Northern Foods PLC
11 November 2003
11 November 2003
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
KEY FINANCIALS
Before goodwill amortisation and FRS 3*
exceptional items
2003 Change YOY 2003 Change YOY
Sales £722.1m +6.5% £722.1m +6.5%
Operating profit £42.2m -9.8% £39.8m +35.8%
Pre-tax profit £32.5m -16.2% £25.8m -65.6%
Earnings per share 5.03p -8.5% 3.72p -68.6%
Dividend per share 3.30p +1.5% 3.30p +1.5%
• Good sales growth despite tough trading conditions
• Operating profit affected by cost under-recovery, lost contract and exceptional weather
• Progressive dividend policy and share buyback programme continue
• Restructuring to increase focus on core operations and reduce costs
• Search for new chief executive well advanced
• Underlying sales in first five weeks of second half up 3.0%
'As we warned in our September trading update, performance in the first half has
been disappointing. However, it is important that these difficulties should not
divert attention from the fundamental strengths of Northern Foods. We have begun
a restructuring programme designed both to concentrate on our core abilities and
to reduce our cost base across the group. Whilst as always the Christmas
trading period will be critical to our results, with the actions we are taking
we aim to stabilise second half pre-tax profits before goodwill amortisation and
exceptional items at around the level achieved in the comparable period last
year.'
Peter Blackburn, Chairman
* Last year's results included the effects of the profit on sale of Ski and
Munch Bunch to Nestle UK
ENQUIRIES:
Northern Foods Hudson Sandler
Peter Blackburn, Chairman Keith Hann
Sean Christie, Finance Director Wendy Baker
020 7796 4133 on Tuesday, 11 November only; 020 7796 4133
01482 325432 thereafter
CHAIRMAN'S STATEMENT
As we warned in our September trading update, performance in the first half has
been disappointing, with reduced margins resulting from unrecovered cost
pressures in a difficult trading environment. However, it is important that
these difficulties should not divert attention from the fundamental strengths of
Northern Foods: consistent sales growth, well-invested facilities, a strong
track record in product innovation, a loyal and committed workforce and a strong
financial base. A group with these significant advantages should be capable of
delivering consistent growth in earnings and shareholder value. Our search for
a new chief executive to drive forward the performance of the business is well
advanced. Pending this appointment, we have already begun a restructuring
programme designed both to concentrate on our core abilities and to reduce our
cost base across the group.
Results
We have continued to enjoy good sales growth with all but one of our major
customers, driving a 6.5 per cent turnover increase to £722.1 million. This
includes the benefit of acquiring full control of Solway Foods at the end of
June. Operating profit, before goodwill amortisation and exceptional items of
£2.4 million, however, declined by 9.8 per cent to £42.2 million, despite a 7.5
per cent improvement in the results of our Grocery businesses. A 22.8 per cent
reduction in Convenience operating profit before goodwill amortisation and
exceptional items reflected the under-recovery of raw material cost inflation,
the loss of a major savoury products contract, and the impact of record summer
temperatures.
Following an 11.0 per cent increase in interest costs as a result of our
continuing share buyback programme and the acquisition of Solway Foods, pre-tax
profit, before goodwill amortisation and exceptional items of £6.7 million, was
16.2 per cent lower than in the previous first half at £32.5 million. Earnings
per share before goodwill amortisation and exceptional items were 8.5 per cent
lower at 5.03 pence, with the profit reduction mitigated by a lower tax charge
as well as share buybacks. On an FRS 3 basis, pre-tax profit was £25.8 million
(2002: £75.0 million) and earnings per share were 3.72 pence (2002: 11.86
pence).
Dividend and share buybacks
The board has declared an increased interim dividend of 3.30 pence per share
(2002: 3.25 pence), a rise of 1.5 per cent. This reflects our confidence in the
operational and financial strengths of the group, as well as our long-standing
commitment to a progressive dividend policy and the creation of shareholder
value.
We have continued to purchase shares in the market for cancellation, acquiring
10.0 million shares at a cost of £15.3 million so far this year. We have
returned a total of £121.8 million to shareholders by this means since we began
our current share buyback programme three years ago.
