northern foods plc
2180 century way
thorpe park
leeds
ls15 8zb
tel 0113 390 0110
fax 0113 390 0211
wwwnorthernfoodscom
 northern foods plc annual report 200809
annual report 200809
making great tasting food  designed and produced by 35 communications
food photography rob white
people and location photography simon kreitem and philip gatward
we would like to thank our employees at the following sites for their 
assistance in the photography featured within this report gunstones bakery 
northern foods grimsby thorpe park northern foods swansea 
fox’s biscuits kirkham cavaghan  gray carlisle matthew walker 
the pizza factory solway foods worksop
printed at the colourhouse iso14001 and carbonneutral
®
this report is printed on hello silk which is produced using wood ﬁ bre from fully 
sustainable forests in europe canada the usa and chile with fsc certiﬁ cation 
all pulps used are elemental chlorine free ecf and manufactured at a mill 
that has been awarded the iso14001 and emas certiﬁ cates for environmental 
management the use of the fsc logo identiﬁ es products which contain wood 
from wellmanaged forests certiﬁ ed in accordance with the rules of the forest 
stewardship council
financial highlights
  good sales growth increasing total revenue by 46 to £9752m 200708 £9319m
  proﬁ t from operations up 89 at £527m 200708 £484m after £42m of incremental 
investment in the business
  proﬁ t before tax pbt at £475m 200708 £501m reﬂ ecting a reduced pension credit
  proﬁ t for the period
1
 of £25m 200708 £345m after restructuring costs of £354m 200708 £47m 
and tax allowance changes
  underlying eps
2
 of 645 pence per share 200708 562p
  proposed dividend maintained at 450 pence per share 200708 450p
  robust balance sheet with new revolving credit facility rcf in place through to 2012 
net debt
3
 £2067m 200708 £2002m
 highlights
ifc financial and operating highlights
 directors’ report
02  chairman’s review
04  chief executive’s review
08  performance review
10 operational review
26  corporate social responsibility review
32  board of directors and company secretary
33  corporate governance
41  remuneration report
53  other statutory and regulatory information
56   statement of directors’ responsibilities
 financial statements
57  independent auditors’ report – group
58  consolidated income statement
59  consolidated balance sheet
60  consolidated cash ﬂ ow statement
61    reconciliation of net cash ﬂ ow to 
movements in net debt 
  consolidated statement of recognised 
income and expense
62 notes to the consolidated ﬁ nancial
 statements
99 independent auditors’ report – company
100 company balance sheet
101  company cash ﬂ ow statement
  company statement of recognised 
income and expense
102  notes to the company ﬁ nancial statements
112 five year record
 shareholder information
113 shareholder analysis
114  financial calendar
 company information
115 shareholder information
116 principal operations
footnote deﬁ nitions throughout this report
  items which relate to signiﬁ cant restructuring events are presented as a separate column within their relevant 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
1  proﬁ t for the period includes restructuring costs of £354m 200708 £47m – including £229m for fenland mothballing – and an exceptional tax charge of £125m following the withdrawal 
of industrial buildings allowances
2  underlying earnings per share eps is before restructuring items movement on deferred tax due to change in legislation oneoff release of prior year tax liability and the net pension 
ﬁ nancing this is reconciled to earnings per share in the ﬁ nancial statements
3  net debt is deﬁ ned as total borrowings including both short and long term bank loans bonds loan notes and ﬁ nance 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 us dollar denominated loan notes
4  underlying proﬁ t before taxation reﬂ ects group proﬁ t before tax before restructuring items and net pension ﬁ nancing this is reconciled to pbt in the ﬁ nancial statements 
5  roic is proﬁ t from operations before restructuring items for continuing operations divided by a 13 month average invested capital net equity adjusted to exclude retirement beneﬁ t 
obligations net of deferred tax and net debt together with accumulated goodwill previously written off
6  adjusted earnings per share eps is basic eps before restructuring items movement on deferred tax due to change in legislation and oneoff release of prior year tax liability this is 
reconciled to earnings per share in the ﬁ nancial statements
go online…
wwwnorthernfoodscom
 200809 200708
 £m £m
revenue 9752 9319
proﬁ t from operations 527 484
proﬁ t before taxation 475 501
underlying pbt
4
 390 344
proﬁ t for the period
1
  25 345
operating margin 54 52
return on invested capital roic
5
 117 110
underlying earnings per share eps
2
 645p 562p
adjusted earnings per share eps
6
 776p 788p
dividend per share proposed 450p 450p 1 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
our business
northern foods has delivered a resilient performance this year 
in challenging economic conditions
we have successfully adapted the business to the current retail 
environment whilst continuing to invest to enhance the trading 
position of the group
operating highlights
business successfully adapted to current retail environment growth 
in discount sector and value products complementing our strength 
in the premium market
strong performance in chilled and bakery reﬂ ecting our superior 
product offering frozen division growth impacted by euro strength
signiﬁ cant commodity cost increases successfully recovered
frozen bakery chilled
northern foods makes great tasting food we produce 
outstanding branded and retailer own brand ready meals 
sandwiches and salads pizza biscuits and puddings 2 northern foods plc annual report and accounts 200809 
chairman’s 
review
anthony hobson
chairman 3 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
and acquisition led investments the board 
has considered that the prudent approach 
is to maintain the dividend at the prior year 
level of 450p per share giving a dividend 
cover of 17 times from prerestructuring 
cash ﬂ ows the ﬁ nal dividend of 295p 
per share will be payable in august 2009
key to our future success is attracting 
and retaining the right management talent 
we have made a number of important and 
high quality appointments during the year 
and enhanced our performance culture 
a focus on efﬁ ciency and innovation is 
at the heart of everything we do and is a 
key building block in our reward structures 
during the year we took the difﬁ cult 
decision to mothball our fenland foods 
site when we were unable to reach 
agreement with the main customer of that 
site which would ensure its ﬁ nancial viability 
at our hull ready meals site the conclusion 
of negotiations with our main customer 
of that site has led to a termination of 
the supply contracts as a result we are 
consulting with our employees on a 
proposal to cease production and close 
the site our decision to discontinue supply 
contracts reﬂ ects the need for the group 
to eliminate unproﬁ table or marginal 
business and ensure that northern foods 
is best placed to succeed in this very 
competitive environment
we also continue to evaluate a proposal 
to invest in a new world class biscuit 
manufacturing facility in a highly 
competitive market this is a signiﬁ cant 
initiative for us but the current volatile and 
difﬁ cult economic conditions mean that the 
decision process is complex the board 
fully recognises the impact these difﬁ cult 
choices have on our employees and their 
local communities our top priority is 
to continue our timely communication 
with all those affected and to ensure 
that the consequences of our decisions 
are mitigated as far as possible
overview 
in a tough market and set against a 
backdrop of a recessionary environment 
northern foods has continued to grow into 
a stronger and more effective business 
which is well placed in our sector we 
are delivering growth in value products 
alongside our traditional premium ranges 
maintaining our drive towards lowering 
costs and increasing efﬁ ciency and 
targeting investment and new channels 
to develop our business
performance and dividend 
despite very challenging trading conditions 
continued high commodity costs the 
impact of the stronger euro for our nonuk 
operations and investment to build our 
brands we have reported a proﬁ t from 
operations of £527m an increase of 
nearly 9 on the previous year after a 
lower pension ﬁ nancing credit reﬂ ecting 
reduced asset returns we reported a 
proﬁ t before tax of £475m 200708 £501m 
underlying proﬁ t before tax
4
 increased 
by 13 to £390m 200708 £344m 
during the year we spent £110m on a share 
buyback programme which beneﬁ ted 
our earnings per share adjusted eps
6
 
was 776p 200708 788p whilst underlying 
eps
2
 increased by 15 to 645p 200708 
562p proﬁ t for the period
1
 was £25m 
200708 £345m after restructuring 
items of £354m 200708 £47m and the 
withdrawal of tax allowances of £125m 
our balance sheet is strong with a new 
revolving credit facility in place to 2012 
your board is strongly committed to 
enhancing shareholder value and 
maintaining a strong balance sheet 
we have in this challenging and uncertain 
economic environment to be prudent 
and ensure that we have the capacity to 
maintain the appropriate levels of organic 
these are challenging market conditions 
but our operational and ﬁ nancial strengths 
position us favourably to address these 
markets to continue our good progress 
and to build a strong business
in other initiatives we succeeded in winning 
a major contract jointly with dhl to supply 
british airways with onboard catering for 
its short haul ﬂ eet starting in 2010 this 
takes us into a new market which plays to 
our strength in providing high quality and 
innovative convenience food we have also 
been enhancing our customer base by 
building strong relationships with discount 
retailers and developing our range of value 
products which are becoming increasingly 
important in these difﬁ cult times 
our employees
the challenging market in which we 
operate requires the very best from our 
colleagues within northern foods our loyal 
employees have contributed greatly to our 
results in this challenging year and i would 
like to thank them for their continuing efforts
your board
your board has continued to beneﬁ t from 
the skills and depth of experience available 
to support the management team and 
i thank colleagues for their continued 
commitment and support andy booker 
group finance director joined the board 
in november 2008 replacing jez maiden 
who left the group to take up a role at 
national express group plc jez made 
a very important contribution during his 
three years at northern foods and we 
wish him well
summary
we have much still to do to realise our 
potential and deliver value for all our 
stakeholders however we have made 
good progress over the past few years 
in restructuring and repositioning your 
business for success we are operationally 
and ﬁ nancially stronger have a high quality 
management team and are a better 
balanced and more resilient business 
these are challenging market conditions 
but our operational and ﬁ nancial strengths 
position us favourably to address these 
markets to continue our good progress 
and to build a strong business
anthony hobson
chairman
27 may 2009 4 northern foods plc annual report and accounts 200809 
chief executive’s 
review
stefan barden
chief executive 5 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
northern foods – many opportunities 
in the food sector
food is a good market in which to operate 
during a recession today total uk food 
expenditure continues to grow as it has in 
previous downturns management believes 
that there are many proﬁ table opportunities 
available for an innovative manufacturer like 
northern foods 
over the past few years the big four 
retailers have seen relatively similar 
market share growth despite much press 
comment absolute changes in their sales 
are small from year to year but all are 
growing a key plank in each retailer’s 
strategy is to win more sales from each 
customer already within their store and to 
increase their customers’ loyalty as they 
seek to build loyalty through greater 
differentiation in their product offerings 
we believe they will focus more on building 
their own label ranges 
northern foods is well positioned to 
support speciﬁ c retailers achieve their 
differentiation goals
   we have created and supported many 
of the new food markets over the past 
30 years especially in chilled food for 
example chilled ready meals chilled 
sandwiches and chilled salads
   we have a deserved reputation in the 
industry for being a leader in quality 
and innovation which we value and 
want to build upon
   we are investing in new initiatives in 
recipe science and food technology 
in addition we have two strong brands 
with opportunities of their own 
   the fox’s management team has rebuilt 
the fox’s brand and refreshed customer 
relationships in 200809 we grew brand 
sales by 105 to exit the year with a 
52 week value brand share of 93 
acn scantrack 52 we 210309
   whilst goodfella’s has been impacted 
recently by a strong euro all our frozen 
pizza is made in ireland and will be again 
this year we are working on restaging 
our brand and manufacturing base
dear shareholder
northern foods – a stronger 
better balanced business
three years ago management laid out 
a clear simple strategy focussed on the 
single key performance indicator kpi of 
creating ‘above market average rate of 
sale products’ the strategy is built on a 
foundation of producing great tasting food 
from superior insights into recipe science 
and food technology together with our 
long standing culinary capabilities
today this strategy is beginning to show 
results northern foods is now less reliant 
on any single retailer and has a growing 
representation with discount retailers and 
in value products which now account 
for around a ﬁ fth of our business this 
complements our strength in the premium 
market our 200809 year end results 
demonstrate northern foods’ ability to 
continue delivering a resilient performance 
in challenging economic conditions
during 200809 we overcame £523m of 
inﬂ ation a quarter of the products which we 
sell in the uk are manufactured in ireland 
so we also tackled the appreciation of the 
euro head on this was a further headwind 
of £5m 
despite all this we have been able to report
   sales up 46 to £9752m underlying 
revenue
7
 up 50
   proﬁ t from operations up 89 to £527m
whilst these results underline our resilience 
the management team remains determined 
to drive further growth from this stronger 
and more sustainable business
we have successfully adapted our business 
to the current retail environment we are 
working hard to create a strong business 
to serve the millions of people who buy our 
products every day
7   underlying revenue excludes the impact of currency rate 
changes product categories no longer manufactured 
acquisitions and discontinued operations including fenland
revenue by division 200809
01 chilled £4868m
02 frozen £2724m
03 bakery £2160m
03
01
02
profit by division 200809
01 chilled £229m
02 frozen £93m
03 bakery £205m
03
01
02 6 northern foods plc annual report and accounts 200809 
our strategy is built on a foundation 
of producing great tasting food from 
superior insights into recipe science 
and food technology coupled with 
our long standing culinary capabilities
northern foods – working hard to 
capitalise upon new opportunities
we have key initiatives in hand and 
investment opportunities are anticipated 
to materialise as the recession ends
we are in the detailed planning stages 
of several important projects
   our investment in a new facility together 
with dhl will deliver onboard catering 
to british airways this investment offers 
british airways better quality food at 
substantially lower costs than incumbent 
suppliers
   we are evaluating a ‘state of the art’ 
biscuit facility which offers good cost 
saving potential compared to our two 
existing facilities at batley and uttoxeter
   it is our intention in due course 
to reopen our fenland site with a 
number of next generation technologies 
although acquisitions are not essential to 
our strategy we are alert to opportunities 
we believe further opportunities may 
begin to crystallise as the full extent of 
the recession become clear a number 
of food companies historically funded 
by cheap debt are in a weak position 
the credit crunch will expose the poor 
proﬁ tability of the private label uk food 
manufacturing base over the next ﬁ ve years 
branded manufacturers have always made 
strong returns and continue to do so
we believe that the current changes in 
the economic environment have yet to be 
fully understood your management team 
remains cautious for 200910 we do not 
want to undermine our strong industry 
position by moving too quickly we intend 
to restart investment when we see the 
economy recover and when we have 
greater clarity on ﬁ nancial markets
northern foods is 
a stronger better 
balanced business 
today than it was 
three years ago
 we target attractive  
 growing markets
 ready meals
 our ready meals continue to deliver high  
 repeat purchase for our customers
 pizza
 we have a good market position in 
 both frozen and chilled pizza
 sandwiches  salads
 our sandwiches  salads business 
 is in tune with the healthier lifestyle
  biscuits
 our premium fox’s brand and own label  
 business have seen strong sales growth  
 this year
  puddings
 we have the expertise to deliver a 
 unique range of christmas puddings 
 for our customers 7 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
chilled – page 14 frozen – page 18 bakery – page 22
northern foods – preparing for 
investment
management continues to strengthen the 
business generating cash and ensuring 
that we operate from a position of ﬁ nancial 
strength
   in 200809 we generated £354m of free 
cash ﬂ ow
8
 before restructuring which 
covers our dividend payment of £207m 
at 450p per share 17 times
   we have secured a new revolving credit 
facility with completion of a new £250m 
forward start banking facility through 
to july 2012 which replaces the existing 
£460m facility in july 2010 effective 
april 2009 the current £460m facility 
was reduced to £305m this new facility 
positions us well in these uncertain times
   we continue to manage our pension 
schemes in consultation with employees 
we have ended our deﬁ ned beneﬁ t 
schemes for existing employees in 
the leadership population moving to a 
deﬁ ned contribution scheme in parallel 
we are working to reduce the volatility of 
historic liabilities
we continue to invest in talent hiring more 
senior management with global fmcg 
experience as well as investing in our own 
today our senior teams are well balanced 
with about a third being new hires over 
the last two years 
above all we continue to invest in the 
fundamentals of what we do – ‘making 
great tasting food that people want to buy 
again and again    and again’ we have 
created a new role of chief scientist and 
have redeﬁ ned roles to focus on innovation 
through science and technology our initial 
progress in this area has already been 
noted with interest by our customers 
who know that our goal is simply to 
continue giving them the highest rate 
of sale products in the market place 
looking ahead
northern foods is a stronger better 
balanced business today than it was three 
years ago as we continue to strengthen 
our position within the uk food industry we 
are investing in the business to ensure that 
it can capitalise upon the new opportunities 
in the food sector which are emerging in 
these turbulent times 
your management team indeed everyone 
at northern foods is excited about the 
opportunities that are developing we are 
all working hard to create a strong business 
to serve the millions of people who buy our 
products every day – the deﬁ nitive sign of 
quality and value for money
stefan barden
chief executive
27 may 2009
46
sales up 46 to £9752m 
underlying sales up 50
£527m
proﬁ t from operations up 89 
to £527m
8  free cash ﬂ ow is net cash from operating activities adjusted 
for special pension contributions less net capital expenditure 
plus interest received net capital expenditure is purchase 
of property plant and equipment ppe less grants received 
and proceeds from sale of ppe 8 northern foods plc annual report and accounts 200809 
northern foods has delivered a resilient 
performance this year in challenging 
economic conditions we have successfully 
adapted the business to the current retail 
environment responding quickly to the 
recession with new value products and 
discount ranges alongside our core market 
and premium heartland our business with 
the discount retailers or based around 
value products is now around a ﬁ fth of 
the group’s sales
we have continued to drive performance 
improvements right across the group 
growing sales exiting low margin business 
investing in the future improving operational 
efﬁ ciencies and ensuring that we are cash 
focused and cost conscious we remain 
focused on the key markets of ready meals 
sandwiches  salads pizza biscuits and 
puddings this year also saw northern 
