TIDMNHL TIDMTTM
RNS Number : 7600F
Nomad Foods Limited
16 November 2015
Nomad Foods Limited
Condensed Consolidated Interim Financial Information
(unaudited)
For the six months ended 30 September 2015
Nomad Foods Limited-Board of Directors
Martin E. Franklin (Co-Chairman)
Noam Gottesman (Co-Chairman)
Lord Paul Myners (non-executive Director)
Alun Cathcart (non-executive Director)
Guy Yamen (non-executive Director; resigned 1 June 2015)
Brian Welch (non-executive Director; appointed 1 June 2015)
James E. Lillie (non-executive Director; appointed 1 June 2015)
John Coyle (non-executive Director; appointed 1 June 2015)
Elio Leoni Sceti (non-executive Director; appointed 1 June 2015)
Stéfan Descheemaeker (appointed 1 June 2015)
Paul Kenyon (appointed 1 June 2015)
Nomad Foods Limited-Interim management report
Company background
Nomad Foods Limited ("the Company", "Nomad" or "the Group") is a
leading frozen foods company building a global portfolio of
best-in-class food companies and brands within the frozen category
and across the broader food sector. Nomad produces, markets and
distributes brands in 15 countries and has the leading market share
in Western Europe. The Company's portfolio of leading frozen food
brands includes Birdseye, Iglo, and Findus.
On 1 June 2015, the Company consummated its initial acquisition
by purchasing Iglo Foods Holdings Limited ("the Iglo Group"), a
leading frozen food company in Europe, for EUR2.6 billion. Upon
closing, Nomad changed its name to Nomad Foods Limited. Nomad's
Ordinary Shares are currently listed on the London Stock Exchange.
Nomad intends to pursue a primary listing of its Ordinary Shares on
the New York Stock Exchange.
On 2 November 2015, the Company completed its acquisition of
Findus Sverige AB and its subsidiaries (the "Findus Group's
Continental European business") for approximately GBP500 million.
The acquired business includes operations across continental Europe
with leading market positions in France, Sweden and Spain along
with the intellectual and commercialization rights to the Findus,
Lutosa (until 2020) and La Cocinera brands in their respective
markets. The Findus Group's Continental European business has
approximately 1,500 employees and 6 manufacturing locations.
Nomad's strategy is to grow the business profitably and create
shareholder value through the following strategic initiatives:
-- Build an integrated group of best-in-class food companies and
brands within existing and related food categories and expand the
geographic footprint through strategic acquisitions.
-- Leverage Nomad's acquisition expertise, strong management
team and access to capital to identify and evaluate attractive
growth opportunities.
-- Align the Company's business with consumer preferences.
-- Enhance product innovation.
Results for the six months ended 30 September 2015
These financial statements include the trading results of the
Iglo Group from 1 June 2015.
Revenue, cost of sales and other operating expenses in the
period correspond to the sale of frozen food by the Iglo Group and
associated expenses. The majority of assets and liabilities were
acquired with the Iglo Group, giving rise to movements in the
balance sheet from 31 March 2015.
The Founder Preferred Shares Annual Dividend Amount is
structured to provide a dividend based on the future appreciation
of the market value of the Ordinary Shares, thus aligning the
interests of the Founders with those of the investors on a long
term basis. This instrument was being recognised as a liability and
revalued at the balance sheet date. Any difference in the fair
value was recognised as an expense. During the period, an expense
of EUR349.0 million was recognised. Upon completion of the
acquisition of the Iglo Group on 1 June 2015, the Company
determined that the Founder Preferred Shares Annual Dividend Amount
will be equity settled. Accordingly, the instrument was classified
as equity and no further revaluations will be required. This gave
rise to a decrease on the Founder Preferred Share Annual Dividend
Amount within liabilities and recognition of the Founder Preferred
Shares reserve within equity.
Exceptional items for the six months ended 30 September 2015 of
EUR37.8 million (2014: EUR0.2 million) includes EUR25.1 million of
acquisition related costs, EUR4.3 million of listing related costs
and EUR6.3 million of costs relating to strategic and restructuring
decisions made within the Iglo Group. The remaining EUR2.1 million
relates to other exceptional costs.
Finance costs of EUR41.1 million (2014: EURnil) includes EUR27.8
million of interest incurred on senior debt and senior secured
notes, EUR13.4 million of foreign exchange losses plus EUR0.9
million interest on pensions plans net of EUR1.0 million amortised
borrowing costs.
Within intangible assets, goodwill of EUR1,353.7 million was
generated on the acquisition of the Iglo Group and is attributable
mainly to the growth prospects for the business expected
organically and through strategic acquisitions and the assembled
workforce.
On 14 July 2015, the Company completed an offering in which
approximately $320.0 million was raised through the issuance of
15,445,346 Ordinary Shares (the "July 2015 Offering") at a per
share price of $20.75 per Ordinary Share. The number of Ordinary
Shares issued in the July 2015 Offering represented, in aggregate,
approximately 9.9% of the issued Ordinary Share capital immediately
prior to the offering.
Recent developments
On 2 November 2015, the Company completed its acquisition of
Findus Sverige AB and its subsidiaries (the "Findus Group's
Continental European business") for approximately GBP500 million.
The acquired business includes operations across continental Europe
with leading market positions in France, Sweden and Spain along
with the intellectual and commercialization rights to the Findus,
Lutosa (until 2020) and La Cocinera brands in their respective
markets. The Findus Group's Continental European business has
approximately 1,500 employees and 6 manufacturing locations. The
cash portion of the purchase price was funded from a combination of
cash on hand and the issuance of a EUR325 million tranche of senior
debt under Nomad Foods credit facility. The remainder of the
consideration was funded via the issuance of 8,378,380 Ordinary
Shares. Following this issuance, the Company's total number of
Ordinary Shares in issue is 178,431,796 of which none are held in
treasury.
Principal risks and uncertainties
Following the acquisition of the Iglo Group on 1 June 2015, the
risk profile of the Company changed. The principal risks and
uncertainties presented are representative of the Company's risk
profile as at 30 September 2015.
Risks related to Nomad's business and industry
Competition, consumers and customers
The market for frozen food is highly competitive. Over the last
few years, the discounter channel has been growing at a faster rate
than the traditional retailer channel. Furthermore, some
competitors may have substantially greater financial, marketing and
other resources than Nomad. This creates competitive pressures that
could cause the loss of market share or require the lowering of
prices, increased advertising expenditures or increase the use of
discounting or promotional campaigns.
There are a number of trends in consumer preferences which have
an impact on Nomad and the frozen food industry as a whole. The
success of Nomad's business depends on both the continued appeal of
its products and given the varied backgrounds and tastes of the
customer base, the ability to offer a sufficient range of products
to satisfy a broad spectrum of preferences.
Nomad's customers are typically supermarkets and large chain
food retailers in the United Kingdom, Germany and Italy. In the
United Kingdom and Germany, the food retail segments are highly
concentrated. In recent years, the major multiple retailers in
those countries have increased their share of the grocery market
and price competition between those retailers has intensified. This
price competition has led Nomad and the major multiple retailers to
seek lower prices from their suppliers.
Brand names
Nomad's principal brand names and trademarks (such as Birds Eye,
Iglo and Findus) are key assets of the business and its success
depends upon the ability to protect intellectual property rights.
Nomad relies upon trademark laws to establish and protect
intellectual property rights, but cannot be certain that the
actions taken or may be taken in the future, will be adequate to
prevent violation of Nomad's proprietary rights.
The Findus and Birds Eye brand names are used by other producers
in other European markets, the United States and Australia. Even
though the brands have different logos, adverse publicity from
these other markets may negatively impact the perception of Nomad's
brands in its respective markets.
This risk has been partly reduced by the November 2015
acquisition of the Findus Group's Continental European
business.
Supply network, manufacture and distribution facilities
Nomad uses significant quantities of food ingredients and
packaging materials and is therefore vulnerable to fluctuations in
the availability and price of food ingredients, packaging
materials, energy costs and other supplies. Specifically, the
availability and the price of fish, vegetables and other
agricultural commodities, including poultry and meat, can be
volatile.
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Severe weather conditions and natural disasters, such as storms,
floods, droughts, frosts, earthquakes or pestilence or the
occurrence of fire in any of the operating facilities, may affect
the supply of the raw materials that are used for the manufacturing
of products and manufacturing facilities themselves may also be
subject to damage.