Business initiatives
The recent operating performance of the business has been unacceptable. Urgent
action is being taken to improve our profitability and return on capital and to
ensure that there is a solid platform for our new chief executive. We are
examining all aspects of our structure to ensure that our costs are minimised,
the benefits of our scale are realised, and that we are totally focused on the
needs of our customers.
The measures we are currently implementing include the introduction of a new
group purchasing structure. Shared services are being developed to increase
efficiency in such areas as finance, administration and information technology
and capital expenditure is also being rationed and targeted.
At the end of the first half we amalgamated our two biscuit businesses, Fox's
and Elkes, under a single management team, and as the year progresses we expect
to see benefits from both cost savings and a more integrated approach to the
market place.
Acquisitions and divestments
We acquired the outstanding 60 per cent of Solway Foods on 30 June 2003 for
£26.7 million plus £7.2 million of inherited debt. This business operates in
fast growing segments of the chilled convenience foods market, including
sandwiches, prepared salad meals and pasta snacks. Solway Foods performed
strongly over the summer, with its product portfolio benefiting from the very
hot weather.
We acquired the rights to the San Marco pizza brand from Heinz for £0.9 million
on 22 May 2003, strengthening the portfolio of our successful Goodfella's frozen
pizza business.
On 5 September 2003 we sold Fox's Confectionery to Big Bear Limited for £9.4
million. We are determined to focus our business on our core strengths in the
supply of chilled and frozen foods and selected grocery products to the leading
retailers. Further disposals of non-core activities are being evaluated.
Outlook
Underlying sales in the first five weeks of the second half are up 3.0 per cent
despite the loss of the major savoury products contract taking full effect in
August, and consequently having a proportionately greater impact in this trading
period than in the first half. Our market place remains competitive, and we
expect further raw material cost inflation as a result of the relative strength
of the euro and the impact of hot weather across Europe. This has affected the
yield of many crops, most notably cereals and fruit. In common with other
manufacturers, we are negotiating with our customers to recover these cost
increases. Whilst as always the Christmas trading period will be critical to
our results, with the actions we are taking we aim to stabilise second half
pre-tax profits before goodwill amortisation and exceptional items at around the
level achieved in the comparable period last year. From this base, we look
forward to announcing the appointment of a new chief executive who will be
tasked with unlocking the substantial unrealised potential of the group.
Peter Blackburn
Chairman
OPERATING AND FINANCIAL REVIEW
Sales
Overall sales were up 6.5 per cent in the half, with sales to our five largest
customers up 7.5 per cent. This uplift was boosted by the acquisition of Solway
Foods, partially offset by the disposal of Fox's Confectionery.
Underlying sales grew by 3.5 per cent in total, with underlying sales to our
five largest customers showing a similar uplift.
Selling price increases of around 0.5 per cent were achieved in the half, though
these failed to recover input cost inflation, particularly in our Convenience
operations.
Continuing Convenience sales increased by 2.2 per cent to £490.8 million, with
the second quarter showing a much weaker underlying trend than the first. This
reflected one customer's decision to transfer a significant savoury products
contract to our competitors. By the end of the current financial year we expect
to have replaced these lost savoury products sales in full through business
gains with other major retail customers.
The record hot weather was generally unhelpful though those businesses with
summer biased product portfolios all saw very strong sales uplifts, especially
Solway Foods and Pork Farms.
In Grocery, whilst biscuit sales were down due to the hot summer, our other
businesses did well. A good barbeque season boosted Dalepak and Green Isle
benefited from strong underlying sales plus the addition of the San Marco brand.
Operating profit before goodwill amortisation and exceptional items
Operating profit was 9.8 per cent down on last year at £42.2 million.
Under-recovery of raw material cost inflation, the disruption and reduced sales
caused by the record temperatures, and the business loss referred to above, all
affected this result. These negative factors were only partially offset by the
benefits of higher volumes in many businesses, increased efficiencies and the
effect of the changes to pension funding which we implemented during the
previous financial year.
Continuing Convenience operating profit was reduced by £8.5 million to £18.3
million as a result of the above issues, though continuing Grocery operating
profit rose by £1.5 million to £21.2 million despite the expected shortfall in
biscuits. This reflected strong performances by Green Isle and Dalepak based on
the sales uplifts referred to above.