foods secure a prestigious contract to 
serve british airways
total revenue increased by 46 to £9752m 
and proﬁ t from operations by 89 to 
£527m over the prior year group proﬁ t 
before tax at £475m was lower than the 
prior year primarily reﬂ ecting a reduced 
pension credit however underlying proﬁ t 
before tax
4
 pbt grew by 134 despite 
headwinds from the strong euro increased 
investment in our brands and business 
startups return on invested capital
5
 roic 
improved from 110 to 117
proﬁ t before taxation reduced by 52 to 
£475m 200708 £501m reﬂ ecting £42m 
of incremental investment in marketing and 
startup costs for our acquisitions made in 
 the northern foods operating board from left to right 
julian slade garry walsh robin walker stefan barden 
andy booker kuldip kular and graham hunter
we have successfully adapted the business 
to the current retail environment responding 
quickly to the recession with new value 
products and discount ranges alongside 
our core market and premium heartland
performance
review 9 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
the prior year proﬁ t for the period
1
 was 
£25m 200708 £345m as we absorbed 
restructuring items before taxation of 
£354m 200708 £47m relating primarily 
to the mothballing of the fenland facility 
and £125m following the withdrawal of 
industrial buildings allowances ibas
a stronger underlying performance in 
chilled and margin improvement in bakery 
emphasised the beneﬁ ts we are starting 
to see from the strategy put in place during 
2007 whilst proﬁ tability declined in frozen 
which is the division most impacted by 
the euro frozen retains a strong market 
position and we are working hard to 
enhance its proﬁ t performance through 
cost reduction simpliﬁ cation and innovation
over the course of the year material costs 
were around 12 higher than the prior year 
whilst energy costs were approximately 
64 higher we and other manufacturers 
see continued inﬂ ation looking ahead with 
many key commodity prices still up year on 
year we continued to recover higher input 
costs fully through the year 
the integration of the prior year acquisitions 
– ethnic cuisine chilled soup at grimsby 
and mcdougalls frozen pastry – was 
completed during the period we also 
remained focused on reducing our 
cost base across the divisions and we 
continued the evaluation of the proposed 
investment in a world class biscuits factory 
to deliver a step change in efﬁ ciency 
we have a key focus on driving cash 
generation with prerestructuring free 
cash ﬂ ow
8
 of £354m in the year 200708 
£483m net capital expenditure to enhance 
our manufacturing infrastructure saw 
investment increase to 80 of depreciation 
200708 42 whilst working capital 
continues to be tightly managed with an 
increase of only £100m 200708 £116m 
driven by input inﬂ ation and increased sales
our balance sheet remains robust and 
year end debt was £2067m 200708 
£2002m alongside our us private 
placement of £143m which matures 
between 20122017 in march 2009 we 
completed a new £250m forward start 
banking facility to july 2012 which will 
replace the existing £460m facility in july 
2010 in this unprecedented economic 
environment and with weakness elsewhere 
in the food manufacturing sector our 
strong balance sheet provides us with the 
capacity to support our future investment 
plans we are actively managing the 
group’s retirement beneﬁ t obligations 
to maintain a manageable service cost 
whilst reducing risk and volatility
outlook
northern foods has delivered a resilient 
performance in challenging economic 
conditions we anticipate that next 
year will be equally challenging with 
the continuation of food inﬂ ation and 
competitive pressures our operational 
and ﬁ nancial strengths position us well 
to beneﬁ t when markets recover 
financial performance and dividend
revenue increased by 46 to £9752m 
200708 £9319m with underlying revenue
7
 
50 ahead proﬁ t from operations 
improved to £527m 200708 £484m and 
operating margin increased by 20 basis 
points to 54 group proﬁ t before tax 
declined 52 to £475m 200708 £501m 
reﬂ ecting a reduced net pensions ﬁ nancing 
credit underlying pbt
4
 increased 134 to 
£390m 200708 £344m after restructuring 
items including the mothballing of the 
fenland facility asset impairments in 
relation to the hull site and an increased 
tax charge of £125m due to the phasing 
out of industrial buildings allowances 
the statutory proﬁ t for the period
1
 
was £25m 200708 £345m
underlying earnings per share eps
2
 
increased 148 to 645p 200708 562p 
whilst adjusted eps
6
 declined 15 to 
776p 200708 788p basic eps was 
054p 200708 708p
the underlying full year effective tax rate 
excluding the release of a prior year tax 
liability is 238 200708 234 reﬂ ecting 
the lower irish tax rate following a change 
in uk corporate tax legislation in the 
finance act 2008 there is a oneoff 
noncash charge of £125m in the current 
year to reﬂ ect the phasing out of ibas 
this phasing out was offset by a reduction 
in the headline rate of uk corporation tax 
from 30 to 28 in the current year 10 northern foods plc annual report and accounts 200809 
operational review
to reﬂ ect our prudent approach in this 
challenging and uncertain economic 
environment the board proposes to 
maintain the total dividend payable in 
respect of 200809 at 450p per share 
200708 450p this represents adjusted 
eps cover of 17 times 200708 18 times 
and is consistent with our policy of ensuring 
that our dividend is well covered by free 
cash ﬂ ows
subject to shareholder approval a ﬁ nal 
dividend of 295 pence per share 200708 
295p will be payable on 28 august 2009 to 
shareholders on the register at 31 july 2009
key performance indicators
alongside absolute proﬁ t and debt 
measures the group uses the following 
key performance indicators kpis to 
measure progress as shown in the 
kpi table
each kpi is deﬁ ned and assessed within 
this review nonﬁ nancial kpis are featured 
in the northern way our corporate social 
responsibility review
revenue
the group seeks to deliver selective 
proﬁ table increases in revenue by focusing 
on attractive market segments with strong 
growth potential in areas where margin is 
enhanced we continue to exit low margin 
and low volume products through selective 
range rationalisation this in turn reduces 
complexity and drives efﬁ ciency 
improvements in our facilities
revenue was up 46 at £9752m 200708 
£9319m underlying revenue growth
7
 
a key measure for the group was up 50 
prices increased by 42 reﬂ ecting the 
commodity price recovery effect whilst 
volumes were up 08 northern foods 
continues to demonstrate it is a better 
balanced business through capitalising 
on the growth of discount retailers 
alongside its traditional premium heartland 
sales to the group’s top ﬁ ve customers 
by value ms tesco sainsbury asda 
morrisons remain at 77 and sales of 
our value ranges to target cash conscious 
consumers now represent around a ﬁ fth 
of our business
operating margin
proﬁ t from operations rose 89 to £527m 
200708 £484m and operating margin 
improved 20 basis points to 54 200708 
52 a strong performance in our chilled 
and bakery divisions was offset by lower 
proﬁ ts in our frozen division commodity 
inﬂ ation was in double digits during the 
year and working with our customers we 
successfully recovered this in full through 
a mix of selling price increases and other 
initiatives we expect commodity inﬂ ation 
to continue through 200910 albeit at 
lower levels and we plan to recover 
inﬂ ation fully and drive margin improvement 
through investment in the business and 
efﬁ ciency initiatives
rona
each business is focused on driving 
stronger returns from the assets utilised 
in that business better management of 
capital investment together with careful use 
of working capital leads to improved asset 
utilisation the combination of margin and 
asset utilisation is measured through return 
on net assets rona which is deﬁ ned as 
proﬁ t from operations divided by average 
operating assets invested in the business 
during the year rona improved from 137 
to 147 reﬂ ecting improvements in both 
operating margin and asset utilisation 
we target 15 as a minimum medium term 
rona for each business and in 200809 
the bakery division continued to achieve 
a return well above 15 and the chilled 
division made further progress towards 
this target the impact of the stronger 
euro on the frozen division together 
with a competitive pizza market resulted 
in a decline in rona
proﬁ t before taxation
proﬁ t before taxation reduced by 52 
to £475m 200708 £501m proﬁ t for 
the period
1
 was £25m 200708 £345m 
the charge for restructuring items before 
taxation was £354m 200708 £47m 
relating primarily to the mothballing 
of the fenland facility and other cost 
reduction projects the charge for 
restructuring items comprised £118m 
in cash and £236m in noncash items
net ﬁ nancing costs decreased to £137m 
200708 £140m reﬂ ecting lower ﬂ oating 
rates in the second half year as libor 
declined the net pensions ﬁ nancing 
credit reduced to £85m 200708 £157m 
due to lower asset returns as a result the 
net ﬁ nance charge was £52m compared 
to a credit in the prior year of £17m
in accordance with accounting standards 
the company records its expected return 
on deﬁ ned beneﬁ t pension assets within 
the ﬁ nancial statements each ﬁ nancial year 
it has been our practice to show this as 
a separate line within the ﬁ nance and 
expense section of the income statement 
whilst the assets are held as long term 
investments to meet the long term pension 
scheme obligations the nature of the 
assets means that there can be signiﬁ cant 
annual movements in asset values 
and hence returns this has been very 
pronounced in the last twelve months we 
believe that this masks the true underlying 
performance of the business and we have 
therefore introduced an underlying pbt
4
 
and underlying eps
2
 calculation in this 
report eliminating the distorting impact 
of net pension ﬁ nancing
free cash ﬂ ow and capital management
a continued focus on cash management 
was supported by our drive to achieve 
more proﬁ table utilisation of existing 
manufacturing capacity using rona as 
a kpi to embed this discipline across the 
group each business assesses its capital 
requirements utilising robust project 
evaluation techniques which evaluate 
economic and cash criteria
gross capital expenditure the purchase 
of property plant and equipment in the 
year was £310m 200708 £215m compared 
with depreciation and amortisation of 
£393m 200708 £417m this represents 
80 of depreciation 200708 52 with 
a key project being the investment in 
increased automation within our biscuits 
manufacturing we expect capital 
expenditure excluding the new proposed 
biscuit investment which is currently being 
evaluated to continue at broadly similar 
levels in 200910
 kpi 200809 200708
revenue growth underlying
7
 50 33
operating margin 54 52
return on net assets rona 147 137
prerestructuring free cash ﬂ ow
8
 £354m £483m
debt ratio prerestructuring 21 times 20 times
return on invested capital roic 117 110 11 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
  200809 200708
 £m £m
operating cash ﬂ ow before working 
capital  special pension contributions 807 840
movement in working capital  100 116
net interest paid 152 136
net taxation paid 10 30
capital expenditure 310 215
asset sales – 44
grants received 07 03
free cash ﬂ ow 242 390
restructuring items 112 93
prerestructuring free cash ﬂ ow 354 483
despite continued double digit inﬂ ationary 
increases working capital remained tightly 
managed increasing by only £100m during 
the year at the balance sheet date net 
working capital
9
 remained favourably 
negative at £143m 200708 £259m 
the group has successfully maintained 
its discipline over cash management and 
generated further free cash ﬂ ow of £242m 
200708 £390m including restructuring 
cash items of £112m 20078 £93m
free cash ﬂ ow measures the cash 
generated by the group from its normal 
trading activities and represents the cash 
available after paying tax and interest 
costs to ﬁ nance dividends investments 
or acquisition activity it is analysed in the 
adjacent table
debt
a key measure of our ﬁ nancial ﬂ exibility is 
our debt ratio this is the ratio of net debt 
to ebitda
10
 calculated under ‘frozen uk 
gaap’ the accounting basis used when 
the group’s current ﬁ nancing facilities 
were established this is targeted to be 
below 35 times the limit imposed by our 
ﬁ nancing agreements for 200809 the 
debt ratio was 21 times 200708 20 times
using its free cash ﬂ ow the group invested 
£110m in returning cash to shareholders 
through a share buyback a total of 
17500000 shares were repurchased during 
this ﬁ nancial year under the buyback 
programme at an average share price 
of 63p enhancing earnings per share the 
group incurred £112m in cash restructuring 
costs relating to the fenland mothballing 
and cost reduction programmes
after dividend payments of £207m 200708 
£210m a share buyback of £110m and 
cash restructuring costs of £112m the 
year end net debt
3
 was £2067m 200708 
£2002m this level of debt the majority of 
which is at ﬁ xed rates continues to position 
the group favourably in current volatile 
credit markets the group’s ﬁ xed rate 
funding is through us private placement 
notes of £143m which mature between 
2012 and 2017 in march 2009 we completed 
a new £250m forward start banking facility 
through to july 2012 which replaces the 
existing £460m facility in july 2010 effective 
april 2009 the current £460m facility was 
reduced to £305m this reduction in 
facilities is more cost effective by avoiding 
commitment fees on unused facilities whilst 
remaining sufﬁ cient to support the group’s 
future investment plans reﬂ ecting the 
prevailing ﬁ nancial market conditions this 
will incur higher interest costs next year
roic
group total equity reduced to £541m 
200708 £1654m primarily reﬂ ecting the 
change in the retirement beneﬁ t obligation 
the group’s roic
5
 measuring the pretax 
return on shareholders’ invested capital 
increased during the year to 117 200708 
110 as we continued to improve the 
efﬁ ciency of the business
pensions
under international accounting standard 
ias 19 there is a £715m deﬁ cit in the 
pension fund compared with a surplus of 
£616m at the end of our 200708 ﬁ nancial 
year this primarily reﬂ ects the impact 
of economic conditions on asset values 
during the year
northern foods’ long history of providing 
deﬁ ned beneﬁ t pensions to its employees 
has resulted in a large pension fund 
which we need to manage prudently 
the principal uk deﬁ ned beneﬁ t scheme 
is now closed to new members and 
work is well advanced to reduce but not 
eliminate the potential for future funding 
volatility which will be achieved through 
a liability driven investment programme 
we need to ensure that the future service 
accrual remains affordable to both 
the company and scheme members 
our triennial actuarial pension funding 
review for the period to 31 march 2008 
was completed resulting in a funding 
deﬁ cit of £75m trustee basis and required 
no additional cash contributions from 
the company relying instead on fund 
outperformance over an eight year period 
to meet the deﬁ cit to maintain the ﬁ nancial 
stability and competitiveness of the 
business it has been necessary to make 
changes to the deﬁ ned beneﬁ t scheme 
after a period of consultation member 
contributions have been increased 
and the leadership population has been 
transferred to a deﬁ ned contribution 
scheme we continue to keep all pension 
arrangements under review
whilst the principal uk deﬁ ned beneﬁ t 
scheme has been closed to new entrants 
since 2005 there remain some 2207 active 
members of the scheme our aim is to 
continue to provide competitive pension 
beneﬁ ts to our employees at a cost that is 
affordable to the company and enables us 
to compete effectively in the marketplace
9  net working capital is deﬁ ned as inventories plus trade 
and other receivables less trade and other payables
10  ebitda is earnings before interest tax depreciation and 
amortisation it is calculated as proﬁ t from operations 
plus depreciation and amortisation all measured before 
restructuring items 12 northern foods plc annual report and accounts 200809 
risks and uncertainties
the operation of a public company involves 
a series of risks and uncertainties across 
a range of strategic commercial operational 
and ﬁ nancial areas northern foods has a 
robust internal control and risk management 
process as outlined in the corporate 
governance review which is designed 
to provide assurance but which cannot 
avoid all risks outlined below are potential 
risks that could impact the company’s 
performance causing actual results to 
vary from those experienced previously 
or described in forward looking statements 
within this document these risks are 
monitored on an ongoing basis through 
the company’s risk management 
processes additional risks and 
uncertainties not identiﬁ ed may also have 
an adverse material effect on the company
  economic uncertainty – the company 
is responding to the current economic 
conditions by balancing its product 
portfolio in those markets where this 
is considered to be appropriate 
a number of discount products have 
been introduced in different markets 
to compete with the current trend 
of consumers turning towards value 
products whilst maintaining acceptable 
margins given the uncertain consumer 
outlook the company continues to 
manage cost and cash closely sales 
weighting to the second half year in 
particular assumes sales will be in line 
with historical sales patterns over the 
seasonal trading period
  customer relationships – the company 
seeks to manage the risks presented 
by its consolidated customer base 
and the highly competitive environment 
that characterises the industry which 
generally operates without long term 
contracts through its high service high 
quality low cost model targeted across 
a portfolio of markets where it has strong 
positions this is supported by product 
development programmes and by 
maintaining and developing strong 
robust relationships with customers the 
company also monitors customer credit 
risk to manage exposure in the current 
challenging environment
  consumer trends – exposure to 
changing consumer trends can impact 
proﬁ tability the company seeks 
to manage these through portfolio 
changes with greater weight towards 
growth trends which include health 
convenience and indulgence – for 
example by managing new product 
innovation to expand sales in these 
areas while managing the exposure 
to declining market sectors – and to 
providing proﬁ table value sector products 
during times of economic slowdown
  operational disruption – the short lead 
times involved in servicing our customers 
can lead to an adverse impact from 
disruption to our manufacturing and 
distribution facilities for example 
by ﬁ re health and safety failure problems 
of supply information systems failure 
workforce action or environmental 
incident this is managed through 
a process including systems of 
standard operating procedure regulatory 
compliance dedicated steering groups 
monitoring audit consultation and 
multiple sourcing insurance cover 
is maintained where appropriate but 
may not cover all risks and losses
  business continuity – the group is at risk 
to disruption at key sites from incidents 
such as a major ﬁ re which could result 
in signiﬁ cant operational issues our 
businesses have incident management 
processes and continuity plans in place 
to manage the impact of such an event 
as well as insurance to mitigate the 
ﬁ nancial impact a major update of these 
plans is currently nearing completion
  legislation regulation and litigation 
– northern foods manages a range 
of regulatory requirements regarding 
the production sale safety labelling 
compositioningredients and disposal 
of its products compliance monitoring 
and proactive initiatives seek to manage 
this risk the group has policies and 
ongoing monitoring in place to ensure 
that employees are aware of their 
regulatory responsibilities litigation 
claims and proceedings can have an 
adverse effect on the company’s results
  change management recruitment and 
retention – ongoing change requires 
close management attention and the 
company has experience of managing 
such risks and has action plans to 
mitigate them including board oversight 
and project management processes 
failure to implement and complete 
change can impact ﬁ nancial results 
employee recruitment and retention with 
the latter also subject to the availability of 
a suitable pool of domestic and overseas 
staff proactive initiatives for this are 
included in the northern way contained 
later in this report
  managing procurement costs – exposure 
to price including foreign exchange 
impact and supply ﬂ uctuations for 
raw materials and services is managed 
by a central procurement function 
to better negotiate with relationship based 
suppliers agreeing forward prices where 
appropriate and available the company 
seeks to pass on cost increases where 
possible to its customers through price 
rises but constraints in achieving this can 
affect the company’s results in addition 
