Nomad Foods Limited has announced the following trading update for the period ended 30 June 2015.
· €536m loss after tax in six months to 30 June 2015 primarily resulting from a non-cash founder shares valuation charge (€493m), purchase accounting adjustments (€26m) and costs associated with the acquisition of the Iglo Group (€22m).
· Net leverage ratio as at 30 June 2015 was 3.5x following the implementation of the new capital structure associated with the acquisition of the Iglo Group. The net leverage ratio excludes the $320 million (gross) of equity raised in July 2015.
Nomad Foods Limited acquired the Iglo Foods Group “Iglo Group” on 1 June 2015 for approximately €2.6bn. As such, pro forma as adjusted and reported information is being commented on below for the 6 month period ended 30 June 2015. This information does not reflect the Company’s results for the half yearly period ending on 30 September 2015.
Stéfan Descheemaeker, Nomad Foods’ Chief Executive Officer, stated, “Overall, results were in line with our expectations at the time of the acquisition, taking into account the difficult retail environment in Iglo Group’s core geographies. In response to market conditions, we have selectively increased promotion levels to remain relevant to value-seeking consumers whilst maintaining profitability and cash generation through rigorous control of the cost base. We have also continued to rejuvenate our portfolio via the launch of the Breakfast Platform in Italy and the Wholegrain Platform across all major markets. As we look to the future, we believe Nomad is well positioned to take advantage of numerous growth opportunities across Western Europe and globally, not only within the frozen food category, but also within the broader packaged food space.”
· Net Revenue decline year-on-year was (2.4)%. Excluding the impact from currency exchange, the exit from Romania, Slovakia and Turkey and 1 less trading day year-on-year like-for-like Net Revenue decline was (4.9)%.
· Gross margin was broadly flat despite higher promotional investment.
· Six months to June 2015 pro forma As Adjusted EBITDA was €142.9m, (1.1)% down year-on-year but pro forma As Adjusted EBITDA margin increased 0.2% due to lower advertising and promotion spend (compared to significant one-time strategic launch activity in the comparable period) and FX benefit on translation of sterling profits.
· Pro forma As Adjusted EPS is €0.49 for six months to June 2015 and €0.50 for the comparable period.
· Adjusted cash conversion ratio high at 87%.
Acquisition Highlights and Recent Developments
On 14 July 2015, Nomad Foods completed the private placement of a total of 15,445,346 new ordinary shares of no par value raising gross proceeds of approximately US$320 million before expenses. The shares were issued at a price of US$20.75 per share. The proceeds are intended for general purposes including potential future acquisitions.
On 13 August 2015, Nomad Foods entered into an option agreement with LionGem Sweden 1 AB (‘the seller’) under which Nomad Foods or one of its subsidiaries shall be obliged, at the option of the seller, to acquire Findus Sverige AB and its subsidiaries for approximately £500 million. Through this transaction, Nomad Foods will acquire Findus Group’s businesses in Sweden, Norway, Finland, Denmark, France, Spain and Belgium. These operations include the intellectual property and commercialisation rights to the Findus, Lutosa and La Cocinera brands in the respective markets.
Noam Gottesman, Nomad Foods’ Co-Chairman and Founder, commented, “Stéfan and his team have created a strong platform to lead the consolidation in the fragmented global food sector. The Iglo acquisition is performing as expected and we are excited about other potential acquisitions opportunities that meet our criteria of being market leaders in niche markets and having a long history of strong free cash flow generation. As an example, we recently entered into an agreement to acquire Findus, one of Europe’s largest frozen food and seafood companies with leading brands in the Nordic region as well as Southern Europe. We remain dedicated to improving the operational efficiencies within our existing businesses which will lead to superior long-term value for shareholders. The momentum we have achieved thus far in 2015 have us well positioned to achieve meaningful long-term growth both organically as well as through prudent and complementary M&A opportunities.”