Solway Foods contributed £2.4 million to operating profit during our 13 weeks of
full ownership, while the contribution of Fox's Confectionery prior to disposal
was flat compared with the prior first half at £0.3 million.
Pre-tax profit
The increased interest cost due to the share buyback programme and acquisition
of Solway Foods, plus the cessation of the associate contribution in the second
quarter, left pre-tax profit, before goodwill amortisation and exceptional items
of £6.7 million, down 16.2 per cent at £32.5 million. On an FRS 3 basis, as a
result of the profit on sale of Ski and Munch Bunch to Nestle UK last year,
pre-tax profit reduced to £25.8 million (2002: £75.0 million).
Earnings per share
Primarily as a result of the relatively strong performance of our Irish
operations and tax efficient funding, our tax rate before goodwill amortisation
and exceptional items has fallen to 20.0 per cent, compared with 22.7 per cent
last year. This, coupled with the reduction in our average shares in issue,
meant that the fall in earnings per share before goodwill amortisation and
exceptional items was limited to 8.5 per cent. On an FRS 3 basis, earnings per
share were 3.72 pence (2002: 11.86 pence).
Exceptional items
In the first half, exceptional items totalled £4.9 million. This was more than
accounted for by the loss on the sale of Fox's Confectionery of £5.5 million,
following a goodwill write-back of £5.3 million. We have retained for future
sale the valuable Paynes factory site in Croydon, from which production was
transferred to Fox's Leicester base last year. Other exceptional items
comprised reorganisation costs following the establishment of the group's shared
service centre which were more than offset by the release of provisions no
longer required, mainly relating to the sale of Ski and Munch Bunch to Nestle
UK. As the year progresses, additional reorganisation costs are likely to be
incurred in relation to the Fox's/Elkes merger and further cost saving
initiatives.
Distributions to shareholders
We have increased the interim dividend by 1.5 per cent to 3.30 pence per share,
which will be paid on 26 March 2004 to those shareholders on the register at 16
January 2004.
We have also continued to buy shares in the market, purchasing 10.0 million
shares for £15.3 million in the current year to date. The buybacks helped to
mitigate the dilution from disposals in the current and prior year.
Capital expenditure
Capital expenditure in the period was in line with depreciation at £32.1
million, compared with £34.1 million in the first half last year. The major
projects were the ongoing spend on SAP ahead of the shared service centre
commissioning and the refurbishment of the Savoury Foods factory in Nottingham
to accommodate rapid growth in chilled pizza volumes.
Cash flow and balance sheet
The first half saw an increase in net debt of £89.8 million, compared with a
reduction in net debt of £70.0 million in the previous first half. Last year's
figure reflected the proceeds of £145.0 million from the sale of Ski and Munch
Bunch to Nestle UK. We normally expect a cash outflow in the first half since
our borrowings traditionally near their peak in September and October as we
build working capital ahead of the Christmas trading period.
We returned £43.9 million to shareholders through dividends and share buybacks.
The net cost of acquisitions and divestments was £19.9 million.
As a result of the cash outflow, net debt as at 30 September 2003 was £413.4
million (2002: £343.7 million). EBITDA interest cover, our main debt covenant,
was 7.4 times.
