Bakkavor : Half Year Results 2021

Significant improvement in revenue, margin and profitability, and a positive outlook for the full year

Bakkavor Group plc ('Bakkavor', or 'the Company'), the leading international provider of multi-category fresh food, today announces its half year unaudited results for the 26-week period ended 26 June 2021.

Returned to revenue growth with strong conversion to profits and cash

• Strong revenue momentum; Group revenue of £915.7m, up 4.0%. Like-for-like revenue of £924.9m, up 6.4% on the prior period and 1.2% ahead of 2019.
• Profitability improved significantly; operating profit of £47.0m, up 243.1%. Adjusted operating profit of £47.0m up 63.8% on the prior period and 10.8% ahead of 2019
• Strong cash generation, with free cash flow of £39.7m, up from an outflow of £3.3m in the prior period, enabled further reduction in net debt; leverage close to medium term target of 1.5 to 2.0 times at 2.1 times
• Basic earnings per share up 3.3p to 4.2p and an interim dividend per share of 2.64p reflecting confidence in the future

Significantly strengthened the Group's platform for sustainable growth and enhanced returns

• Revenue momentum underpinned by exciting new product launches aligned to the latest consumer trends, as shopping visit frequency returned to pre-pandemic levels
• Good progress in driving efficiency and productivity contributed to a substantial increase in adjusted operating margin, up 180bps year on year
• Significant growth in the US underpinned by unlocking capacity across our existing footprint and a period of a steady recovery in China
• Continued to make good progress across our Trusted Partner ESG strategy

A positive outlook, in line with the Board's expectations, despite industry-wide challenges

• A strong H1 2021 performance and continued recovery in volumes at the start of H2 gives confidence in delivering a full year performance in line with the Board's expectations
• Despite unprecedented challenges in labour availability and its impact on the supply chain, as well as raw material inflation, the Group expects to deliver full year operating profit margin in line with the first half
• The Group's financial position remains strong, and we will continue to invest in capacity and productivity across the Group to drive growth and enhance our return on invested capital

FINANCIAL SUMMARY

£ million (unless otherwise stated)	H1 2021	H1 2020	Change	H1 2019	Change
Group revenue	915.7	880.5	4.0%	923.0	(0.8%)
Like-for-like revenue1	924.9	869.1	6.4%	913.6	1.2%
Adjusted EBITDA pre IFRS 161	74.1	56.2	31.9%	65.2	13.7%
Adjusted operating profit1	47.0	28.7	63.8%	42.4	10.8%
Adjusted operating profit margin1	5.1%	3.3%	180bps	4.6%	50bps
Operating profit	47.0	13.7	243.1%	29.3	60.4%
Operating profit margin	5.1%	1.6%	350bps	3.2%	190bps
Profit before tax	34.6	6.8	408.8%	19.5	77.4%
Basic earnings per share	4.2p	0.9p	3.3p	3.0p	1.2p
Adjusted earnings per share1	4.8p	2.6p	2.2p	4.9p	(0.1p)
Free cash flow1	39.7	(3.3)	43.0	15.0	24.7
Operational net debt1	(324.5)	(367.4)	42.9	(356.6)	32.1
Interim dividend per share2	2.64p	0.0p	2.64p	2.0p	0.64p

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 21. During the period, the final dividend relating to the period ended 28 December 2019 was paid, please refer to Note 9 for further details.

Agust Gudmundsson, CEO

'I am pleased with the overall performance in the period as like-for-like revenues exceed pre-pandemic levels and profitability improved considerably with all three regions delivering meaningful progress. The UK has shown a positive recovery, benefiting from a return of shopping habits to 2019 levels and a strong pipeline of innovation, as well as a meaningful pick up in operational gearing as volumes recover. In the US, we continue to deliver strong top line growth supported by strategic customer wins and unabated market demand, and we are building on our solid foundations for sustainable profitable growth. In China, the steady top line recovery continues and we are well placed to take advantage of significant growth opportunities in the region following recent capacity investments.

We, and the industry, face a unique set of challenges in labour availability and this is also impacting the entire supply chain, contributing to raw material price inflation and logistics disruption. We are continuing to mitigate the impact of these issues by working collaboratively with our customers and suppliers, accelerating operational efficiency initiatives, and taking measures to attract and retain colleagues effectively. Our performance in the period and the continuation of these mitigating actions, combined with our track record of delivery through previous challenging periods over our thirty-five year history, gives us confidence in our full year outlook. We are pleased to reinstate an interim dividend which delivers value for shareholders whilst continuing to reduce the Group's leverage ratio.'

Presentation

A copy of these results is available on www.bakkavor.com

We will be presenting to analysts via a webcast at 09.00 am, 8 September 2021, through the Investor section of the Group's website at: https://streams.eventcdn.net/bakkavor/2021h1/ . The presentation can also be accessed via a replay service shortly after the presentation has concluded.

ENQUIRIES

Institutional investors and analysts:
Ben Waldron, Chief Financial Officer
Emily Daw, Head of Investor Relations	[phone]
Financial media:
Rachel Farrington, MHP Communications	[phone]
Oliver Hughes, MHP Communications	[phone]
Katie Hunt, MHP Communications	[phone]

About Bakkavor

Bakkavor is the leading provider of fresh prepared food ('FPF') in the UK, with a growing international presence in the US and China. The Group is the number one by market share in the UK in the four FPF product categories of meals, salads, desserts and pizza & bread, providing high-quality, fresh, healthy and convenient food. Its customers include every major UK grocery retailer, including Tesco, Marks & Spencer, Sainsbury's and Waitrose, and some of the world's best-known food brands. The Group's International segment operates in the US and China. Bakkavor was founded in 1986 and has its headquarters in London. The Group has over 19,000 employees and operates 23 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'). These represent expectations for the Group's business, and involve known and unknown risks and uncertainties, many of which are beyond the Group's control. The Group has based these forward‐ looking statements on current expectations and projections about future events. These forward-looking statements may generally, but not always, be identified by the use of words such as 'will', 'aims', 'anticipates', 'continue', 'could', 'should', 'expects', 'is expected to', 'may', 'estimates', 'believes', 'intends', 'projects', 'targets', or the negative thereof, or similar expressions.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and reflect the Group's current expectations and assumptions as to such future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements. You should not place undue reliance on any forward looking statements. These forward-looking statements are made as of the date of this announcement. The Group expressly disclaims any obligation to publicly update or review these forward-looking statements other than as required by law. Some numbers and period on period percentages in this statement have been rounded or adjusted in order to ensure consistency with the financial information.