which are both new in design and those being modified. Expenditure on research and development is
recognised as an expense in the period in which it is incurred.
51
FINANCIAL STATEMENTS

2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Significant accounting policies continued
Operating profit
Operating profit is stated after charging/crediting exceptional items (as presented in note 7), disposal of
subsidiaries and associates, impairment of assets (as presented in note 8) and share of results of associates but
before investment income and finance costs.
Retirement benefit obligations
Defined contribution 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, 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.
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. Actuarial gains and losses
are recognised in full in the period in which they occur. They are recognised outside profit or loss and presented in
the statement of comprehensive income.
Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is
amortised on a straight-line basis over the average period until the benefits become vested.
The retirement benefit recognised in the statement of financial position represents the present value of the
defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of
scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of
available refunds and reductions in future contributions to the scheme.
52 Bakkavor Group Annual Report 2011

2
Significant accounting policies continued
Taxation
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 year. 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 years
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.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit, and is accounted for using the balance sheet 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.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries
and associates, and interests in joint ventures, 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 equity, in which case the deferred tax is also dealt with in equity.
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.
Capitalisation of finance costs
Finance costs are netted against the loan finance to which it relates. These costs, together with the interest
expense, are allocated to the Income Statement over the term of the finance facility at a constant rate on the
carrying amount.
Financial assets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial
asset is under a contract whose terms require delivery of the financial asset within the timeframe established by
the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial
assets classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets at ‘fair value through profit or
loss’ (FVTPL), ‘held-to-maturity’ investments, and ‘loans and receivables’. The classification depends on the nature
and purpose of the financial assets and is determined at the time of initial recognition.
53
FINANCIAL STATEMENTS

2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Significant accounting policies continued
Financial assets continued
Effective interest method
Income is recognised on an effective interest basis for debt instruments other than those financial assets
designated as at FVTPL. The effective interest method is a method of calculating the amortised cost of a debt
instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral
part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of
the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Financial assets at FVTPL
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as
at FVTPL.
A financial asset is classified as held for trading if:
• It has been acquired principally for the purpose of selling in the near term; or
• On initial recognition it is a part of a portfolio of identified financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or
• It is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial
recognition if:
• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or
• The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and
its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management
or investment strategy, and information about the Group is provided internally on that basis; or
• It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments:
Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as
at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised
in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on
the financial asset and is included in the ‘other gains and losses’ line item in the income statement. Fair value is
determined in the manner described in note 29.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in
an active market are classified as ‘loans and receivables’. Loans and receivables 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.
54 Bakkavor Group Annual Report 2011

2
Significant accounting policies continued
Financial assets continued
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each statement of
financial position date. Financial assets are impaired where there is objective evidence that, as a result of one or
more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
Objective evidence of impairment could include:
• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
For certain categories of financial assets such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for
a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the
number of delayed payments in the portfolio past the average credit period, as well as observable changes in
national and local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original
effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes
in the carrying amount of the allowance account are recognised in the income statement.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed through the income statement to the extent that the carrying amount of the asset at the date
the impairment is reversed does not exceed what the amortised cost would have been had the impairment not
been recognised.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and short-term bank deposits with an original maturity of three
months or less, and other short-term highly liquid investments that are readily convertible to a known amount of
cash and are subject to an insignificant risk of changes in value.
Derecognition of financial assets
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.
55
FINANCIAL STATEMENTS

2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Significant accounting policies continued
Financial liabilities
Financial liabilities held by the Group are classified as other financial liabilities at amortised cost and derivatives
at FVTPL.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated
as at FVTPL.
A financial liability is classified as held for trading if:
• It has been incurred principally for the purpose of disposal in the near future; or
• It is a part of an identified portfolio of financial instruments that the Group manages together and has a recent
actual pattern of short-term profit-taking; or
• It is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial
recognition if:
• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or
• The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk
management or investment strategy, and information about the Group is provided internally on that basis; or
• It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments:
Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as
at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss.
The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is
determined in the manner described in note 29.
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. The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the
financial liability to its net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or they expire.
56 Bakkavor Group Annual Report 2011

2
Significant accounting policies continued
Derivative financial instruments
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates. The Group uses foreign exchange forward contracts and interest rate swap contracts to manage
these exposures. 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. Changes in the fair value of derivative financial
instruments are recognised in the income statement as they arise.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives
when their risks and characteristics are not closely related to those of host contracts and the host contracts are
not carried at fair value, with gains or losses reported in the income statement.
Provisions
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.
Present obligations arising from onerous contacts 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.
Contingent liabilities
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 not
recognised but it is disclosed in the notes to the financial statements. When an outflow becomes probable, it is
recognised as a provision.
57
FINANCIAL STATEMENTS

3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group’s accounting policies
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:
Going concern
The Directors, in their detailed consideration of going concern, have reviewed the Group’s future cash forecasts
and revenue projections, which they believe are based on prudent market data and past experience, and believe,
based on those forecasts and projections, that it is appropriate to prepare the financial statements of the Group on
a going concern basis.
In arriving at this conclusion the Directors considered the Group’s financing arrangements, which comprise £380m of
bank facilities committed to June 2014 and £350m of seven year listed bonds issued in February 2011. Importantly,
the Group’s liquidity remains particularly strong with £110m of facilities undrawn as at 31 December 2011.
The bank facilities are subject to a series of covenants set by the lenders. Financial covenants are measured
quarterly and include an assessment of leverage (the ratio of net debt to “EBITDA” (Earnings before interest, tax,
depreciation and amortisation); cashflow cover (the ratio of finance charges to cash generated from operations);
interest cover (the ratio of finance charges to EBITDA) and capital expenditure limits. The key financial covenant is
leverage which must be less than 5.75 times at 31 December 2011 and less than 5.0 times at 31 December 2012.
At 31 December 2011 the leverage ratio of net debt to EBITDA was 5.5 times. At the date of this report the Group
has complied in all respects with the terms of its borrowing agreements, including its financial covenants.
The Group believes it is adequately placed to manage covenant compliance successfully despite the challenging
macro economic environment. In the event that conditions worsen, the Group has the flexibility to react by
accessing additional working capital arrangements that we have already agreed with key stakeholders. Further
actions available to management may include a reduction to our capital expenditure programme and supply chain
improvements. Should this situation change, we believe that constructive discussions with our lenders would
enable the covenant to be reset, although we recognise that this could result in increased costs to the business.
Consequently the Directors have formed a reasonable expectation that the Company and the Group have
adequate resources to meet their liabilities as they fall due. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
Impairment of goodwill and other intangible assets
Impairment reviews in respect of goodwill are performed annually unless an event indicates that an impairment
review is necessary. Impairment reviews in respect of definite life intangible assets are performed when an event
indicates that an impairment review is necessary. Examples of such triggering events include a significant planned
restructuring, a major change in market conditions or technology, expectations of future operating losses, or a
significant reduction in cash flows.
The Group has recently undergone an internal restructuring, which also triggered a re-evaluation of its cash
generating units (‘CGUs’). As a consequence, the Group has increased the number of CGUs across the business
to reflect the revised lowest level of identifiable cash flows. This re-organisation does not impact the level at which
information is reviewed by the chief operating decision maker and as a consequence our reporting segments (as
defined in note 4) remain unchanged.
58 Bakkavor Group Annual Report 2011

3
Critical accounting judgements and key sources of estimation uncertainty continued
Impairment of goodwill and other intangible assets continued
The recoverable amount of CGUs are determined based on the higher of net realisable value and value-in use
calculations. These calculations require the use of estimates.
The Group has considered the impact of the assumptions used on the calculations and has conducted sensitivity
analysis on the impairment tests of the CGUs carrying values. See note 14 for further details.
Fair value of derivatives and other financial instruments
Derivative financial instruments and certain other financial assets are recorded at fair value in the statement
of financial position. The fair value of the financial instruments that do not have quoted market prices requires
significant judgement and estimates. The Directors use their judgement in selecting an appropriate valuation
technique for these financial instruments. Valuation techniques commonly used by market practitioners are applied.
For derivative financial instruments, assumptions are made based on quoted market rates adjusted for specific
features of the instrument. Other financial instruments are valued using a discounted cash flow analysis based
on assumptions supported, where possible, by observable market prices or rates. The estimation of fair value
of unlisted shares includes some assumptions not supported by observable market prices or rates. These
assumptions are based on past and expected future performance. Details of the assumptions used and of the
results of sensitivity analyses regarding these assumptions are disclosed in note 29.
Pensions
The Group maintains a number of defined benefit pension plans for which it has recorded a pension asset or
liability. The pension asset/liability is based on an actuarial valuation that requires a number of assumptions
including discount 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 work force. Details of the principal actuarial assumptions used in calculating the
recognised asset/liability for the defined benefit plan is given in note 36.
Recognition of deferred tax assets and current tax provision
The recognition of deferred tax assets is based upon whether it is probable that sufficient and suitable taxable
profits will be available in the future against which the reversal of temporary differences can be deducted. Where
the temporary differences related to losses, the availability of the losses to offset against forecast taxable profits
is also considered. Recognition therefore involves judgement regarding the future financial performance of the
particular legal entity or tax group in which the deferred tax asset has been recognised.
The Group operates in various countries and its income tax returns are subject to audit and adjustment by local tax
authorities. The nature of the Group’s tax exposures is often complex and subject to change and the amounts at
issue can be substantial. The Group develops an estimate of the potential tax liability based on the tax positions
taken, historical experience and its internal tax expertise. These estimates are refined as additional information
becomes known. Any outcome upon settlement that differs from a recorded provision may result in a materially
higher or lower tax expense in future periods. The impact of any such adjustments is disclosed in note 25. The
Group had unrecognised deferred tax assets as a result of unused tax losses of £17.9 million (2010: £18.9 million),
available for offset against future profits. Deferred tax assets are not recognised on the losses carried forward to
the extent that it is not probable that the losses will be utilised.
59
FINANCIAL STATEMENTS