the company manages exposure to key 
suppliers through dual supplier sourcing 
where feasible
  food safety – appropriate product 
manufacturing storage and avoidance 
of contamination are critical standard 
manufacturing and distribution protocols 
are in place together with proven 
product recall processes for product 
recovery widespread food scares 
can impact directly through the sale 
of a contaminated product or indirectly 
through lack of supply or reduced 
consumer demand shareholder information highlights directors’ report financial statements
13 northern foods plc annual report and accounts 200809
  environment – the company maintains 
environmental policies and relationships 
with relevant regulators to manage 
the impact its activities have on the 
environment in addition the company 
has an active programme described in 
the northern way to reduce this impact 
over time nevertheless changes in 
environmental legislation or unplanned 
incidents could impact the company’s 
operations adversely 
  financial risks – the company has 
committed ﬁ nancing in place which 
can only be withdrawn in the event of a 
breach of ﬁ nancing agreement such as 
covenants when the company might be 
restricted in its ability to operate normally 
and could be required to dispose of 
assets to pay down debt and incur 
additional costs the principal banking 
facility is now in place until july 2012 and 
funding availability for that renewal may 
be more constrained in light of recent 
credit market conditions board policy 
is to operate with ﬁ xed rate borrowings 
within a range of 20 to 50 of net 
borrowings over the medium term to 
manage interest rate risk although the 
group may operate outside this range 
from time to time pension schemes 
could require increases in future company 
funding and pension regulation could 
restrict the freedom of the company 
to undertake certain corporate activities 
including disposals and return of capital 
to shareholders the company has 
certain tax exposures in addition to 
current trading tax balances these 
exposures total £238m which are provided 
for but which in the event of an adverse 
ﬁ nding by taxation authorities could result 
in a substantial payment of cash the 
irish business is exposed to foreign 
exchange risk and transaction exposure 
is hedged on a rolling 12 month basis 
basis of preparation
this ﬁ nancial information has been 
prepared in accordance with international 
financial reporting standards ifrs
forward looking statements
forward looking statements are made 
throughout this review these forward 
looking statements are based on a number 
of assumptions concerning future events 
and information currently available the 
user of this performance review 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 reﬂ ected in those 
forward looking statements are reasonable 
it cannot assure users that those 
expectations will prove to be fulﬁ lled 
in addition to those factors described 
under ‘risks and uncertainties’ 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
comparative statements
in this report northern foods makes 
certain statements with respect to its 
market position or its products’ or its 
brands’ market positions by comparisons 
with third parties or their products or 
brands these statements are based on 
both internal sources and independent 
sources and are accurate to the best of the 
knowledge and belief of northern foods
going concern 
in determining whether the group’s annual 
consolidated ﬁ nancial statements can be 
prepared on a going concern basis the 
directors considered the group’s business 
activities together with the factors likely to 
affect its future development performance 
and position the review also includes 
the ﬁ nancial position of the group its 
cash ﬂ ows liquidity position and borrowing 
facilities the key factors considered 
by the directors were as follows
  the implications of the challenging 
economic environment and future 
uncertainties on the group’s revenues 
and proﬁ ts the group undertakes 
forecasts and projections of trading and 
cash ﬂ ows on a regular basis this allows 
the group to target performance and 
identify areas of focus for management
  the impact of the competitive 
environment within which the group’s 
businesses operate
  the potential actions which could be taken 
in the event that revenues are worse 
than expected to ensure that operating 
proﬁ t and cash ﬂ ows are protected
  the group has access to overdraft 
facilities and a committed bank facility 
to meet daytoday working capital 
requirements following the reﬁ nancing of 
the bank facility in march 2009 the group 
has committed bank facilities to july 2012 
in april 2009 the existing facility was 
reduced from £460m at march 2009 to 
£305m the facility will reduce to £250m 
in july 2010
as at the date of this report the directors 
have a reasonable expectation that the 
company and group have adequate 
resources to continue in business for the 
foreseeable future  accordingly the annual 
report and ﬁ nancial statements for the 
52 weeks ended 28 march 2009 have been 
prepared on the going concern basis chilled
the chilled division delivered 
improved performance 
growing revenue operating 
margin and proﬁ t
we are responding 
to the current retail 
environment with 
our range of 
competitively priced 
sandwiches t esco 
chicken  sweetcorn 
£100 rsp
 prices correct at time of going to press 27 may 2009
14 northern foods plc annual report and accounts 200809  our premium 
sandwiches are 
ﬁ lled with delicious 
ingredients ms 
crayﬁ sh  rocket 
£300 rsp
15 northern foods plc annual report and accounts 200809 16 northern foods plc annual report and accounts 200809 
ready meals
sales growth outperformed the market 
with underlying sales increasing by 66 
in a market which fell by 20 tns data 
52 we 220309 this emphasised the 
importance we place on repeat purchase 
rates as a key success driver across 
all of our businesses we are committed 
to driving improvements in proﬁ tability 
across ready meals and we saw a good 
performance three speciﬁ c products – 
melt in the middle fishcakes sweet  sour 
battered balls and prawn primavera – 
performed strongly during the period 
and were featured in tv advertising by 
marks  spencer our accompaniments 
range for ms also saw strong growth 
helping provide products for the time 
poor consumer in the run up to christmas 
we saw over one million ultimate mash 
products supplied to ms a great example 
of the high volume we can deliver from 
our modern automated sites we are 
continuing to ensure that we utilise capacity 
at our sites in the best way possible
in may 2008 we announced the 
mothballing of our fenland foods facility 
in grantham which produced italian based 
cuisine for ms we were unable to reach 
agreement to return fenland to proﬁ tability 
consistent with our stated strategy to 
continue with business only where terms 
generate an adequate return for the 
group’s shareholders the fenland 
mothballing has resulted in restructuring 
items of £229m which includes impairment 
of ﬁ xed assets of £181m and other costs of 
£48m net of a retirement beneﬁ t obligation 
curtailment gain of £04m cash costs 
associated with the fenland mothballing 
were £52m and noncash costs were 
£177m we continue to discuss the potential 
reopening of fenland in the future with 
new customers
the division delivered a robust 
performance over the year revenue 
increased by 11 to £4868m 200708 
£4815m ready meals growth offset slightly 
lower volume growth in sandwiches and 
salads due to the poor summer weather 
underlying revenue
7
 increased by 56 
as a result of average selling prices being 
29 ahead as we increased prices to 
recover commodity inﬂ ation and volumes 
were 27 ahead
we worked closely with our customers to 
develop new value and discount products 
in pizza sandwiches and salads alongside 
our premium ranges improvements in 
underlying performance were offset by 
startup costs of £12m in commissioning 
our chilled soup plant at grimsby divisional 
proﬁ t from operations increased to £229m 
200708 £221m and operating margin 
increased slightly to 47 200708 46
with constrained capacity in the industry 
for producing ready meals sandwiches 
and salads proﬁ tably and with the high 
quality that consumers demand we are 
well positioned in markets which offer 
good long term growth prospects
sainsbury’s taste the difference moroccan 
couscous
sandwich ﬁ llers for retailers including morrisons
chilled
the focus for the chilled division is on 
making fresh short shelf life products which 
meet consumers’ desires for convenient 
high quality food that reﬂ ects the demands 
of busy healthier lifestyles shareholder information highlights directors’ report financial statements
17 northern foods plc annual report and accounts 200809
following the conclusion of negotiations to 
seek mutually acceptable and commercially 
viable terms for business supplied from 
northern foods’ hull ready meals facility 
northern foods and its main customer 
served by the site have agreed to terminate 
the existing supply contracts as a result 
we will be commencing consultation 
with employees on a proposal to cease 
production and close the site in 
accordance with our strategy to continue 
with business only where terms generate 
an adequate return the proposal includes 
consultation to move a proportion of 
production to other facilities the net 
proﬁ t impact in 200910 will be minimal 
and the company will incur a oneoff cash 
restructuring cost in the 200910 ﬁ nancial 
year which is expected to be less than 
£5m our 200809 accounts include a 
noncash impairment of £59m 
promotional activity increased during 
the period as retailers sought to deliver 
better value for hardpressed consumers 
whilst we worked closely with all of our 
major customers we are less reliant on 
promotions to drive sales 
sandwiches and salads
in sandwiches and salads revenue growth 
was ahead by 60 against market growth 
of 07 in sandwiches acn 52 we 180409 
and 11 in salads acn 52 we 180409 
but slower than anticipated due to the poor 
summer weather the business performed 
creditably despite the difﬁ cult market 
conditions we successfully introduced 
sandwiches for our major customers 
including wiltshire ham  west country 
cheddar for the tesco finest range 
and a range of sandwiches for ms 
in its ‘best of british’ range 
our prepared salads business delivered 
a commendable performance investment 
to expand capacity at our corby salads site 
was successfully completed during the ﬁ rst 
half providing us with additional capacity 
in this market 
chilled pizza continues to operate in 
a challenging and promotionally driven 
competitive environment although we 
have been able to secure new business to 
capitalise on the downturn and consumers 
looking for healthy yet convenient products 
our chilled pizza sales remained stable 
during the year supported by premium 
and value ranges for several of our main 
customers in line with other areas of our 
business we launched products under 
two new tertiary brands for tesco pizza 
americano and trattoria verdi focused 
on a speciﬁ c price point 
the chicken fajita forms part of the american range 
launched exclusively in sainsbury’s
melt in middle fishcakes were one of three products 
featured in ms adverts during the year
66
ready meals sales growth 
outperformed the market 
with underlying sales increasing 
by 66 in a market which fell 
by 20
one million
in the run up to christmas 
we supplied over one million 
ultimate mash products to ms
  200809 200708
 52 weeks 52 weeks
revenue £4868m £4815m
operating margin 47 46
proﬁ t from operations £229m £221m frozen
frozen operates in attractive and 
growing markets the division’s 
proﬁ tability was impacted by 
a strong currency exchange 
this year
in both branded 
and own label pizza 
we are targeting 
the cash conscious 
consumer san 
marco deep pan 
margherita 
£199 rsp
 prices correct at time of going to press 27 may 2009
18 northern foods plc annual report and accounts 200809  our premium 
pizzas address 
the eatingin 
culture goodfella’s 
la bottega 
pepperoni classic 
£279 rsp
19 northern foods plc annual report and accounts 200809 20 northern foods plc annual report and accounts 200809 
pizza
we are adjusting our business model 
to the current economic conditions with 
a continuous drive to lower cost in our 
manufacturing base we consolidated 
pizza production into two well invested 
lean manufacturing sites with the move 
of operations and employees as we closed 
the smaller poldys site in ireland to the 
larger scale facilities at naas and longford 
we relaunched our san marco pizza range 
during the second half proﬁ tably targeting 
a speciﬁ c price point for the constrained 
consumer we expect further promotional 
activity to also drive sales in this segment 
in retailer own brand we continued to 
develop new products for several of our 
customers reﬂ ecting market data showing 
supermarket’s own label ranges to be 
increasingly popular 
fish  vegetables
donegal catch our branded ﬁ sh business 
predominantly retailed in ireland continues 
to experience good growth in the sector 
and remains number one in ireland along 
with our green isle vegetable brand with 
over half of the irish market donegal catch 
was introduced into the uk during the 
second half of the year and we continue 
to work hard to secure business through 
our major customers 
further strengthening of the euro our 
manufacturing operations are based in 
ireland and increased promotional activity 
impacted the frozen division this year 
total revenue was 110 ahead at £2724m 
200708 £2454m with underlying revenue
7
 
37 higher the impact of price increases 
of 86 as we successfully recovered 
commodity inﬂ ation saw frozen volumes 
decline by 49 despite volume decline 
frozen food as evidenced by most market 
data remains a popular choice for time 
poor families and cash conscious 
consumers 
the impact from the continued strength 
of the euro impacted overall proﬁ tability 
by £50m in the full year as a result 
proﬁ t from operations reduced to £93m 
200708 £114m with operating margin 
at 34 200708 46 the division has 
undertaken a number of cost reduction 
programmes to lower its cost base
frozen
the focus for our frozen division is 
to meet the needs of the cash conscious 
consumer’s desire for healthy yet 
convenient food
our mcdougalls frozen pies are a value choice for 
all the family
we produce over two million frozen and chilled pizzas 
every week 21 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
pastry meat  meatfree grills
our prior year acquisition of the 
mcdougalls brands in pastry has been 
successful with good progress made 
our challenge to improve the performance 
of the pastry and meat grills businesses 
was set out last year and remains a key 
priority the mcdougalls acquisition was 
fully integrated into our centre of excellence 
at portumna in ireland consolidating 
capacity is helping to improve the efﬁ ciency 
of our operation enabling us to provide 
a better service for customers and drive 
superior product innovation and margin 
improvement the mcdougalls frozen pies 
range was successfully relaunched during 
the year establishing itself as the number 
one frozen pie brand in the 52 weeks 
to 21 march 2009 acn scantrack 
52 we 210309 
holland’s continued its recovery plan 
through product improvement and effective 
press promotion holland’s which remains 
a strong brand in the north west of 
england has refocused on its core chip 
shop outlets and is looking to increase 
distribution in foodservice and at sporting 
venues whilst meat grills were again 
impacted adversely by the poor summer 
weather in the important barbeque season 
the dalepak business beneﬁ ted from a 
number of performance improvements 
and the launch of the exciting gardein 
meatfree brand the growth in the 
healthier cooking market continues 
to provide attractive opportunities
no1
the mcdougalls frozen pies 
range was successfully 
relaunched during the year 
establishing itself as the 
number one frozen pie brand
pizza
we relaunched our san marco 
pizza range during the second 
half proﬁ tably targeting a speciﬁ c 
price point for the constrained 
consumer
our modern sites help us to deliver high volumes for 
our customers day in day out
donegal catch the number one irish ﬁ sh and vegetable 
brand was launched in the uk during the year
  200809 200708
 52 weeks 52 weeks
revenue £2724m £2454m
operating margin 34 46
proﬁ t from operations £93m £114m bakery
the progress made in our 
bakery performance has 
been particularly pleasing
oatland oaties is 
just one of the own 
label brands we 
helped to develop 
tesco oatland 
oaties 45p rsp
 prices correct at time of going to press 27 may 2009
22 northern foods plc annual report and accounts 200809  our fox’s brand 
continues to 
focus on premium 
indulgence 
fox’s half coated 
chunkie £159 rsp
23 northern foods plc annual report and accounts 200809 24 northern foods plc annual report and accounts 200809 
biscuits
biscuits represents a signiﬁ cant growth 
opportunity for northern foods with our 
commitment to invest in the fox’s brand 
showing real beneﬁ ts our increased 
spend by £18m in the new ‘vinnie’ tv 
advertising campaign helped increase 
the number of households buying fox’s 
biscuits during the period as with all our 
businesses fox’s has focused on its 
‘power 5’ its top ﬁ ve best selling products 
with our top ﬁ ve products driving 
incremental sales and margins our most 
popular product rocky is set for relaunch 
in the autumn
reducing complexity has helped our 
overall performance and whilst our exit 
from a number of low proﬁ t own label 
contracts has helped us to focus on 
higher value business we continue to work 
with our retail customers to develop new 
propositions examples include the oatland 
oaties range which is targeted at cash 
conscious consumers we have seen 
further growth with our ability to adapt 
products for customers such as aldi and 
netto helping us to increase orders for 
retailer own brand business
we announced in july that we would 
evaluate a project to streamline our 
biscuit manufacturing operations and 
reduce costs by transitioning from three 
production sites to two world class facilities 
building on recent investments in greater 
automation we are continuing the feasibility 
phase of this project to ensure that we 
rigorously assess all the options in view 
of the extremely volatile and recessionary 
environment this project offers the 
potential to improve efﬁ ciency whilst 
we recognise the uncertainty for our 
employees we have to evaluate all the 
options comprehensively we are working 
towards concluding the feasibility at the 
end of 2009 in the meantime we remain 
committed to open communication with 
our employees throughout this process
the bakery division delivered a strong 
performance over the year building on 
the improvement from the prior year 
we further increased our investment in the 
fox’s brand through the vinnie campaign 
driving improved national awareness and 
distribution revenue increased by 54 
to £2160m 200708 £2050m selling prices 
increased by 15 as we successfully 
recovered commodity inﬂ ation and 
volumes increased by 39 despite exiting 
some unproﬁ table or low margin retailer 
own brand contracts the premium nature 
of the fox’s brand and increased focus on 
higher margin retailer own brand business 
helped drive operating margin improvement 
with proﬁ t from operations increasing 
by 376 to £205m 200708 £149m 
and operating margin improving to 
95 200708 73
competitive pressure in the puddings 
market will bring challenges to improve 
proﬁ tability yet we are focused on retaining 
our market leadership in the biscuits 
market there is potential to continue proﬁ t 
improvement over the medium term 
the sweet biscuit market grew by 80 
in 200809 acn scantrack 52 we 210309 
with the fox’s brand share increasing to 93 
bakery
the focus in the bakery division is to sell 
premium indulgent fox’s biscuits and 
christmas puddings which meet consumer 
desires for quality taste and enjoyment
fox’s premium indulgence sales grew during the year we made over 18 million christmas puddings for our 
customers during the year 25 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
puddings
in puddings a market where we have 
leadership our christmas trading period 
was successfully delivered all of the 
christmas pudding stock we made at 
our matthew walker site was sold and 
once again we received excellent feedback 
on the quality and taste of our products 
which derives from a unique steaming 
process built on 110 years of experience 
our unique pressurised steam cook 
process and range of different recipes 
from extramatured to nutfree saw our 
products featured across all of the major 
retailers from the traditional discount 
supermarkets to the premium end 
of the market
a new competitor to target mainstream 
retailers in the puddings market for 
christmas 2009 emerged during the year 
the necessary investment to maintain our 
leadership in this market will reduce short 
term proﬁ tability however we believe that 
the quality required by consumers in this 
market will keep us well placed across 
our customer base we also continue 
to manage the complexity within this 