Distribution costs have historically fluctuated significantly
over time, particularly in connection with oil prices and increases
in such costs could result in reduced profits. In addition, certain
factors affecting distribution costs are controlled by third party
carriers.
Nomad outsources some of its business functions to third-party
suppliers, such as the processing of certain vegetables and other
products, the manufacturing of packaging materials and the
distribution of its products. The risk of suppliers failing to meet
timelines, contractual obligations or provide sufficient products
may also adversely affect business performance.
Nomad employs approximately 2,800 employees across various
facilities in a number of countries. A labour disturbance or work
stoppage at any of these facilities or at a suppliers' facility in
Germany, the United Kingdom, Italy or elsewhere may have an adverse
effect on such facility's operations and potentially, on Nomad's
business, financial condition and results of operations.
Compliance with health, safety and environmental regulations
Food safety and the public's perception that the products under
the various brands within Nomad are safe and healthy are essential
to the image and business. The sale of food products for human
consumption subjects Nomad to safety risks such as product
contamination, spoilage, misbranding or product tampering. Product
contamination could result in negative publicity, temporary plant
closures and substantial costs of compliance or remediation.
Nomad may also be subjected to claims or lawsuits relating to an
actual or alleged illness, injury or death stemming from the
consumption of a misbranded, altered, contaminated or spoiled
product, which could negatively affect business.
As a producer of food products for human consumption, Nomad's
operations are subject to extensive regulation in the United
Kingdom, Germany, Italy and other countries, as well as the
European Union. Regulation governs production, composition,
manufacturing, storage, transport, advertising, packaging, health,
quality, labelling, safety and distribution standards. Failure to
comply with applicable laws and regulations could subject Nomad to
civil remedies, including fines, injunctions, product recalls or
asset seizures, as well as potential criminal sanctions, any of
which could have a material adverse effect on our business,
financial condition and results of operations.
Economic and other trends
Nomad conducts its operations in the key markets of the United
Kingdom, Germany and Italy and is particularly influenced by
economic developments and changes in consumer habits in those
countries.
The European food retail industry as a whole has been affected
by the recent economic downturn, tighter credit conditions and slow
or declining growth. This can result in consumers purchasing
cheaper private label products instead of equivalent branded
products.
Exchange rate fluctuation
Nomad is exposed to exchange rate risk because the operations of
the Group are conducted in a range of currencies, principally Euro,
Pound Sterling, U.S Dollars and Swedish Krona, whilst the
presentation currency of the Group is Euro.
In the UK business, a significant proportion of sales and
related costs are in Pound Sterling. This exposes the group to
foreign exchange risk when these results are translated into Euro.
The risk is partially mitigated through holding debt in Pound
Sterling to act as a natural hedge.
Nomad is also exposed to exchange rate risk due to the fact that
a significant portion of raw material purchases, mainly fish and
peas, are denominated in U.S. Dollars and Swedish Krona
respectively. In order to mitigate this risk, Nomad buys forward
short term foreign exchange contracts to cover the value of all
U.S. Dollar/Euro, Pound Sterling/Euro and Swedish Krona/Euro
contractual commitments and some forecasted commitments. However,
such hedging arrangements may not fully protect the Group against
currency fluctuations. Fluctuations and sustained changes in the
U.S. Dollar/Euro, Pound Sterling/Euro or Swedish Krona/Euro
exchange rates may materially adversely affect our business,
financial condition and results of operations.
Indebtedness
Nomad has indebtedness and may continue to incur additional debt
in the future to fund operations, growth or acquisitions. This
leverage exposes the Group to risk in the event of downturns in the
businesses (whether through competitive pressures or otherwise) in
the industries in which the Group operates or in the economy
generally.
A significant part of the debt held by the Group is subject to
certain financial and operational covenants. Nomad's ability to
comply with these covenants may be affected by events beyond the
Group's control. A breach of one or more of these covenants could
result in an event of default and may give rise to an acceleration
of the debt. In the longer term, such breach of covenants could
have a material adverse effect on the operations and cash flows of
the Group.
Seasonality of the business
Sales and working capital levels of the Iglo trading group have
historically been affected to a limited extent by seasonality. In
general, sales volumes for frozen food are slightly higher in cold
or winter months, partly because there are fewer fresh alternatives
available for vegetables and because retailers typically allocate
more freezer space to the ice cream segment in summer or hotter
months. In addition, variable production costs, including costs for
seasonal staff and working capital requirements associated with the
keeping of inventories, vary depending on the harvesting and buying
periods of seasonal raw materials, in particular vegetable crops.
For example, stock levels (and therefore net working capital)
typically peak in August to September just after the pea harvest.
If seasonal fluctuations are greater than anticipated, our
business, financial condition and results of operations could be
adversely affected.
Risks related to Nomad's structure and acquisition strategy
Successful integration of acquisitions
Nomad's strategy is largely based on the formation of an
integrated group, achieved through the acquisition of additional
businesses. Consummating acquisitions of related businesses, or the
failure to integrate such businesses successfully into Nomad's
existing businesses, could result in unanticipated expenses and
losses. Furthermore, Nomad may not be able to realize any of the
anticipated benefits from acquisitions.
In addition, Nomad may encounter unforeseen obstacles or costs
in the integration of businesses that may be acquired and may be
unable to deliver the anticipated benefits, which may have a
material adverse effect on the results of operations and Nomad's
financial condition.
Competition for acquisition opportunities
There may be significant competition for some or all of the
acquisition opportunities that the Company may explore. Nomad
cannot assure investors that it will be successful against such
competition. Such competition may cause the Company to be
unsuccessful in executing any acquisition or may result in a
successful acquisition being made at a significantly higher price
than would otherwise have been the case.
Effectiveness of due diligence
Nomad intends to conduct such due diligence as it deems
reasonably practicable and appropriate based on the facts and
circumstances applicable to any potential acquisition. There can be
no assurance that the due diligence undertaken will reveal all
relevant facts that may be necessary to evaluate such acquisition
including the determination of the price that Nomad may pay for an
acquisition target or to formulate a business strategy.
Anti-trust regulations
Many jurisdictions in which Nomad operates have anti-trust
regulations which involve governmental filings for certain
acquisitions, impose waiting periods and require approvals by
government regulators. Governmental authorities may seek to
challenge potential acquisitions or impose conditions, terms,
obligations or restrictions that may delay completion of the
acquisition or materially reduce the anticipated benefits
(financial or otherwise). Nomad's inability to consummate potential
future acquisitions, or to receive the full benefits of such
acquisitions, because of antitrust regulations could limit its
ability to execute on its acquisition strategy, which could have a
material adverse effect on our financial condition and results of
operations.
Change of fiscal year
On 28 May 2015, the financial year of the company was changed
from 31 March to 31 December. Fiscal year 2015 will be a nine month
period for the Company.
Nomad Foods Limited-Statement of Directors' Responsibilities
The directors confirm that, to the best of their knowledge:
-- The condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard
("IAS") 34, Interim Financial Reporting, and give a true and fair
view of the assets, liabilities, financial position and profit/
loss of Nomad and all consolidated companies; and
-- The interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
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b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
On behalf of the Board
Stéfan Descheemaeker Paul Kenyon
Chief Executive Officer Chief Financial Officer
13 November 2015 13 November 2015
Independent review report to Nomad Foods Limited
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Nomad Foods Limited's condensed consolidated
interim financial statements (the "interim financial statements")
in the condensed consolidated interim financial information of
Nomad Foods Limited for the 6 month period ended 30 September 2015.