4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Segment information
The chief operating decision-maker has been defined as the executive Directors. They review the Group’s internal reporting in
order to assess performance and allocate resources. Management has determined the segments based on these reports.
The Group is geographically diverse and within the UK operates primarily within the prepared food and produce markets.
Management assess the performance of the Group based on geographic location and splits the UK business into Prepared
and Produce segments.
As at the statement of financial position date, the Group is organised as follows:
• UK Prepared Foods: The preparation and marketing of fresh prepared foods for distribution in the UK.
• UK Produce: The marketing and distribution of fresh produce in the UK.
• Continental Europe: The preparation and marketing of fresh prepared foods and the marketing and distribution of
fresh produce in Europe.
• Rest of World: The preparation and marketing of fresh prepared foods and the marketing and distribution of
fresh produce in the rest of the world.
The Group’s segment measure of profit represents operating profit before exceptional items (as presented in note 7),
disposals of subsidiaries, associates and property, plant and equipment, impairment of assets (as presented in note 8),
management charges and share of results of associates.
Measures of total assets are provided to the chief operating decision-maker; 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 chief operating decision-maker.
The following table provides an analysis of the Group’s segment information for the period to 31 December 2011:
UK UK Continental Rest
£m Prepared Produce Europe of World Unallocated Total
Revenue 1,322.5 84.9 208.0 62.3 – 1,677.7
Segment profit/(loss) 60.6 (1.3) (3.5) (1.4) – 54.4
Exceptional items 10.1 (1.6) (0.5) (0.8) – 7.2
Impairment of assets (23.5) (13.8) (25.4) (14.2) – (76.9)
Bakkavor Group ehf management charge (1.2)
Loss on disposal of subsidiary (1.0)
Loss on disposal of associate (1.6)
Loss on disposal of property, plant and equipment (0.3)
Share of results of associates 1.1
Operating loss (18.3)
Investment revenue 0.1
Finance costs (65.2)
Other gains (net) 6.0
Loss before tax (77.4)
Tax 2.4
Loss for the period (75.0)
Other segment information
Depreciation and amortisation (40.3) (1.2) (8.8) (3.0) – (53.3)
Adjusted EBITDA 100.9 (0.1) 5.3 1.6 – 107.7
Capital additions 31.6 0.1 3.7 1.1 – 36.5
Total assets 1,082.6 7.8 115.9 64.5 42.2 1,313.0
60 Bakkavor Group Annual Report 2011

4
Segment information continued
The following table provides an analysis of the Group’s segment information for the period to 1 January 2011:
UK UK Continental Rest
£m Prepared Produce Europe of World Unallocated Total
Revenue 1,274.0 108.5 202.9 57.8 – 1,643.2
Segment profit/(loss) 77.0 (1.0) 1.7 0.3 – 78.0
Exceptional items 14.9 (0.1) (1.5) (0.6) – 12.7
Bakkavor Group ehf royalty (12.3)
Share of results of associates 1.0
Operating profit 79.4
Investment revenue 0.1
Finance costs (67.8)
Other gains 9.7
Profit before tax 21.4
Tax (14.2)
Profit for the period 7.2
Other segment information
Depreciation and amortisation (40.1) (1.3) (9.3) (3.0) – (53.7)
Adjusted EBITDA 117.4 0.3 11.0 3.3 – 132.0
Capital additions 24.0 0.2 3.1 1.5 – 28.8
Total assets 1,116.3 40.6 171.9 77.6 17.7 1,424.1
Major customers
In 2011 the Group’s five largest customers accounted for 75% of total revenue (2010: 75%), with no single customer
representing more than 28% (2010: 28%) of our global revenue. The Group does not enter into long-term contracts with its
retail customers.
61
FINANCIAL STATEMENTS

5
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Cost of sales and other administrative costs restatement
The Group has reviewed the basis of calculation of the gross profit. As a result of this review the calculation has been
amended. This is considered necessary to give a more accurate representation of the Group’s performance and to provide a
more comparable measure to that of our competitor peer group. The gross profit restatement includes a reversal of historic
overhead reclassifications and the extraction of distribution costs previously included with its gross profit.
The impact of the change is as follows:
As reported Restated
52 weeks 52 weeks
ended ended
1 January Effect of 1 January
£m 2011 change 2011
Revenue 1,643.2 – 1,643.2
Cost of sales (1,406.3) 212.4 (1,193.9)
Gross profit 236.9 212.4 449.3
Other distribution costs – (83.4) (83.4)
Other administrative costs (158.9) (129.0) (287.9)
Exceptional items 12.7 – 12.7
Bakkavor Group ehf royalty charge (12.3) – (12.3)
Total administrative costs (158.5) (212.4) (370.9)
Share of results of associates after tax 1.0 – 1.0
Operating profit 79.4 – 79.4
Operating (loss)/profit
(Loss)/profit for the period has been arrived at after charging/(crediting):
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Depreciation of property, plant and equipment – owned 41.5 41.7
Depreciation of property, plant and equipment – leased 2.4 2.6
Research and development costs 5.6 5.5
Cost of inventory recognised as an expense 868.1 831.1
Write down of inventories recognised as an expense/(credit) 0.2 (1.2)
Amortisation of intangible assets included in other administrative expenses 9.4 9.4
Impairment of assets 76.9 –
Exceptional items (note 7) (7.2) (12.7)
Loss on disposal of property, plant and equipment 0.3 0.3
Loss on disposal of subsidiary (note 31) 1.0 –
Loss on disposal of associate (note 32) 1.6 –
Staff costs (note 9) 388.2 377.8
62 Bakkavor Group Annual Report 2011

6
7
Operating (loss)/profit continued
The analysis of auditor remuneration is as follows:
52 weeks 52 weeks
ended ended
31 December 1 January
£’000 2011 2011
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 85 –
The audit of the Company’s subsidiaries pursuant to legislation 549 650
Total audit fees 634 650
Tax services 313 38
Fees payable to the Company’s auditor and their associates for other services to the Group 281 75
Total non-audit fees 594 113
Of the total non-audit fees, £539,000 relates to the refinancing that was completed in February 2011.
Exceptional items (net)
Exceptional items are those that, in management’s judgement, should be disclosed by virtue of their nature or amount.
Exceptional items are as follows:
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Defined benefit pension scheme credits 12.0 15.8
Fire insurance claim – 0.6
Legal settlement 3.1 –
Restructuring costs (7.9) (3.7)
7.2 12.7
Defined benefit pension scheme
The exceptional non-cash credit of £12.0 million in 2011 and £15.8 million in 2010, relates to the defined benefit pension
scheme. This has arisen due to changes to the scheme regarding future discretionary increases in 2010 and the closure of the
defined benefit pension scheme to future accrual as at the end of March 2011.
Restructuring costs
In 2011, the Group incurred £7.9 million (2010: £3.7 million) of restructuring costs of which £6.8 million relates to redundancy
costs and the remainder primarily comprises lease termination costs. The allocation of exceptional items by segment is shown
in note 4 of the accounts.
Legal settlement
In 2011, the Group received £3.1 million (2010: £nil) from the settlement of a legal claim.
63
FINANCIAL STATEMENTS

8
9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Impairment of assets
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Impairment of goodwill 71.2 –
Impairment of intangible assets 4.0 –
Impairment of property, plant and equipment 1.7 –
64 Bakkavor Group Annual Report 2011
76.9 –
The annual impairment review of the carrying value of goodwill and intangible assets has resulted in an impairment charge of
£75.2 million in total. The majority of the goodwill and intangible assets have been impaired for the Produce, Europe and
China businesses.
During the period, the Group also impaired property, plant and equipment by £1.7 million, in its UK businesses.
Staff costs
The average monthly number of employees (including executive Directors) during the year was:
2011 2010
Number Number
Production 15,730 15,593
Management and administration 1,815 1,625
Sales and distribution 873 896
18,418 18,114
Their aggregate remuneration comprised:
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Wages and salaries 333.2 329.9
Social security and other costs 44.9 43.1
Other pension costs (10.1) (11.3)
368.0 361.7
Other pension costs includes £12.0 million of defined benefit pension credits (2010: £15.8 million) as per note 7.

9
10
11
12
Staff costs continued
The Directors’ emoluments were as follows:
52 weeks 52 weeks
ended ended
31 December 1 January
£’000 2011 2011
Directors’ emoluments excluding pension contributions 819 3,189
Directors’ pension contributions 124 200
943 3,389
In addition one Director received £133,333 in the period for services provided in 2010.
The aggregate emoluments of the highest paid director were £596,520 (2010: £1,166,000). The accrued pension contributions
of the highest paid director at 1 January 2011 were £77,250 (2010: £35,000).
Investment revenue
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Interest on bank deposits 0.1 0.1
Other gains (net)
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Increase in the fair value of derivative financial instruments 6.3 9.3
Foreign exchange (losses)/gains (0.3) 0.4
Finance costs
6.0 9.7
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Interest on borrowings 59.7 46.3
Interest on obligations under finance leases 0.2 0.5
Amortisation of refinancing costs 3.8 11.8
Interest on loans from other group companies 0.7 8.1
Unwinding of discount on provisions 0.8 1.1
65.2 67.8
65
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
13Tax
52 weeks
ended
31 December
52 weeks
ended
1 January
£m 2011 2011
Current tax 2.6 3.6
Deferred tax (note 25) (5.0) 10.6
66 Bakkavor Group Annual Report 2011
(2.4) 14.2
Corporation tax is calculated at 26.5% (2010: 28%) of the estimated assessable (loss)/profit for the period. Taxation for other
jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The (credit)/charge for the period can be reconciled to the (loss)/profit per the income statement as follows:
2011 2011 2010 2010
£m % £m %
(Loss)/profit before tax: (77.4) (100.0) 21.4 100.0
Tax at the UK corporation tax rate of 26.5% (2010: 28%) (20.5) (26.5) 6.0 28.0
Non-deductible expenses 20.9 27.0 4.0 18.7
Adjustment in respect of prior periods (0.8) (1.0) 3.3 15.4
R&D tax credits (1.7) (2.2) (0.3) (1.4)
Tax effect of utilisation of tax losses not previously recognised (1.0) (1.3) (0.8) (3.7)
Tax effect of losses carried forward 2.6 3.3 2.3 10.8
Overseas taxes at different rates 1.0 1.3 0.8 3.7
Release of deferred tax on IBA reversal (0.8) (1.0) (0.5) (2.3)
Deferred tax change in rate (2.1) (2.7) (0.6) (2.8)
Tax (credit)/charge and effective tax rate for the period (2.4) (3.1) 14.2 66.4
In addition to the amount credited to the income statement, a £5.0 million credit (2010: £2.5m charge) relating to tax has been
recognised directly in other comprehensive income. No other tax charges have been recognised directly in equity.
During the year the relevant deferred tax balances have been re-measured as a result of the change in the UK main
corporation tax rate to 26%, which was substantively enacted on 29 March 2011 and became effective from 1 April 2011; and
to 25%, which was substantively enacted on 5 July 2011 and will be effective from 1 April 2012.
Further reductions to the UK corporation tax rate were announced in the March 2011 budget. The changes, which are expected
to be enacted separately each year, propose to reduce the rate by 1% per annum to 23% by 1 April 2014. The changes had not
been substantively enacted at the balance sheet date and therefore are not recognised in these financial statements.