business whilst ensuring that our quality 
is undiminished elsewhere in our 
puddings business we launched a range 
of sponge puddings including a new 
brand ‘scrummie’ to help support our 
all year round business in four exciting 
ﬂ avours scrummie evokes memories of 
childhood with its innovative ‘sticky ﬁ ngers’ 
packaging design our belief is that our 
main retailer own brand and branded 
ranges continue to offer attractive 
opportunities for further development
vinnie
our increased spend in the new 
‘vinnie’ tv advertising campaign 
helped to increase the number 
of households buying fox’s 
biscuits during the period
unique
our unique pressurised steam 
cook process and range 
of different recipes saw our 
puddings featured across 
all of the major retailers 
from the traditional discount 
supermarkets to the premium 
end of the market
the delicious scrummie sponge pudding was 
launched to develop our all year round puddings 
business
our proposal to integrate our biscuits manufacturing 
and develop a new world class facility would improve 
efﬁ ciency
  200809 200708
 52 weeks 52 weeks
revenue £2160m £2050m
operating margin 95 73
proﬁ t from operations £205m £149m corporate social 
responsibility review
the northern way – northern foods 
is committed to making great tasting 
food in a responsible and sustainable 
manner 
26 northern foods plc annual report and accounts 200809  27 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
our northern way kpis are detailed 
in the table on pages 30 and 31 which 
gives a detailed picture of our progress 
to date and targets for the next two years
workplace
northern foods is a great place to work 
we operate in 21 manufacturing sites 
and employ around 10000 people 
we understand that skilled and motivated 
people are fundamental to our performance 
considerable time and resources 
are invested to ensure that the safety 
wellbeing and development needs of 
our people are addressed and that we 
support our people to deliver better results
health  safety hs
we have continued to deliver improvements 
in performance with a 19 reduction 
in headline statistics from 066 to 054 
see graph below in addition we have 
developed our hs leadership model 
and have embedded processes at board 
business unit and site levels in accordance 
with the iodhse guidance on ‘leading 
health and safety at work’
key areas of focus in our strategy are audits 
and surveys trainingtechnical development 
and property protection enhancement 
this includes the delivery of behavioural 
safety and business continuity management 
processes across group sites
this strong hs leadership model 
proactive strategy and excellent capability 
now in place are together helping to ensure 
that we maintain and develop a sustainable 
continuously improving hs culture
our dalepak foods site has recently 
achieved a 12 month period with an 
accident frequency rate afr of zero 
strong leadership on hs through 
a difﬁ cult change process and the 
application of the strategic initiatives 
outlined above have helped this operation 
improve from an afr of 158 in march 2008 
to an afr of 00 in march 2009 this 
represents an excellent improvement 
story for this site and underlines the 
effectiveness of our developed strategy
training
training is fundamental to delivering the 
quality service and efﬁ ciency standards 
demanded by our customers and 
consumers to be successful we must 
ensure our employees have the skills they 
need to be efﬁ cient in their current role 
and to develop their careers 
northern foods signed the skills pledge 
in may 2007 this is a public declaration to 
deliver nationally recognised qualiﬁ cations 
to our people to deliver this pledge we 
have signed a strategic agreement with 
the grimsby institute who will work with 
us to develop and deliver all of our training 
needs in 200809 548 people achieved 
national qualiﬁ cations through the pilot the 
aim in 200910 is for a further 1700 people 
to gain nationally recognised qualiﬁ cation 
standards
wellbeing
the health and wellbeing of our 
employees contributes to the health of 
the business proactive management 
in this area can help reduce absence 
costs and improve productivity over the 
last 12 months a group wide wellbeing 
programme has been delivered across 
all sites see table below
this activity has had a positive contribution 
on our company absence rate which has 
reduced from 583 to 465
how we do business
highlights 
  achieving gold status in the business 
in the community bitc corporate 
responsibility index
  improving energy efﬁ ciency and 
delivering the fourth climate change 
levy target 
  sponsoring 60 food science 
undergraduates in 2008 with a further 
90 planned over the next three years
  supporting 565 primary schools with 
their healthy eating programmes 
through our phunky foods sponsorship 
  engaging with over 20 policy making 
and industry bodies to shape future 
good practice
  sustaining a strong performance on 
health  safety 
  developing the northern foods academy 
to deliver our commitment to training
  delivering wellbeing programmes 
across the company
  maintaining our status as the only food 
manufacturer to have achieved ukas 
united kingdom accreditation services 
accreditation for both our food testing 
and site certiﬁ cation activities for the 
eighth year running
  securing the good egg award for the 
commitment to use only cagefree and 
organic eggs in our biscuits business
during 200809 we made great progress 
in our corporate social responsibility csr 
agenda the northern way embedding 
this into our ways of working and identifying 
partners to help deliver change
the northern way is central to how 
we do business and is aligned with our 
business goals of increasing proﬁ tability 
by developing our people improving 
sustainability husbanding resources 
and working with partners to deliver 
the required change
we continue to build on our relationship 
with bitc the uk’s acknowledged thought 
leaders in csr and continue to develop 
programmes which impact on the 
workplace marketplace environment 
and community
wellbeing calendar
27 northern foods plc annual report and accounts 200809
month focus  activity
september know your numbers individual blood pressure and heart rate 
  sessions with occupational health experts
october world sight day free eye tests for vdu users and 
  specsaver activity
march mother’s day payment for parents information based 
  activity to ensure all parents are claiming 
  their entitlements
left our advanced efﬂ uent plant at carlisle releases 
water of rainwater quality back into the water system
12 month rolling accident frequency rates
per hundred thousand hours worked
120
110
100
090
080
070
060
050
040
030
020
010
000
mar 06
088
056
mar 07
066
mar 08 mar 09
054
food industry average 28 northern foods plc annual report and accounts 200809 
community
northern foods can have a positive impact 
on the community at a national and local 
level we have focused on projects which 
enhance our links with the local community 
and contribute to consumer wellbeing in 
the area of food
phunky foods
in 200809 we continued our support 
of phunky foods the unique primary 
school programme which delivers healthy 
lifestyle education for 5 to 11 year olds the 
programme supports the development 
of informed choice by introducing children 
their families and their teachers to the 
science of healthy lifestyles four operating 
sites have each formed strong partnerships 
with 13 local schools with the pizza factory 
in nottingham delivering a full day’s training 
in pizza making at the local primary school
as founder sponsors northern foods 
has supported the programme since 
its pilot stage and is delighted to have 
the programme in 565 schools across 
england this year
sponsorship of undergraduate 
food scientists
one in four food science roles is vacant 
at any one time in our industry in january 
2007 northern foods launched a 
foundation for food science and 
technology providing bursary support 
for food science and technology 
undergraduates the foundation will 
provide support for undergraduates 
for the duration of their courses at leeds 
nottingham and reading universities
in addition we continue to work with these 
universities to identify ways to increase 
participation in these areas and this 
includes the introduction of the nottingham 
summer school in food sciences in 2009 
aimed at helping gcse students to ﬁ nd 
out more about what it is like to work in the 
food industry and to study a food science 
related degree at university this will 
complement the longestablished summer 
school for a level students run by the 
university of reading for which northern 
foods has been a key sponsor for 
many years
stakeholder engagement
effective stakeholder management can 
help us to manage risk and optimise our 
performance northern foods is actively 
involved in relevant industry and regulatory 
bodies which allows us to respond 
effectively to emerging challenges 
during 200809 our involvement included 
but was not limited to
  chief executive membership of the 
prince’s rural action programme
  regional ambassador for yorkshire  
humberside for bitc
  board membership of improve 
the sector skills council for food 
manufacturing
  board membership for the centre 
for robotics and automation cenfra
  acting as a member of a pilot project 
for the health  safety executive hse
  furthering the food chain safety and 
sustainability activities of the executive 
committee of the chilled food 
association cfa
  chairing the microbiological assurance
quality control working party for 
the world renowned camden and 
chorleywood food research association 
ccfra 
  president of the irish national training 
council
  chair of the economic affairs committee 
for the irish business and employers 
confederation
overall northern foods is involved with more 
than 20 external bodies to which it devoted 
an estimated 20 months of senior executive 
time this investment helps the sector 
to share best practice and support the 
consumer’s needs as efﬁ ciently as possible 
northern foods donated £74000 200708 
£60000 to various charities during 200809
rural action awards
the year saw the group’s continued 
sponsorship of the rural action award 
one of bitc’s awards for excellence which 
showcase csr best practice in the uk 
supporting this award nationally recognises 
companies which are working hard to 
create and maintain a vibrant sustainable 
rural economy 
environment
northern foods understands that 
sustainability and environmental 
commitment makes great business sense 
and can deliver competitive advantage 
in 200809 the group revisited its carbon 
footprint to align itself to the world resource 
institute’s greenhouse gas protocol scope 
3 emissions the project identiﬁ ed energy 
usage as the main area in which we could 
make the most difference 
progress on environmental issues is 
assessed by the operating board on 
a monthly basis energy waste and water 
reduction targets have been agreed see 
table on pages 30 and 31 northern foods 
was delighted to be recognised as one 
of the most improved companies in the 
bitc environmental index see table on 
pages 30 and 31
energy
northern foods has delivered its climate 
change levy targets for the fourth time 
energy teams at each site continued to 
identify areas for further efﬁ ciency gains 
these projects are coordinated including 
monitoring and targeting through the 
operations excellence team in some 
sites we have delivered signiﬁ cant energy 
reduction and now we are identifying 
best practice and rolling this out across 
the group 
we have also provided an annual update 
to the carbon disclosure project an initiative 
which benchmarks progress of ‘uk plc’ 
in mitigating the impact of climate change 
corporate social responsibility review
continued
highlights
insulation
saving energy is all about detail 
lagging pipes and turning lights 
off can make a big difference 
our employees are helping us to save energy shareholder information highlights directors’ report financial statements
the new fat strippa™ at our kirkham site collects fat 
to reuse as biofuel
we are a signatory to the courtauld commitment 
on reducing waste packaging and landﬁ ll
29 northern foods plc annual report and accounts 200809
waste
good husbandry of our resources brings 
environmental and ﬁ nancial beneﬁ ts 
northern foods was one of the ﬁ rst food 
manufacturers to sign the courtauld 
commitment in november 2006 this is a 
public declaration to deliver zero packaging 
growth by 2008 and 3 packaging 
reduction from 2010 whilst simultaneously 
tackling the issue of food waste we have 
worked with the waste resources action 
programme wrap the architects of the 
courtauld commitment to agree targets 
and report results 
in last year’s report we repeated our 
commitment to zero waste to landﬁ ll by 
2010 due to the economic changes we 
have all witnessed the anticipated encycle 
solution is not yet commissioned northern 
foods is still committed to zero waste to 
landﬁ ll and we will achieve this through local 
site and regional partnerships ranging from 
anaerobic digesters to composting reuse 
of material on site and better streaming 
of our contaminated waste 
two examples of effective local 
management are
1  the fat strippa™ at our fox’s site in 
kirkham which captures one tonne of fat 
each month from the wash room waste 
water which is recycled into bio fuel
2  the introduction of wormtech to the 
swansea site where we will send 50 
of our current landﬁ ll waste to be 
composted and recycled
the group has nine sites which are 
compliant for integrated pollution prevention 
and control ippc a government regulated 
environmental management system ems 
and a further two will be ippc compliant 
this year we are proactively introducing 
ems to all sites during 200910 
market place
our market place activities cover the 
group’s responsibilities to create food that 
is safe to eat that reﬂ ects the healthy eating 
agenda and that helps consumers make 
informed purchasing decisions 
policy is how we work in partnership with 
our supply chain the policy has been 
approved by the national farmers union 
and is available on our website
sedex is the largest ethical trading 
database in the world active in 132 
countries with over 18000 companies 
participating northern foods was a 
founding member of sedex in 1998 
this year we have targeted ourselves 
with persuading 75 of our top 150 suppliers 
to become members of sedex see 
table overleaf for current details this will 
provide a better connection between our 
businesses and that of our global suppliers 
in order to improve the sharing of ethical 
data and to enable the continuous 
improvement of ethical performance 
northern foods has a great commitment 
to employees agency staff and migrant 
labour our labour policy ensures all staff 
including agency workers and migrant 
labour are given the same support on 
health  safety including the provision 
of full training 
conclusion
our aim during the year was to secure real 
business beneﬁ t from the northern way
the northern way is delivering 
measurable beneﬁ ts in energy waste 
and water reduction as well as employee 
development to achieve nationally 
recognised qualiﬁ cations 
this structured approach is ﬁ rmly 
embedding the northern way in how 
we do business and northern foods was 
pleased to be recognised in april 2009 with 
a gold rating in the bitc ‘100 companies 
that count’ rankings
food safety
having appropriate testing and audit 
procedures in place to assure food 
safety and quality is core to the group’s 
proposition our nottingham based 
accredited central testing laboratory 
continues to occupy an unparalleled 
position for results reliability with more than 
half a million tests conducted throughout 
our group every week
to support the continuous development 
of leading standards in the safe production 
of wholesome food the group continued to 
share expert microbiological and technical 
knowledge with key organisations such 
as the food standards agency fsa the 
chilled food association cfa department 
of environment foods and rural affairs 
defra the british retail consortium 
and campden bri
recipe reformulation
the group has continued on course to 
meet the national targets for salt reduction 
ahead of the fsa’s 2010 schedule in 2008 
we again supported the fsa this time 
as industry stakeholders in the saturated 
fat  energy density agenda for both 
biscuits and meat products and hosted 
fsa nutrition group visits to our fox’s 
biscuits site in kirkham and our holland’s 
site in accrington we continue to consider 
nutritional quality in each and every product 
reformulation 
supporting informed purchasing
front of pack additional nutritional labelling 
based on clearly deﬁ ned recommended 
portions for example half a pizza or a single 
biscuit is in place across our brands giving 
the consumer the knowledge they need 
to make an informed choice
supply chain impact
the group continues to recognise the 
potential impact it has on those in our 
wider supply chain it is now recognised 
that primary agriculture accounts for more 
than 60 of the total carbon footprint in the 
food supply chain we continue to work with 
our approved suppliers to champion best 
practice and to minimise our impact where 
possible northern foods’ farm assurance 
food waste
our swansea site composts 
food waste instead of sending 
it to landﬁ ll environment direct company impact nonﬁ nancial indicators target 201011 200708 200809 
global warming co 2 emissions meet our biannual uk climate change levy targets by site na 24653t 
a measure of our climate change impact as agreed with the government   
power efﬁ ciency  increase of efﬁ cient use of electricity by 5 year on year 472kwht 483kwht 
a measure of our use of resources     
     
waste to landﬁ ll and recycling  zero packaging growth 155kgt 150kgt 
a measure of our use of resources 125kgt of product by 201011   
 zero waste to landﬁ ll 2014   
     
water use  target 45m
3
 per tonne of product produced by 201011 55m
3
t 56m
3
t 
a measure of our future impact      
 workplace direct company impact nonﬁ nancial indicators target 201011 200708 200809 
hs lost time injury rate reduce to 054 cases per 100000 over 3 days lost on a rolling 064 054 
lost time injury incidents expressed 12 month basis   
as a rate per 100000 hours worked major injury days lost 11 5
on a 12 month rolling average total injury days lost 3375 2761 
hs sickness absence rate reduce absence rate to 40 by 201011 583 465 
percentage of calendar days lost     
to sickness absence expressed     
as a rolling 12 months     
     
training nvqs and basic skills deliver full national qualiﬁ cations to 3000 employees by na 548 
a measure of our investment in 31 december 2010   
our employees     
employee engagement index the northern foods engagement survey was launched in 200809  na 483 
a measure of the success of our and targeted the top 350 leadership population in 200910 it will    
relationship with our employees be extended to 2000 employees the target is to deliver 45   
 satisfaction by 200910 as the survey will be expanded to include   
 a larger population
 marketplace direct company impact nonﬁ nancial indicators target 201011 200708 200809 
ethical trading to achieve 100 of top 150 supplier membership of sedex by 2010 data 44 
a measure of the application of sedex    not  
labour standards within our supply chain   collected  
 community direct company impact nonﬁ nancial indicators target 201011 200708 200809 
phunky foods  to increase the number of primary schools participating 282 565 
a measure of our commitment to alter to 2000 by 2010   
the obesity trend in primary schools     
food science number of undergraduates on food science courses 30 60 
a measure of our commitment sponsored by northern foods – 90   
to ﬁ ll an industry wide skills need     
30 northern foods plc annual report and accounts 200809 
corporate social responsibility review
key performance indicators
we enabled 548 employees to achieve national 
qualiﬁ cations this year
exceeded by 
24653 tonnes financial indicators 200708 200809 indirect impacts
total energy costs gas and electricity for group £150m £240m positive impact from introduction of clear site 
including inﬂ ation   targets and monthly reporting
total energy cost per tonne of product £4508 £6990 negative impact on producing goods  
including inﬂ ation   excellent employee response to company 
    focus in this area
waste disposal £33m £33m deliver courtauld commitment in the  
    food sector
    ensure the uk delivers its eu landﬁ ll targets
    increase land available for other uses
water  efﬂ uent costs £61m £43m reducing the impact on waste   
    infrastructure in the uk
financial indicators 200708 200809 indirect impacts
financial impact to the business of days lost £16m £12m improves the reputation of the sector enabling
through accidents   lower insurance costs and better recruitment
    
cost to the business of absences £124m £100m increasing days at work reduces nhs costs  
    and increases productivity
    northern foods’ wellbeing programme will 
    enable our employees to be happy healthy
    and here
investment in training per 1000 employees £100000 £93000 increases the level of skills within the uk
    population increasing productivity and 