Sean Christie
Finance Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year to
Six months to 30 September 2003 Six months to 30 September 2002 31 March
(unaudited) (unaudited) 2003
Before Before
goodwill Goodwill goodwill Goodwill
amortisation amortisation amortisation amortisation
and and and and
exceptional exceptional exceptional exceptional
items items Total items items Total Total
£m £m £m £m £m £m £m
Group turnover
- continuing 694.7 - 694.7 672.2 - 672.2 1,408.3
- acquisitions 22.7 - 22.7 - - - -
Total continuing 717.4 - 717.4 672.2 - 672.2 1,408.3
- discontinued 4.7 - 4.7 5.9 - 5.9 12.9
Group turnover 722.1 - 722.1 678.1 - 678.1 1,421.2
Operating profit
- continuing 39.5 (1.9) 37.6 46.5 (16.0) 30.5 72.2
- acquisitions 2.4 (0.4) 2.0 - - - -
Total continuing 41.9 (2.3) 39.6 46.5 (16.0) 30.5 72.2
- discontinued 0.3 (0.1) 0.2 0.3 (1.5) (1.2) (1.6)
Operating profit 42.2 (2.4) 39.8 46.8 (17.5) 29.3 70.6
Share of associated undertakings 0.4 (0.2) 0.2 1.1 (0.3) 0.8 0.7
(Loss)/profit on disposal of - (4.1) (4.1) - 54.0 54.0 54.0
businesses
Profit before interest 42.6 (6.7) 35.9 47.9 36.2 84.1 125.3
Net interest payable (10.1) - (10.1) (9.1) - (9.1) (19.5)
Profit before taxation 32.5 (6.7) 25.8 38.8 36.2 75.0 105.8
Taxation (6.5) (0.1) (6.6) (8.8) (1.5) (10.3) (5.1)
Profit after taxation 26.0 (6.8) 19.2 30.0 34.7 64.7 100.7
Equity dividends (16.7) - (16.7) (16.7) - (16.7) (44.9)
Retained profit for the period 9.3 (6.8) 2.5 13.3 34.7 48.0 55.8
Earnings per ordinary share
- before goodwill amortisation and exceptional items 5.03p 5.50p 14.81p
- basic 3.72p 11.86p 18.73p
- diluted 3.70p 11.28p 18.02p
Dividend per ordinary share 3.30p 3.25p 8.70p
Average number of shares (million) 516.5 545.4 537.6
Analysis of earnings before interest, tax, depreciation and amortisation (EBITDA)
Operating profit before goodwill
amortisation and exceptional
items 42.2 46.8 115.6
Add: associate 0.4 1.1 1.4
depreciation 32.0 30.9 62.7
EBITDA before exceptional items 74.6 78.8 179.7
CONSOLIDATED BALANCE SHEET
30 September 31 March
(unaudited)
2003 2002 2003
£m £m £m
Fixed assets
Intangible fixed assets 67.5 41.5 41.4
Tangible fixed assets 687.8 672.1 670.6
Investments 4.4 22.0 21.5
759.7 735.6 733.5
Current assets
Stocks 97.0 97.5 85.1
Debtors 254.3 230.6 211.6
Investments 16.3 10.0 10.6
Cash at bank and in hand 18.4 26.5 33.5
386.0 364.6 340.8
Creditors: amounts falling due within one year 290.6 298.8 322.1
Net current assets 95.4 65.8 18.7
Total assets less current liabilities 855.1 801.4 752.2
Creditors: amounts falling due after more than one year
Convertible subordinated bonds 2008 90.5 90.4 90.5
Loans and other creditors 340.4 279.3 232.5
430.9 369.7 323.0
Provisions for liabilities and charges 69.7 63.7 63.1
Net assets 354.5 368.0 366.1
Capital and reserves
Called-up share capital 128.4 134.5 130.8
Share premium account 57.6 57.2 57.4
Revaluation reserve 3.8 3.9 3.9
Capital redemption reserve 21.6 15.4 19.1
Other reserves 6.7 6.7 6.7
Profit and loss account 136.4 150.3 148.2
Equity shareholders' funds 354.5 368.0 366.1
CONSOLIDATED CASH FLOW STATEMENT
Six months to 30 Year to
September 31 March
(unaudited)
2003 2002 2003
£m £m £m
Operating profit per profit and loss account 39.8 29.3 70.6
Goodwill amortisation 1.6 1.1 2.4
Depreciation 32.0 30.9 62.7
Exceptional provision for impairment of fixed assets - 8.3 29.2
(Profit)/loss on sale of tangible fixed assets (0.1) 0.3 -
Government grants (0.8) (0.8) (1.6)
Other non-cash items 0.1 0.1 0.2
Working capital movement (44.2) (27.5) (11.9)
Net cash inflow from operating activities 28.4 41.7 151.6
Return on investments and servicing of finance - net (9.8) (9.2) (18.6)
interest paid
Taxation 3.0 (3.0) (9.4)
Purchase of tangible fixed assets (39.7) (39.7) (80.0)
Sales of tangible fixed assets 1.0 2.4 3.7
Grants received 0.1 0.2 0.3
Net cash outflow from capital expenditure (38.6) (37.1) (76.0)