14Goodwill
Cost
At 2 January 2010 739.7
Adjustment to consideration on acquisition of subsidiaries (note 32) (6.2)
Acquisition of business (note 32) 6.1
Exchange differences 0.3
At 1 January 2011 739.9
Adjustment to consideration on acquisition of subsidiaries (note 32) 0.1
Acquisiton of subsidiaries (note 32) 0.4
Disposal of subsidiary (note 31) (1.3)
Exchange differences (0.8)
At 31 December 2011 738.3
Accumulated impairment losses
At 2 January 2010 & 1 January 2011 –
Impairment (71.2)
At 31 December 2011 (71.2)
Carrying amount
At 31 December 2011 667.1
At 1 January 2011 739.9
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected
to benefit from that business combination. A summary of the allocation of carrying value of goodwill is as follows:
31 December 1 January
£m 2011 2011
UK Prepared 604.1 627.6
Produce – 10.8
Europe 36.5 63.3
Rest of World 26.5 38.2
667.1 739.9
The recoverable amounts of the CGUs are determined based on value in use calculations.
67
£m
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
continued
The following impairments have been recognised in the period:
14Goodwill
31 December 1 January
£m 2011 2011
UK Prepared 23.5 –
Produce 10.8 –
Europe 23.9 –
Rest of World 13.0 –
68 Bakkavor Group Annual Report 2011
71.2 –
These impairments have arisen as a result of adverse trading conditions. Any favourable change in assumptions in future
periods will result in additional headroom of value in use over net assets of the CGU. However any adverse changes would
result in additional impairment.
The key assumptions used are as follows:
• Discount rates: Management uses post-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 that
ranges from 10.0% to 10.9%.
• Growth rates: The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are
based on past practices and expectations of future changes in the market. The Group prepares cash flow forecasts derived
from the most recent financial budgets approved by management for the next year and extrapolates cash flows for the
following four years based on an estimated growth rate, determined by business unit, to provide a 5 year forecast. Cash
flows are then extrapolated using a perpetuity growth rate of 2 per cent (2010: 2 per cent) which does not exceed the
average long-term growth rate for the relevant markets.
The assumptions used, and the impact of sensitivities on these assumptions, are shown below:
UK Rest of
£m
Sensitivity:
Prepared Europe World
Head room of impairment test based on management assumptions 187.0 9.3 9.4
If the pre-tax discount rate were to be increased by a factor of 5% this would result in an increased impairment charge of
£4.6 million and for an increase of 10% the impairment charge would increase by £20.4 million. A 10% reduction in the
perpetuity growth rate would not result in any further impairment charge.

intangible assets
£m
15Other
Cost
Customer
Relationships
Customer
Contracts Total
At 2 January 2010 92.8 1.6 94.4
Exchange differences (0.1) – (0.1)
At 1 January 2011 92.7 1.6 94.3
Exchange differences (0.1) – (0.1)
At 31 December 2011 92.6 1.6 94.2
Amortisation
At 2 January 2010 (34.9) (0.8) (35.7)
Charge for the period (9.3) (0.1) (9.4)
At 1 January 2011 (44.2) (0.9) (45.1)
Impairment (4.0) – (4.0)
Charge for the period (9.2) (0.2) (9.4)
At 31 December 2011 (57.4) (1.1) (58.5)
Carrying amount
At 31 December 2011 35.2 0.5 35.7
At 1 January 2011 48.5 0.7 49.2
The impairment of £4.0 million in 2011 (2010: £nil) has arisen as a result of adverse trading conditions.
The breakdown of where the impairments have occurred is as follows:
31 December 1 January
£m 2011 2011
Produce 1.3 –
Europe 1.5 –
Rest of World 1.2 –
4.0 –
69
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
plant and equipment
Land Fixtures
and and
16Property,
£m buildings equipment Total
Cost
At 2 January 2010 108.8 391.9 500.7
Additions 3.5 25.3 28.8
Acquisition of subsidiary (note 32) – 0.6 0.6
Disposals (0.1) (3.6) (3.7)
Exchange differences 0.4 (1.6) (1.2)
At 1 January 2011 112.6 412.6 525.2
Additions 2.6 33.9 36.5
Acquisition of subsidiary (note 32) 0.1 0.1 0.2
Disposal of subsidiary (note 31) (2.0) (2.2) (4.2)
Disposals – (8.3) (8.3)
Reclassification from assets held for sale 6.1 – 6.1
Exchange differences (0.3) (1.8) (2.1)
At 31 December 2011 119.1 434.3 553.4
Accumulated depreciation and impairment
At 2 January 2010 (32.2) (137.7) (169.9)
Charge for the period (6.3) (38.0) (44.3)
Disposals – 3.3 3.3
Exchange differences (0.1) 0.4 0.3
At 1 January 2011 (38.6) (172.0) (210.6)
Charge for the period (6.4) (37.5) (43.9)
Disposals of subsidiary (note 31) 0.3 0.9 1.2
Disposals – 7.9 7.9
Impairment of assets – (1.7) (1.7)
Exchange differences 0.2 1.2 1.4
At 31 December 2011 (44.5) (201.2) (245.7)
Carrying amount
At 31 December 2011 74.6 233.1 307.7
At 1 January 2011 74.0 240.6 314.6
The carrying value of the Group’s fixtures and equipment includes an amount of £4.2 million (2010: £13.5 million) in respect of
assets held under finance leases.
At 31 December 2011, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment amounting to £3.4 million (2010: £5.3 million).
During the period, the Group impaired property, plant and equipment by £1.7 million, in its UK Produce businesses.
70 Bakkavor Group Annual Report 2011

in associates
£m
17Interests
Aggregated amounts relating to associates
31 December
2011
1 January
2011
Total assets 15.9 17.0
Total liabilities (10.4) (11.3)
Net assets 5.5 5.7
Group’s share of associates net assets 2.0 3.7
Premium on acquisition 8.0 8.5
Interests in associates 10.0 12.2
Revenue 75.5 74.6
Profit for the period 3.0 2.2
Groups share of associates’ profit for the period 1.1 1.0
Details of the principal associated undertakings for the Group at 31 December 2011 are as follows:
Proportion of voting interest Place of registration Method of
Name 2011 2010 and operation accounting
Manor Fresh Limited 27.5% 27.5% United Kingdom Equity
La Rose Noire Limited 45.0% 45.0% Hong Kong Equity
Manor La Rose Gastro
Fresh Noire Primo
£m Limited Limited Limited Total
Share of net assets/costs
At 2 January 2010 0.5 9.2 2.3 12.0
Share of profit after tax 0.3 0.8 (0.1) 1.0
Currency movement – 0.3 0.2 0.5
Dividend payment (0.3) (1.0) – (1.3)
At 1 January 2011 0.5 9.3 2.4 12.2
Share of profit after tax 0.3 0.8 – 1.1
Currency movement – 0.1 – 0.1
Dividend payment (0.2) (0.8) – (1.0)
Disposal of associate – – (2.4) (2.4)
At 31 December 2011 0.6 9.4 – 10.0
On 21 December 2011 the Group acquired 52% of Gastro Primo Limited in Hong Kong, to increase its ownership to 100%,
for a cash consideration of US$1.0 million (£0.6 million) and deferred consideration of US$0.4 million (£0.3 million). The 48%
already held has been accounted for as a disposal of associate, under IFRS 3 business combinations, which has resulted in
a loss on sale of associate of £1.6 million being recorded in the income statement.
71
FINANCIAL STATEMENTS

19
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
18
Other investments
£m
Non listed
investments
held at cost
At 1 January 2011 and 31 December 2011 0.1
Inventories
31 December 1 January
£m 2011 2011
Raw materials and packaging 48.2 44.2
Work-in-progress 2.4 2.1
Finished goods 11.9 10.3
62.5 56.6
Trade and other receivables
31 December 1 January
£m 2011 2011
Amounts receivable from trade customers 164.8 165.8
Allowance for doubtful debts (3.2) (4.4)
Net amounts receivable from trade customers 161.6 161.4
Other receivables 10.7 11.9
Prepayments 17.8 16.7
190.1 190.0
Less: amounts receivable after one year
Other receivables – (0.3)
190.1 189.7
The average credit period taken on sales of goods is 36 days (2010 – 36 days). An allowance has been made for estimated
irrecoverable amounts from the sale of goods of £3.2 million (2010: £4.4 million). Allowances of receivables are made on a
specific basis based on objective evidence and previous default experience. 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.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value due to their
short-term nature.
72 Bakkavor Group Annual Report 2011

and other receivables continued
The following table is an ageing analysis of trade receivables:
20Trade
31 December 1 January
£m 2011 2011
Not past due 145.3 142.4
Past due by 1 – 30 days 14.7 15.1
Past due by 31 – 60 days 1.5 4.1
Past due by 61 – 90 days 0.5 1.5
Past due by more than 90 days 2.8 2.7
Trade receivables renegotiated in 2011 that would have otherwise have been past due or impaired amounted to £nil
(2010: £nil).
164.8 165.8
The majority of the Group’s customers are all leading UK retailers, representing more than 75% of the Group’s revenue and
therefore hold favourable credit ratings. On this basis the Group does not see any need to charge interest, seek collateral or
credit enhancements to secure any of its trade receivables due to their short term nature.
The following table is an analysis of the movement of the Group’s trade receivables allowance for doubtful debts:
31 December 1 January
£m 2011 2011
Balance at beginning of the period (4.4) (3.1)
Allowances recognised on receivables (1.1) (1.5)
Amounts written off as uncollectible during the year 0.5 0.2
Amounts recovered during the year 1.5 –
Allowance reversed 0.3 –
Balance at end of the period (3.2) (4.4)
The following table is an analysis of the Group’s net trade receivables by currency:
31 December 1 January
£m 2011 2011
GBP 125.3 127.4
USD 4.6 4.7
Euro 25.2 25.5
CZK 0.3 0.2
ZAR 1.7 1.5
RMB 3.3 2.1
CAD 0.1 –
HKD 1.1 –
161.6 161.4
73
FINANCIAL STATEMENTS