     ﬂ exibility a further £88000 per 1000 employees 
will be delivered from the learning and skills 
council by august 2009
recruitment costs for salaried employees  £14m £09m employee engagement is a driver of customer  
    satisfaction
number of employees 10767 9890 increasing automation will continue to impact
    on the number of people and skills required
financial indicators 200708 200809 indirect impacts
£ purchased from sedex suppliers data £1532m increased visibility across the supply chain  
  not  leading to the ability to share best practice
  collected
financial indicators 200708 200809 indirect impacts
investment in phunky foods £100000 £100000 education for families ensuring nhs obesity 
    related costs are decreased across 
    the population
financial investment in universities £37 900 £63900 increase attractiveness of sector to graduates
augmented by additional northern foods    making it easier to recruit the right talent
resource as required   
31 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
we rolled out our wellbeing programme this year 32 northern foods plc annual report and accounts 200809 
01
04
07
02
05
08
03
06
01 anthony hobson chairman •‡
joined the board in 2002 and became chairman in 2005 
he is also chairman of the sage group plc and a nonexecutive 
director of glas cymru welsh water a chartered accountant 
he was the group finance director of legal  general group plc 
from 1987 to 2001 he chairs the nomination committee
02 stefan barden chief executive
joined the board in 2006 and was appointed chief executive on 
5 february 2007 he was formerly managing director of heinz uk 
and ireland from 2003 to 2005 he has extensive experience of the 
food industry having held roles with iceland mckinsey  company 
and unilever he sits on the policy issues committee of the 
igd and is a director of improve the uk’s food and drink sector 
skills council
03 andrew booker group finance director
joined the board in 2008 he was formerly european finance 
director of japan tobacco international incgallaher plc a role 
he held from 2004 he has held senior ﬁ nancial sales and 
general management roles with gallaher group over 19 years 
04 orna nichionna senior independent non–executive director •†‡
joined the board in 2002 as a nonexecutive director she is 
chair of the soil association a member of eden mccallum’s 
advisory board and is also a director of the british united 
provident association limited she was formerly a partner of 
mckinsey  company she is the senior independent director 
and chairs the remuneration committee
05 ronnie bell non–executive director •‡
joined the board in 2005 as a nonexecutive director 
he was formerly president of kraft foods europe until 2004 
he is chairman of milk link and is a nonexecutive director of 
ansell limited tagboard limited and the edrington group limited 
06 tony illsley nonexecutive director •†‡
joined the board in 2006 as a nonexecutive director he was 
chief executive of telewest plc until 2000 and has held roles 
with pepsico and colgate palmolive he is chairman of 
plastic logic limited velocix limited holds a nonexecutive 
position with sepura plc and is a trustee of the charity whizzkidz
07 david nish non–executive director •†‡
joined the board in 2005 as a nonexecutive director he is 
group finance director of standard life plc formerly he held the 
positions of executive director infrastructure and group finance 
director of scottish power plc prior to which he was a partner 
with pricewaterhouse he chairs the audit committee
08 carol williams company secretary
joined northern foods in 1990 she is head of legal and was 
appointed company secretary in march 2005 she is a director 
of ci group services limited
• nonexecutive director
 remuneration committee member
† audit committee member
‡ nomination committee member
board of directors and company secretary 33 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
compliance
northern foods is committed to the highest standards of 
corporate governance throughout the group and seeks to 
remain at the forefront of corporate governance best practice 
the board has overall responsibility for corporate governance 
and is accountable to the company’s shareholders for good 
governance the directors recognise the importance of this 
responsibility and can confirm that the company has complied 
fully throughout the year with the provisions set out in section 1 
of the 2006 combined code on corporate governance 
the ‘combined code’ and the associated turnbull guidance 
as annexed to the financial services authority’s listing rules
this review describes the company’s governance policies and 
explains how the company has applied the main and supporting 
principles of the combined code
directors
the board
the board determines the strategic direction of the company and 
reviews its operating and financial position the board ensures that 
the necessary resources are in place in order for the company 
to meet its objectives it has a schedule of matters specifically 
reserved to it which can be amended only by the board itself and 
which has been reviewed and updated during the financial year 
under review
these matters include approval of
 membership of the board and its committees
   the annual and half year results and interim management 
statements
   the group strategy operating plans and financial policy
  acquisitions and divestments
  the annual budget including operating and major capital 
expenditure
  treasury and tax policies
  dividend policy
  material amendments to the company’s pensions schemes
  the overall system of control and risk management
the schedule of matters is available on the company’s website 
all other matters relating to the management of the company are 
delegated to the operating board within clearly defined limits of 
authority the board monitors the performance of management 
and aims to ensure that the strategy policies and procedures 
adopted are not only in the long term interest of shareholders but 
also meet the needs of northern foods’ customers employees 
suppliers and the local communities in which it operates the 
operating board is responsible to the board for developing the 
strategy and for the overall performance of the group and for 
managing the group’s businesses as defined by the board
the board chaired by anthony hobson has seven directors 
comprising two executive directors and five nonexecutive directors 
the executive directors are stefan barden chief executive and 
andrew booker group finance director orna nichionna is the 
senior independent director the nonexecutive directors possess 
a range of skills and experience and bring independent judgement 
to bear on issues of strategy performance and resources that are 
vital to the success of the group the nonexecutive directors have 
a particular responsibility to challenge constructively the strategy 
proposed by the executive directors to scrutinise and challenge 
performance and to satisfy themselves that the group maintains 
a sound system of internal control to safeguard shareholders’ 
investment and the company’s assets
attendance at board meetings and committees of the board
the board met nine times during the year including one meeting 
devoted to strategy review in addition the chairman held one 
separate meeting with the nonexecutive directors without the 
executive directors being present to discuss board related issues 
including structure and succession planning the nonexecutive 
directors also met once without the chairman present to appraise 
his performance the board holds meetings in london or 
leeds and at least one meeting each year is held at one of the 
operational sites in april 2008 the board met in naas ireland 
at the site of the green isle foods’ business
the table below shows the number of meetings of the board audit 
remuneration and nomination committees held during the year 
and the number of meetings attended by each director the 
directors attended board and committee meetings wherever 
possible unless personal circumstances prevented their attendance 
as shown below where a director is unable to attend a board or 
committee meeting hisher views on agenda items are canvassed 
in advance of the meeting and incorporated into the discussions 
number of 
meetings held
30 march 2008 to board
1
 audit
2
 remuneration
3
 nomination
4
28 march 2009 9 3 5 2
number of meetings attended
s barden 99 na na na
r j s bell 89 na 55 22
a m booker
5
 33 na na na
a j hobson 99 na na 22
a k illsley 89 33 55 22
j k maiden
6
 66 na na na
o g nichionna 99 33 55 22
d t nish 99 33 25 12
notes
1  a j hobson is chairman of the board
2  d t nish is chair of the audit committee 
3  o g nichionna is chair of the remuneration committee 
4  a j hobson is chair of the nomination committee 
5  a m booker was appointed to the board on 17 november 2008 
6   j k maiden resigned from the board on 14 november 2008
the chairman is not a member of the remuneration and audit 
committees but attends by invitation senior executives below 
board level are periodically invited to attend board meetings 
to make presentations on their areas of responsibility 
corporate governance 34 northern foods plc annual report and accounts 200809 
procedures to deal with directors’ conflicts of interest
the company has procedures in place to deal with the situation 
where a director has a conflict of interest and intends to report 
annually on the effectiveness of these procedures
a code of practice on conflicts of interest was approved by the 
board on 1 october 2008 and can be viewed on the company’s 
website as part of this process for dealing with conflicts the 
members of the board will endeavour to
  consider each conflict situation separately on its particular facts
  keep records and board minutes of authorisations granted 
by directors and the scope of any approvals given 
  annually review conflict authorisations
appointments to the board
appointments to the board are the responsibility of the full board 
on the recommendation of the nomination committee there is 
a formal rigorous and transparent procedure for the appointment 
of new directors which is made on merit and against objective 
criteria the criteria are set by the nonexecutive directors and 
include identifying any areas where skills are lacking and making 
appointments to enhance the balance of skills and experience 
of the board in addition care is taken to ensure that appointees 
have enough time available to devote to their role 
the terms and conditions of appointment of nonexecutive 
directors are available for inspection at the company’s registered 
office during normal business hours and at the annual general 
meeting for 15 minutes prior to and during the meeting 
an example of the letter of appointment is available on the 
northern foods website wwwnorthernfoodscom
in november 2008 andrew booker was appointed to the board 
as group finance director following a careful selection process 
and the use of recruitment consultants the miles partnership 
an executive director is permitted to hold one nonexecutive 
directorship and retain the fees from that appointment provided 
that the board considers that this will not adversely affect his 
executive responsibilities any proposed appointment to the board 
of another company requires the prior approval of the board the 
current executive directors do not hold any such appointments
information and professional development
all directors have unlimited access to information regarding 
the company and to the advice and services of the company 
secretary whose appointment and removal requires the approval 
of the board and they may obtain external advice as required 
at the expense of the company 
one week prior to each scheduled board meeting the chairman 
and the company secretary ensure that the directors receive 
all relevant papers so that they are properly appraised of the 
company’s current performance and information on any other 
matter which is referred to the board for consideration
chairman and chief executive 
there is a clear written division of responsibility between the 
chairman and the chief executive the chairman is responsible 
for leadership of the board setting the agenda and ensuring 
its effectiveness he is also responsible for ensuring that the 
directors receive accurate timely and clear information and 
for effective communication with shareholders the chairman 
also facilitates the effective contribution of the nonexecutives 
directors and ensures a good working relationship between 
executive and nonexecutive directors the chairman’s other 
significant commitments and any changes during the year 
are detailed in his biography on page 32 the board is satisfied 
that the commitments of the chairman outside the company 
are not such as to interfere with the performance of his duties 
the chief executive is responsible for operating the business 
and implementing the board’s strategies and is supported in 
these matters by the operating board
board balance and independence
the company complies with the requirement of the combined 
code that there should be a balance of executive and non
executives such that no one individual has unrestricted powers 
of decision there is a succession plan approved by the board 
to ensure continual review of the balance of skills and experience 
influence is balanced within the board by virtue of a nonexecutive 
senior independent director and a further three nonexecutive 
directors whose skills and business experience are invaluable 
in constructively challenging and developing the group’s strategy 
and direction 
the board uses criteria to assist in arriving at its decision that 
the nonexecutive directors are independent these include
  a deep appreciation of the group’s business and activities so 
that a thorough evaluation of information received can be made
 objective decisionmaking after debate
 objective challenge of management
  a clear and consistent approach demonstrating that heshe 
has the good of the group uppermost in hisher behaviour 
when challenging others and defending hisher viewpoints
following the annual review of independence the board is of 
the opinion that all of the current nonexecutive directors are 
independent by these criteria and are free from any relationship 
or circumstance which could affect or appear to affect their 
independent judgement david nish is the group finance director 
of standard life plc which owned 1126 of the company’s shares 
as at 27 may 2009 the company does not consider that this 
affects his independence as his role at standard life does not 
include direct responsibility for investment decisions this potential 
conflict of interest was thoroughly reviewed by the directors at 
a board meeting held in november 2008 and a resolution was 
passed authorising the potential conflict however should any 
circumstances change in relation to his role at standard life this 
will be reconsidered and if necessary appropriate action taken
corporate governance
continued 35 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
there is a comprehensive induction process tailored to the needs 
of the individual directors which is arranged by the company 
secretary this includes meetings with management and external 
advisors so that the new director receives an appreciation of the 
activities of the group the key drivers of business performance 
and the significant current issues visits to operational sites are 
encouraged the training also covers the role of the board and 
its committees corporate governance practices and procedures 
and the duties responsibilities and liabilities of a director of a 
public listed company following his recruitment to the board 
andrew booker undertook a formal induction process which 
included specific training in the role and duties of a director 
and pensions training the induction also included prearranged 
visits to each business within the group to meet the senior 
management teams 
additional training is arranged by the company secretary 
on a group or individual basis as needs arise for example 
when a nonexecutive director is appointed to a board committee
during the year in order to assist them in their duties the directors 
received presentations on the legislative changes implemented 
under the companies act 2006 including the codification of 
directors’ duties and in particular directors’ obligations in relation 
to conflicts of interests
board performance evaluation 
it is recognised that the effectiveness of the board is vital to 
the success of the group in order to evaluate the effectiveness 
of the performance of the board the chairman and its principal 
committees a rigorous evaluation is undertaken annually 
this process is conducted internally led by the chairman and 
supported by the company secretary as in previous years 
this has taken the form of obtaining completed detailed 
questionnaires which are updated and revised each year from 
all board members analysing the responses and providing the 
opportunity for directors to comment on any issues not covered 
directly by the questionnaire the responses were analysed and 
discussed at a meeting of the board held in april 2009 it was 
agreed that the results confirmed that the board and its 
committees continued to be effective
the board evaluation process also aims to identify the areas 
where improvements can be made following last year’s 
performance evaluation the board requested regular exposure 
to and the opportunity to meet with senior management and 
this has been actioned during the course of this financial year
orna nichionna senior independent director has analysed 
responses to a detailed questionnaire designed to evaluate the 
performance of the chairman the results of the survey were 
discussed with the executive and nonexecutive directors when 
the chairman was not present the outcome of these discussions 
confirmed that the performance of the chairman was effective 
and that he continues to provide strong leadership to the board
the chairman assesses the performance of the nonexecutive 
directors after consultations with the executive directors and 
the senior independent director following this process it was 
confirmed that each individual nonexecutive director continued to 
act effectively and to fulfil the duties and responsibilities expected 
demonstrating commitment to the role including commitment of 
time for board and committee meetings and other duties
reelection of directors
under the company’s articles all directors are subject to election 
by shareholders at the first opportunity after their appointment and 
then to reelection at intervals of no more than three years retiring 
directors may offer themselves for reelection
following his appointment as group finance director in november 
2008 andrew booker will be seeking election by shareholders at 
this year’s annual general meeting in addition stefan barden and 
ronnie bell will be standing for reelection the board has set out 
in the notice of annual general meeting enclosed with this report 
their reasons for supporting the election and reelection of these 
directors at the forthcoming annual general meeting
the biographical details of all the directors put forward for 
reelection are contained on page 32 of the annual report and 
in the explanatory notes contained in the notice of meeting
remuneration
remuneration is set out in the remuneration report and the work 
of the remuneration committee is set out on pages 41 and 42
accountability and audit
financial reporting
the board is required to present a balanced and understandable 
assessment of the company’s position and prospects this 
responsibility extends to annual and half year reports and other 
price sensitive reports the company is also required to present 
interim management statements covering the first and third quarter 
trading during each six months trading following implementation 
of the transparency directive in january 2007 for the financial 
year 200809 the company made two such interim management 
statements in compliance with the regulations
the board is satisfied that it has met its obligations in presenting 
a balanced and clear assessment of the company’s position and 
prospects this assessment is provided in the directors’ report 
which incorporates the chief executive’s report the performance 
review and the corporate social responsibility review the 
statement of directors’ responsibilities in respect of the financial 
statements is set out on page 56 36 northern foods plc annual report and accounts 200809 
corporate governance
continued
roles and responsibilities for each area of identified risk are 
outlined below
  strategic delivery through its regular meetings the board 
assesses performance against objectives in doing so it 
considers performance data and also considers external 
dynamics such as shifting customer and consumer trends 
that could affect the delivery of these objectives
  health  safety the group’s health  safety team sets strategy 
and risk management standards a detailed monthly review 
process facilitates performance measurement against targets 
governance is maintained through the coordination and delivery 
of an operationally focused audit which complies with health  
safety executive guidance the group function also provides 