Cash outflow on acquisitions (29.3) (4.3) (4.4)
Cash inflow on disposals 9.4 145.0 145.0
Net cash (outflow)/inflow from acquisitions and (19.9) 140.7 140.6
disposals
Equity dividends paid (28.1) (27.9) (45.1)
Cash (outflow)/inflow before use of liquid resources (65.0) 105.2 143.1
and financing
Management of liquid resources (5.7) (0.9) (1.5)
New borrowings - - 50.0
Revolving credit facility 120.0 (40.0) (110.0)
Repayment of other borrowings (47.1) (22.7) (12.1)
Capital element of finance lease rental payments (3.3) (3.2) (6.4)
69.6 (65.9) (78.5)
Purchase of own shares (15.8) (35.7) (55.0)
Issue of equity share capital net of costs 0.3 0.3 0.5
Net cash inflow/(outflow) from financing 54.1 (101.3) (133.0)
(Decrease)/increase in cash (16.6) 3.0 8.6
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
£m £m £m
(Decrease)/increase in cash in the period (16.6) 3.0 8.6
Movement in liquid resources 5.7 0.9 1.5
New borrowings - - (50.0)
(Increase)/decrease in revolving credit facility (120.0) 40.0 110.0
Repayment of other borrowings 47.1 22.7 12.1
Capital element of finance lease rental payments 3.3 3.2 6.4
Changes in net debt resulting from cash flows (80.5) 69.8 88.6
Loans acquired with subsidiary (7.4) - -
Loan notes issued on acquisition of subsidiary (2.0) - -
Exchange adjustments 0.2 0.3 1.7
Amortisation of bond and financing costs (0.1) (0.1) (0.2)
Movement in net debt in the period (89.8) 70.0 90.1
Net debt at 31 March 2003 (323.6) (413.7) (413.7)
Net debt at 30 September 2003 (413.4) (343.7) (323.6)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
£m £m £m
Profit attributable to equity shareholders 19.2 64.7 100.7
Currency translation differences 0.9 2.2 12.1
Total recognised net gains for the period 20.1 66.9 112.8
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
£m £m £m
Profit attributable to equity shareholders 19.2 64.7 100.7
Currency translation differences 0.9 2.2 12.1
Total recognised net gains for the period 20.1 66.9 112.8
Equity dividends (16.7) (16.7) (44.9)
New share capital subscribed (net of costs) 0.3 0.3 0.5
Repurchase of shares (15.3) (35.7) (55.5)
Goodwill previously written off included in retained profit for the - 65.0 65.0
period
Movement in equity shareholders' funds (11.6) 79.8 77.9
Opening equity shareholders' funds 366.1 288.2 288.2
Closing equity shareholders' funds 354.5 368.0 366.1
ANALYSIS OF ACTIVITIES
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
Turnover £m £m £m
Continuing operations
Convenience 490.8 480.2 1,014.1
Grocery 203.9 192.0 394.2
694.7 672.2 1,408.3
Acquisitions - Convenience 22.7 - -
Total continuing 717.4 672.2 1,408.3
Discontinued operations
Grocery 4.7 5.9 12.9
Total group 722.1 678.1 1,421.2
Operating profit before goodwill amortisation
and exceptional items
Continuing operations
Convenience 18.3 26.8 70.0
Grocery 21.2 19.7 44.8
39.5 46.5 114.8
Acquisitions - Convenience 2.4 - -
Total continuing 41.9 46.5 114.8
Discontinued operations
Grocery 0.3 0.3 0.8
Total group 42.2 46.8 115.6
30 September 31 March
(unaudited)
2003 2002 2003
£m £m £m
Operating assets
Convenience 613.2 553.7 533.7
Grocery 257.7 259.7 257.1
Total group 870.9 813.4 790.8
ANALYSIS OF NET ASSETS
30 September 31 March
(unaudited)
2003 2002 2003
£m £m £m
Fixed assets 759.7 735.6 733.5
Stocks 97.0 97.5 85.1
Debtors 254.3 230.6 211.6
Creditors (240.1) (250.3) (239.4)
Net operating assets 870.9 813.4 790.8
Current taxation (16.5) (20.7) (9.7)
Deferred taxation (69.7) (63.7) (63.1)
Dividend payable (16.8) (17.3) (28.3)
Trading capital employed 767.9 711.7 689.7
Net borrowings (413.4) (343.7) (323.6)
Net assets 354.5 368.0 366.1
NOTES TO THE INTERIM FINANCIAL INFORMATION
1 Accounting policies
The interim financial information has been prepared on the basis of the
accounting policies set out in the accounts for the year to 31 March 2003.