21
22
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Assets held for sale
31 December 1 January
£m 2011 2011
Assets held for sale – 7.9
Property with a carrying value of £1.8 million was sold during the period to a third party for net cash consideration of
£1.6 million, resulting in a £0.2 million loss on disposal.
The remaining properties classified as held for sale with a carrying value of £6.1 million (2010: £6.1 million) were re-classified
during the period to property, plant and equipment. The decision to no longer classify the remaining properties as held for sale
was taken by the Board of Directors as they believe it is unlikely that the properties will be sold during the next 12 months.
Cash and cash equivalents
31 December 1 January
£m 2011 2011
Cash and cash equivalents 30.1 40.8
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three
months or less. The carrying amount of these assets approximates their fair value.
Cash balances include £3.1 million of restricted cash in respect of the net sale proceeds from the sale of Bakkavor Traiteur
and a property sale. This balance is held within a separate account under the control of Barclays bank. In February 2012 the
balance in this account will be used to prepay £3.1 million of the Company’s bank term loan as required under the terms of the
Company’s banking agreement.
Borrowings
31 December 1 January
£m 2011 2011
Bank overdrafts 4.1 2.1
Bank loans 262.8 618.3
8.25% senior secured notes 352.0 –
The borrowings are repayable as follows:
74 Bakkavor Group Annual Report 2011
618.9 620.4
On demand or within one year 32.6 56.1
In the second year 16.6 563.8
In the third to fifth years inclusive 569.7 0.5
618.9 620.4
Less: Amount due for settlement within 12 months (shown under current liabilities) (32.6) (56.1)
Amount due for settlement after 12 months 586.3 564.3

continued
Borrowings by currency
23Borrowings
31 December 1 January
£m 2011 2011
GBP 611.8 520.6
USD – 46.8
Euro 5.1 51.3
ZAR – 0.4
RMB 1.5 1.3
CZK 0.3 –
HKD 0.2 –
The weighted average interest rates paid were as follows:
618.9 620.4
31 December 1 January
2011 2011
% %
Bank overdrafts 1.78 2.63
Bank loans 6.93 4.02
£300 million (2010: £400 million) interest rate swaps and a collar were in place at 31 December 2011 against Group bank
facilities, which expose the Group to fair value interest rate risk. Other borrowings continue to be arranged at floating rates,
thus exposing the Group to cash flow interest rate risk.
The Directors estimate the fair value of the Group’s borrowings are not materially different from their book value due to the
current rates available to the Group being in line with the rates agreed over the facilities and the relative costs of renegotiation
of the debt as compared to the capital value.
31 December 1 January
£m
Analysis of net debt
2011 2011
Cash and cash equivalents 30.1 40.8
Borrowings (617.1) (620.4)
Unamortised fees 15.3 –
Interest accrual (17.1) –
Total borrowings (618.9) (620.4)
Finance leases (2.6) (5.8)
Net debt (591.4) (585.4)
On the 7 February 2011, Bakkavor Finance (2) plc issued a seven year £350 million listed bond and the Group also refinanced
its main financing facilities in Bakkavor London Limited, Bakkavor Acquisitions (2008) Limited and Bakkavor China Limited
through a term loan and revolving credit facility (RCF) of £380 million that will expire on 30 June 2014 arranged through
Bakkavor Finance (2) plc. The majority of the Group’s loan facilities are therefore now through Bakkavor Finance (2) plc.
75
FINANCIAL STATEMENTS

23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Borrowings continued
The Bakkavor Finance (2) plc bond and bank facilities are subject to various restrictive financial covenants including interest
cover ratio (EBITDA as a multiple of finance charges), leverage (net debt as a multiple of EBITDA) and cashflow cover (cashflow
as a multiple of finance charges). At 31 December 2011 the Group was in compliance with all such covenants.
The key features of the bond and loans are as follows:
Bakkavor Finance (2) plc bond
Bakkavor Finance (2) plc issued on 7 February 2011 £350 million of 8.25% Senior Secured Notes due in 2018. Interest on
the Notes is payable semi-annually each year on February 15 and August 15 with the first payment made on 15 August 2011.
The Notes will mature on 15 February 2018. The Notes are secured by fixed and floating charges over the assets of Bakkavor
Finance (2) plc and its significant subsidiaries.
Bakkavor Finance (2) plc bank facilities
Bakkavor Finance (2) plc has a term loan of £260 million and a Revolving credit facility (RCF) of £120 million which both expire
on 30 June 2014. The Group has drawn £260 million of the term loan but has not drawn any of the RCF as at 31 December
2011. The RCF facility includes a £10 million ‘carve out’ for overdraft and £20 million for ancillary facilities. At 31 December
2011, £13.7 million of the ‘carve out’ was utilised.
The term loan is to be repaid in instalments with £5 million due in June 2012 and December 2012, followed by £10 million in
June 2013 and December 2013. The balance is then due on termination in June 2014. The interest rate of the term loan at
31 December 2011 was a variable rate of 5.63% which represents LIBOR plus a margin of 4.5%. The bank facilities are
secured by a floating charge over the assets of Bakkavor Finance (2) plc and its subsidiaries.
Bakkavor Estates Limited loan
The loan Bakkavor Estates Limited had at 1 January 2011 of £19.8 million from Kaupthing Singer & Friedlander was repaid on
10 January 2011.
24
Derivative financial instruments
Held for trading derivatives that are not designated in hedge accounting relationships:
31 December 1 January
£m 2011 2011
Foreign currency contracts – included in current assets 0.4 1.0
Foreign currency contracts (2.0) –
Interest rate contracts (15.9) (24.8)
Included in current liabilities (17.9) (24.8)
Total (17.5) (23.8)
Further details of derivative financial instruments are provided in note 29.
76 Bakkavor Group Annual Report 2011

tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the
25Deferred
current and prior reporting period.
Accelerated Retirement
tax Fair value Impairment benefit
£m depreciation gains Intangibles Provisions losses obligations Total
At 2 January 2010 30.1 (9.5) 16.5 (3.3) (6.7) (3.7) 23.4
Charge/(credit) to income 4.6 2.9 (3.2) 1.9 – 4.4 10.6
Charge to equity – – – – – 2.5 2.5
Reallocation of deferred tax (5.1) – – – 5.1 – –
As 1 January 2011 29.6 (6.6) 13.3 (1.4) (1.6) 3.2 36.5
Charge/(credit) to income (7.3) 2.4 (4.4) 0.1 0.1 4.1 (5.0)
Credit to equity – – – – – (5.0) (5.0)
Translation of overseas balances 0.6 – – – – – 0.6
As 31 December 2011 22.9 (4.2) 8.9 (1.3) (1.5) 2.3 27.1
The credit to equity relates to retirement benefit obligation movements of £5.0 million (2010: £2.5 million charge).
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after
offset) for financial reporting purposes:
31 December 1 January
£m 2011 2011
Deferred tax liabilities 27.1 36.5
At the statement of financial position date, the Group has unused tax losses of £17.9 million (2010: £18.9 million) available for
offset against future profits. Deferred tax assets are not recognised on the losses carried forward to the extent that it is not
probable that the losses will be utilised.
The Group is not aware of any temporary differences associated with undistributed earnings of subsidiaries due to the
availability of tax credits against such liabilities. The Group is in a position to control the timing of the reversal of any such
temporary differences should they arise.
Temporary differences arising in connection with interests in associates are insignificant.
77
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
26Obligations under finance leases
78 Bakkavor Group Annual Report 2011
Minimum lease Present value of
payments lease payments
31 December 1 January 31 December 1 January
£m 2011 2011 2011 2011
Amounts payable under finance leases:
Within one year 0.9 3.1 0.8 2.8
In the second to fifth years inclusive 2.3 3.3 1.8 3.0
Less: future finance charges (0.6) (0.6)
3.2 6.4 2.6 5.8
Present value of lease obligations 2.6 5.8 2.6 5.8
Less: Amount due for settlement within 12 months (shown under current liabilities) (0.8) (2.8)
Amount due for settlement after 12 months 1.8 3.0
It is the Group’s policy to lease certain fixtures and equipment under finance leases. The weighted average lease term
outstanding is 4.5 years (2010: 4 years). For the 52 weeks ended 31 December 2011, the weighted average effective
borrowing rate was 4.20% (2010: 4.46%). 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.
Obligations are denominated in Sterling (£0.2 million), Euro (£2.3 million) and Hong Kong dollars (£0.1 million) and the fair value
of the Group’s lease obligations approximates their carrying amount. The Group’s obligations under finance leases are secured
by the lessors’ rights over the leased assets.

and other payables
£m
27Trade
31 December
2011
1 January
2011
Trade payables 197.1 183.8
Amounts payable to other group companies 0.1 0.7
Social security and other taxation 3.2 3.8
Put option consideration (note 33) – 5.0
Deferred consideration 0.3 –
Other payables 31.3 35.0
Accruals 83.5 83.2
Less: amounts due after one year:
315.5 311.5
Deferred consideration (0.1) –
Other payables (0.2) (0.2)
Trade and other payables due within one year 315.2 311.3
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average
credit period taken for trade purchases is 60 days (2010 – 53 days). No interest is incurred against trade payables.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
The following table is an analysis of the Group’s trade payables by currency:
31 December 1 January
£m 2011 2011
GBP 143.7 131.9
USD 3.3 3.3
Euro 43.6 44.2
CZK 0.4 0.4
ZAR 1.7 1.4
RMB 3.4 2.6
CAD 0.2 –
HKD 0.8 –
197.1 183.8
79
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Onerous leases
and other Dilapidations
28Provisions
£m provisions provisions Total
At 2 January 2010 7.3 11.6 18.9
Additional provision in the period 3.4 0.3 3.7
Release of provision (1.3) (3.4) (4.7)
Utilisation of provision (3.0) (1.5) (4.5)
Unwinding of discount 0.2 0.9 1.1
At 1 January 2011 6.6 7.9 14.5
Included in current liabilities 1.8 – 1.8
Included in non-current liabilities 4.8 7.9 12.7
At 1 January 2011 6.6 7.9 14.5
Increase of provision 3.0 – 3.0
Release of provision (2.8) (1.1) (3.9)
Utilisation of provision (2.0) – (2.0)
Unwinding of discount 0.4 0.4 0.8
At 31 December 2011 5.2 7.2 12.4
Included in current liabilities 1.2 0.6 1.8
Included in non-current liabilities 4.0 6.6 10.6
Onerous leases and other provisions
Onerous lease and other provisions include provisions related to unused premises. Of this, £5.2 million (2010: £5.5 million)
relates to onerous leases and related costs that will be utilised over the term of the individual leases to which they relate.
Releases of provisions relate to where onerous leases have been reviewed due to changing circumstances and adjustments
to the ongoing provisions are required. The release of provisions follows the original treatment which are released in
administrative costs.
Dilapidation provisions relate to 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.
80 Bakkavor Group Annual Report 2011