a centre of excellence to support each business and site in 
working to defined risk management standards
  key improvement activities are defined and assistance 
provided to aid the implementation of improvement activities 
these activities include processes such as behavioural 
safety programmes safety training initiatives and site based 
improvement project support networking is strongly supported 
through the operation of an annual best practice award scheme 
annual safety conference and the safety function contact 
group activities
  a dedicated risk management steering group identifies and 
manages fire risk through site audits and the implementation 
of recommendations and standards together with sharing of 
best practice
  talent management and human resources centrally driven 
organisational capability reviews ensure that each of the 
businesses and functions regularly reviews its existing 
management capability and succession plans in the context 
of the company’s strategic plans
  food safety and quality the technical services team 
assesses and approves raw material suppliers audits the 
quality management systems in the group provides guidance 
on compliance with food related and environmental legislation 
sets technical standards and offers expertise on food science 
and technology this expertise and governance is reflected in 
the independent accreditation of the team as ukas certification 
body no199 and ukas testing laboratory no 2087 the 
dual accreditation has again continued without interruption 
in 200809 a record that is unique to northern foods
  asset management and engineering contractors for building 
engineering and professional services are approved by the 
businesses’ engineering resource in conjunction with group 
procurement and group health  safety
  procurement group procurement supports the businesses 
in identifying contracting and managing strategic supply 
relationships it plays a key role in the group’s risk management 
of external third party expenditure
internal control and risk management
the board has overall responsibility for the company’s system 
of internal controls and for reviewing its effectiveness which 
covers all aspects of the business key risks are identified in the 
performance review on pages 12 and 13 and include strategic 
commercial operational and financial risks these risks are 
managed through a comprehensive internal control and risk 
management system as outlined below 
underlying this process is the board’s aim to safeguard 
shareholders’ investments and the company’s assets it also aims 
to ensure that proper accounting records are maintained and 
that the financial information used within the business and for 
publication is accurate reliable and fairly presents the financial 
position of the company and results of its business operations
in line with turnbull guidance as revised the directors regularly 
review the effectiveness of the group’s system of controls and 
risk management the directors believe that appropriate steps 
are being taken to embed internal control and risk management 
further into the operations of the business and to identify 
opportunities for improvement which come to the attention of 
management and the board the system is designed to provide 
reasonable not absolute assurance of effective operations and 
compliance with laws and regulations
as part of its review process the board considers new and 
emerging risks and also considers key external business drivers 
such as market trends and competitive activity the board also 
plays an important role in driving continuous improvement in the 
management of risk by encouraging the sharing of best practice 
across the business 
a summary of the principal control structure and processes 
in place across the group is set out below
control structure and processes
the board assesses key areas of internal control and risk 
management and sets policy accordingly it tasks each business 
to identify and document each significant risk and to implement 
appropriate controls for that risk the board also requires the 
businesses to manage monitor and report on the effectiveness 
of these controls 
the businesses are supported by appropriate corporate 
management resources which provide the technical skills and 
expertise needed to supplement the businesses’ own resource 
and to provide overall assurance for the major areas of risk 
there are clearly defined lines of authority and accountability
the internal auditors have reviewed the overall approach adopted 
by the company towards its risk management activities
the audit committee oversees both internal and external audit 
procedures and monitors response to any significant control 
issues raised  37 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
  finance each business prepares detailed annual budgets 
and strategic plans which are reviewed and updated on a 
regular basis weekly and monthly accounts are prepared 
for each business and performance is monitored against 
the original budget and updated forecasts the group’s chief 
executive and group finance director meet on a formal basis 
each month to review the performance of each of the 
businesses with its managing director and finance director
capital expenditure planning budgeting and approval 
of expenditure is performed by executive management 
up to an agreed level delegated by the full board
the internal audit function reviews the standard of internal financial 
control and the accuracy of financial reporting through a rolling 
cycle of audit visits under a programme of activity approved by 
the audit committee 
the central finance function obtains advice and provides 
adequate insurance cover for major losses with appropriate 
levels of deductibles through a group programme with external 
insurance brokers this cover is reviewed and negotiated annually
financial and treasury management oversee the principal areas 
of treasury risk including liquidity interest and currency risk
  information technology the information services function 
provides appropriate systems infrastructure and backup 
services to the business
  legal provides and obtains advice on a full range of legal 
issues across the group and ensures good title to properties 
and intangible assets 
  corporate social responsibility the corporate social 
responsibility director ensures that there are effective systems 
in place for evaluating and managing social environmental 
and ethical see risks further information is provided in 
the corporate social responsibility review on pages 26 to 31
review process 
an ongoing review process includes an assessment of internal 
controls in particular internal financial controls it also includes 
reports from the internal audit function as well as the external 
auditor on matters identified in the course of its statutory audit work
businesses and specialist functions report by exception on any 
matters arising during the year to the monthly business review 
meetings the results of formal half yearly internal reviews are taken 
forward to the audit committee which oversees both internal and 
external audit and monitors management’s response
the board is therefore able to confirm that there is an ongoing 
process for identifying evaluating and managing the significant 
risks faced by the group that it has been in place for the year 
under review and up to the date of approval of these financial 
statements that it is regularly reviewed by the board and that 
it accords with turnbull guidance
audit committee and auditors
a principle of the combined code is that the board should 
establish formal and transparent arrangements for considering 
how it should apply the financial reporting and internal control 
principles and for maintaining an appropriate relationship with the 
external auditors deloitte llp these responsibilities are delegated 
to and are discharged by the audit committee whose work is 
described on pages 39 and 40
relations with shareholders 
dialogue with shareholders
the board attaches great importance to maintaining good 
relationships with all shareholders who are kept informed of 
significant company developments presentations are made 
of the half year and full year results briefings are given to analysts 
and other meetings to discuss company direction are held 
with institutional shareholders on a regular basis significant 
matters relating to the trading or development of business 
are disseminated to the market by way of stock exchange 
announcements 
the chief executive and group finance director are closely 
involved in investor relations and report the views of major 
shareholders back to the board investor meetings are arranged 
through the company’s broker ubs investment bank and 
others the chairman the senior independent director and other 
nonexecutive directors are available to meet major shareholders 
whenever necessary and the chairman did so during the year 
all material information reported to the regulatory news services is 
simultaneously published on the company’s website affording all 
shareholders full access to company announcements in addition 
the company has introduced an electronic communication facility 
to allow shareholders to receive information more quickly and in 
a manner more convenient for them the company has also taken 
advantage of provisions under the companies act 2006 which 
allows the use of the website to communicate with shareholders 
as an alternative to receiving hard copies a resolution to this effect 
was passed at the company’s annual general meeting in 2007 
it was implemented in november 2007 by shareholders being 
offered the choice of receiving communications from the 
company either via the website or by way of hard copy it is 
intended that this exercise will be repeated during 200910 38 northern foods plc annual report and accounts 200809 
corporate governance
continued
search consultants have been used extensively in the identification 
of new board appointments for the appointment of the group 
finance director the committee was supported by external 
executive recruitment consultants the miles partnership who 
conducted a thorough search and identified a number of high 
quality candidates for the role the nomination committee reviewed 
the proposed candidates and identified andrew booker as the 
best applicant and took the recommendation to the full board 
for final approval
when the need for a new director is identified the criteria in 
respect of the background and competencies of potential 
candidates are approved by the board before the search is 
started this specification is drawn up after consideration of the 
skills knowledge and experience of existing board members 
the committee also ensures that candidates have enough time 
available to devote to the position as part of the process for 
nominating candidates for appointment the committee will also 
obtain details and review any interests the candidate may have 
which conflict or may conflict with the interests of the company 
if such conflict is found to exist the committee will consider 
whether there are grounds for recommending the candidate 
for appointment and for the board to authorise such conflict 
the committee also reviews annually the need for succession 
planning particularly for the chairman chief executive and other 
key board positions and makes recommendations accordingly 
in formulating its succession plans the committee takes into 
account the challenges and opportunities facing the company 
and what skills and expertise therefore will be required on the 
board and from senior management in the future
remuneration committee 
o g nichionna chair
r j s bell
a k illsley
d t nish
the remuneration committee which is chaired by the senior 
independent director consists of the nonexecutive directors and 
determines the broad policy and framework for the remuneration 
of executive directors and senior managers no director 
is permitted to be present when hisher own remuneration 
is being discussed nor to vote on hisher own remuneration 
the committee also determines the nature and scale of 
incentive performance arrangements that encourage enhanced 
performance and which reward individuals in a fair and 
responsible manner for their contribution to the success of the 
business in setting the remuneration policy for executive directors 
and senior managers the committee also takes into account 
the reward policies for managers in the marketplace generally
an integral part of the role of the remuneration committee is to 
carry out an appraisal of the performance of the chief executive
constructive use of the annual general meeting
the board regards the annual general meeting which will be held 
on wednesday 15 july 2009 as an opportunity to communicate 
directly with private investors wherever possible all directors 
attend the annual general meeting a presentation is made to 
shareholders at the meeting to facilitate greater awareness of the 
group’s activities shareholders are invited to ask questions and 
are able to meet the directors informally notice of annual general 
meeting is circulated to shareholders at least 20 working days 
prior to the meeting separate resolutions are proposed on each 
substantially separate issue and the number of proxy votes cast 
for and against each resolution as well as the number of votes 
withheld are announced to the meeting following voting on a 
show of hands a poll would be called on any resolution where 
it was appropriate or required the company offers an electronic 
voting facility to investors 
details of proxy voting by shareholders including votes withheld 
are announced through the london stock exchange and are 
also placed on the company’s website
board committees
each board committee has written terms of reference which 
define the role and responsibilities of the committees and are 
reviewed annually the terms of reference of each committee 
are available from the company secretary or can be viewed 
on the company’s website
appointments to the committees are made on the 
recommendation of the nomination committee but subject to 
board approval membership of the committees is for periods 
of up to three years normally extendable by no more than two 
additional three year periods the company secretary acts as 
secretary to the board committees
nomination committee 
a j hobson chair
r j s bell
a k illsley
o g nichionna
d t nish
the committee meets as required to review the structure 
size and composition of the board and if appropriate makes 
recommendations for changes to the board the committee 
leads the process for board appointments in both executive and 
nonexecutive capacities and the reelection and succession of 
directors during 200809 the committee met twice i to consider 
the terms of appointment of directors succession planning and 
board skill and balance and ii to consider the candidates put 
forward for the role of group finance director and make 
recommendations to the board 39 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
audit committee
d t nish chair
a k illsley
o g nichionna
the audit committee comprises three nonexecutive directors 
each is considered to be independent as required by the 
combined code the chairman of the board is invited to attend 
meetings of the committee the committee is authorised by the 
board to obtain outside legal and other independent professional 
advice within its terms of reference and to secure the attendance 
of advisers with relevant experience and expertise if it considers 
this necessary members of the audit committee have unrestricted 
access to the external auditors
the main duties of the committee set out in its terms of reference 
are to
   make recommendations on the appointment and remuneration 
of external auditors and to monitor their performance
  approve and monitor the policy for nonaudit services provided 
by the external auditors to ensure that the independence 
of the auditors is not compromised
  review and advise the board on the company’s financial 
statements its accounting policies and on the control and 
mitigation of its financial and business risks
  review the nature and scope of the work to be performed 
by the external and internal auditors the results of their audit 
work and of the response of management
  review and advise the board on the effectiveness of the 
company’s internal control environment including its 
‘whistleblowing’ procedures
 
d t nish took over the chair of the committee on his appointment 
to the board he is a member of the institute of chartered 
accountants of scotland and is group finance director of 
standard life plc he is considered to have the recent and relevant 
financial experience required for the provisions of the combined 
code the other members of the committee have a wide range 
of business experience which is evidenced by their biographical 
summaries on page 32 the board has reviewed the audit 
committee’s composition during the year and is satisfied 
that it has the expertise and resource to fulfil effectively its 
responsibilities including those relating to any risk controls 
meetings
the committee invites executive directors management 
external and internal auditors to attend meetings as it considers 
appropriate for the matters being discussed the committee 
receives sufficient timely and reliable information prior to each 
meeting in order to reach an informed decision on any issue
work of the committee
during 200809 the audit committee met on three occasions 
and reported its conclusions to the board it met privately with 
the internal and external auditors without executives present 
it also met with executive management and executive directors
the committee discharged its obligations in respect of 200809 
as follows
financial reporting
during the year the committee reviewed the draft half year and 
annual financial statements prior to board approval the committee 
received a report from the external auditors setting out the 
accounting or judgemental issues which required its attention 
the auditors’ reports were based on an independent review 
half year report and a full scope audit annual report respectively
the committee has also advised the board on accounting 
policies disclosure and controls
internal controls and risk management
the committee reviews reports from internal audit at three 
meetings during the year these reports consider the operation 
of and issues arising from the group’s internal control procedures 
together with observations from the external auditors the 
committee monitored the effectiveness of the group’s risk 
management process which considers the key risks both 
financial and nonfinancial facing the group and the effectiveness 
of the group’s controls to manage and reduce the impact of 
those risks
internal audit
it is the role of internal audit to advise management and the board 
on the extent to which systems of internal control are effective 
and to provide independent and objective assurance that the 
processes by which significant risks are identified assessed 
and managed are appropriate and effectively applied the internal 
audit plan which covers the scope authority and resources of 
the function is determined through a structured process of risk 
assessment and is approved by the audit committee the nature 
and scope of the work of the internal audit team was reviewed 
and approved the reports of results received and the responses 
of management considered the plan set out at the beginning 
of the year was achieved and the outcome of the work was in 
line with expectations to ensure the independence of the internal 
audit function the senior internal auditor has the right of direct 
access to the chair of the committee and to the chairman of the 
board this right was not invoked in the year under review the 
head of internal audit has a separate session with the chair of the 
audit committee before or after a formal audit committee meeting 40 northern foods plc annual report and accounts 200809 
corporate governance
continued
external audit
the committee reviews auditor independence annually the 
committee also monitors the cost effectiveness and objectivity of 
the external auditors the engagement and independence of the 
external auditors is considered annually by the audit committee 
before it recommends its selection to the board the committee 
has satisfied itself that deloitte llp is independent and that there 
are adequate controls in place to safeguard its objectivity to assist 
in ensuring independence the role of the audit partner on the 
audit is rotated every five years the provision of nonaudit services 
by the external auditors is considered in line with the committee’s 
terms of reference the audit committee must approve all services 
of at least £100000 and executive approval must be given for all 
approved services of less than £100000 the auditor should only 
provide nonaudit services where such advice does not conflict 
with their statutory responsibilities and ethical guidance the audit 
committee has sole authority to approve nonaudit services from 
the external auditors 
during the year the auditors also provided tax advice auditor 
objectivity and independence was safeguarded through the 
use of a separate tax audit partner in addition the auditors report 
annually on the actions taken to comply with professional and 
