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Nomad Foods Limited (0RMO)

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Thursday 18 June, 2015

Nomad Foods Limited

Annual Report

RNS Number : 5220Q
Nomad Foods Limited
18 June 2015
 



18 June 2015

NOMAD FOODS LIMITED

ANNUAL REPORT

Nomad Foods Limited ("Nomad" or the "Company") announces that its Annual Report for the year ended 31 March 2015 (the "Annual Report") has been published and is now available on the Nomad website: www.nomadfoods.com.

A copy of the Annual Report has also been submitted to the National Storage Mechanism and will shortly be available at www.hemscott.com/nsm.do.

In compliance with the Disclosure and Transparency Rules ("DTR") the information in the Appendix below is extracted from the Annual Report and constitutes the material required by DTR 6.3.5 to be provided in full unedited text. The material is not a substitute for reading the Annual Report in full and page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the Annual Report.

Contact details

Liz Cohen

Weber Shandwick

+1-212-445-8044

[email protected]

Kelly Gawlik

Weber Shandwick

+1-212-445-8368

[email protected]

Nick Oborne

+44 (0) 20 7067 0721

[email protected]

Tom Jenkins

Weber Shandwick

+44 (0) 20 7067 0810

[email protected]

Appendix: Information required by DTR 6.3.5

Status and activities

The following status and activities statement is extracted in its entirety from page 3 of the Annual Report.

The Company was admitted to the LSE (the "Admission") on 15 April 2014 through an initial public offering ("IPO"), raising gross proceeds of $500 million, consisting of $485 million through the placing of Ordinary Shares (with matching Warrants) at a placing price of $10 per Ordinary Share and a further $15 million through the subscription of Founder Preferred Shares at a placing price of $10 per Preferred Share (also with matching Warrants). Each Warrant entitled the holder to subscribe for one-third of an Ordinary Share, exercisable in multiples of three Warrants, at $11.50 per whole Ordinary Share (subject to the terms and conditions of the Warrant Instrument).

The Company was established to undertake an acquisition of a target company or business. The Company's efforts in identifying a prospective target business was not limited to a particular industry or geographic region. The Company's business activities during the period under review have been limited to evaluating potential target businesses, including negotiating and entering into the Acquisition Agreement (as defined below).

On 20 April 2015, the Company entered into a definitive agreement (the "Acquisition Agreement") to acquire Iglo Foods Holdings Limited ("Iglo"), a leading European frozen food business, from a company backed by the Permira funds for approximately €2.6 billion, subject to customary closing conditions (the "Transaction"). In conjunction with the closing of the Transaction, the Company changed its name to Nomad Foods Limited. In connection with the Transaction, the LSE, at the Company's request, suspended its ordinary shares and warrants from trading on the LSE on 20 April 2015. The Company intends to seek readmission of its Ordinary Shares to a standard listing on the Official List and trading on the London Stock Exchange as soon as practicable after closing of the Transaction ("Readmission").  In addition, following the closing of the Transaction and the resumption of trading on the LSE, the Company expects to pursue a listing of its ordinary shares on the NYSE. Subject to the Company completing a listing on the NYSE, the Company currently intends to apply to the UKLA and the LSE requesting the cancellation of admission of the ordinary shares from the Official List and of trading in the ordinary shares on the LSE's main market for listed securities.

The transaction was funded through a combination of Nomad's cash on hand, equity and proceeds from a private placement of approximately $794.5 million at US$10.50 per ordinary share (75.7 million ordinary shares), proceeds of approximately $168.0 million from the early exercise 48.1 million of Nomad's existing warrants at reduced price of US$10.50 per whole ordinary share (16.0 million ordinary shares), as well as the assumption of approximately €1.2 billion of the Iglo Group's existing debt. The seller of the Iglo Group re-invested a portion of their proceeds into €133.5 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.

Principal Risks and Uncertainties

The following statements in respect of principal risks and uncertainties are extracted in their entirety from pages 13 to 15 of the Annual Report.

The Board has identified the following principal risks and uncertainties facing the Company. The risks referred to below do not purport to be exhaustive and are not set out in any particular order of priority. Additional risks and uncertainties not currently known to the Board or which the Board currently deem immaterial may also have an adverse effect on the Company's business. In particular, the Company's performance may be affected by changes in the market and/or economic conditions and in legal, regulatory and tax requirements.