Based on our review, nothing has come to our attention that causes
us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Rules and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Condensed Consolidated Interim Statement of Financial Position as at 30 September 2015;
-- the Condensed Consolidated Interim Statement of Income and
Condensed Interim Consolidated Statement of Comprehensive Income
for the period then ended;
-- the Condensed Consolidated Interim Statement of Changes in
Equity for the period then ended;
-- the Condensed Consolidated Interim Statement of Cash Flows for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the condensed
consolidated interim financial information have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Rules and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The condensed consolidated interim financial information,
including the interim financial statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the condensed consolidated interim
financial information in accordance with the Disclosure Rules and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the condensed consolidated interim
financial information based on our review. This report, including
the conclusion, has been prepared for and only for the company for
the purpose of complying with the Disclosure Rules and Transparency
Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the condensed
consolidated interim financial information and considered whether
it contains any apparent misstatements or material inconsistencies
with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
November 2015
a) The maintenance and integrity of the Nomad Foods Limited
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions
Nomad Foods Limited-Unaudited Condensed Consolidated Interim
Statement of Financial Position
As of 30 September 2015
31 March
Note 2015 30 September 2015
----- --------------------- ------------------
EURm EURm
Non-current assets
Intangible assets 7 - 2,677.5
Property, plant and equipment 8 - 260.3
Deferred tax assets - 48.8
--------------------- ------------------
Total non-current assets - 2,986.6
--------------------- ------------------
Current assets
Cash and cash equivalents 126.8 842.6
Inventories - 256.5
Short-term securities 320.6 -
Trade and other receivables - 34.0
Derivative financial instruments - 2.0
--------------------- ------------------
Total current assets 447.4 1,135.1
--------------------- ------------------
Total assets 447.4 4,121.7
===================== ==================
Current liabilities
Bank overdrafts - 461.1
Trade and other payables 0.7 294.1
Loans and borrowings 9 - (3.1)
Founder Preferred Shares Annual Dividend Amount 10 38.2 -
Derivative financial instruments - 4.7
Tax payable - 18.4
Provisions 11 - 29.3
--------------------- ------------------
Total current liabilities 38.9 804.5
===================== ==================
Non-current liabilities
Loans and borrowings 9 - 1,169.9
Founder Preferred Shares Annual Dividend Amount 10 133.1 -
Warrant redemption liability 0.5 -
Employee benefits 12 - 110.6
Deferred tax liabilities - 322.1
--------------------- ------------------
Total non-current liabilities 133.6 1,602.6
--------------------- ------------------
Total liabilities 172.5 2,407.1
===================== ==================
Equity
Capital reserve 13 353.5 1,651.4
Founder Preferred Shares Dividend reserve 10 - 531.5
Merger reserve - 0.9
Translation reserve 88.9 76.6
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Cash flow hedging reserve - (0.1)
Accumulated deficit (167.5) (545.7)
--------------------- ------------------
Total equity 274.9 1,714.6
--------------------- ------------------
Total liabilities and equity 447.4 4,121.7
===================== ==================
The accompanying notes are an integral part of these Unaudited
Condensed Consolidated Interim Financial Statements.
Nomad Foods Limited-Unaudited Condensed Consolidated Interim
Statement of Income
For the six months ended 30 September 2015 and 30 September
2014
For the six months
ended
----------------------------
30 September 30 September
Note 2014 2015
----- ------------- -------------
EURm EURm
Revenue - 418.3
Cost of sales - (311.0)
------------- -------------
Gross profit - 107.3
Other operating expenses (0.2) (66.3)
Charge related to Founders
Preferred Shares Annual
Dividend Amount 10 (22.4) (349.0)
(Charge)/Release relating
to Warrant redemption
liability (0.4) 0.4
Exceptional items 14 (0.2) (37.8)
------------- -------------
Operating loss (23.2) (345.4)
Finance income 15 0.1 1.5
Finance costs 15 - (41.1)
------------- -------------
Net financing income/(costs) 0.1 (39.6)
Loss before tax (23.1) (385.0)
------------- -------------
Taxation 16 - (5.3)
------------- -------------
Loss for the period attributable
to Parent Company (23.1) (390.3)
============= =============
Earnings per share
------------- -------------
Basic and diluted loss
per share 17 (EUR0.50) (EUR2.99)
============= =============
The accompanying notes are an integral part of these Unaudited
Condensed Consolidated Interim Financial Statements.
Nomad Foods Limited-Unaudited Condensed Consolidated Interim
Statement of Comprehensive Income
For the six months ended 30 September 2015 and 30 September
2014
For the six months
ended
----------------------------
30 September 30 September
Note 2014 2015
----- ------------- -------------
EURm EURm
Loss for the period (23.1) (390.3)
Other comprehensive income:
Actuarial gains on defined
benefit pension plans 12 - 17.4
Taxation charge on measurement
of defined benefit pension
plans - (5.3)
------------- -------------
Items not reclassified
to the Statement of Income - 12.1
Gain/(loss) on investment
in foreign subsidiary,
net of hedge - (10.6)
Gain on translation due
to change of presentational
currency 29.8 (1.7)
Effective portion of changes
in fair value of cash
flow hedges - (2.6)
Taxation credit relating
to components of other
comprehensive income - 2.5
------------- -------------
Items that may be subsequently
reclassified to the Statement
of Income 29.8 (12.4)
Other comprehensive income/(loss)
for the period, net of
tax 29.8 (0.3)
------------- -------------
Total comprehensive income/(loss)
for the period attributable
to owners of the Parent
Company 6.7 (390.6)
============= =============
The accompanying notes are an integral part of these Unaudited
Condensed Consolidated Interim Financial Statements.
Nomad Foods Limited-Unaudited Condensed Consolidated Interim
Statement of Changes in Equity
For the six months ended 30 September 2015
Founders
Preferred Cash flow
Capital Shares Merger Translation hedge Accumulated
Notes reserve reserve reserve reserve reserve deficit Total
------- --------- --------- -------- ----------- --------- ----------- -------
EURm EURm EURm EURm EURm EURm EURm
Balance as of
1 April 2014 - - - - - - -
Issue of
Ordinary
Shares 350.7 - - - - - 350.7
Issue of
Founder
Preferred
Shares 10.6 - - - - - 10.6
Cost of
admission (8.0) - - - - - (8.0)
Loss and total
comprehensive
loss for the
period - - - 29.8 - (23.1) 6.7
--------- --------- -------- ----------- --------- ----------- -------
Balance as of
30 September
2014 353.3 - - 29.8 (23.1) 360.0
========= ========= ======== =========== ========= =========== =======
Balance as of
31 March 2015 353.5 - - 88.9 - (167.5) 274.9
Issuance of
Ordinary
Shares 1,303.7 - - - - - 1,303.7
Cost of
admission (5.8) - - - - - (5.8)
Founder
Preferred
Shares Annual
Dividend
Amount 10 - 531.5 - - - - 531.5
Merger reserve - - 0.9 - - - 0.9
Loss and total
comprehensive
loss for the
period - - - (12.3) (0.1) (378.2) (390.6)
--------- --------- -------- ----------- --------- ----------- -------
Balance as of
30 September
2015 1,651.4 531.5 0.9 76.6 (0.1) (545.7) 1,714.6
========= ========= ======== =========== ========= =========== =======
The accompanying notes are an integral part of these Unaudited
Condensed Consolidated Interim Financial Statements.
Nomad Foods Limited-Unaudited Condensed Consolidated Interim
Statements of Cash Flows
For the six months ended 30 September 2015 and 30 September
2014
For the six months ended
--------------------------------------
Note 30 September 2014 30 September 2015
----- ------------------ ------------------
EURm EURm
Cash flows from operating activities
Net loss (23.1) (390.3)
Reconciliation of net loss to net cash used in operating
activities:
Exceptional items 14 0.2 37.8
Non-cash charge related to Founder Preferred Shares Annual
Dividend Amount 22.4 349.0
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Non-cash (gain)/charge related to Warrant redemption liability 0.4 (0.4)
Non-cash fair value purchase price adjustment of inventory - 26.0
Depreciation and amortisation 7, 8 - 10.8
Finance costs 15 - 41.1
Finance income 15 (0.1) (1.5)
Taxation - 5.3
------------------ ------------------
Operating cash flow before changes in working capital and
provisions (0.2) 77.8
Increase in inventories - (53.7)
Decrease in trade and other receivables - 32.4
Increase in trade and other payables 0.1 12.5
Increase in employee benefits & other provisions - (0.6)
------------------ ------------------
Cash generated from operations (0.1) 68.4
Cash flows relating to exceptional items (0.2) (73.4)
Tax paid - (4.3)
------------------ ------------------
Net cash used in operating activities (0.3) (9.3)
================== ==================
Cash flows from investing activities:
Purchase of Iglo, net of cash acquired - (689.0)
Purchase of portfolio investments (166.6) -
Redemption of portfolio investments - 178.3
Purchase of property, plant and equipment 8 - (7.7)
Purchase of intangibles - (0.2)
------------------ ------------------
Net cash used in investing activities (166.6) (518.6)
================== ==================
Cash flows from financing activities:
Proceeds from issuance of Founder Preferred Shares 10.6 -
Proceeds from issuance of Ordinary Shares 13 350.7 1,303.7
Costs of admission (8.0) (5.8)
Loans from Founder Entities for incorporation 0.1 -
Repayment of loans to Founder Entities (0.1) -
Repayment of loan principal 9 - (490.0)
Payment of financing fees - (5.4)
Interest paid - (24.4)
Interest received - 0.7
------------------ ------------------
Net cash provided by financing activities 353.3 778.8
================== ==================
Net increase in cash and cash equivalents 186.4 250.9
Cash and cash equivalents at beginning of period - 126.8
Effect of exchange rate fluctuations 17.6 3.8
------------------ ------------------
Cash and cash equivalents at end of period 204.0 381.5
================== ==================
Cash and cash equivalents comprise cash at bank of EUR842.6m
less bank overdrafts of EUR461.1m (2014: cash at bank of EUR204.0m,
bank overdrafts EURnil).