instruments
Capital risk management
29Financial
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 debt, which includes the borrowings disclosed in note 23, cash and cash equivalents and equity attributable
to equity holders 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 cash 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 and enables the Group to operate as a going concern
and maximise stakeholders return.
When the Group considers an acquisition, the Board of Directors will decide on how to fund that acquisition either through
debt, equity or a mixture of both. The Board of Directors will look at the Group’s existing debt to equity ratio and the costs
involved in financing debt or equity, before deciding on how to fund the proposed acquisition.
Gearing ratio
The gearing ratio at the year end is as follows:
31 December 1 January
£m 2011 2011
Debt 621.5 626.2
Cash and cash equivalents (30.1) (40.8)
Net debt 591.4 585.4
Equity 301.3 187.7
Net debt to net debt plus equity percentage 66.2% 75.7%
Debt is defined as long and short term borrowings, such as bank loans, overdrafts and finance leases payable.
Externally imposed capital requirement
The Group is subject to externally imposed capital requirements on capital expenditure as a result of bank covenants (see note
23, Borrowings).
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 2 to the financial statements.
81
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
instruments continued
Categories of Financial Instruments
29Financial
31 December 1 January
£m
Financial assets
Fair value through profit and loss:
2011 2011
Derivative financial instruments 0.4 1.0
Loans and receivables at amortised cost:
Trade receivables 161.6 161.4
Other receivables 10.7 11.9
Cash and cash equivalents 30.1 40.8
202.8 215.1
Financial liabilities
Fair value through profit and loss:
Derivative financial instruments 17.9 24.8
Other Financial liabilities at amortised cost:
Trade payables 197.1 183.8
Put option consideration – 5.0
Deferred consideration 0.3 –
Other payables 31.3 35.0
Amounts due to other group companies 0.1 205.7
Borrowings 618.9 620.4
Finance leases 2.6 5.8
868.2 1,080.5
The fair value of the financial assets approximates to their carrying value due to the short term nature of the receivables. Fair
values have been determined as level 2 under IFRS 7.
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 finance lease fair value approximates to the
carrying value based on discounted future cash flows.
Financial risk management
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 these risks where possible and does this by
constantly monitoring, reviewing, effectively managing and using derivative financial instruments as detailed in the Directors’
report. Use of financial instruments is governed by Group policies which are approved by the Board of Directors. The treasury
function does not operate as a profit centre, makes no speculative transactions and only enters into or trades financial
instruments to manage specific exposures.
To make sure the management of those financial risks faced by the Group remain effective, it is very important that any new
businesses that are acquired by the Group are immediately integrated. This means the new business is providing timely and
accurate information to the central Treasury department, so they can produce group reports on key financial risks that reflect
the ultimate position of the Group at that time.
Further details on financial risks are provided within the Our Governance section on page 32.
82 Bakkavor Group Annual Report 2011

instruments continued
Market risk
29Financial
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:
• Forward foreign exchange contracts to hedge the exchange rate risk arising on revenues and purchases in foreign
currencies.
• Interest rate swaps to mitigate the risk of rising interest rates.
Market risk exposures are supplemented by sensitivity analysis. There has been no change to the Group’s exposure to market
risks or the manner in which it manages and measures the risk.
Foreign currency risk management
Foreign currency risk management occurs at a transactional level on revenues and purchases in foreign currencies and at a
translational level in relation to the translation of overseas operations. Board policy is for UK businesses to hedge transactional
exposures using forward foreign exchange contracts wherever material. Transactional exposure in our overseas businesses,
are generally not hedged, as receipts and payments are largely in their local currencies. The Group monitors foreign exchange
rates to assess the potential impact on group profits if exchange rates move significantly and a summary of hedges in place
are reported monthly to the Board of Directors.
The Group’s main foreign exchange risk is to the Euro and US dollar.
During the 52 week period to 31 December 2011, the Euro weakened against Sterling by 2.6%, with the closing rate at
�1.1972 compared to �1.1671 at the prior period end. The average rate for the 52 week period to 31 December 2011 was
�1.1529, a strengthening of the Euro of 1.1% versus prior year.
In the same period the US dollar, strengthened against Sterling by 0.7%, with the closing rate at $1.5541 compared to
$1.5657 at the prior period end. The average rate for the period to 31 December 2011 was $1.6045, a 3.9% weakening of the
US dollar versus the prior year.
The net foreign exchange impact on profit from transactions is a loss of £0.3 million (2010: gain of £0.4 million).
83
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
instruments continued
Foreign currency risk management continued
29Financial
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, and 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
where Sterling strengthens 10% against relevant currency.
Profit or (loss) Profit or (loss)
10% Strengthening 10% Weakening
31 December 1 January 31 December 1 January
£m 2011 2011 2011 2011
Euro (1.1) 2.3 1.2 (2.5)
USD (1.0) 2.7 1.1 (2.9)
RMB 0.1 0.1 (0.1) (0.1)
ZAR (0.2) 0.1 0.2 (0.1)
Forward foreign exchange contracts
It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments and
receipts. The Group also enters into forward foreign exchange contracts to manage the risk associated with anticipated sales
and purchase transactions to minimise the exposure generated.
The following table details the Sterling forward foreign currency contracts outstanding as at 31 December 2011:
Average exchange Foreign currency Contract value Fair value
rate
(m)
(£m)
(£m)
Outstanding contracts
Buy Euros:
2011 2010 2011 2010 2011 2010 2011 2010
Less than 3 months 1.16 1.18 16.4 22.7 14.2 19.3 (0.5) 0.3
3 to 6 months 1.17 1.20 16.5 14.0 14.2 11.7 (0.3) 0.4
6 to 12 months
Buy US Dollars:
1.17 1.19 9.0 6.9 7.7 5.8 (0.1) 0.2
Less than 3 months 1.56 1.56 6.8 4.9 5.9 3.1 (0.1) –
3 to 6 months 1.59 1.55 2.0 5.9 1.2 3.8 0.1 –
6 to 12 months 1.58 1.56 1.4 1.6 0.9 1.1 – –
44.1 44.8 (0.9) 0.9
84 Bakkavor Group Annual Report 2011

instruments continued
Forward foreign exchange contracts continued
29Financial
The following table details the Euro forward foreign currency contracts outstanding as at 31 December 2011:
Average Foreign Contract Fair Fair
exchange currency value value value
rate (m) (€m) (€m) (£m)
Outstanding contracts
Buy US Dollars:
2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
Less than 3 months 1.37 – 0.5 – 0.4 – – – – –
6 to 12 months 1.38 1.32 10.4 2.0 7.5 1.5 (0.5) – (0.5) –
7.9 1.5 (0.5) – (0.5) –
The following table details the South African Rand (ZAR) forward foreign currency contracts outstanding as at 31 December 2011:
Average Foreign Contract Fair Fair
exchange currency value value value
rate (m) (ZARm) (ZARm) (£m)
Outstanding contracts
Buy US Dollars:
2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
Less than 3 months
Buy Sterling:
– 0.12 – 0.3 – 2.8 – 0.5 – 0.1
Less then 3 months 12.72 – 0.2 – 2.8 – (1.6) – (0.1) –
3 to 6 months 12.93 – 0.1 – 1.0 – (0.4) – (0.1) –
3.8 2.8 (2.0) 0.5 (0.2) 0.1
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. Interest rate risk management balances debt financing as a tool to improve the returns through
leverage in the capital structure with the potential for an increase in interest rates to impact profits negatively. The Group
operates a risk policy which broadly maintains the ratio between floating and fixed interest rates at 50:50. Since the Group
refinancing in February 2011 most of the debt is now at a fixed rate but this will reverse to a large extent, as £250 million of
interest rate swaps mature in the next 12 months. The Group also uses derivative financial instruments such as interest rate
swaps and interest rate collars to minimise the risk associated with variable interest rates. As a result of this policy, at the year
end 48% of the Group’s borrowings were covered by interest rate swaps and collars (2010: 65%). The remaining borrowings
are mostly at fixed rates. The Group has issued £350 million of 8.25% fixed rate Senior Secured Notes that are listed on the
Irish Stock Exchange (see note 23). Board approval is required for the use of any interest rate derivative.
Interest rate sensitivity analysis
Interest rate sensitivity analysis has been performed on the financial assets and liabilities 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, comprising management’s
assessment of reasonably possible changes in interest rates.
Profit/(loss) Profit/(loss)
31 December 1 January
£m 2011 2011
Effects of 100 basis points increase in interest rate (0.7) (5.1)
Effects of 100 basis points decrease in interest rate 0.7 5.1
It is assumed that all other variables remained the same when preparing the interest rate sensitivity analysis.
85
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
instruments continued
Interest rate risk management continued
29Financial
Interest rate swaps
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 risk of changing
interest rates on the fair value of issued fixed rate debt held and 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
yield curves at the reporting date and the credit risk inherent in the contract, and is disclosed below. The average interest rate
is based on the outstanding balances at the end of the financial year. £250 million of these interest rate swaps mature in the
next 12 months.
The following table details the notional principal amounts and remaining terms of interest rate swap contracts and collars
outstanding as at 31 December 2011:
Average contract Notional
fixed interest rate
principal amount
Fair value
2011 2010 2011 2010 2011 2010
% % £m £m £m £m
Interest rate swaps
0 to 1 years 5.03 4.90 150.0 100.0 (4.4) (3.0)
1 to 5 years – 5.03 – 150.0 – (10.0)
Over 5 years
Collars
4.90 4.90 50.0 50.0 (9.9) (6.7)
0 to 1 years 4.37 – 100.0 – (1.6) –
1 to 5 years – 4.37 – 100.0 – (5.1)
300.0 400.0 (15.9) (24.8)
The interest rate swaps settle on a quarterly basis. The floating rate on the interest rate swaps is 3 months LIBOR. The Group
will settle the difference between fixed and floating interest rates on a net basis.
Although one of the derivatives has a maturity of more than twelve months, it is expected that the derivative will be held for
less than twelve months from the reporting period, and therefore has been presented as a current liability.
86 Bakkavor Group Annual Report 2011