regulatory requirements and on current best practice required to 
ensure independence the audit committee reviewed the external 
auditors’ proposed plan in november 2008 and their report of may 
2009 and has considered the effectiveness of the external audit
operating board 
the board delegates responsibility for the management of the 
business to the operating board led by the chief executive the 
operating board is comprised of the chief executive the group 
finance director and the five managing directors with responsibility 
for the individual business units
going concern 
in determining whether the group’s annual consolidated financial 
statements can be prepared on a going concern basis the 
directors considered the group’s business activities together with 
the factors likely to affect its future development performance and 
position these statements are set out in the performance review 
the review also includes the financial position of the group its 
cash flows liquidity position and borrowing facilities the key factors 
considered by the directors were as follows
   the implications of the challenging economic environment 
and future uncertainties on the group’s revenues and profits 
the group undertakes forecasts and projections of trading and 
cash flows on a regular basis this allows the group to target 
performance and identify areas of focus for management
   the impact of the competitive environment within which the 
group’s businesses operate
   the potential actions which could be taken in the event that 
revenues are worse than expected to ensure that operating 
profit and cash flows are protected 
   the group has access to overdraft facilities and a committed 
bank facility to meet daytoday working capital requirements 
following the refinancing of the bank facility in march 2009 the 
group has committed bank facilities to july 2012 in april 2009 
the existing facility was reduced from £460m at march 2009 
to £305m the facility will reduce to £250m in july 2010
as at the date of this report the directors have a reasonable 
expectation that the company and group have adequate 
resources to continue in business for the foreseeable future 
accordingly the annual report and financial statements for 
the 52 weeks ended 28 march 2009 have been prepared on 
the going concern basis
by order of the board
carol williams 
company secretary 
27 may 2009 41 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
dear shareholder
i am pleased to present the remuneration committee’s report on 
directors’ remuneration for 200809 as well as for the forthcoming 
financial year and subject to ongoing review subsequent years
this has been a year of unprecedented economic turmoil 
however the committee believes that it has appropriate pay 
practices in place and during this time the decisions made by 
the committee have been made with the objective of maintaining 
a coherent remuneration policy
at the 2009 review the committee awarded salary increases to 
executive directors that are consistent with general salary awards 
for the rest of the company’s workforce
the bonus targets set at the start of the year were applied 
resulting in no bonus payout for the financial element of the 
bonus despite a good financial result in the circumstances 
and a modest payout on the personal element of bonus
the 2008 awards under the performance share plan psp were 
made as contemplated in last year’s annual report and accounts 
except that the grants had to be delayed until early july because 
the company was in a prohibited period at the beginning of 
the financial year the tsr target for these awards was based 
on the company’s share price in the month prior to grant
finally in order to manage effectively the costs and risks of future 
pension provision the company decided to move from defined 
benefit to defined contribution provision for senior employees 
the maximum company contribution under the new defined 
contribution arrangement is 10 of salary and is intentionally 
below market norms for the executive population
a resolution to vote for the directors’ remuneration report will be 
put to the annual general meeting i hope that you will support 
this resolution
orna nichionna
chair of the remuneration committee
remuneration report
1 introduction
the board has prepared this report in accordance with the 
requirements of schedule 7a to the companies act 1985 
the report also meets the relevant requirements of the revised 
combined code on corporate governance issued by the 
financial reporting council ‘the combined code’ and is 
prepared for the 52 weeks ended 28 march 2009
this report to shareholders sets out the remuneration policy and 
explains the policy under which the executive and nonexecutive 
directors and management team were remunerated for the 
52 weeks ended 28 march 2009 it also provides details of the 
salary incentives share and pension interests of all the directors 
for the year and subject to ongoing review by the remuneration 
committee outlines remuneration policy for the forthcoming and 
subsequent years
the auditors are required to report to the company’s members 
on the audited element of the directors’ remuneration report and 
to state whether in their opinion that part of the report has been 
properly prepared in accordance with the companies act 1985
unaudited information
the information in this following section of the remuneration report 
has not been audited by the company’s external auditors
2 remuneration committee
the remuneration committee is a committee of the board and 
the members all of whom are independent during the year were 
o g nichionna chair r j s bell d t nish and a k illsley details 
of attendance for the committee are provided in the corporate 
governance review on page 33 at the invitation of the chair of 
the committee the chief executive the group finance director 
and group hr director attend committee meetings to provide 
background and context on matters relating to executive 
remuneration a j hobson is not a member but attends the 
committee by invitation the secretary to the committee is 
c williams company secretary
the role of the remuneration committee is to approve implement 
and keep under review the remuneration policy and practice of 
the group and specifically to
  agree with the board the framework and the value of the 
remuneration of the chairman executive directors and senior 
managers
  agree the terms of the executive directors’ and company 
secretary’s service contracts and remuneration
  determine the nature and scale of short and long term 
performance incentive arrangements that drive high 
performance whilst rewarding individuals in a fair and reasonable 
manner for their contribution to the success of the group 42 northern foods plc annual report and accounts 200809 
remuneration report
continued
the committee regularly monitors and reviews the company’s 
remuneration policy to ensure that the policy adopted continues 
to ensure that the remuneration of executive directors and senior 
managers is directly linked to and supports the delivery of 
strategic objectives closely aligned to the interests of shareholders 
this is achieved by the delivery of differentiated rewards 
dependent on performance the measurement of an individual’s 
personal performance and delivery is determined by a set of 
rigorous individual performance measures aligned to the delivery 
of these strategic objectives clearly linking pay to performance
a significant proportion of an executive’s remuneration package 
is dependent on the attainment of demanding performance 
objectives both short and long term the annual bonus scheme 
is designed to incentivise and reward the achievement of 
demanding financial and business related objectives long term 
share based incentives are designed to align the interests of 
executive directors and other senior managers with the longer 
term interests of shareholders by rewarding them for delivering 
sustained increased shareholder value
in agreeing the level of base salaries and the performance related 
elements of the remuneration package the committee considers 
the potential maximum remuneration that executives could receive 
the committee reviews the packages and varies individual 
elements when appropriate from year to year the policy continues 
to reward senior managers at the relevant midmarket level for on 
target performance whilst delivering highly competitive rewards for 
outstanding performance
5 remuneration policy for 
nonexecutive directors
nonexecutive directors are appointed for an initial term of three 
years with the expectation that subject to satisfactory performance 
they will be invited to serve a second and third three year term 
the dates of the chairman’s and current nonexecutive directors’ 
letters of engagement the dates on which their appointment 
took effect and the current expiry dates are as follows
 date of effective date expiry date
 commencement of current term of current term
r j s bell 1 sep 05 1 sept 08 31 aug 11
a j hobson  28 may 02 28 may 08 27 may 11
a k illsley 2 oct 06 2 oct 06 1 oct 09
o g nichionna 28 may 02 28 may 08 27 may 11
d t nish 1 jul 05 1 jul 08 30 jun 11
a k illsley whose letter of engagement expires on 1 october 2009 
will be offered a further three year term of engagement subject 
to confirmation by the board that his performance continues to 
be effective
the appointments of the chairman and the nonexecutive directors 
may be terminated by the company on six months’ notice and 
by the relevant nonexecutive directors on three months’ notice 
no compensation is payable by the company on termination 
of an appointment with due notice
in undertaking this role the committee considers remuneration 
policy and rewards across the company and not just at 
board level
the committee has been formally delegated the authority by the 
board to establish policy in respect of all terms of employment 
for executive directors no individual plays a part in any discussion 
about his or her remuneration
it is the role of the committee to ensure that the group’s 
remuneration policy and framework provides competitive reward 
for its executive directors and other senior managers taking 
into account the company’s performance the markets in which 
it operates and pay and conditions elsewhere in the group
the board believes that a properly constituted remuneration 
committee is essential in establishing a system of remuneration 
which clearly aligns the interests of executive directors and 
senior managers with those of shareholders and links incentives 
to improvements in the absolute performance and relative 
competitiveness of the company the committee’s terms 
of reference are published on the company’s website
3 advisers to the remuneration committee
during the year the committee continued to engage the services 
of hewitt new bridge street consultants llp ‘hnbs’ to provide 
advice in the formulation of executive remuneration packages 
hnbs provided no other services to the company however 
hewitt associates limited is the appointed scheme actuary to the 
principal northern foods uk pension schemes hnbs operates 
separately from the rest of hewitt and there are provisions in place 
to ensure that there is no crossover of information between the 
two teams the committee retained dla piper uk llp as solicitors 
to advise on matters relating to directors’ contracts and specific 
employment law advice the committee appointed pinsent masons 
llp to provide advice regarding the principal northern foods uk 
pension schemes 
the company engaged pricewaterhousecoopers llp pwc to act 
as advisers to management regarding the design of the pension 
arrangements available to both the executive directors and senior 
management population
the committee identified no conflict in the nature of the services 
provided by its advisers the terms of business of hnbs dla 
piper uk llp pinsent masons llp and pwc are available from 
the company secretary
4 remuneration policy
to deliver its objective of creating real increases in shareholder 
value relative to its peers the company needs to attract and retain 
the most talented and committed people in the industry and 
create the right employment conditions and reward opportunities 
for them
the company’s remuneration policy is designed to support 
the recruitment motivation and retention of such high calibre 
employees remuneration is considered within the context of the 
sector of which the company is a part and the wider ftse 350 
community where the company competes for talent the sector 
includes companies operating as fast moving consumer goods 
fmcg companies 43 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
the balance of the fixed and variable pay at current value for 
200910 exclusive of pension and benefits is illustrated below for 
the two executive directors the table is a theoretical model and 
assumes that on target group performance is achieved for short 
term incentives and the director’s individual performance and that 
long term incentive awards under the psp with an initial value at 
the time of grant of 150 of salary are valued at an expected value 
of 55 of the initial value 
   basic  annual  long term
   salary as a  bonus as a  incentives as a
   proportion of  proportion of proportion of
  performance remuneration  remuneration  remuneration 
s barden on target 440 197 363
  maximum 286 286 429
a m booker on target 440 197 363
  maximum 286 286 429
61 salary
salaries of executive directors are reviewed annually taking into 
account information from independent sources for comparable 
roles in the industry and in other selected quoted companies 
reviews also reflect the individual’s responsibilities performance 
and development and the group’s performance basic salary is 
the only pensionable remuneration
the executive directors’ current salaries effective as at 1 april 2009 
before salary sacrifice in relation to northern foods employees’ 
self invested pension plan ‘the sipp’ membership are 
 basic salary as at 1 april 2009
s barden £486400
a m booker £291840
for s barden and a m booker this represents an increase of 
24 over the prior year and is the average increase awarded 
to other members of senior management consistent with the 
general salary awards for the rest of the company’s workforce
62 annual incentive plan
the remuneration committee believes that achieving annual 
performance targets is a high priority for the executive directors 
incentive targets for executive directors are set each year by the 
committee to take account of current business plans
the company continues to be committed to driving a high 
performance culture at all levels in the business to support this 
aim the annual incentive plan drives differentiation in the level of 
award based upon the individual’s contribution to the delivery of 
group performance the target incentive for an executive director 
remains at 45 of basic salary for on target performance in line 
with the group’s ethos of pay for performance in the case of 
exceptional individual performance and group results significantly 
above operating plan the executive can continue to expect to 
receive an incentive payment up to a maximum of 100 of basic 
salary representing a significant increase in reward in return for 
over performance
northern foods’ policy regarding nonexecutive directors’ fees 
takes into account the need to attract individuals of the right 
calibre and experience and reflects the responsibilities and time 
commitments of the role fees for the nonexecutive directors 
are reviewed annually on the recommendation of the executive 
directors and the chairman and are then subject to approval 
by the board fees are set with regard to a range of external 
information for equivalent companies there are no other 
emoluments for nonexecutive directors except where the 
company meets authorised expenses incurred on the company’s 
activities they are not eligible for pension scheme membership 
and do not participate in any of the company’s annual or long 
term incentive schemes 
fees were reviewed in 2008 and a decision was taken to increase 
the basic fees of the nonexecutive directors to £38500 per annum 
and to increase the chairman’s fee to £150000 per annum these 
fee increases were implemented effective 1 june 2008 and fees 
will remain unchanged in 2009
6 remuneration policy for executive directors 
the remuneration committee aims to ensure that the company’s 
executive directors are fairly rewarded for their individual 
contributions to the group’s performance the committee’s policy 
is to offer differentiated remuneration packages clearly linked to 
both individual and business performance which are capable 
of attracting retaining and motivating executive directors of high 
calibre providing both short and long term focus for the business 
the approach is designed to ensure that the company is 
managed effectively for the benefit of shareholders and will 
create real increases in shareholder value 
the committee seeks to align the remuneration of executive 
directors with that of the wider northern foods senior management 
team the committee’s objective is to achieve a structured and 
balanced remuneration package 
the committee believes that a significant proportion of the total 
remuneration of an executive director should be performance 
related accordingly a rigorous approach has been adopted 
to the assessment of individual performance whereby significant 
emphasis is placed upon the individual’s contribution to 
the group’s overall performance this is to ensure that the 
remuneration package for executive directors is aligned closely 
with shareholder interests and individual performance 
the four main components of the ongoing remuneration package 
for executive directors and senior management in 200910 are
   basic annual salary targeted at market median within the 
sectors where we compete for talent although it is recognised 
that it may occasionally be necessary to pay above this to 
attract sufficiently high calibre executives
  an annual incentive plan based upon the delivery of annual 
operating plans for the group and individual strategic 
objectives described in performance contracts
  participation in long term incentive plans based upon the 
delivery of sustainable high performance
  pension and other benefits 44 northern foods plc annual report and accounts 200809 
remuneration report
continued
631 performance share plan 2007
as part of the development of the group’s senior executive 
incentive strategy and in order to further align the interests of 
executives and shareholders through the use of greater variable 
reward the committee introduced the psp in 200708
in terms of quantum participants may be granted annual awards 
over shares in the company worth no more than 200 of base 
salary in practice the committee intends to operate within a limit 
of 150 of salary for awards made under the psp 
the committee believes that the performance conditions for the 
psp reinforce the alignment of the interests of senior executives 
with those of shareholders the benefits available to participants 
of the psp only accrue to them when the company has delivered 
significant benefits to shareholders over a fixed three year period 
awards vest three years after grant subject to the extent to which 
demanding performance conditions have been achieved by the 
end of a single three year period two performance conditions 
determine the vesting of awards these are based on growth in 
the company’s return on invested capital roic and its absolute 
total shareholder return tsr performance each determines the 
vesting of one half of each award
6311 return on invested capital 
the proportion of the award that will vest is assessed by reference 
to a vesting scale as follows
 percentage of the total number
growth in roic over the of performance shares under
performance period an award that will vest
less than 100 basis points 0
100 basis points 75
between 100 basis points straight line vesting between
and 200 basis points 75 and 50
200 basis points or more 50
for the purpose of determining any reward roic is defined as 
profit from operations before restructuring items adjusted to 
exclude any nonservice charge element of pension costs divided 
by average invested capital average invested capital is calculated 
as the sum of net equity adjusted to exclude retirement benefit 
obligation net of deferred tax thereon net debt and accumulated 
goodwill previously written off
in response to any significant events including material trading 
events the committee may at its discretion amend the 
performance conditions to reflect these changes in addition 
the roic element will only vest if the committee is satisfied that 
the investment level over the performance period was appropriate 
for ensuring the business’ long term growth
under the annual incentive plan 80 of annual bonus opportunity 
is linked to group financial targets in the form of profit before tax 
and restructuring items the other 20 is directly related to the 
committee’s assessment of the directors’ individual performances 
against their personal performance contracts these contracts 
are set at the start of the financial year and contain six individual 
performance targets achievement of which is integral to the 