The accompanying notes are an integral part of these Unaudited
Condensed Consolidated Interim Financial Statements.
Nomad Foods Limited-Notes to the Unaudited Condensed
Consolidated Interim Financial Statements
1. General information
Nomad Foods Limited (the "Company" or "Nomad") is registered in
the British Virgin Islands. The address of Nomad's registered
office is Nemours Chambers, Road Town, Tortola, British Virgin
Islands. On 1 June 2015, the Company acquired the entire share
capital of Iglo Foods Holdings Limited (the "Iglo Group") a company
domiciled and incorporated in the United Kingdom.
2. Basis of preparation
These unaudited condensed consolidated interim financial
statements for the six months ended 30 September 2015 have been
prepared in accordance with International Accounting Standard 34,
Interim Financial Reporting, as issued by the IASB. They do not
include all the information required for a complete set of IFRS
financial statements. The financial information consolidates the
Company and the subsidiaries it controls (together referred to as
the "Nomad Group") and includes selected notes to explain events
and transactions that are significant to an understanding of the
changes in Nomad's financial position and performance since the
last annual consolidated financial statements. Therefore the
unaudited condensed consolidated interim financial statements
should be read in conjunction with the annual financial statements
for the year ended 31 March 2015, which have been prepared in
accordance with International Financial Reporting Standards as
issued by the IASB and as adopted by the European Union
("IFRS").
These condensed consolidated interim financial statements were
authorised for issue by the Company's Board of Directors on 13
November 2015.
There are no new accounting standards which have a material
impact on this financial information.
The Company's financial statements and notes were previously
presented in U.S. Dollars, which was its presentation and
functional currency. Upon the acquisition of the Iglo Group on 1
June 2015, Nomad adopted the Euro ("EUR") as its functional
currency and reporting currency because this is the functional and
presentation currency of the Iglo Group, which comprises all of
Nomad's operations post-acquisition. The exchange rate at the date
of the change in functional currency was one Euro to 1.115 U.S.
Dollars. All financial information has been rounded to the nearest
EUR0.1 million, except where otherwise indicated.
On 28 May 2015 the Company changed its year end reporting date
from 31 March to 31 December. This change has no impact on the
financial statements and notes included herein.
3. Accounting policies
The accounting policies adopted are consistent with those of the
previous financial period. The following additional accounting
policies were adopted as a result of the acquisition of the Iglo
Group:
3.1 Business Combination
The Nomad Group uses the acquisition method to account for
business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interest
issued by the Nomad Group. The consideration transferred includes
the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. Acquisition-related costs are expensed as
incurred.
3.2 Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All intercompany
balances and transactions have been eliminated.
3.3 Foreign currency translation
Management uses judgement to determine the functional currency
that represents the economic effects of the underlying
transactions, events and conditions. Foreign currency transactions
are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation
where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
translation at period end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the
Statement of Income.
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For the purposes of presenting consolidated financial
statements, the assets and liabilities of foreign operations are
translated at period-end exchange rates, income and expenses are
translated at average exchange rates during the period, and equity
components (excluding current year movements, which are translated
at the average rates) are translated at historical rates. Net
unrealised exchange adjustments arising on the translation of the
financial statements are reported in the translation reserve line
item along with related qualifying hedges.
3.4 Segment reporting
The Chief Operating Decision Maker ("CODM") has been determined
to be the Chief Executive Officer as he is primarily responsible
for the allocation of resources to segments and the assessment of
performance of segments.
Following the acquisition of Iglo Group, Nomad's operations are
organised into one operating unit, 'Frozen', which comprises all
the brands, as well as the factories, private label business units
and corporate overheads.
The CODM uses revenue and earnings before interest, taxation,
depreciation and amortisation ("Adjusted EBITDA") as the key
measure of the segments' results. Revenue is presented to the CODM
using budgeted currency exchange rates while Adjusted EBITDA is
presented to the CODM at actual exchange rates.
Segment reporting as reported to the CODM is included within
note 6.
3.5 Intangible Assets
Intangible assets acquired separately are recorded at cost. With
the exception of goodwill, as discussed below, intangible assets
acquired as part of a business combination are recorded under the
purchase method of accounting at their estimated fair values at the
date of acquisition.
i) Goodwill
Goodwill represents amounts arising on acquisition of
subsidiaries and associates. Goodwill is the difference between the
cost of the acquisition and the fair value of the net identifiable
assets acquired.
Goodwill is stated at cost less any accumulated impairment
losses. Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment.
ii) Computer software
Capitalised software costs include the cost of acquired computer
software licences and costs that are directly associated with the
design, construction and testing of such software where this
relates to a major business system.
Costs associated with identifying, sourcing, evaluating or
maintaining computer software are recognised as an expense as
incurred.
The assets are stated at cost less accumulated amortisation and
impairment losses.
Software costs are amortised by equal annual installments over
their estimated useful economic life of five to seven years once
the software is capable of being brought into use.
iii) Brands
Based on the market position of the brands, the significant
levels of investment in advertising and promoting the brands, and
the fact that they have been established for over 50 years,
management considers that the Birds Eye, Iglo and Findus brands
should be considered to have indefinite lives. Therefore these
brands are not amortised but instead held at historical cost less
provision for any impairment.
3.6 Property, plant and equipment
i) Owned assets
Property, plant and equipment acquired in a business combination
is recorded at fair value at the acquisition date. Otherwise,
property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
ii) Leased assets
Leases in which the Nomad Group assumes substantially all the
risks and rewards of ownership of the leased asset are classified
as finance leases. Where land and buildings are held under finance
leases the accounting treatment of the land is considered
separately from that of the buildings. Leased assets acquired by
way of finance lease are stated at an amount equal to the lower of
their fair value and the present value of the minimum lease
payments at inception of the lease, less accumulated depreciation
and impairment losses.
All other leases are classified as operating leases.
iii) Depreciation
Depreciation is charged on a straight line basis. Depreciation
is charged over the estimated useful lives of each part of an item
of property, plant and equipment once the item is brought into use.
Land is not depreciated. The estimated useful lives are as
follows:
Useful
Life
---------
Building 40 years
Plant and equipment 5 to 14
years
Computer equipment 3 to 5
years
The assets' residual values and useful lives are reviewed on a
frequent basis.
3.7 Inventories
Inventories are stated at the lower of fair value (for inventory
acquired in a business combination), or cost, and net realisable
value ("NRV"). NRV is determined by estimating selling prices in
the applicable market location and related costs of disposal in the
ordinary course of business.
Cost is based on the weighted average principle and includes
expenditures incurred in acquiring the inventories and bringing
them to their existing location and condition. In the case of
manufactured inventories and work in progress, cost includes an
appropriate share of overheads based on normal operating
capacity.
Inventories are reduced by an allowance for slow moving,
obsolete and defective inventories, based on the review of on-hand
inventories and historical and forecasted usage.
3.8 Financial instruments
i) Trade receivables
Trade receivables are measured at fair value upon initial
recognition (including trade receivables in a business
combination), and are subsequently measured at amortised cost using
the effective interest method, less any impairment. Since trade
receivables are due within one year, this equates to initial
carrying value less any impairment.
Appropriate allowances for estimated irrecoverable amounts are
recognised in the Statement of Income when there is objective
evidence that the asset is impaired.
Trade receivables are presented net of customer rebate
balances.
ii) Loans and borrowings
a. Valuation
Interest bearing borrowings are recognised initially at fair
value less attributable transaction costs.