instruments continued
Credit risk management
29Financial
Credit risk refers to the risk of financial loss to the Group if, a counterparty defaults on its contractual obligations of the loans
and receivables at amortised cost held in the balance sheet.
The Group’s main credit risk is attributable to its trade receivables. The Group’s top five customers, all leading UK retailers,
continue to represent more than 75% of the Group’s revenue. These customers hold favourable credit ratings and
consequently reduce the credit risk for the Group’s overall trade receivables.
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 to spread the risk. Currently Group deposits are shared between banks that are counterparties in the Group’s secured
committed bank facilities. Bakkavor Finance (2) plc current bank credit limit consists of a £260 million Term loan and a £120
million RCF facility, through a bank syndicate. Barclays Capital is the syndicate agent of this facility and they manage the
syndicate and participation with other counterparties.
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.
Commodity risk management
The Group acquires substantial amounts of raw materials for its operations, including dairy, wheat and rapeseed oil. The Group
is exposed to commodity price and supply risks for these raw materials. The Group takes actions to reduce overall material
costs and exposure to price fluctuations. This is done in a number of ways. For example, the Group buys raw materials from
suppliers all over the world, thereby decreasing geographic risk and frequently tenders to benchmark market prices. In general
our requirements are managed using contracts for periods of between three to twelve months forward. The Group also
manage any local currency exposure in line with agreed contracts.
Liquidity risk management
Liquidity risk refers to the risk that the Group may not be able to fund the day to day running of the Group. Liquidity risk is
reviewed by the Board of Directors on a monthly basis. The Group manages liquidity risk by monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities. The Group also monitors the drawdown of debt
against the available banking facilities and reviews the level of reserves. Liquidity risk management ensures sufficient debt
funding is available for the Group’s day to day needs. Board policy is to maintain reasonable headroom of unused committed
bank facilities in a range of maturities at least 12 months beyond the period end.
87
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
instruments continued
Maturity profile of financial liabilities
29Financial
The following table illustrates the Group’s financial liability obligations and when they fall due.
31 December 1 January
£m
Due within one year:
2011 2011
Trade payables 197.1 183.8
Amounts due to other group companies 0.1 0.7
Put option consideration – 5.0
Deferred consideration 0.2 –
Other payables 31.1 34.8
Derivative financial instruments 17.9 24.8
Borrowings 32.6 56.1
Finance leases 0.9 3.1
Interest on borrowings 48.5 40.0
Total due within one year 328.4 348.3
In the second to fifth years inclusive:
Other payables 0.2 0.2
Amounts due to other group companies – 205.0
Deferred consideration 0.1 –
Borrowings 237.9 564.3
Finance leases 2.3 3.3
Interest on borrowings 136.3 6.1
Total due in the second to fifth years 376.8 778.9
Due after five years:
Borrowings 348.4 –
Interest on borrowings 43.2 –
Total due after five years 391.6 –
The weighted average interest rates for the Group’s borrowings are found in note 23 and in note 26 for Finance leases.
88 Bakkavor Group Annual Report 2011

capital and reserves
Share Capital
30Share
31 December
£m
Issued and fully paid:
2011
53,258 ordinary shares of £1 each 0.1
One ordinary share was issued to provide the Company with start up capital on 21 January 2011. On 3 February 2011,
1,200 ordinary shares were issued in consideration for the acquisition of Bakkavor Finance (3) Limited. On 4 February 2011,
50,000 ordinary shares were issued to Bakkavor Finance (1) Limited for a cash consideration of £50,000. On 7 February 2011,
a further 2,057 ordinary shares were issued in consideration for the assumption by the Company’s parent Bakkavor Finance (1)
Limited of an intra-Group loan owed by a Group subsidiary to the Company’s ultimate parent Company, Bakkavor Group ehf,
which was subsequently capitalised.
Share premium
On 3 February 2011, £96.6 million of share premium was created in relation to the acquisition of Bakkavor Finance (3) Limited.
Further to this, on 7 February 2011, the amount due to other group companies loan of £205 million, owed to Bakkavor Group
ehf, was capitalised in exchange for shares.
Merger reserve
The incorporation of Bakkavor Finance (2) plc as an intermediate holding Company of the Group was accounted for using the
principles of merger accounting.
Capital reserve
The capital reserve of £4.0 million arose in 2009 following the capitalisation of an inter-company balance between Bakkavor
London Limited and Bakkavor Group ehf.
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
balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange
differences arising, if any, are recognised in the translation reserve.
89
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
of subsidiary
On 7 September 2011 the Group disposed of its interest in Bakkavor Traiteur SAS for a cash consideration of �1.9 million (£1.6
31Disposal
million), resulting in a loss on disposal of £1.0 million, net of £0.1 million of disposal costs. The loss on disposal includes £0.4
million of foreign currency translation gains recycled from the translation reserve to the income statement on disposal.
The net assets of Bakkavor Traiteur SAS at the date of disposal and as at 1 January 2011 were as follows:
7 September 1 January
£m 2011 2011
Property, plant and equipment 3.0 3.3
Inventories 0.3 0.6
Trade receivables 0.9 1.6
Trade and other payables (1.2) (2.2)
Bank overdraft (1.1) (0.7)
Finance lease (0.3) (0.5)
Attributable goodwill 1.3 1.3
Net assets 2.9 3.4
Disposal costs 0.1
Recycle net foreign exchange gains (0.4)
Loss on disposal (1.0)
Total consideration 1.6
Net cash inflow arising on disposal:
Cash consideration 1.6
Bank overdrafts disposed of 1.1
Disposal costs (0.1)
2.6
The disposal of Bakkavor Traiteur SAS does not qualify as a discontinued operation as defined by IFRS 5 Non-current assets
held for sale and discontinued operations, as it does not represent a separate major line of business.
90 Bakkavor Group Annual Report 2011

of business
2011
32Acquisition
On 21 December 2011 the Group acquired 52% of Gastro Primo Limited in Hong Kong, to increase its ownership to 100%, for
a cash consideration of US$1.0 million (£0.6 million) and deferred consideration of US$0.4 million (£0.3 million). Gastro Primo
held £0.4 million of cash at the date of acquisition. This has resulted in goodwill of £1.2 million being recognised and also a
loss on disposal of an associate of £1.6 million being recorded in the income statement.
The net effect of the acquisition is as follows:
£m
Fair value of 100% of Gastro Primo 1.7
Book value and fair value of net assets acquired (0.5)
Goodwill on acquisition 1.2
The loss on disposal of an associate is as follows:
£m
Carrying value of original 52% investment in Gastro Primo 2.4
Fair value of 52% investment in Gastro Primo 0.8
Loss on disposal of an associate (1.6)
On 3 November 2011 the Group acquired the remaining 20% of Bakkavor China Limited that it did not own for a cash
consideration of US$30,000, which resulted in the recognition of £0.8 million negative goodwill. This negative goodwill has
been recognised in the income statement.
2010
MS Salads Marketing Limited
On 4 May 2010, a subsidiary company, English Village Salads Limited, acquired the trade and assets of the packaging and
marketing business of MS Salads Marketing Limited from Hedon Salads Holdings Limited. In exchange for the assets
acquired, English Village Salads Limited issued share capital to their current shareholders and the shareholders of Hedon
Salads Holdings Limited on a basis that effectively transferred 30% of the Group’s ownership of English Village Salads Limited
to the shareholders of Hedon Salads Holdings Limited.
The net effect of the acquisition is as follows:
£m
Fair value of shares issued 2.6
Book value and fair value of net assets acquired (0.6)
Goodwill on acquisition 2.0
Goodwill from the acquisition relates to benefits associated with the wider range of produce marketing experience in the
combined business and anticipated future operating synergies from the combination.
91
FINANCIAL STATEMENTS

32
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Acquisition of business continued
Italpizza Srl
On 7 December 2010 a Put option in relation to the 10% non-controlling interest in Italpizza Srl was exercised by the option
holder. As a result the Group was required to acquire the remaining 10% interest and a liability of �5.8 million (£5.0 million)
was booked in the 2010 financial statements.
In April 2011, Italpizza Srl paid a dividend of �530,000 (£459,000) to the non-controlling interest. This transaction has reduced
the consideration for the remaining 10% interest from �5.8 million (£5.0 million) to �5.3 million (£4.5 million). As a result of
the decrease in consideration, the value of goodwill generated from the acquisition of the remaining 10% interest, has also
been reduced from �4.8 million (£4.1 million) to €4.3 million (£3.6 million).
Other acquisitions
In 2010 £6.8 million of deferred consideration payments and £9.9 million of contingent consideration payments were made in
relation to acquisitions transacted in previous periods. The contingent consideration payment related to the acquisition of Two
Chefs on a Roll Inc. and was lower than the original estimate. This settlement has therefore had the impact of reducing the
Group’s goodwill in relation to this acquisition by £6.2 million.
Notes to the statement of cash flows
31 December 1 January
£m 2011 2011
Operating (loss)/profit (18.3) 79.4
Adjustments for:
Share of results of associates (1.1) (1.0)
Depreciation of property, plant and equipment 43.9 44.3
Amortisation of intangible assets 9.4 9.4
Loss on disposal of property, plant and equipment 0.3 0.5
Loss on disposal of subsidiary (note 31) 1.0 –
Loss on disposal of associate (note 32) 1.6 –
Impairment of assets 76.9 –
Net retirement benefits charge less contributions (16.4) (16.1)
Operating cash flows before movements in working capital 97.3 116.5
Increase in inventories (5.9) (6.2)
Decrease/(increase) in receivables 0.5 (8.3)
Increase in payables 13.3 41.0
Increase in exceptional creditor 1.5 0.7
Decrease in provisions (3.0) (5.4)
Cash generated by operations 103.7 138.3
Income taxes paid (3.4) (2.6)
Interest paid (64.5) (59.2)
Net cash from operating activities 35.8 76.5
92 Bakkavor Group Annual Report 2011

34
Contingent liabilities and commitments
The Group may from time to time, and in the normal course of business, be subject to claims from customers and
counterparties. The Group regularly reviews all of these claims to determine any possible financial loss to the Group. No
provision was considered necessary in the consolidated financial statements. In addition, there are a number of legal claims
or potential claims against the Group, the outcome of which cannot at present be foreseen. Provision has been made for all
probable liabilities.
As at 31 December 2011 the Group has purchase commitments for the next 12 months to guarantee supply and price of raw
materials of £51.6 million (1 January 2011: £35.4 million).
35
Operating lease arrangements
The Group as lessee
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Minimum lease payments under operating leases recognised as an expense in the period 10.4 10.2
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under noncancellable
operating leases, which fall due as follows:
Land and buildings Other
31 December 1 January 31 December 1 January
£m
Operating leases which expire:
2011 2011 2011 2011
Within one year 6.1 6.6 3.9 3.8
Within two to five years 20.3 23.6 5.6 6.1
After five years 44.7 50.1 – 0.1
71.1 80.3 9.5 10.0
The Group leases various offices and operational facilities under non-cancellable operating lease arrangements. The leases
have various terms, escalation clauses and renewal rights. The Group also leases plant and machinery under non-cancellable
operating lease agreements.
93
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
benefit schemes
The Group operates a number of pension schemes in the UK and overseas. These schemes are either trust or contract
36Retirement
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 other a funded defined benefit scheme which was closed for future accrual in March 2011.
Pension credit/costs charged in arriving at profit on ordinary activities before taxation were:
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
UK defined benefit scheme net (credit)/charge (1.6) 3.5
UK defined benefit scheme exceptional credit (12.0) (15.8)
UK defined contribution scheme net charge 3.2 0.7
Overseas net charge 0.3 0.3
Total credit (10.1) (11.3)
The exceptional credit has arisen due to the defined benefit scheme closing to future accrual and closure of the scheme in
March 2011.
Defined contribution schemes
The total cost charged to income of £3.5 million (2010: £1.0 million) represents contributions payable to these schemes by
the Group at rates specified in the rules of the plans. No amounts were owing at the period end for the defined contribution
schemes (2010: £nil)
Defined benefit schemes
A full actuarial valuation of plan assets and the present value of the defined benefit obligation for funding purposes was
carried out at 31 March 2010 and was updated for IAS 19 purposes to 31 December 2011 by a qualified independent actuary.
The projected unit cost method was used to value the liabilities and was conducted by Lloyd Cleaver a qualified independent
actuary with Towers Watson Limited.
The major assumptions used in this IAS 19 valuation were:
31 December 1 January
2011 2011
Expected rate of salary increases – 4.40%
Future pension increases 2.95% 3.30%
Expected return on scheme assets 6.25% 7.34%
Discount rate applied to scheme liabilities 5.00% 5.50%
Inflation assumption (CPI) 2.00% 2.70%
94 Bakkavor Group Annual Report 2011

