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Stefan Barden Chief Executive

Stefan Barden

Faraday
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Stefan Barden Chief Executive

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    3. 3 Trading well – investing for growth Trading well in a competitive environment Actions taken to create a better balanced business Maintaining our strong balance sheet Investing in capability: Talent Investing in sales growth: Brands Investing in cost efficiencies: Golden

    4. 4 Financial highlights Solid first half year LFL sales# +2.9%; total sales at £466.9m Profit from operations* +2.0% at £20.5m Underlying EPS1 up at 2.14p H1 dividend maintained at 1.55p Divisional performance progressing Good margin progression in Bakery & Frozen Lower profitability in Chilled Strong balance sheet to support new opportunities Net debt2 £24.6m lower than H1 2008/09; long term facilities in place

    5. Andy Booker – Group Finance Director Financial Review

    6. 6 H1 2009/10 – income statement

    7. 7 H1 2009/10 – income statement

    8. 8 H1 2009/10 – income statement

    9. 9 Underlying revenue impacts – H1 vs prior year

    10. 10 Divisional financial summary

    11. 11 H1 divisional summary: Chilled – H1 and FY impacts

    12. 12 Strong cash management

    13. 13 A strong balance sheet Balance sheet: Net debt2 £222.2m (H1 2008/09: £246.8m); facility headroom £200m** Core (£143m USPP) fixed rate financing (5.5%) to 2012-2017 RCF reduced in April to £305m to July 2010; new £250m forward start facility agreed from July 2010 to July 2012 > Covenants unchanged; max 3.5x EBITDA / min 4x interest cover Pension funding agreed, next triennial review 2011

    14. Stefan Barden – Chief Executive Delivering our strategy

    15. 15 Investing for growth Supporting our investment case: Investing in capability: Talent Investing in sales growth: Brands Investing in cost efficiency: Golden

    16. 16 Talent: Building industry leading capabilities

    17. 17 Brands: Getting better at brand building

    18. 18 Brands: Vinnie demonstrates our capability

    19. 19 Brands: Reinvigorating Rocky Good niche investment opportunity ‘Biscuit bar’ attractive segment More ‘on-the-go’ snacking than mainstream biscuits ‘New’ Rocky - a brand with ‘edge’

    20. 20 Brands: Rocky – TV campaign

    21. 21 Brands: Matthew Walker: Market leadership Christmas pudding market: Niche yet attractive Mainly private label; diverse quality Two new entrants (Avana; Aunties – NZ) No clear market direction from retailers Matthew Walker: The definitive Christmas pudding 110 year heritage Original recipe, ingredients and cooking process The authentic Pudding for the authentic Christmas! Driving consumer awareness and trial Mid-market pricing and trade margin – competitive with own label Full marketing mix, inc. £1.5m TV (November/ December) Full trade support including front of store displays

    22. 22 Brands: Matthew Walker – TV campaign

    23. 23 Golden: Investing for competitive advantage Golden programme: Today, improved conversion cost Investment in automation and efficiency today £26.5m investment (including restructuring) Objective still to transition from ‘3 sites to 2’ Good returns for shareholders Positive EBITDA4 from 2011/12; Post-tax IRR 20%+ Margin up, enhanced EPS Invest over 18 months; phased to 2010/11 Cash discipline and flexibility maintained; minimal balance sheet impact Net reduction of c220 roles; voluntary redundancy where possible Further opportunities remain Additional capacity to alleviate today’s pinch points Possible industry consolidation – but not yet

    24. 24 Golden: World class quality and productivity

    25. 25 2009/10 EBIT outlook:

    26. 26 Trading well – investing for growth

    27. 27 Definitions * Results are stated before restructuring items. ‘Restructuring items’ which relate to significant restructuring events are presented as a separate column within their relevant Condensed consolidated income statement category. Presentation of these items in a separate column helps to provide a better indication of the Group’s underlying business performance. ‘Restructuring items’ includes costs or income associated with the restructuring of businesses and gains or losses on the disposal or closure of businesses. # Underlying revenue excludes the impact of currency rate changes and product categories no longer manufactured. Underlying earnings per share (EPS) is before restructuring items, movement on deferred tax due to change in legislation, one-off release of prior year tax liability and net pension financing, net of tax. This is reconciled to earnings per share in the financial statements. 2 Net debt is defined as total borrowings (including both short and long term bank loans, bonds, loan notes and finance leases) less cash and cash equivalents and short-term investments. Net debt will also include the proportion of the fair value of the currency swaps hedging the balance sheet value of the Group’s dollar denominated loan notes. 3 Underlying profit before tax is Group profit before tax, before restructuring items and net pension financing. This is reconciled to profit before tax in the financial statements. 4 EBITDA is earnings before interest, tax, depreciation and amortisation. It is calculated as profit from operations plus depreciation and amortisation, all measured before restructuring items. 5 Free cash flow is net cash from operating activities, less capital expenditure, plus interest received. 6 EBIT is earnings before interest and tax and is defined as Profit from operations in the financial statements.

    28. 28 Forward looking statements Forward looking statements are made throughout this document. These forward looking statements are based on a number of assumptions concerning future events and information currently available. The user should not rely unduly on these forward looking statements, which are not a guarantee of performance and which are subject to a number of uncertainties and other facts, many of which are outside of the Company’s control and could cause actual events to differ materially from those in these statements. Although Northern Foods believes that the expectations reflected in those forward looking statements are reasonable, it cannot assure users that those expectations will prove to be fulfilled. In addition other factors could cause actual results to differ materially from our expectation, including economic and political conditions, changes in laws, regulation and accounting standards, customer relationships and actions, effectiveness of spending and marketing programmes and unusual weather patterns. No guarantee can be given of future results, levels of activity, performance or achievements.

    29. 29 Appendix 1: Food inflation (English Farming and Food Partnership)

    30. 30 Appendix 2: Reconciliation of statutory profit after tax for the six months to September 2009

    31. 31 Appendix 3: Managing post-retirement benefits

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