Subsequent to initial recognition, interest bearing loans and
borrowings are stated at amortised cost with any difference between
cost and redemption value being recognised in the Statement of
Income over the expected period of the borrowings on a straight
line basis.
Loans assumed in a business combination are recorded at fair
value on the acquisition date.
b. Capitalisation of borrowing costs
Costs incurred in securing borrowings are carried at cost and
amortised over the expected life of the loan.
iii) Derivative and hedge accounting
Derivative financial instruments are recognised at fair value.
When a derivative financial instrument is not designated in a hedge
relationship that qualifies for hedge accounting, all changes in
its fair value are recognised immediately in the Statement of
Income. However, where derivatives qualify for hedge accounting,
recognition of any resultant gain or loss depends on the nature of
the item being hedged.
The fair value of interest rate caps represents the time value
plus the intrinsic value at the financial year end date.
The fair value of forward exchange contracts is their quoted
market price at the financial year end date, being the present
value of the quoted forward price.
a. Cash flow hedges
Where a derivative financial instrument is designated as a hedge
of the variability in cash flows of a recognised asset or
liability, or a highly probable forecast transaction, the effective
part of any gain or loss on the derivative financial instrument is
recognised directly in the cash flow hedging reserve. Any
ineffective portion of the hedge is recognised immediately in the
Statement of Income.
When a hedging instrument expires or is sold, terminated or
exercised, or the entity revokes designation of the hedge
relationship but the hedged forecast transaction is still expected
to occur, the cumulative gain or loss at that point remains in
equity and is recognised when the transaction occurs. If the hedged
transaction is no longer expected to take place, the cumulative
unrealised gain or loss recognised in equity is recognised in the
Statement of Income immediately.
b. Net investment hedges
Foreign currency differences arising on the retranslation of a
financial liability designated as a hedge of a net investment in a
foreign operation are recognised in Other Comprehensive Income to
the extent that the hedge is effective, and are presented in the
translation reserve within equity. To the extent that the hedge is
ineffective, such differences are recognised immediately in the
Statement of Income. When the hedged net investment is disposed of,
the relevant amount in the translation reserve is transferred to
the Statement of Income as part of the gain or loss on
disposal.
3.9 Provisions
Provisions are recognised when the Nomad Group has a legal or
constructive present obligation as a result of a past event, and it
is probable that the Nomad Group will be required to settle that
obligation. Provisions are measured at management's best estimate
of the expenditure required to settle the obligation at the
financial year end date, and are discounted to present value where
the effect is material.
3.10 Revenue
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Revenue comprises sales of goods after deduction of discounts
and sales taxes. It does not include sales between companies within
the Nomad Group. Discounts given by the Nomad Group include
rebates, price reductions and incentives given to customers,
promotional couponing and trade communication costs. At each
financial year end date any discount incurred but not yet invoiced
is estimated and accrued.
Revenue is recognised when the risks and rewards of the
underlying products have been transferred to the customer. The
timing of the transfer of risks and rewards varies depending on the
individual terms of the sales agreement, usually being on receipt
of goods by the customer.
3.11 Expenses
i) Operating lease payments
Payments made under operating leases are recognised in the
Statement of Income on a straight line basis over the term of the
lease. Lease incentives received are recognised on a straight line
basis in the Statement of Income as an integral part of the total
lease expense.
ii) Borrowing costs
Unless capitalised as part of the cost of borrowing (see note
9), borrowing costs are recognised in the Statement of Income in
the period in which they are incurred.
iii) Exceptional items
The separate reporting of non-recurring exceptional items helps
provide an indication of the Nomad Group's underlying business
performance. This is a non-IFRS measure. Exceptional items are
comprised of transaction, integration and acquisition costs
relating to new acquisitions; restructuring costs; impairments or
reversal of impairments of intangible assets; operational
restructuring; investigation of strategic opportunities; costs
relating to certain management incentive plans; and other
significant items that are non-recurring in nature.
iv) Research and development
Expenditures on research activities are recognised in the
Statement of Income as an expense as incurred.
3.12 Employee benefits
i) Defined contribution plans
Obligations for contributions to defined contribution pension
plans are recognised as an expense in the Statements of Income as
incurred. Prepaid contributions are recognised as an asset to the
extent that a cash refund or reduction in the future payments is
available.
ii) Defined benefit plans
The Nomad Group's net obligation in respect of defined benefit
pension plans and other post-employment benefits is calculated
separately for each plan by estimating the amount of future benefit
that employees have earned in return for their service in the
current and prior periods. That net obligation is discounted to
determine its present value. The calculation is performed by a
qualified actuary using the projected unit credit method. All
actuarial gains and losses are recognised in the period in which
they occur through the statement of recognised income and expense.
Past service cost is recognized immediately.
iii) Other management incentive schemes
If schemes fall outside the scope of IFRS 2, since they are not
related to the price or value of equity instruments, but do fall
within the scope of IAS 19 "Employee Benefits", an annual charge is
taken over the service period based on an estimate of the amount of
future benefit employees will earn in return for their service.
3.13 Impairment of non-current assets
The carrying amounts of the Nomad Group's assets are reviewed
annually to determine whether there is any indication of
impairment. If any such indication exists, the asset's recoverable
amount is estimated. Impairment losses are recognised in the
Statement of Income in the period in which they arise.
For goodwill and assets that have an indefinite useful life, an
impairment review is performed at least annually.
Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate
that the net carrying amount may not be recoverable.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount.
i) Calculation of recoverable amount
Recoverable amount is the greater of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows of the business are discounted to their present
value using a discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
ii) Allocation of impairment losses
Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to cash-generating units, then to any related indefinite
life intangible assets, and then to reduce the carrying amount of
the other assets in the unit on a pro rata basis. A cash-generating
unit is the smallest identifiable group of assets that generates
cash inflows that are largely independent of the cash inflows from
other assets or groups of assets.
iii) Reversals of impairment
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when
there is an indication that the impairment loss may no longer exist
and there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
3.14 Interest income
Interest income is recognised in the Statement of Income in the
period in which it is earned.
3.15 Taxation
The Company is not subject to income tax or corporation tax in
the British Virgin Islands. However, the Company's operating
subsidiaries are subject to income tax within their own
jurisdictions.
Tax on the profit or loss for the period comprises current and
deferred tax. Tax is recognised in the consolidated statements of
operations except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax payable is the expected tax payable on the taxable
income for the year, using tax rates enacted or substantively
enacted at the financial year end date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities recognised for financial
reporting purposes and the amounts used for taxation purposes on an
undiscounted basis. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial
recognition of assets or liabilities that affect neither accounting
nor taxable profit other than in a business combination; and
differences relating to investments in subsidiaries, to the extent
that the Company can control the reversal, and they will probably
not reverse in the foreseeable future. The amount of deferred tax
provided is based on the amount expected to be recovered based on
the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the financial year end date.
3.16 Share-based payments
Where the Nomad Group engages in share based payment
transactions in respect of services received from certain of its
employees, directors and consultants, these are accounted for as
equity settled share based payments in accordance with IFRS 2.
The fair value of the grant of the options issued was recognised
as an expense by reference to the fair value of the awards
granted.
Non-market vesting conditions are included in assumptions about
the number of awards that are expected to vest. The total expense
is recognised in the Statement of Income with a corresponding
credit to equity over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the entity revises its
estimates of the number of awards that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the Statement of
Income, with a corresponding adjustment to equity.
3.17 Founder Preferred Shares
Nomad issued Founder Preferred Shares to both TOMS Acquisition
I, LLC and Mariposa Acquisition II, LLC (collectively the "Founder
Entities") in connection with its initial public offering in April
2014. Holders of the Founder Preferred Shares are entitled to
receive annual dividend amounts subject to certain performance
conditions (the "Founder Preferred Shares Annual Dividend Amount").
The instrument and its component parts were analysed under IFRS
2.
In addition to the right to receive the Founder Preferred Shares
Annual Dividend Amount, the Founder Preferred Shares give the
holder the same entitlements as a holder of Ordinary Shares. As the
cash consideration received for this equity entitlement was the
same price as the Company's initial public offering in April 2014,
the Founder Preferred Share reserve amount is outside the scope of
IFRS 2 and is classified as equity in accordance with IAS 32.
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Prior to the acquisition of the Iglo Group on 1 June 2015, Nomad
classified the Founder Preferred Shares Annual Dividend Amount as a
liability at fair value, calculated using a Monte Carlo simulation.
