2008 press releases

1. Change in presentation of the net pensions financing credit

International Accounting Standard 19 ‘Employee Benefits’ allows the net pensions financing credit to be disclosed within Profit from operations or Financing in the Income statement.  Since the adoption of International Financial Reporting Standards in the 2005/06 financial year, Northern Foods plc (‘the Group’) has reported the net pensions financing credit within Profit from operations.  The impact of this treatment on the underlying operating profits has been previously disclosed in the Group’s accounts.

The Group has decided to change the presentation of the net pensions financing credit with effect from the 52 weeks ending 29 March 2008, to report the net pensions financing credit as a Financing item in the Income statement, rather than within Profit from operations.  This is in line with developing market practice and will allow easier understanding of the underlying operational performance of the Group.  This change is a disclosure change only and will not impact on the profit before taxation of the Group.

2. Background

The Group operates a number of defined benefit pension schemes and a post retirement healthcare scheme (“the Retirement Benefit Schemes”), principally comprising the Northern Foods Pension Scheme (“the Scheme”) and Northern Foods Pension Builder (“Pension Builder”) in the United Kingdom and the Green Isle Group Retirement and Death Benefit Plan (“the Plan”) in the Republic of Ireland.  The Scheme and the Plan are final salary schemes and the Scheme was closed to new entrants in March 2005.  The accounting policy in respect of the Retirement Benefit Schemes is set out in Section 4 below extracted from the audited Financial statements for the 52 weeks ended 31 March 2007.

The purpose of this document is to summarise the impact of a change in presentation of the net pensions financing credit relating to the Retirement Benefit Schemes. The net pensions financing credit relating to the Retirement Benefit Schemes comprises the expected return on pension scheme assets net of the interest on pension scheme obligations. 

To date, the net pensions financing credit has been reported within Profit from operations in the Income statement.  In order to provide easier understanding of the presentation of the impact of movements in the net pensions financing credit in the Financial statements for the 52 weeks ended 29 March 2008 and thereafter, the Group will disclose the net pensions financing credit within Finance income and expense. 

The impact of this change on the previously disclosed Income statement and segmental note for the 26 weeks ended 30 September 2006, 52 weeks ended 31 March 2007 and the 26 weeks ended 29 September 2007 is set out in Section 3 below.  There is no change to the Group’s accounting policy in respect of Retirement Benefit Obligations.  We will also disclose the impact of the change on the 2007/08 year end results as part of our Full year results announcement which is due to be issued on 27 May 2008.

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