Bakkavor : Half Year Results 2020

Proven business model delivers a solid performance

Bakkavor Group plc ('Bakkavor', 'the Group' or 'the Company'), the leading provider of fresh prepared food in the UK, today announces its half year unaudited results for the 26-week period ended 27 June 2020.

FINANCIAL HIGHLIGHTS

• Reduction in Group revenue limited to 4.6% at £880.5m and steady recovery since April into H2
• Group like-for-like revenue¹ down 5.2% to £852.4m
  • Solid UK trading in extremely challenging market, with 4.5% decrease to £754.0m
  • International revenues down 10.1% to £98.4m, reflecting early impact of COVID-19 in China, offset by encouraging growth in the USA
• Adjusted operating profit¹ down 32.3% to £28.7m
• Basic earnings per share of 0.9p and Adjusted earnings per share of 2.6p
• Operational net debt¹ increased by 3.0% to £367.4m, with leverage of 2.6x
• Successful planned refinancing of core debt facilities in Q1 andsignificant liquidity available
• Dividend policy under regular review and no interim payable

OPERATIONAL HIGHLIGHTS

• Strong start to the year in UK and US until the COVID-19 outbreak
• Continued to prioritise safety and wellbeing of all colleagues through enhanced H&S and hygiene protocols
• Rapidly adapted business operations in response to short-term changes in demand
• Decisive mitigating actions taken to lower cost base and preserve cash, including strategic restructurings in all regions
• Working closely with customers in all markets to drive growth back into categories

£ million (unless otherwise stated)	H1 2020	H1 2019	Change
Group revenue	880.5	923.0	(4.6%)
Like-for-like revenue1	852.4	899.2	(5.2%)
Adjusted operating profit1	28.7	42.4	(32.3%)
Adjusted operating profit margin1	3.3%	4.6%	(130bps)
Operating profit	13.7	29.3	(53.2%)
Profit before tax	6.8	19.5	(65.1%)
Basic EPS	0.9p	3.0p	(2.1p)
Adjusted EPS1	2.6p	4.9p	(2.3p)
Free cash flow1	(3.3)	15.0	(18.3)
Operational net debt1	367.4	356.6	10.8
Interim dividend per share	0p	2p	(2p)

1. Alternative performance measures are referred to as 'like-for-like', 'adjusted', 'underlying' and are applied consistently throughout this document. These are defined in full and reconciled to the reported statutory measures in Note 20.

OUTLOOK

It is encouraging that the steady recovery in trading seen across the business in June has been maintained into the second half of the year.

The macroeconomic uncertainty caused by COVID-19, combined with limited clarity as to the terms and implications of the UK's exit from the EU, means that we have to be cautious as we look ahead to the rest of this year and into 2021. However, our performance in the first half of the year has proven our ability to withstand major operational challenges and gives us confidence in the quality of our business model and strength of our customer partnerships.

We continue to be a robust business with market leading positions in each of the categories in which we operate and, as such, we are well-placed to capitalise on the long-term trend for fresh, healthy and convenient food.

AGUST GUDMUNDSSON, CEO, SAID:

'The first half of this year has been extremely challenging, but I am pleased to report that the Group has produced a solid performance given the COVID-19 issues the business has faced. The scale and strength of our operations, coupled with our ability to react at speed, has proved a clear advantage to our customers during this period.

'But more than this, our performance is testament to the hard work and commitment of everyone at Bakkavor. In difficult circumstances, we have worked tirelessly to minimise disruption and continue to deliver for our customers. We are fortunate to have such dedicated colleagues and their health, safety and wellbeing continues to be our foremost priority. I am hugely grateful for their support.

'We have taken many difficult yet necessary decisions this year to protect the long-term success of our business. Whilst there will be further challenges ahead, we remain a robust, balanced and well capitalised Group and the steps we have already taken to protect our business, combined with the recent improvement in trading, gives us confidence for the future.'

PRESENTATION

We will be presenting to analysts via a webcast at 10.00 am, 8 September 2020, through the Investors section of the Group's website at https://bakkavor.eventcdn.net/2020h1/register/. The presentation can also be accessed via a replay service shortly after the presentation has concluded.

ENQUIRIES

Institutional investors and analysts:
Peter Gates, Chief Financial Officer
Sally Barrett-Jolley, Head of Corporate Affairs	[phone]
Financial media:
Tulchan Communications
Will Smith	[phone]

About Bakkavor

Bakkavor is the leading provider of fresh prepared food ('FPF') in the UK, with a growing international presence in the United States and China. The Group is the number one by market share in the UK in the four FPF product categories of meals, pizza & bread, salads and desserts, providing high-quality, fresh, healthy and convenient food. Its customers include some of the UK's leading grocery retailers, including Tesco, Marks & Spencer, Sainsbury's and Waitrose. The Group's International segment operates in the US and China. As these FPF markets continue to grow, Bakkavor seeks to leverage its UK expertise in order to build its presence in these territories. Bakkavor was founded in 1986 and has its headquarters in London. The Group has over 20,000 employees and operates 25 factories in the UK, 5 in the US and 9 in China.

LEI number: 213800COL7AD54YU9949

Disclaimer - forward-looking statements

This half year statement, prepared by Bakkavor Group plc (the 'Company'), may contain forward-looking statements about Bakkavor Group plc and its subsidiaries (the 'Group'). Forward-looking statements involve uncertainties because they relate to events, and depend on circumstances, that will, or may, occur in the future. If the assumptions on which the Group bases its forward-looking statements change, actual results may differ from those expressed in such statements. Forward-looking statements speak only as of the date they are made and the Company undertakes no obligation to update these forward-looking statements. Nothing in this statement should be construed as a profit forecast. Some numbers and period on period percentages in this statement have been rounded or adjusted in order to ensure consistency with the financial information.