WHY THIS RISK AFFECTS US
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.

WHAT MIGHT HAPPEN IF WE GET IT WRONG
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.

HOW WE MITIGATE OUR RISKS
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 they have access to dedicated Bakkavor employees at all levels of the decision-making process. At a senior management level we appoint Customer Champions in the UK to manage customer relations and long-term strategic account planning.

PROGRESS
We continue to work collaboratively with customers to secure joint business plans and deliver growth across the categories in which we operate. In 2012, we received three supplier awards from our customers in recognition of our service and partnership approach.

WHY THIS RISK AFFECTS US
Our diverse and innovative product range is critical to developing customer relations and future growth.

WHAT MIGHT HAPPEN IF WE GET IT WRONG
Investing in product areas which fail or underperform is costly in terms of resource, profitability and our reputation with our customers.

HOW WE MITIGATE OUR RISKS
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.

PROGRESS
We launched over 2,000 products in 2012 and won 11 food product awards, testament to our product quality and innovation.

WHY THIS RISK AFFECTS US
Bakkavor spends over £800 million on ingredients and packaging every year and may be exposed to fluctuating prices in significant areas of expenditure.

WHAT MIGHT HAPPEN IF WE GET IT WRONG
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.

HOW WE MITIGATE OUR RISKS
Through its central procurement team the Group aims to benefit from 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 any delays in achieving price increases.

PROGRESS
The Group has increased its level of hedging and as at 29 December 2012 32% of raw material spend for 2013 was hedged. We will continue to mitigate raw material price volatility through forward purchasing. However, in certain instances there is not always a seller willing to enter into such forward contracts. Further hedging arrangements will be secured where it is both practical and possible to do so.