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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Nomad Food | LSE:NHL | London | Ordinary Share | VGG6564A1057 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 12.40 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
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
Hot Features
Premium
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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