2008 press releases

Financial highlights

• Strong sales growth, increasing total revenue by 6.8% to £468.6 million (2007/08: £438.6m)
• Underlying revenue¹ up 3.8%
• Profit from operations* up 3.1% at £20.1 million (2007/08: £19.5m)
• Profit before tax* at £16.9 million (2007/08: £20.1m), impacted by currency and pension credit changes; and investment in our brands
• Adjusted EPS² at 2.72 pence per share (2007/08: 3.21p)
• Interim dividend maintained at 1.55 pence per share (2007/08: 1.55p)
• Robust financial position with ongoing committed facilities in place; net debt³ at £246.8 million (2007/08: £218.5m) reflecting share buyback and previous acquisitions
• Statutory loss for the period of £17.1 million (2007/08: profit £15.0m), primarily reflecting mothballing of Fenland Foods (£22.4m) and the withdrawal of Industrial Buildings Allowance⁴ (£11.9m)

 Operating highlights

• Making continued progress; benefiting from actions taken over the last two years
• Well positioned in each market segment; capitalising on growth in discount sector and value products
• Strong performance in Bakery, with underlying revenue up 6.8%, reflecting investment in the Fox’s brand driving increased household penetration
• Frozen division well positioned for current environment, reflecting Goodfella’s number one market position; and the successful integration of the McDougall`s pastry acquisition, together with the pizza site rationalisation.
• Chilled improvement continuing, with underlying sales in ready meals up 4.4% and overall profit maintained, reflecting our superior product offering in market place
• Continued full recovery of commodity cost increases during the period

Stefan Barden Chief Executive of Northern Foods said Northern Foods is a new and much stronger company.  Over the past two years we have created a better balanced and more resilient business, which is making good progress despite these tough market conditions.

We have successfully responded to the current economic environment by introducing value product ranges for our customers including the discounters.  Our traditional premium ranges continue to be successful and we have a good proposition across all market segments.  In these market conditions, we remain focussed upon growing our brands, operational efficiency and maintaining our strong balance sheet  We remain confident of maintaining good progress throughout the balance of our financial year whilst sharing the widely publicised uncertainty around consumer spending over the Christmas period

click here to download results pdf

A presentation to analysts will take place on 11 November at 09.30am at UBS, 4th Floor, 100 Liverpool Street, London EC2M 2RH.  The presentation is also available live via webcast at www.northernfoods.com

Footnote definitions throughout this report:

Note: 2007/08 has been restated for reclassification of the net pensions financing credit

* Results are stated before restructuring items.  ‘Restructuring items’ which relate to significant restructuring events are presented as a separate column within their relevant Condensed consolidated income statement category.  Presentation of these items in a separate column helps to provide a better indication of the Group’s underlying business performance.  ‘Restructuring items’ includes costs or income associated with the restructuring of businesses and assets and financial instrument gains and impairments arising from the Group’s restructuring activities.

¹ Underlying revenue excludes the impact of currency translation, product categories no longer manufactured and acquisitions.
² Adjusted earnings per share is basic earnings per share before restructuring items and movement on deferred tax due to change in legislation
³  Net debt is defined as total borrowings (including both short term and long term bank loans, bonds, loan notes and finance leases) less cash and cash equivalents and short term investments
⁴  Reflecting amendments to the industrial buildings allowance regime which were substantively enacted in the Finance Act 2008 and accordingly have been reflected in the Group’s results for the 26 weeks ended 27 September 2008
⁵  TNS 52 weeks ended 7 September 2008 (excl Soup, Fishcakes & Crispbakes, Pasta & Sauce)
⁶ AC Nielsen Homescan 12 weeks ended 12 July 2008
⁷  Net working capital is defined as inventories plus trade and other receivables less trade and other payables
⁸  Free cashflow is net cash from operating activities adjusted for special pension contributions, less net capital expenditure, plus interest received.  Net capital expenditure is purchase of property, plant and equipment (PPE) less grants received and proceeds from sale of PPE
⁹  EBITDA is earnings before interest, tax, depreciation and amortisation.  It is calculated as profit from operations plus depreciation and amortisation, all measured before restructuring items