Bakkavor Group operates within a governance framework which we believe identifies all the elements of a sound approach to governance and responsibility.

The Board, together with 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.

At Bakkavor, governance is about making sure that the Group Board and the Management Board:

• have assessed the necessary options and are taking the business in the right strategic direction
• are leading and managing the business effectively and are accountable for their actions
• have put in place appropriate controls which are used actively throughout the business
• consider the interests of all our stakeholders in making executive decisions

At Bakkavor, we believe that effective governance is realised through leadership and collaboration.

The Group Board retains ultimate responsibility for upholding corporate governance standards and determining the strategic objectives of the Group.

The Management Board implements the strategic objectives of the Group Board, determines investment policies, agrees on performance criteria and delegates to management of the Group operations 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 and quarterly performance reporting and budget updates. In addition, the Management Board receives regular presentations from directors of key Group functions including Marketing, Human Resources and Legal, enabling it to explore specific issues and developments in greater detail.

The governance framework is reinforced across the organisation and addresses all stakeholder interests through the five Bakkavor 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. These values are fundamental to our ability to carry out our day-to-day business with integrity. We recruit new people and reward all managers against their ability to demonstrate Bakkavor values in the day-to-day running of the business. In 2012 our values were relaunched and communicated across the Group.

OUR BOARD OF DIRECTORS BRINGS A VALUABLE AND BALANCED RANGE OF EXPERIENCE.

Board composition and effectiveness
In conjunction with the issuance of Senior Secure Notes in 2011, the Company, Bakkavor Finance (2) plc, was incorporated and acts as a holding company of the Group. The Directors were therefore appointed either on or subsequent to the Company's incorporation date. (For further details of Company appointments refer to the Directors' Report). The table below highlights the appointment of Board members to the overall Group, prior to the incorporation of the holding company, Bakkavor Finance (2) plc.

The majority of the Board Directors were independent during the financial reporting period, with three independent members and two non-independent members.

It is considered that the size and composition of the Board of Directors makes it possible for it to discharge its duties efficiently and with integrity. Together, the Board of Directors brings a valuable and balanced range of experience as they all hold senior positions in professional and public life. (See profiles of our Board of Directors).

The Board of Directors convened six times in 2012. The attendance is set out below.

* Asgeir Thoroddsen, Non-executive Director, resigned from the Group Board on 25 September 2012. Gudmundur Sigurdsson was appointed to the Group Board on 25 September 2012.

* Asgeir Thoroddsen, Non-executive Director, resigned from the Group Board on 25 September 2012. Gudmundur Sigurdsson was appointed to the Group Board on 25 September 2012.

In advance of each regular Board meeting, the Board members are provided with a Board report which includes a comprehensive report of the Group's financial and operational performance, and a broader market update. Board members are informed about all significant matters immediately.

OUR DECENTRALISED MODEL EMPOWERS THE MANAGEMENT OF OUR BUSINESSES TO IDENTIFY, EVALUATE AND MANAGE THE RISKS THEY FACE.

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.

In 2011 we reported eight risks, the mitigation of which is paramount to the day-to-day running of our business and the achievement of our long-term vision. Following a risk assessment in 2012, it was confirmed that all eight identified risks remain key risks to the business. These are: Food safety and integrity, Health & Safety, Loss of key employees, Customer relationships, Consumer understanding, Commodity price Inflation, Covenant compliance and Interest rates, Liquidity & credit.

For more information about why these risks are deemed to be key, how we aim to mitigate them and who is responsible for managing them see our Risks.

The Board conducts an annual review of the Group's systems of internal control. These 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 systems are designed to manage rather than to eliminate all possible risk and to provide reasonable, but not absolute, assurance against material misstatement or loss. 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, which comprises key management across the business, to regularly monitor internal controls. 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 professionals from an external provider, 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 each business unit. The results of these representations are reviewed by internal audit before being reported to the Audit Committee.

The Audit Committee is also responsible for the appointment of the Company's Auditor, Deloitte LLP. Annually the Committee reviews the relationships the Company has with Deloitte LLP and considers the level of non-audit services provided by the Auditor. The engagement of Deloitte LLP for non-audit services requires approval from the Group Financial Controller and, if significant, the Audit Committee, to ensure that any services provided do not impair the objectivity of the external Auditor. A list of non-audit services provided by Deloitte LLP in 2012 and the associated fees has been provided in Note 6 of the Group's financial statements.

Disclosure of information to Auditor
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 Deloitte LLP will be proposed at the Company's Annual General Meeting.

IN 2012 WE HELD OVER 600 MEETINGS AND TELEPHONE CALLS WITH INVESTORS AND ANALYSTS.

INVESTOR ENGAGEMENT PROGRAMME
The Board delegates the management of Bakkavor's investor engagement programme to our CEO, CFO and Head of External Affairs. In 2012 the team ran a comprehensive programme and held over 600 meetings and telephone calls with investors and analysts. Please refer to the Investor Relations section on our website for an overview of the 2013 Financial Calendar.