As the Founder Preferred Shares were issued to affiliates of
certain of the non-executive directors of Nomad, the fair value of
the Founder Preferred Shares Annual Dividend Amount given to the
holders was recorded as an expense. There are no further service
conditions attached and the expense was recognised immediately.
Subsequent to its initial recognition when issued, the liability
was adjusted for changes in fair value. Changes in value were
recorded in the income statement through 1 June 2015.
Upon completion of the acquisition of the Iglo Group on 1 June
2015, the Company intended that the Founder Preferred Shares Annual
Dividend Amount would be equity settled. Accordingly, the Founder
Preferred Shares Annual Dividend Amount as of 1 June 2015 of
EUR531.5 million (the "Founder Preferred Shares Dividend reserve")
was classified as equity and no further revaluations will be
required or recorded.
Should a Founder Preferred Share Annual Dividend Amount become
due and payable (subject to the performance conditions detailed in
note 10), the market value of any dividend paid will be deducted
from the Founder Preferred Shares Dividend reserve, with any excess
deducted from retained earnings.
4. Accounting estimates
The preparation of financial information requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expense. Actual results may
differ from these estimates.
In preparing the condensed consolidated interim financial
statements, the key sources of estimation uncertainty for the
interim period ended 30 September 2015 were as follows:
4.1 Valuation of Founder Preferred Shares
The Founder Preferred Shares Annual Dividend Amounts were valued
and recognised as a liability under IFRS 2. The fair value of the
liability at each balance sheet date was valued using a Monte Carlo
simulation and any difference in fair value was recorded as an
expense from 1 April 2014 through 1 June 2015.
The payment of the Founder Preferred Shares Annual Dividend
Amount is mandatory after 1 January 2015 if certain performance
conditions are met. Nomad, at its discretion, may settle the
Founder Preferred Shares Annual Dividend Amount by issuing shares
or by cash payment but intends to equity settle.
4.2 Fair value of derivative financial instruments
The Nomad Group holds derivative financial instruments as of 30
September 2015. Management has estimated the fair value of these
instruments by using valuations based on discounted cash flow
calculations.
4.3 Employee benefit obligation
Actuarial valuations of the assumed defined benefit pensions are
performed by qualified actuaries. The Nomad Group's principal
assumptions around the actuarial valuations are disclosed in Note
12.
4.4 Discounts
Discounts given by the Nomad Group include rebates, price
reductions and incentives given to customers, promotional couponing
and trade communication costs. At each quarter end date any
discount incurred but not yet invoiced is estimated, based on
historical trends and rebate contracts with customers, and
accrued.
4.5 Income tax
The income tax expense and the provision for income taxes for
the period to 30 September 2015 for the Nomad Group have been
determined based on an estimate of the weighted average annual
income tax rate expected to apply for the full financial period.
Where tax exposures can be quantified, an accrual is made based on
best estimates and management's judgements. Given the inherent
uncertainties in assessing the outcomes of these exposures (which
can sometimes be binary in nature), the Nomad Group could in future
periods experience adjustments to these accruals.
5. Acquisition
On 1 June 2015, Nomad completed its acquisition of the Iglo
Group for approximately EUR2.6 billion.
In the four months between 1 June 2015 and 30 September 2015,
the Iglo Group contributed total revenue of EUR418.3 million and
loss before tax of EUR0.9 million to the Company's results. If the
acquisition had occurred on 1 April 2015, management estimates that
consolidated revenue would have been EUR661.1 million (2014:
EUR704.1 million for the 6 months ended 30 September 2014, as if
the acquisition had occurred on 1 April 2014), and consolidated
loss before tax for the period would have been EUR379.1 million
(2014: EUR35.2 million loss). In determining these amounts,
management has assumed that the fair value adjustments, determined
provisionally, that arose on the date of acquisition would have
been the same if the acquisition had occurred on 1 April 2015.
The transaction was funded through a combination of Nomad's cash
on hand, equity and proceeds from a private placement in April 2015
of approximately EUR729.8 million at EUR9.60 ($10.50) per Ordinary
Share (75.7 million Ordinary Shares), proceeds of approximately
EUR154.3 million from the early exercise of 48.1 million of Nomad's
existing warrants at reduced price of EUR9.60 ($10.50) per whole
Ordinary Share (16.0 million Ordinary Shares), as well as the
assumption of approximately EUR1.2 billion of the Iglo Group's
existing debt. The seller of the Iglo Group re-invested a portion
of their proceeds into EUR133.5 million of equity (13.7 million
Ordinary Shares) at closing. Each of the Founder Entities (either
directly or through an affiliate) subscribed for 1.9 million
Ordinary Shares and exercised all of their outstanding warrants
(1.5 million warrants each) in conjunction with the transaction.
The Company's transaction costs were approximately EUR23.8 million
including costs to amend Iglo Group's senior debt in conjunction
with the transaction.
As described in Note 20, on 2 November 2015, the Company
completed its acquisition of Findus Sverige AB and its subsidiaries
(the "Findus Group's Continental European business"), for
approximately GBP500 million. The cash portion of the purchase
price was funded from a combination of cash on hand and the
issuance of a EUR325 million tranche of senior debt under Nomad
Foods credit facility. The remainder of the consideration was
funded via the issuance of 8,378,380 Ordinary Shares.
Acquisition-related costs
The Group incurred acquisition related costs of EUR30.5 million
on legal fees, due diligence costs, and fees in relation to the
amendment of the Iglo Group's senior debt. EUR25.1 million of these
costs have been included in exceptional items (see Note 14). The
remainder relates to capitalized debt fees.
Identifiable assets acquired and liabilities assumed
The following table summarises the provisional recognised
amounts of assets acquired and liabilities assumed at the date of
acquisition (1 June 2015). The purchase price adjustments are not
finalised as of the date of approving these condensed consolidated
interim financial statements.
EURm
----------
Intangible assets (excluding goodwill) 1,337.4
Property, plant and equipment 265.2
Inventories 233.0
Trading debtors 67.9
Pre-paid debt fees 15.9
Derivative financial instruments 7.7
Cash and cash equivalents 727.7
Bank overdrafts (626.1)
Borrowings (1,186.6)
Trading creditors (281.0)
Retirement benefits (127.3)
Provisions (77.9)
Taxation (18.9)
Net deferred tax liability (270.0)
----------
Total identifiable net assets acquired 67.0
==========
Fair values measured on a provisional basis
The following values have been determined on a provisional
basis:
-- The fair value of the Iglo Group's intangible assets (brands
and software) has been measured provisionally pending completion of
an independent valuation.
-- The fair value of the Iglo Group's property, plant and equipment.
-- The Iglo Group's deferred tax asset/liability.
Fair values are measured on a provisional basis. If new
information obtained within one year of the date of acquisition
about facts and circumstances that existed at the date of
acquisition identifies adjustments to the above amounts, or any
additional provisions that existed at the date of acquisition, then
the accounting for the acquisition will be revised.
Goodwill
Goodwill arising from the acquisition has been recognised as
follows:
Note EURm
----- --------
Consideration transferred 1,420.7
Fair value of identifiable net assets (67.0)
--------
7 1,353.7
========
The goodwill recognized is attributable mainly to the growth
prospects for the business expected organically and through
strategic acquisitions and the assembled workforce.
6. Segment reporting
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Management considers that all revenue and products sold relates
to one category and segment: frozen foods.
Segment Adjusted EBITDA For the six months ended
--------------------------------------
Note 30 September 2014 30 September 2015
----- ------------------ ------------------
EURm EURm
Frozen Adjusted EBITDA - 90.6
------------------ ------------------
Other operating expenses (0.2) (38.8)
Charge related to Founder Preferred Shares Annual Dividend Amount (22.4) (349.0)
Charge relating to warranty redemption (0.4) 0.4
Exceptional items 14 (0.2) (37.8)
Net finance costs 15 0.1 (39.6)
Depreciation 8 - (10.3)
Amortisation 7 - (0.5)
------------------ ------------------
Loss before tax (23.1) (385.0)
================== ==================
No information on segment assets or liabilities is presented to
the CODM.