enefit schemes continued
The mortality table is based on scheme specific postcode fitted SAPS tables with a 102% multiplier for male members and
36Retirement
108% multiplier for female members. Long cohort improvements are applied from 2002 to 2010. Future improvements are in
line with CMIB improvements with a 1.0% pa long term trend, giving life expectancies as follows:
Males expected Males expected Females expected Females expected
future lifetime future lifetime future lifetime future lifetime
2011 2010 2011 2010
Member aged 45 in 2010 41.6 41.5 43.9 43.8
Member aged 65 in 2010 22.1 21.9 24.1 24.0
The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:
Approximate impact
Assumption Change in assumption on scheme liabilities
Discount rate Decrease by 0.1% Increase by 1.5% – 2.0%
Rate of inflation Decrease by 0.1% Decrease by 1.25% – 1.75%
Rate of salary growth N/A N/A
Rate of mortality Increased by 1 year Increase by 3%
Amounts recognised in income in respect of these defined benefit schemes are as follows:
52 weeks 52 weeks
ended ended
31 December 1 January
£m 2011 2011
Current service cost (1.1) (4.1)
Interest cost (9.0) (9.5)
Expected return on scheme assets 11.7 10.1
Past service cost – 15.8
Gain from curtailments 12.0 –
Total credit 13.6 12.3
All of the credit for the period has been included in total administrative expenses, except for the past service cost and gain
from curtailments, which are shown within exceptional items. Actuarial gains and losses have been reported in the statement
of recognised income and expense. At 31 March 2011 the scheme closed to future accrual and this has been allowed for in
the liability calculations. The closure of the scheme has led to a £12.0 million credit to the income statement and is disclosed
within exceptional items.
The actual return on scheme assets was a £4.8 million loss (2010: £22.9 million gain).
Cumulative amount of actuarial gains and losses recognised in other comprehensive income since the date of IFRS transition
is £45.2 million loss (2010: £26.3 million loss).
95
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
benefit schemes continued
The amount included in the balance sheet arising from the Group’s obligations in respect of its defined benefit retirement
36Retirement
benefit schemes is as follows:
31 December 1 January
£m 2011 2011
Fair value of scheme assets 170.6 179.7
Present value of defined benefit obligations (161.3) (167.9)
Surplus in scheme 9.3 11.8
Related deferred taxation liability (2.3) (3.2)
7.0 8.6
The assumptions used by the actuary 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.
Movements in the present value of defined benefit obligations were as follows:
31 December 1 January
£m 2011 2011
Opening balance (167.9) (169.6)
Current service cost (1.1) (4.1)
Interest cost (9.0) (9.5)
Contributions from scheme members (0.8) (2.5)
Benefits paid 7.9 5.9
Loss on change of assumptions (1.5) 1.7
Experience loss (0.9) (5.6)
Removal of future discretionary pension increases – 15.8
Gain from curtailments 12.0 –
Closing balance (161.3) (167.9)
Movements in the fair value of scheme assets were as follows:
31 December 1 January
£m 2011 2011
Opening balance 179.7 156.4
Expected return on scheme assets 11.7 10.1
Experience (loss)/gain (16.5) 12.8
Contributions from the sponsoring Companies 2.8 3.8
Contributions from scheme members 0.8 2.5
Benefits paid (7.9) (5.9)
Closing balance 170.6 179.7
96 Bakkavor Group Annual Report 2011

enefit schemes continued
The analysis of the scheme assets and the expected rate of return at the balance sheet date was as follows:
36Retirement
Expected return Fair value of assets
31 December 1 January 31 December 1 January
2011 2011 2011 2011
% % £m £m
UK equities 6.90 7.80 56.2 67.7
Overseas equities 6.90 7.80 57.5 61.9
Corporate bonds 4.20 4.90 35.9 31.1
UK government bonds 2.50 4.00 12.0 10.6
Property 5.60 6.40 8.7 8.7
Cash – – 0.3 (0.3)
170.6 179.7
31 December 1 January 2 January 27 December 29 December
£m 2011 2011 2010 2008 2007
Fair value of scheme assets 170.6 179.7 156.4 127.9 168.6
Present value of defined benefit obligations (161.3) (167.9) (169.6) (127.5) (150.6)
Surplus/(deficit) in the scheme 9.3 11.8 (13.2) 0.4 18.0
Experience (losses)/gains adjustments on scheme liabilities:
Amount (0.9) (5.6) 3.5 4.9 (8.7)
Percentage of scheme liabilities (%) (0.56) (3.34) 2.06 3.84 (5.78)
Experience gains/(losses) on scheme assets:
Amount (16.5) 12.8 21.6 (51.3) (0.2)
Percentage of scheme assets (%) (9.67) 7.12 13.81 (40.11) (0.12)
The actual amount of contributions expected to be paid to the pension scheme during 2011 was £3.6 million (2010:
£6.3 million). The employer contribution rate for 2011 was 13.2% of pensionable salaries until 31 March 2011 when the
scheme closed to future accrual and so regular contributions ceased to be paid (except for deficit reduction contributions)
(2010: 13.2%).
The next triennial valuation is scheduled to be carried out as at 31 March 2013.
The deficit reduction contributions have been agreed between the Group and the trustees. These are paid over a five year
recovery period ending on 31 March 2016. The recovery contributions are paid monthly and the agreed rates were £2 million in
the first year, £3 million in the second year and £4.5 million in the following three years.
The Group estimate the scheme liabilities on average fall due over 20 years.
The Trustees currently adopt a policy of 70% return seeking assets (equities) and 30% liability matching assets (bonds/
property) which will be reviewed periodically. A review of the investment strategy is currently underway following the closure
of the scheme to future accrual.
The Group and the Trustees work closely together 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.
97
FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and
37Related
are not disclosed in this note. Transactions between the Group and its associates are disclosed below. Transactions between
the Company and its subsidiaries and associates are disclosed in the Company’s separate financial statements.
Trading transactions
During the period, Group companies entered into the following transactions with related parties who are not members of
the Group:
Bakkavor Group
management
charge/trademark
Sale of goods
Purchase of goods
Interest charge
licensing agreement
£m 2011 2010 2011 2010 2011 2010 2011 2010
Associates 0.2 – 0.1 0.2 – – – –
Bakkavor Group ehf. – – – – 0.7 8.1 1.2 12.3
In 2010, the Group paid a royalty fee to Bakkavor Group ehf under a Trademark Licensing Agreement whereby Bakkavor Group
ehf has granted the Group a license to use the Bakkavor name and trademark. This agreement ceased in 2011. Also, in 2010 £1.2
million of cash was paid to Bakkavor Group ehf, which covered both trademark licensing agreement fees and interest costs.
In 2011, £1.2 million was paid to Bakkavor Group ehf relating to management charges.
Amounts owed to
related parties
£m 2011 2010
Bakkavor Group ehf. 0.1 205.0
Other related parties – 1.1
The amount of £205.0 million in 2010 owed to Bakkavor Group ehf is included in the non-current liabilities section of the Group
balance sheet, amounts due to other group companies. The 2011 amount, of £0.1 million is included in the current liabilities
section within Trade and other payables.
Loans between the Group and related parties are all based on varying terms of interest. Related party loans are repayable
between one and five years and incur interest based on the three month libor rate plus 3%.
The amounts outstanding are unsecured. No guarantees have been given or received. No provisions have been made for
doubtful debts in respect of the amounts owed by related parties.
Remuneration of key management personnel
The remuneration of the Directors and senior management, who are the key management personnel of the Company, is set
out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
31 December 1 January
£m 2011 2011
Short-term employee benefits 6.1 5.8
Post-employment benefits 0.7 0.4
6.8 6.2
98 Bakkavor Group Annual Report 2011

38
39
Events after the statement of financial position date
There were no significant events after the statement of financial position date.
Controlling party
The Company’s immediate and ultimate parent Company and ultimate controlling party is Bakkavor Group ehf, a Company
registered in Iceland. The largest Group in which the results of the Group are consolidated is that headed by Bakkavor Group
ehf. It has included this Group in its Group financial statements, copies of which are available from Thorvaldsenstraeti 6,
6th Floor, 101 Reykjavik, Iceland.
99
FINANCIAL STATEMENTS

COMPANY INCOME STATEMENT
50 WEEKS ENDED 31 DECEMBER 2011
50 weeks
ended
31 December
£m Notes 2011
Continuing operations
Finance costs 4 (46.2)
Loss before tax (46.2)
Tax 5 12.2
Loss and total comprehensive income for the period (34.0)
The accompanying notes are an integral part of this income statement.
The Company has no recognised gains and losses other than the loss above, and therefore no separate Statement of
comprehensive income is presented.
COMPANY STATEMENT OF CHANGES IN EQUITY
50 WEEKS ENDED 31 DECEMBER 2011
Share Share Retained Total
£m capital premium earnings equity
New shares issued 0.1 302.4 – 302.5
Loss for the period – – (34.0) (34.0)
Balance at 31 December 2011 0.1 302.4 (34.0) 268.5
100 Bakkavor Group Annual Report 2011

COMPANY STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2011
£m Notes 31 December 2011
Non-current assets
Investment in subsidiaries 7 929.4
Current assets
Amounts due from other group companies 11 12.2
Current liabilities
Borrowings 6 (35.7)
Amounts due to other group companies 11 (51.6)
Other payables (0.1)
Non-current liabilities
Borrowings 6 (585.7)
Net assets 268.5
Equity
Share capital 10 0.1
Share premium 10 302.4
Retained earnings (34.0)
Total equity 268.5
The financial statements of Bakkavor Finance (2) plc, company number 7501697, and the accompanying notes, which form an
integral part of the Company financial statements, were approved by the Board of Directors on 27 February 2012. They were
signed on behalf of the Board of Directors by:
A Gudmundsson
Director
12.2
(87.4)
101
FINANCIAL STATEMENTS