Limited warranty protection has been provided to the Company in connection with the Transaction

Although the Acquisition Agreement contains representations and warranties from the Seller, no representations and warranties survived the closing of the Transaction except for the Seller's representations and warranties with respect to its ownership of Iglo's equity and its authority to enter into the Acquisition Agreement and to consummate the Transaction. The Company will therefore have limited recourse against the Seller and as a consequence may not be able to recover any loss suffered as a result of entering into the Transaction.

The due diligence conducted by the Company in connection with the Transaction may not have revealed all relevant considerations or liabilities of the Iglo Group, which could have a material adverse effect on the Company's financial condition or results of operations

There can be no assurance that the due diligence undertaken with respect to the Iglo Group in connection with the Transaction revealed all relevant facts that may have been necessary to evaluate such acquisition including the determination of the price, or to formulate a business strategy. Furthermore, the information provided during due diligence may have been incomplete, inadequate or inaccurate. As part of the due diligence process, the Company also made subjective judgments regarding the results of operations, financial condition and prospects of the opportunities. If the due diligence investigation failed to correctly identify material issues and liabilities that may be present in a target company or business, or if the Company considered such material risks to be commercially acceptable relative to the opportunity, the Company may subsequently incur substantial impairment charges or other losses. In addition, the Company may be subject to significant, previously undisclosed liabilities relating to the acquired businesses that were not identified during due diligence and which could contribute to poor operational performance, undermine any attempt to restructure the acquired companies or businesses in line with the Company's business plan and have a material adverse effect on the Company's business, results of operations, financial condition, cash flows, liquidity and/or prospects.

The Founders and/or the Founder Entities may in the future enter into related party transactions with the Company, which may give rise to conflicts of interest between the Company and some or all of the Founders and/or the Directors

The Founders, Founder Entities and/or one or more of their affiliates may in the future enter into other agreements with the Company that are not currently under contemplation. While the Company will not enter into any related party transaction without the approval of a majority of the Independent Directors, it is possible that the entering into of such an agreement might raise conflicts of interest between the Company and some or all of the Founders and/or the Directors.

Failure to maintain the Company's tax status may negatively affect the Company's financial and operating results and Shareholders

The Company is incorporated in the British Virgin Islands but the Company is not subject to any income, withholding or capital gains taxes in the British Virgin Islands. If the Company were to be considered to be resident in or to carry on a trade or business within the United States for U.S. taxation purposes or in any other country in which it is not currently treated as having a taxable presence, the Company could be subject to U.S. income tax or taxes in such other country on all or a portion of its profits, as the case may be, which may negatively affect its financial and operating results.

Becoming resident in the U.K. for taxation purposes may have an adverse impact upon the Company's financial position

Following Readmission the Company intends to pursue a listing of its Ordinary Shares on the New York Stock Exchange. The Board currently intends that, at or about the same time as such listing, the Company will become centrally managed and controlled in the United Kingdom and will therefore become resident in the United Kingdom for U.K. taxation purposes.

If the Company becomes resident in the United Kingdom for U.K. tax purposes, it will become subject to U.K. taxation on its income and gains, except where an exemption applies (it is likely that dividend income will generally be exempt from U.K. corporation tax on income). The Company may be treated as a dual resident company for U.K. tax purposes. As a result, the Company's right to claim certain reliefs from U.K. tax may be restricted, and changes in law or practice in the United Kingdom could result in the imposition of further restrictions on the Company's right to claim U.K. tax reliefs.

In addition, if the Company were to become centrally managed and controlled in the United Kingdom for U.K. tax purposes, U.K. stamp duty reserve tax will be payable in respect of any agreement to transfer Depositary Interests in respect of Ordinary Shares, generally at the rate of 0.5 per cent of the consideration for the transfer.