2 Operating profit
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
£m £m £m
Operating profit before goodwill amortisation and
exceptional items
42.2 46.8 115.6
Exceptional operating charges
- continuing (0.8) (15.0) (40.5)
- discontinued - (1.4) (2.1)
Goodwill amortisation
- continuing (1.1) (1.0) (2.1)
- acquisitions (0.4) - -
- discontinued (0.1) (0.1) (0.3)
(2.4) (17.5) (45.0)
Operating profit 39.8 29.3 70.6
3 Exceptional items
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
Exceptional items before taxation £m £m £m
Operating exceptional items
Restructuring costs (0.8) (16.4) (42.6)
Non-operating exceptional items
(Loss)/profit on disposal of businesses (4.1) 54.0 54.0
The restructuring costs relate to the centralisation of IT, finance and group
support services and the restructuring programme to reduce the cost base across
the group. These were largely offset by the release of provisions no longer
required in relation to the remaining Eden Vale business following the sale of
Ski and Munch Bunch.
The loss on disposal of businesses relates to the sale of the Fox's
Confectionery business less the release of provisions no longer required in
relation to the sale of Ski and Munch Bunch.
4 Goodwill amortisation
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
£m £m £m
The charge for the period is analysed as
follows:
- subsidiaries (1.6) (1.1) (2.4)
- associates (0.2) (0.3) (0.7)
5 Taxation
Six months to 30 September Year to
(unaudited) 31 March
2003 2002 2003
£m £m £m
Corporation tax
Ordinary 3.5 7.2 9.9
Exceptional 0.1 3.5 (3.5)
Deferred tax
Ordinary 3.0 1.6 8.0
Exceptional - (2.0) (9.3)
6.6 10.3 5.1
The taxation charge before goodwill amortisation and exceptional items for the
six months to 30 September 2003 has been calculated on the basis of the
estimated effective tax rate for the full year of 20.0 per cent. The reduction
in the tax rate reflects the impact of lower tax on Irish profits and tax
efficient funding.
6 Interim report
The figures for 31 March 2003 have been extracted from the accounts which have
been filed with the Registrar of Companies and which contain an unqualified
audit report and did not include a statement under Section 237 (2) or (3) of the
Companies Act 1985, nor a report under Section 235 of the Companies Act 1985 in
respect of the financial year.
The interim report for 30 September 2003 was approved by the directors on 11
November 2003. The interim report is not the company's statutory accounts and
has not been audited.
The group's auditors have reviewed the interim report and the review report of
the auditors is set out below.
The interim report will be posted to all shareholders and will be available on
request from The Secretary, Northern Foods plc, Beverley House, St Stephen's
Square, Hull, East Yorkshire, HU1 3XG.
INDEPENDENT REVIEW REPORT TO NORTHERN FOODS PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 September 2003 which comprises the profit and loss
account, balance sheet, cash flow statement, statement of total recognised gains
and losses and related notes 1 to 6, together with the reconciliation of net
cash flow to movement in net debt, reconciliation of movements in equity
shareholders' funds, analysis of activities and analysis of net assets. We have
read the other information contained in the interim report and considered
whether it contains any apparent mis-statements or material inconsistencies
with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law we do not accept or assume responsibility to anyone, other than
the company, for our review work, for this report or for the conclusions we have
formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
polices and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2003.
Deloitte & Touche LLP
Chartered Accountants
Leeds
11 November 2003
This information is provided by RNS
The company news service from the London Stock Exchange