Geographical information
External revenue by geography For the six months ended
----------------------------------------
30 September 2014 30 September 2015
------------------- ------------------
EURm EURm
United Kingdom - 164.3
Italy - 102.1
Germany - 75.7
Rest of Europe - 76.2
-------------------- ------------------
Total external revenue by geography - 418.3
==================== ==================
7. Intangible assets
Goodwill Brands Computer software Total
--------- -------- ------------------ --------
EURm EURm EURm EURm
Net book value as of 1 April 2015 - - - -
Acquisition 1,353.7 1,333.9 3.5 2,691.1
Additions - - 0.2 0.2
Amortisation charge for the period - - (0.5) (0.5)
Effect of movements in foreign exchange - (13.5) 0.2 (13.3)
--------- -------- ------------------ --------
Net book value as of 30 September 2015 1,353.7 1,320.4 3.4 2,677.5
========= ======== ================== ========
The Company did not hold any intangible assets prior to the
acquisition of the Iglo Group.
8. Property, plant and equipment
Property, plant and equipment
------------------------------
EURm
Net book value as of 1 April 2015 -
Acquisition 265.2
Additions 7.7
Depreciation charge for the period (10.3)
Effect of movements in foreign exchange (2.3)
------------------------------
Net book value as of 30 September 2015 260.3
==============================
The Company did not hold any property, plant or equipment prior
to the acquisition of the Iglo Group.
9. Loans and borrowings
30 September 2014 30 September 2015
------------------- -----------------------
EURm EURm
Current liabilities
Deferred borrowing costs to be amortised within 1 year - (3.1)
-------------------- -----------------------
Total current liabilities - (3.1)
-------------------- -----------------------
Non-current liabilities
Senior debt and other loans - 681.6
2020 floating rate senior secured notes - 500.0
Less capitalised borrowing costs to be amortised in 2 - 5 years - (11.7)
-------------------- -----------------------
Total due after more than one year - 1,169.9
-------------------- -----------------------
Total loans and borrowings - 1,166.8
==================== =======================
The interest rate on the loans and the floating rate senior
secured notes are re-priced within one year to the relevant Euribor
or Libor rate.
Recent events
Concurrent with the acquisition of the Iglo Group on 1 June 2015
by the Company, the Iglo Group amended its Senior Facilities
Agreement and repaid EUR490.0 million of gross debt. This amendment
is expected to deliver lower interest costs due to the reduction in
gross debt and a reduction of 0.25% in the interest rates applied.
The acquired debt continues to be repayable on 30 June 2020.
This was viewed as a modification of existing debt, therefore
eligible transaction costs of EUR5.4 million were capitalised as
part of the amendment of debt and will be amortised over the
remaining life of the debt.
The Company acquired an EUR80.0 million multicurrency revolving
credit facility. This facility is available until 31 December 2019.
As of 30 September 2015 EUR4.2 million has been utilised for
letters of credit, overdrafts, customer bonds and bank guarantees
against the revolving credit facility.
On 2 November 2015, as part of funding the acquisition of the
Findus Group's Continental European business, the Group incurred
new Senior debt of EUR325.0 million under its Senior financing
facility. This Senior C3 EUR debt is repayable on 30 June 2020,
with a margin of EURIBOR plus 400bps and is secured against certain
assets of the group, with equal ranking to existing Senior and bond
debt. The Group expects to incur EUR8.3 million of associated
transaction fees which will be capitalised and amortised across the
repayment period.
10. Founder Preferred Shares Annual Dividend Amount
The Founder Preferred Shares Annual Dividend Amount is
structured to provide a dividend based on the future appreciation
of the market value of the Ordinary Shares, thus aligning the
interests of the Founders with those of the investors on a long
term basis. Commencing with 2015, the Founder Preferred Share
Annual Dividend Amount becomes payable once the Company's volume
weighted average Ordinary Share price is above $11.50 for the last
10 trading days of the Company's financial year. The Founder
Preferred Shares Annual Dividend Amount in the first year it is
payable will be equal to 20% of the increase in the market price of
our Ordinary Shares compared to the initial public offering price
of $10.00 multiplied by 140,220,619 (the "Preferred Share Dividend
Equivalent"). In subsequent years, the Preferred Shares Annual
Dividend amount will be calculated as 20% of the increase in market
value of our Ordinary Shares compared to the highest price
previously used in calculating the Founder Preferred Share Annual
Dividend Amounts multiplied by the Preferred Share Dividend
Equivalent. The Founder Preferred Shares Annual Dividend Amount is
paid for so long as the Founder Preferred Shares remain
outstanding. The Founder Preferred Shares automatically convert on
the last day of the seventh full financial year following
completion of the acquisition of the Iglo Group or upon a change of
control, unless in the case of a change of control, the
independent
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Directors determine otherwise.
The Preferred Share Dividend Equivalent is equal to the number
of Ordinary Shares outstanding immediately following the Iglo
Acquisition, but excluding the 13.7 million Ordinary Shares issued
to the seller of the Iglo Group.
The amounts used for the purposes of calculating the Founder
Preferred Shares Annual Dividend Amount and the relevant numbers of
Ordinary Shares are subject to such adjustments for share splits,
share dividends and certain other recapitalisation events as the
Directors in their absolute discretion determine to be fair and
reasonable in the event of a consolidation or sub-division of the
Ordinary Shares in issue, as determined in accordance with Nomad's
Memorandum and Articles of Association.
Founder
Preferred Shares
Annual Dividend Amount
------------------------
EURm
Balance as of 1 April 2014 -
Charge recognised in the income statement 165.8
Foreign exchange impact 5.5
Balance as of 31 March 2015 171.3
Charge recognised in the income statement 349.0
Foreign exchange impact 11.2
Classified within equity (note 4.1) (531.5)
------------------------
Balance as of 30 September 2015 -
========================
Assuming the Founder Preferred Shares Dividend reserve of
EUR531.5 million (which represents the fair value of the Founder
Preferred Share Annual Dividend Amount as of 1 June 2015) was
settled in Ordinary Shares as of 30 September 2015, the company
would have issued 37.8 million additional Ordinary Shares.
11. Provisions
Provisions
-----------
EURm
Balance as of 1 April 2015
Acquisition 77.9
Additions during the period 5.9
Amounts released in period (0.6)
Utilisation of provision (53.9)
-----------
Balance as of 30 September 2015 29.3
===========
The utilization during the period consisted primarily of the
payout of certain management incentive schemes of the Iglo Group
following its acquisition by the Company.
Of the total provision balance at 30 September 2015, EUR13.2
million (2014: EURnil) relates to committed plans for certain
operational restructuring activities which are due to be completed
within the next 18 months. The amounts have been provided based on
information available on the likely expenditure required to
complete the committed plans. The remainder relates to ordinary
course, indirect tax and legal matters.
The Company did not have any provisions prior to the acquisition
of the Iglo Group.
12. Employee benefits
The Iglo Group operates defined benefit pension plans in
Germany, Italy and Austria as well as various contribution plans in
other countries. The defined benefit pension plans are partially
funded in Germany and Austria and unfunded in Italy. In addition,
an unfunded post-retirement medical plan is operated in Austria. In
Germany and Italy long term service awards are in operation and
various other countries provide other employee benefits. There were
no changes in the nature of any schemes in the period to 30
September 2015.
Employee
Benefits
----------
EURm
Balance as of 1 April 2015
Acquired funded retirement 127.3
Actuarial gain on pension scheme valuations (17.4)
Service cost 0.3
Net interest expense 0.9
Contributions by employer (0.5)
----------
Balance as of 30 September 2015 110.6
==========
The principal assumptions used by qualified actuaries in
determining the valuations as of 30 September 2015 were as
follows:
Defined benefit retirement plans Post-employment medical benefits and other
benefits
------------------------------------- --------------------------------------------------
Germany Austria Italy Germany Austria
------------ ------------ --------- ------------------------ ------------------------
Discount rate 2.4% 2.5% 1.7% 1.4% 2.5%
Inflation rate 2.0% - 1.8% 2.0% -
Rate of increase in
salaries 2.7% 3.0% 3.0% 2.7% 3.0%
Rate of increase in
pension payment 1-2% 1.7% - - -
Long-term medical cost
of inflation - - - - 2.0%
The Company did not have any defined benefit pension plans prior
to the acquisition of the Iglo Group.