The Company is a holding company whose principal source of operating cash is the income received from its subsidiaries

The Company is dependent on the income generated by its subsidiaries in order to make distributions and dividends on the Ordinary Shares. The amount of distributions and dividends, if any, which may be paid from any operating subsidiary to the Company will depend on many factors, including such subsidiary's results of operations and financial condition, limits on dividends under applicable law, its constitutional documents, documents governing any indebtedness of the Company, and other factors which may be outside the control of the Company. In addition, the Amended and Restated Facility Agreement contains certain negative operating covenants, including covenants restricting the ability of the borrowers, the guarantors and their respective subsidiaries to declare or pay any distributions or dividends within the Group and/or to the Company. If the acquired business is unable to generate sufficient cash flow, the Company may be unable to make distributions and dividends on the Ordinary Shares.

The Company may not be able to consummate future acquisitions or successfully integrate acquisitions into its business, which could result in unanticipated expenses and losses.

Part of the Company's strategy is to grow through acquisitions of further businesses to build an integrated group. Consummating acquisitions of related businesses, or the Company's failure to integrate such businesses successfully into the Group's existing businesses, could result in unanticipated expenses and losses. Furthermore, the Company may not be able to realise any of the anticipated benefits from acquisitions.

The Company anticipates that any future acquisitions it may pursue as part of its business strategy may be partially financed through additional debt. If new debt is added to current debt levels, or if the Group incurs other liabilities, including contingent liabilities, in connection with an acquisition, the debt or liabilities could impose additional constraints and requirements on the Group's business and financial performance, which could materially adversely affect the Company's financial condition and operations.

In connection with the Company's completed and future acquisitions, the process of integrating acquired operations into the Company's existing group operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of existing operations. Some of the risks associated with acquisitions include:

•           unexpected losses of key employees or customers of the acquired company;

•           conforming the acquired company's standards, processes, procedures and controls with the Company's operations;

•           coordinating new product and process development;

•           hiring additional management and other critical personnel;

•           negotiating with labour unions; and

•           increasing the scope, geographic diversity and complexity of the Iglo Group's current operations.

In addition, the Company may encounter unforeseen obstacles or costs in the integration of businesses that it may acquire, including in connection with the Transaction. In addition, general economic and market conditions or other factors outside the Company's control could make the Company's operating strategies difficult or impossible to implement. Any failure to implement these operational improvements successfully and/or the failure of these operational improvements to deliver the anticipated benefits could have a material adverse effect on the Company's results of operations and financial condition.

Directors' Responsibilities

As set out above, the following responsibility statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from pages 12 and 13 of the Annual Report.

The Directors are responsible for preparing the Report and the financial statements in accordance with applicable law and regulations including the DTR and Listing Rules.

The Directors are responsible for the maintenance and integrity of the company's website. A copy of the financial statements is placed on our website www.nomadfoods.com

The Directors consider that the Report and the financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess a company's performance, business model and strategy.

Each of the Directors, who are in office and whose names and functions are listed on page 6, confirms that, to the best of each person's knowledge and belief:

•           the Company financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Company; and

•           the Directors' report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.



 

 

The following is extracted in its entirety from pages 21 to 24 of the Annual Report.

Statement of Comprehensive Income

For the Period from incorporation on 1 April 2014 to 31 March 2015


For the period



from incorporation on



1/4/2014


 $000s except per share data

to 31/3/2015

Notes




(LOSS)/INCOME






Administration costs

           (1,688)

4

Charge related to Founder Preferred Shares and related dividend rights

       (186,660)

11

Charge related to Warrant redemption liability

              (500)

12

Operating loss

       (188,848)





Finance Income



Realised and unrealised gain on short-term securities

                  70


Interest income

                    4





LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE PERIOD

       (188,774)





Basic and diluted loss per share ($'s)

       $(3.77)





 



 

Statement of Financial Position

As of 31 March 2015

$000s


Notes

ASSETS






Cash and cash equivalents

        138,457

2.5

Portfolio investments

        349,980


TOTAL ASSETS

         488,437





LIABILITIES AND EQUITY






CURRENT LIABILITIES



Payables and accrued expenses

                719


Liability arising on Founder Preferred Share dividend rights

            41,724

7,11




NON-CURRENT LIABILITIES



Liability arising on Founder Preferred Share dividend rights

         145,311

7,11

Warrant redemption liability

                500

7,12




TOTAL LIABILITIES

         188,254





EQUITY






Founder Preferred Shares

           14,625

9

Ordinary Shares

         474,295

9

Share-based payment reserve

                  37


Retained losses

       (188,774)