COMPANY STATEMENT OF CASH FLOWS
50 WEEKS ENDED 31 DECEMBER 2011
50 weeks
ended
31 December
£m 2011
Increase in payables 50.4
Cash generated by operations 50.4
Interest paid (43.1)
Net cash generated from operating activities 7.3
Investing activities:
Acquisition of subsidiary (627.1)
Net cash used in investing activities (627.1)
Financing activities:
Issue of shares 0.1
New borrowings 654.7
Repayment of borrowings (35.0)
Net cash generated from financing activities 619.8
Net increase in cash and cash equivalents –
Cash and cash equivalents at beginning of period –
Effect of foreign exchange –
Cash and cash equivalents at end of period –
102 Bakkavor Group Annual Report 2011

NOTES TO THE COMPANY FINANCIAL STATEMENTS
1
2
3
4
General information
Bakkavor Finance (2) plc (the “Company”) was incorporated in the United Kingdom under the Companies Act 2006 on
21 January 2011 as a Limited Liability Company for the purpose of becoming an intermediate holding Company of the
Group previously headed by Bakkavor Holdings Limited. On 4 February 2011 the Company was registered as a Public Limited
Company and issued 50,000 £1 ordinary shares to Bakkavor Finance (3) Limited.
As the Company was incorporated during the period, these Company financial statements are for the 50 week period to
31 December 2011 and therefore there are no comparative figures for the prior period.
Significant accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that
Act, the separate financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted by EU.
The financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments.
The principal accounting policies adopted are the same as those set out in note 2 to the consolidated financial statements
except as set out below.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Employees, Directors and audit remuneration
Audit fees of £85,000 for the period ended 31 December 2011 have been borne by fellow Group Company Bakkavor Foods
Limited. The Company has no employees and payments to Directors for the period ended 31 December 2011 have been borne
by fellow Group Company Bakkavor Foods Limited.
Finance costs
50 weeks
ended
31 December
£m 2011
Interest on borrowings 41.1
Amortisation of refinancing costs 3.8
Interest on loans from other group companies 1.3
103
46.2
FINANCIAL STATEMENTS

5
6
7
NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
Tax
The charge for the period can be reconciled to the loss per the income statement as follows:
50 weeks
ended
31 December
2011
£m %
Loss before tax (46.2) (100.0)
Group relief surrendered at tax rate of 26.5% 12.2 26.5
Tax charge and effective tax rate for the period 12.2 26.5
Borrowings
31 December
£m 2011
Bank overdraft 9.7
Bank loans 259.7
8.25% senior secured notes 352.0
621.4
The borrowings are repayable as follows:
On demand or within one year 35.7
In the second year 16.0
In the third to fifth years inclusive 569.7
621.4
Less: Amount due for settlement within 12 months (shown under current liabilities) (35.7)
Amount due for settlement after 12 months 585.7
All borrowings are denominated in Pounds Sterling.
Investments in subsidiaries
Investment
in Group
£m Companies
Additions during the period 929.4
Balance at 31 December 2011 929.4
104 Bakkavor Group Annual Report 2011

8
Subsidiaries
As at 31 December 2011, Bakkavor Finance (2) plc held investments in the share capital in the following Companies
(ownership in dormant Companies have not been listed):
Place of registration
Name
Directly held investments:
and operation Principal activity Interest
Bakkavor Finance (3) Limited United Kingdom Holding Company 100%
Indirectly held investments:
Bakkavor Foods Limited United Kingdom Preparation and marketing of fresh prepared foods 100%
Heli Food Fresh AS Czech Republic Preparation and marketing of fresh prepared foods 100%
Anglia Crown Limited United Kingdom Preparation and marketing of fresh prepared foods 100%
Bakkavor Fresh Cook Limited United Kingdom Preparation and marketing of fresh prepared foods 100%
English Village Salads Limited United Kingdom Packaging and marketing of fresh produce 65%
Cinquime Saison SAS Group (includes 2 further subsidiaries) France Preparation and marketing of fresh prepared foods 100%
Centrale Salades France SAS France Preparation and marketing of fresh prepared foods 100%
Crudi SAS France Preparation and marketing of fresh prepared foods 100%
Sogesol SA Spain Preparation and marketing of fresh prepared foods 100%
S.B.L.P SAS France Preparation and marketing of fresh prepared foods 100%
Bakkavor Overseas Limited United Kingdom Importer and exporter of machinery and equipment 100%
Vaco BV Belgium Preparation and marketing of fresh prepared foods 100%
Bakkavor (SA) (Pty) Limited
Creative Food Group Limited
South Africa Preparation and marketing of fresh prepared foods 100%
(includes 13 further subsidiaries within Hong Kong and China) Hong Kong Produce and manufactures salad products 100%
Italpizza Srl Italy Manufacture of branded and private label pizza products 100%
Two Chefs on a Roll Inc USA Manufacture of custom and private label savoury
and bakery products 100%
Bakkavor Foods Canada Inc Canada Preparation and marketing of fresh prepared foods 100%
Bakkavor Estates Limited United Kingdom Property management 100%
Bakkavor Finance Limited United Kingdom Group management services 100%
Bakkavor London Limited United Kingdom Holding Company 100%
Bakkavor Acquisitions (2008) Limited United Kingdom Holding Company 100%
Bakkavor USA Inc USA Holding Company 100%
Bakkavor USA Limited United Kingdom Holding Company 100%
Bakkavor (Acquisitions) Limited United Kingdom Holding Company 100%
Bakkavor Limited United Kingdom Holding Company 100%
Bakkavor Foods France United Kingdom Holding Company 100%
4G Financiere SAS France Holding Company 100%
4G SAS France Holding Company 100%
Bakkavor European Marketing BV Netherlands Holding Company 100%
Bakkavor China Limited United Kingdom Holding Company 100%
Bakkavor Asia Limited United Kingdom Holding Company 100%
Bakkavor Invest Limited United Kingdom Holding Company 100%
Bakkavor Pension Trustees Limited United Kingdom Holding Company 100%
Bakkavor Acquisition (2008) ehf Iceland Non-trading 100%
Bakkavor London ehf Iceland Non-trading 100%
Notsallow 256 Limited United Kingdom Non-trading 100%
Exotic Farm Prepared Limited United Kingdom Non-trading 100%
Cucina Sano Limited United Kingdom Non-trading 100%
105
FINANCIAL STATEMENTS

8
9
10
NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
Subsidiaries continued
Place of registration
Name and operation Principal activity Interest
Indirectly held investments continued:
Bakkavor Central Finance Limited United Kingdom Non-trading 100%
Butterdean Products Limited United Kingdom Non-trading 100%
Bakkavor Overseas Holdings Limited United Kingdom Non-trading 100%
Exotic Farm Produce Limited United Kingdom Non-trading 100%
Bakkavor Maroc Morocco Non-trading 100%
Financial instruments
Foreign currency risk
The Company is not exposed to any foreign currency risk as its borrowings are all in Pounds Sterling.
Interest rate risk management
The Company is exposed to interest rate risk on borrowings. The risk is managed by maintaining an appropriate mix between
fixed and floating rate borrowings. The Group uses derivative financial instruments such as interest rate swaps and interest
rate collars to minimise the risk associated with variable interest rates.
Interest rate sensitivity analysis
Interest rate sensitivity analysis has been performed on Company borrowings of £324.3 million to illustrate the impact on
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, comprising management’s
assessment of reasonably possible changes in interest rates.
31 December
2011
£’000 Profit/(loss)
Effects of 100 basis points increase in interest rate (3.2)
Effects of 100 basis points decrease in interest rate 3.2
All Company borrowings are denominated in Sterling.
Share capital and reserves
Issued and fully paid:
106 Bakkavor Group Annual Report 2011
31 December 2011
Number £m
Ordinary shares of £1 each 53,258 0.1
One ordinary share was issued to provide the Company with start up capital on 21 January 2011. On 3 February 2011,
1,200 ordinary shares were issued in consideration for the acquisition of Bakkavor Finance (3) Limited. On 4 February 2011,
50,000 ordinary shares were issued to Bakkavor Finance (1) Limited for a cash consideration of £50,000. On 7 February 2011,
a further 2,057 ordinary shares were issued in consideration for the assumption by the Company’s parent Bakkavor Finance (1)
Limited of an intra-Group loan owed by a Group subsidiary to the Company’s ultimate parent Company, Bakkavor Group ehf.
which was subsequently capitalised.

10
12
13
Share capital and reserves continued
Share premium
On 3 February 2011, £96.6 million of share premium was created in relation to the acquisition of Bakkavor Finance (3) Limited.
Further to this, on 7 February 2011, the related party loan of £205 million owed to Bakkavor Group ehf was capitalised in
exchange for shares.
11
Related party transactions
Transactions
During the period, the Company entered into the following transactions with related parties.
Amounts owed by Amounts owed to
related parties related parties
£m 2011 2011
Group Companies 12.2 51.6
£51.6 million is a corporate loan owed to Bakkavor London Limited and £12.2 million is tax Group relief owed to Bakkavor
Finance (2) plc by various other Group Companies.
These amounts are unsecured and will be settled in cash. No guarantees have been given or received. No provisions have
been made for doubtful debts in respect of the amounts owed by related parties.
Amounts are denominated in Sterling. All related party payables and receivables are held at amortised cost.
Events after the statement of financial position date
There were no significant events after the statement of financial position date.
Controlling party
The Company’s ultimate parent Company and ultimate controlling party is Bakkavor Group ehf, a Company registered in
Iceland. The largest Group in which the results of the Company are consolidated is that headed by Bakkavor Group ehf. It has
included the Company in its Group financial statements, copies of which are available from Thorvaldsenstraeti 6, 6th Floor,
101 Reykjavik, Iceland.
The immediate parent of the Company is Bakkavor Finance (1) Limited.
The smallest Group into which the accounts are consolidated is Bakkavor Finance (2) Limited plc, copies of the financial
statements of Bakkavor Finance (2) plc are available form West Marsh Road, Spalding, Lincolnshire, PE11 2BB,
United Kingdom.
107
FINANCIAL STATEMENTS

CORPORATE INFORMATION
Bakkavor Group Head Office
3 Sheldon Square
Paddington Central
London
W2 6HY
Tel: +44 20 7266 6400
Bakkavor Registered office
West Marsh Road
Spalding
Lincolnshire
PE11 2BB
External Affairs
Tamarin Bibow
Tel: +44 20 7266 6443
Investor.relations@bakkavor.com
Auditors
Deloitte LLP
4 Brindley Place
Birmingham
B1 2HZ
Principal bankers
Barclays Capital
Royal Bank of Scotland PLC
Rabobank International, London Branch
Mizuho Corporate Bank, Ltd.
108 Bakkavor Group Annual Report 2011

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