13. Capital reserve
31 March 30 September 2015
Shares 2015
----------------------------- -------- -----------------
31 March 30 September 2015 EURm EURm
2015
---------- ----------------- -------- -----------------
Issued and fully paid:
Ordinary Shares 48,525,000 170,053,416 350.9 1,654.6
Founder Preferred Shares 1,500,000 1,500,000 10.6 10.6
-------- -----------------
Total share capital 361.5 1,665.2
Cost of admission (8.0) (13.8)
-------- -----------------
Total capital reserve 353.5 1,651.4
======== =================
Ordinary Shares
The Company issued 121.5 million Ordinary Shares between 1 April
2015 and 30 September 2015. Of these, 13.7 million were issued as a
result of the acquisition of the Iglo Group on 1 June 2015, 75.7
million were issued through a private placement on 26 May 2015 and
a further 15.4 million were issued through a subsequent private
placement on 8 July 2015. 16.7 million were issued from the early
exercise of warrants.
On 2 November 2015, Nomad issued 8.4 million shares as partial
consideration for the acquisition of Findus Sverige AB. See Note 20
for further information.
Warrants
On 6 May 2015, the Company obtained the consent of over 75% of
the holders of outstanding Warrants to an amendment to the terms of
the Warrants in order to provide that the subscription period for
the Warrants, which previously would have expired on the third
anniversary of the Company's consummation of its first acquisition,
would instead expire on the consummation of the Iglo Group
acquisition (except in certain limited circumstances, in which
case, such holder will be permitted to exercise his, her or its
Warrants until the date that is 30 days following the date of
Readmission). The Warrant Amendment was thereby effective on 6 May
2015. As of 30 September 2015, all warrants have either been
exercised or cancelled.
14. Exceptional items
For the six months ended
--------------------------------------
30 September 2014 30 September 2015
------------------ ------------------
EURm EURm
Transaction related costs 0.2 29.4
Costs related to management incentive plans - 1.5
Investigation of strategic opportunities and other items - 2.7
Cisterna fire net costs - 0.6
Other restructuring costs - 3.6
------------------
Total exceptional items 0.2 37.8
================== ==================
The tax impact on the exceptional items at 30 September 2015
amounts to EUR5.1 million (2014: EURnil).
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Included in the statement of Condensed Consolidated Interim
Statements of Cash Flows is EUR73.4m of cash outflows relating to
exceptional items. This includes the cash flows related to the
above items and the cash impact of the settlement of provisions
acquired with the Iglo Group, most notably in respect of the payout
of certain management incentive schemes. Please refer to Note 11
for further details.
15. Finance income and costs
For the six months ended
--------------------------------------
30 September 2014 30 September 2015
------------------ ------------------
EURm EURm
Finance Income
Interest income - 1.5
Net foreign exchange arising on retranslation of financial assets and 0.1 -
liabilities
------------------ ------------------
Total finance income 0.1 1.5
------------------ ------------------
Interest expense - (27.8)
Interest on defined benefit pension plan obligation - (0.9)
Amortisation of borrowing costs - 1.0
Net foreign exchange arising on retranslation of financial assets and
liabilities - (13.4)
------------------ ------------------
Total finance costs - (41.1)
------------------ ------------------
Net finance costs 0.1 (39.6)
================== ==================
16. Taxation
Income tax expense of EUR5.3 million (2014: EURnil) for the six
month period to 30 September 2015 is recognised based on
management's estimate of the weighted average annual income tax
rate expected for the full financial period.
The Company's subsidiaries, which are subject to tax, operate in
many different jurisdictions and, in some of these, certain tax
matters are under discussion with local tax authorities. These
discussions are often complex and can take many years to resolve.
Accruals for tax contingencies require management to make estimates
and judgements with respect to the ultimate outcome of a tax audit,
and actual results could vary from these estimates. Where tax
exposures can be quantified, a provision is made based on best
estimates and management's judgements. Given the inherent
uncertainties in assessing the outcomes of these exposures (which
can sometimes be binary in nature), the Group could in future
periods experience adjustments to this provision.
Management believes that the Group's position on all open
matters including those in current discussion with local tax
authorities is robust and that the Group is appropriately
provided.
Applicable to the Nomad Group's subsidiaries subject to UK tax,
through the enactment of the Finance Act 2013 in the UK and
subsequent amendments, the standard rate of corporation tax in the
UK was 20% for 30 September 2015. This rate is reflected in these
financial statements. A further reduction of corporation tax in the
UK to 19% from 1 April 2017 and 18% from 1 April 2020 has been
announced but has not yet been substantively enacted. As such, this
change has not been reflected in these financial statements.
17. Earnings per share
Six months ended
-------------------------------------------
30 September 2014 30 September 2015
--------------------- --------------------
Loss attributable to shareholders (EURm) EUR (23.1) EUR (390.3)
Weighted average Ordinary Shares and Founder Preferred Shares 46,209,891 130,512,120
Basic loss per share EUR (0.50) EUR (2.99)
Basic loss per share is calculated by dividing the loss
attributable to the shareholders of the Company of EUR390.3 million
by the weighted average number of Ordinary Shares of 129,012,120
and Founder Preferred Shares of 1,500,000.
There were no dilutive shares as at 30 September 2015. For the
six months ended 30 September 2014, the exercise of the Initial
Options and Warrants would not be dilutive, given the losses
arising.
The Ordinary Shares that could be issued to settle the Founder
Preferred Shares Annual Dividend Amount and warrants outstanding
are potentially dilutive.
18. Contingent liabilities
The Iglo Group is currently in discussions with tax authorities
and a third party in one of its markets regarding the treatment of
the 2006 acquisition of the Iglo Group by the previous owners. The
Company has an indemnity in respect of this tax issue. A related
tax indemnification asset of EUR7.9m has been recognised as at 30
September 2015.
19. Related parties
Mariposa Capital, LLC and TOMS Capital LLC perform advisory
services on behalf of the Company. The total fees for these
services for the six months ended 30 September 2014 and 2015 were
EUR81,668 and EUR636,778, respectively. As at 30 September 2015, an
amount of EUR357,047 was outstanding (30 September 2014:
EURnil).
Key management personnel comprise the Directors of Nomad. On
acquisition of the Iglo Group on 1 June 2015, a new Board of
Directors was assembled. In light of this, key management
compensation is disclosed below, for information purposes only, for
the period ending 30 September. This disclosure will continue to be
addressed in the Annual Report thereafter:
Six months ended
--------------------------------------
30 September 2014 30 September 2015
------------------ ------------------
EUR EUR
Short term employee benefits - 739,087
Post-employment benefits - 42,967
Non-executive Director fees 92,738 73,137
Total 92,738 885,191
------------------ ------------------
In 2014, the non-executive Directors elected that their fees
payable to them for their first year of appointment were paid as a
lump sum and used to subscribe for Ordinary Shares at a price of
$10.00 per share.
Lord Myners, Alun Cathcart, James E. Lillie and Elio Leoni Sceti
will be entitled to an annual restricted stock grant equal to
$100,000 of Ordinary Shares valued at the date of issue, which will
vest on the earlier of the date of the following year's annual
general meeting or 13 months from the issuance date.
A number of the Directors or their related parties hold
positions in other companies that result in them having control or
significant influence over these companies. As part of the 26 May
2015 private placing of shares, the following related entities
purchased Ordinary Shares in Nomad:
- Pershing Square Capital Management LP - 33,333,334 Ordinary Shares;
- Olidipoli Sprl - 2,380,953 Ordinary Shares;
- Mariposa Acquisition II, LLC - 1,880,953 Ordinary Shares; and
- TOMS Capital Investments Acquisition LLC- 1,880,953 Ordinary Shares.
20. Subsequent events
On 2 November 2015, the Company completed its acquisition of
Findus Sverige AB and its subsidiaries (the "Findus Group's
Continental European business") for approximately GBP500 million.
The acquired business includes operations across continental Europe
with leading market positions in France, Sweden and Spain along
with the intellectual and commercialization rights to the Findus,
Lutosa (until 2020) and La Cocinera brands in their respective
markets. The Findus Group's Continental European business has
approximately 1,500 employees and 6 manufacturing locations. The
cash portion of the purchase price was funded from a combination of
cash on hand and the issuance of a EUR325 million tranche of senior
debt under Nomad Foods credit facility. The remainder of the
consideration was funded via the issuance of 8,378,380 Ordinary
Shares. Following this issuance, the Company's total number of
Ordinary Shares in issue is 178,431,796 of which none are held in
treasury.
The Company is in the process of finalising the acquisition
accounting of the Findus Group's Continental European business.
As described in Note 9, on 2 November 2015, the Group amended
its Senior financing facility through taking out new Senior debt of
EUR325 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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