TOTAL EQUITY

         300,183





TOTAL LIABILITIES AND EQUITY

         488,437


 



 

Statement of Changes in Equity

For the Period from incorporation on 1 April 2014 to 31 March 2015


Founder




Share






Preferred




Based






Share


Ordinary


Payment


Retained



$000s

Capital


Shares


Reserve


Losses


Total











Balance as of 1 April 2014

                    -  


 

-


                    -  


 

-


                

   -  

Issue of Founder Preferred Shares

            14,625


 

-


                    -  


 

-


            14,625

 

Issue of Ordinary Shares

                    -  


 

485,250


                    -  


 

-


           485,250

 

Cost of Admission

                    -  


         (10,955)


                    -  


 

-


           (10,955)

 

Share-based compensation

                    -  


 

-


                   37


 

-


                    37

Loss and total comprehensive loss for the period

                    -  


 

-


                    -  


 

(188,774)


           (188,774)











Balance as of 31 December 2014

            14,625

 

 

 

  474,295


                   37


         (188,774)


          300,183

 



 

Statement of Cash Flows

For the Period from incorporation on 1 April 2014 to 31 March 2015


For the period from incorporation on


1/4/2014

$000s

to 31/3/2015

OPERATING ACTIVITIES:


Net loss

                  (188,774)

Reconciliation of net loss to net cash used in operating activities:


Share-based compensation

                          37

Non-cash charge related to Founder Preferred Shares and related dividend rights

                  

                   186,660

Non-cash charge related to Warrant redemption liability

                        500

Non-cash Non-Founder Directors fees

                        250

Unrealised gain on portfolio investments

                         12

Increase in cash resulting from changes in liabilities:


Payable and accrued expenses

                        719

Net cash used in operating activities

                       (596)



INVESTING ACTIVITIES:


Purchase of portfolio investments

                (579,944)

Redemption of portfolio investments

                 229,952

Net cash provided by investing activities

                  (349,992)



FINANCING ACTIVITIES:


Proceeds from issuance of Founder Preferred Shares

                   15,000

Proceed from issuance of Ordinary Shares

                 485,000

Costs of admission

                   (10,955)

Loans from Founder Entities for incorporation

200

Repayment of loans to Founder Entities

(200)

Net cash provided by financing activities

                 489,045



Net increase in cash and cash equivalents

                 138,457

Cash and cash equivalents at beginning of period

                           -  

Cash and cash equivalents at end of period

                 138,457



 



 

Related Party Transactions

The following description of related party transactions is extracted in its entirety from page 38 of the Annual Report.

In conjunction with the inception of the company, the Company, in consideration for each of the Founder Entities advancing the Company $100,000, issued an unsecured promissory note for a principal amount of $100,000 to each of the Founder Entities.  The terms of the loans were that there should be no interest accrued on the principal amount and that the loans should be repaid within 60 days following admission. On 14 May 2014 the loans were repaid in full and the terms of the promissory notes were therefore satisfied.

During the period, the Company issued Founder Preferred Shares which are intended to incentivise the Founders to achieve the Company's objectives.  In addition to providing long term capital, the Founder Preferred Shares are 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 holders of Ordinary Shares on a long term basis. The Founder Preferred Shares are also intended to encourage the Founders to grow the Company following the Acquisition and to maximise value for holders of Ordinary Shares by entitling the holders to a share of any increase in the Company's value through the right to convert their Founder Preferred Shares into Ordinary Shares at any time within seven years following the Acquisition once the Performance Condition has been satisfied. The Performance Condition will be satisfied under such circumstances as described in Note 9 or in the event of a Change of Control.

Prior to Admission, certain costs associated with the marketing, placing and listing of shares were incurred and paid by the Founders and recharged to Nomad Foods Limited at cost. Within the total costs associated with the Admission, amounting to $10,955,000, $12,791 represented recharges from related parties. All balances had been re-paid at 31 March 2015. In addition, certain costs related to the Founder Directors' travel expenses of $1,200 were reimbursed.

Mariposa Capital II, LLC and TOMS Acquisition I LLC perform certain administrative, investment and accounting services on behalf of the Company. The total fees for these services from inception to 31 March 2015 were $230,000.

Directors' statement under the UK Corporate Governance Code

The board of directors of the Company considers that the Annual Report taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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