performance of the business these are considered appropriately 
stretching by the committee 
the level of profit before tax and restructuring items achieved 
in 200809 was £475m which was below that required to trigger 
payment under the profit element of bonus the committee 
determined that the individual performance measures had 
been satisfactorily met to trigger payment under the personal 
element of bonus a payment equivalent of 15 of salary was 
awarded to s barden a m booker received a payment equivalent 
of 10 of salary prorated to reflect length of service in the 
performance period
the targets set for 200910 continue to be made up of financial 
business and individual performance measures the financial 
element is set in terms of the group’s performance based on 
profit before tax and restructuring items and performance versus 
operating plan the business and individual elements comprise 
a number of commercially sensitive strategic objectives for each 
individual and the executive team encompassing both financial 
and nonfinancial targets such as economic environmental and 
social targets 
the performance targets selected are considered appropriately 
stretching by the committee
63 long term incentive share plans
the company’s long term incentive policy has been developed 
to provide long term management focus and motivation creating 
a clear link between sustainable business performance and an 
executive’s reward the committee believes that a significant 
element of executive remuneration should be linked to the delivery 
of long term returns for shareholders
during 2007 the committee introduced and shareholders 
approved the psp details set out under section 631 to act as 
the primary vehicle for the delivery of long term incentives across 
the group 45 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
64 savingsrelated share option scheme
the company introduced an hmrc approved savingsrelated 
share option scheme the ‘scheme’ for all employees during 
200708 this scheme is open to all employees subject to 
eligibility including executive directors options are normally 
exercisable after either three or five years from the date of grant 
in accordance with hmrc requirements there are limits on the 
number of shares which could be issued under the scheme in 
addition the use of new issue shares under the scheme is limited 
to 10 of the issued share capital of the company taking account 
of shares issued or to be issued under any other company 
employee share schemes over the previous ten year period 
a grant was made under the scheme in december 2007 the 
price at which options were offered was not less than 80 of the 
middle market price on the dealing day immediately preceding 
the date of invitation to date no further invitations have been 
offered under this scheme
65 executive shareholding 
executives’ interest in both relative and absolute share price 
performance is important and this is facilitated by share 
schemes and the encouragement to build a significant personal 
shareholding in the company 
the company has introduced a policy requiring the executive 
directors to build a significant level of shareholding it is the 
view of the committee that the act of building and maintaining 
a substantial shareholding in the company creates a strong 
alignment of interest between shareholders and executives
651 minimum shareholding requirements
the company’s minimum shareholding policy requires 
the retention of a value of shares as follows
  300 of basic salary for the chief executive
 200 of basic salary for other executive directors
executives are expected to retain all shares acquired through 
share option plans long term incentive plans or deferred share 
plans other than those sold to meet income tax and national 
insurance contribution nic liabilities until the required minimum 
shareholding is achieved 
the numbervalue of shares required as the minimum share 
holding is fixed for each year no purchases are required to 
respond to share price falls during the year
6312 total shareholder return
in order to focus executives on delivering outstanding returns to 
shareholders the committee has decided to set the tsr targets 
in terms of improvement measured from the company’s share 
price normally averaged over the three months immediately prior 
to the beginning of the financial year 
the proportion of the award that will vest is assessed by reference 
to the following scale
 percentage of the total number
tsr at the end of the of performance shares under
performance period an award that will vest
less than 30 growth  nil
30 growth 75
between 30 growth straight line vesting between
and 80 growth 75 and 50 
growth of 80 or more 
equivalent to a share price 
plus dividends of £223 or more  50
the base prices threshold and maximum tsr for each award 
expressed as share price plus dividends are as follows
   200708 200809 200910
base price  £124 £0659
1
 £0531
threshold 30 growth £161 £0857 £0690
maximum 80 growth £223 £1186 £0955
1
the awards made in july 2008 were subject to a tsr 
performance condition requiring growth from the one month 
average share price at the date of awards of 659p which was 
above the actual share price at grant the committee had originally 
contemplated using a base figure calculated at the end of the 
preceding financial year but in view of delays in making the 
award because the company was in a prohibited period and 
the turbulent state of the stock market at the time it concluded 
that it was more appropriate to use the average share price over 
the month prior to the actual award 
the tsr will be calculated using the closing return indices over 
the final three months of the performance period 
in addition the tsr element will only vest to the extent that the 
committee is satisfied that the company’s tsr over the period is 
reflective of the underlying financial performance of the company
awards vest on a change of control or cessation of employment 
under ‘good leaver’ provisions subject to the performance 
conditions having been met prorata and are normally reduced 
to reflect the shortened performance period
the committee intends to make further awards in 2009 in 
accordance with its policy of awarding shares worth around 150 
of salary to executive directors with similar performance conditions 
to those set out above a proportion of psp awards will be made 
using hmrc approved options in order to secure potential tax 
and national insurance savings available for such awards within 
the hmrc limit of £30000 46 northern foods plc annual report and accounts 200809 
remuneration report
continued
66 benefits
in addition to basic salary all the executive directors receive 
certain benefits principally a car or car allowance private medical 
insurance and a pension
661 pensions
prior to 1 april 2009 the executive directors were members 
of northern foods pension builder ‘pension builder’ their 
dependents were eligible for dependents’ pensions and the 
payment of a lump sum in the event of death in service 
for all employees including the executive directors appointed 
after 22 march 2005 the pension arrangements provided by 
pension builder for pension on retirement at age 65 are based 
upon a career average accrual of either
  125 of annual salary per annum revalued before retirement 
by inflation up to 50 with an employee contribution of 60 or
  10 of annual salary per annum revalued before retirement 
by inflation up to 50 with an employee contribution of 45
in january 2009 the company entered into a consultation 
process with the leadership population whereby the company 
proposed a move from the established defined benefit pension 
arrangements to an alternative pension plan the northern foods 
employees’ self invested personal pension plan ‘the sipp’ a 
defined contribution pension arrangement operated by legal and 
general portfolio management services ltd following completion 
of the consultation process the company took the decision 
to implement the proposal and the leadership population was 
offered membership of the sipp in respect of service from 1 april 
2009 whether or not an individual accepts membership of the 
sipp no further accruals will be made under pension builder
for all eligible employees including the executive directors 
participating in the sipp the company supplements a core 
employee contribution of 5 of pensionable earnings with 
a company contribution of 10 of pensionable earnings
members of the sipp are also eligible to join the northern foods 
life assurance scheme where subject to the terms of the life 
assurance scheme their dependants are eligible for a lump sum 
payment in the event of a member’s death in service
the design of the new sipp serves to strengthen further the link 
between an executive’s performance and reward executives 
have the opportunity to invest any awards received through the 
northern foods short term incentive plan into the sipp potentially 
subject to the investment performance of the scheme increasing 
their fund value executives also receive the benefit of the national 
insurance savings made by the company currently 128 of the 
total award which are invested into the sipp on their behalf
the sipp has an optional salary sacrifice arrangement
following the removal of the pension’s earnings cap and the 
introduction of the lifetime allowance under the finance act 2004 
with effect from 6 april 2006 the company provides executives 
who hold pension benefits in excess of the lifetime allowance 
with the following options
    continue to accrue pension under the sipp previously 
pension builder subject to the recovery charge or 
  a cash alternative paid on a monthly basis reflecting the 
company’s contribution rate to the sipp previously pension 
builder the cash alternative for executive directors who 
are members of the sipp will be 10 of basic salary
67 directors’ contracts
it is the company’s policy that executive directors should have 
secure agreements providing for a maximum of one year’s notice 
the contracts of a m booker and s barden are terminable upon 
six months’ notice by the executive director and one year’s notice 
by the company
in the event of early termination the contracts of s barden and 
a m booker provide for compensation up to a maximum of 
basic salary together with continued provision or payment of a 
sum equal to the fair value of the car allowance private medical 
insurance permanent health cover and outstanding working time 
regulation holiday
the details of the contracts are summarised in the table below
table 1 date of contract notice period
s barden 30 may 2007 12 months by the company
 and 6 months by s barden
a m booker 13 october 2008 12 months by the company
 and 6 months by a m booker
j k maiden 5 september 2005 12 months by both parties
to protect the interests of the company and its shareholders 
the executive directors’ contracts contain restrictive covenants 
the principal terms of which prevent the executive directors
   undertaking work for direct competitors either during 
their employment with the company or within nine months 
of their employment terminating without the express permission 
of the board
   enticing away from the group individuals or customers with 
whom the executive directors had material contact with or 
responsibility for in the 12 months prior to termination and
   enticing away from the group or employing senior or middle 
managers from within the business with whom the executive 
directors had direct contact or knowledge in the 12 months prior 
to termination
j k maiden gave the company his notice of resignation on 
22 june 2008 and continued to work full time until 14 november 
2008 being responsible for the finance function throughout this 
period as well as a number of strategic initiatives including the 
significant changes to the company’s pension arrangements 
he continued to receive his salary and contractual benefits until 
his departure but received no compensation for loss of office or 
other termination payment and all unvested share awards lapsed 
on his departure he remained eligible to be considered for 
an annual bonus for the period he worked consistent with the 
other executive directors he received no payment in respect of 
the financial targets and was awarded £40631 in relation to his 
personal element 47 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
tsr
250
200
150
100
50
0
2004 2005 2006 2007 2008 2009
financial period end
northern foods  ftse 250 index
7 performance graph
in accordance with the requirements of schedule 7a to the 
companies act 1985 the graph adjacent shows the company’s 
five year performance measured by tsr compared with the 
performance of the ftse 250 index also measured by tsr
the ftse 250 index has been selected as an appropriate 
comparison because it represents a broad equity market index 
of which northern foods is a constituent
tsr measures share price growth with any dividends deemed 
to be reinvested gross on the exdividend date the tsr shown 
is based on daily spot prices
audited information
the information in this following section of the remuneration report has been audited by the company’s external auditors
8  directors’ remuneration and pension entitlements
81 emoluments
table 2 shows an analysis of the salary benefits and bonus elements of remuneration for the individual directors who held office 
during the 52 weeks ended 28 march 2009 pension entitlements are shown in table 3 and interests under the company’s long term 
incentive plans and deferred share bonus plan are disclosed in the sections covering share awards on pages 48 to 52
    accrued compensation  
  salary  annual for loss  
  fees benefits bonus of office total total
table 2 
  200809 200809
1
 200809 200809 200809 200708
directors’ remuneration  £ £ £ £ £ £
executive directors
s barden
2
   461450 576 71250 – 533276 836247
a m booker
2
   135274 240 13254 – 148768 –
j k maiden
2
   231998 11848 40631 – 284477  650372
nonexecutive directors
r j s bell
3
   38208 – – – 38208 36458
a j hobson   148667 – – – 148667 142000
a k illsley
3
   38208 – – – 38208 36458
o g nichionna
3
   50208 – – – 50208 47792
d t nish
3
   45208 – – – 45208 43292
notes to table 2
note 1
benefits include medical insurance and company car
note 2
the salaries are net of salary sacrifice in relation to pension builder membership the salary paid to j k maiden included a 
nonpensionable salary supplement in lieu of pension contribution of £40603 where a cash car allowance is taken in lieu of 
company car this is included as salary
note 3
from 1 june 2008 the fee payable to nonexecutive directors was increased to £38500 the additional annual fees of £7000 paid 
to the chairs of the audit and remuneration committees and of £5000 to the senior independent director were not increased the 
chairman’s fee was increased to £150000 these increases were intended to bring the fees of the nonexecutive directors into line 
with those of nonexecutives in companies of a similar size in the food and beverage industry and in the general industry as a whole 
no increases will be awarded during 2009
tsr performance index comparison
northern foods tsr compared to ftse mid 250 – 
1 april 2004 to 1 april 2009 48 northern foods plc annual report and accounts 200809 
remuneration report
continued
82 pension benefits
       transfer   
       value   
  accrued    accrued of real   increase in
  pension   additional pension increase in transfer transfer transfer
  as at real  pension as at year less value value value
  29 march increase  earned 28 march directors’ 29 march 28 march directors’
table 3 
  2008 in year inflation in year  2009 
2
 contributions 2008
3
 2009 
3
 contributions
directors’ pension entitlements notes £ £ £ £ £ £ £ £ £
s barden 1 10316 5600 516 6116 16432 39472 75961 115835 39874
a m booker 1 – 1484 0 1484 1484 8978 – 8978 8978
j k maiden 1 9772 2269 489 2758 12530 17274 77526 95392 17866
notes to table 3
note 1
the company provided executive directors who were members of pension builder up to 1 april 2009 with a pension payable at age 65 
the accrual rates and member contributions for the scheme are set out in section 661 death in service cover was a lump sum of 
three times annual earnings on the death of a director or a retired director a spouse’s pension of 50 would be payable
early retirement may be granted with the consent of the company and the trustee of the scheme from age 55 but benefits are 
reduced by 4 per annum for ages 55 up to 64 years once in payment pensions are increased in line with retail price index inflation 
up to a ceiling of 25 per annum the trustee with the consent of the company has discretion to apply such greater increase as it 
considers appropriate
note 2
the accrued pension at 28 march 2009 is the pension which the director would have been entitled to receive based on completed 
pensionable service to 28 march 2009 payable from normal pension date and subject to revaluation increases between leaving 
and retirement
note 3
the transfer values are based on the accrued pensions at 29 march 2008 and at 28 march 2009 and are calculated as at 29 march 2008 
and at 28 march 2009 respectively based on actuarial factors the transfer values are the lump sums which would have been paid to 
another pension scheme for the benefit of the director if they left service at the respective dates a transfer value cannot be paid to a 
director personally
83 long term incentive plans
831 executive share option plan 2004 esop
details of grants exercises and lapses of options for individual executive directors under the esop are as follows
       balance at exercised granted lapsed balance at
    option date from  29 march during during during 28 march
table 4 
   date of price which expiry 2008 year year year 2009
executive share options
1
   grant p exercisable date number number number number number
s barden   04 jul 06 7967 04 jul 09 03 jul 16 37655 – – – 37655
   04 jul 06 7967 04 jul 09 03 jul 16 376554 – – – 376554
       414209 – – – 414209
j k maiden   14 dec 05 15333 14 dec 08 13 dec 15 19565 – – 19565 –
   14 dec 05 15333 14 dec 08 13 dec 15 151634 – – 151634 –
   04 jul 06 7967 04 jul 09 03 jul 16 414209 – – 414209 –
       585408 – – 585408 – 49 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
notes to table 4
note 1
these options were granted under the esop and are subject to a performance condition measured by reference to growth adjusted 
earnings per share over three years in excess of rpi as set out below
  3 real annual growth in earnings per share allocations up to 100 of salary
  4 real annual growth in earnings per share allocations between 100–149 of salary vest
 5 real annual growth in earnings per share allocations between 150–199 of salary vest
  6 real annual growth in earnings per share allocations at 200 of salary vest
the performance condition does not allow for retesting
participation in the company’s esop is at the discretion of the committee the plan comprises an hmrc approved section and an 
unapproved section options are generally exercisable in the seven year period following the third anniversary of grant and before the 
tenth anniversary provided that the executive remains in employment and subject to satisfaction of the performance condition should 
an employee leave the organisation by virtue of redundancy or retirement the requirement under the performance condition remains 
in place company performance is measured on a prorated basis to assess the extent to which it has been met 
note
the midmarket price of the company’s shares at 28 march 2009 was 51p 29 march 2008 9250p and the range during the year was 
42p to 95p
832 long term incentive plan 1997 ltip
details of the awards made under the ltip are as follows
      shares   
      released   
    beneficial conditional by the awards shares beneficial conditional
1
    interest at interest at nominee made lapsed interest at interest at
table 5 
    29 march 29 march during during during 28 march 28 march
executive long term incentive plan    2008 2008 the year the year the year 2009 2009
s barden    – 93750 – – – – 93750
j k maiden    – 128176 – – 128176 – –
    – 221926 – – 128176 – 93750
notes to table 5
note 1
the interest in shares at 28 march 2009 for stefan barden is comprised of an award made on 4 july 2006 the shares will vest after 
three years from the date of grant subject to performance conditions the market price of the shares at the date of grant for this award 
was 8000p
note 2
vesting of awards is determined by performance against two performance conditions
   vesting of 50 of the ltip is triggered by comparing the growth in tsr in terms of share price growth and dividends to that of 
the tsr of the companies comprising a selected group of comparable companies from the ftse food producers all share index 
   the remaining 50 is triggered by the achievement of a minimum growth in roic of 100 basis points over three years measured 
against a base year if the minimum target is not achieved this part of the conditional award will lapse
shares awarded under the ltip are retained in trust on behalf of the participants for a further two years after vesting during the 
retention period the participants are entitled to dividends on the shares and to instruct the nominee how to vote the performance 
measurement date is the three year period from the commencement of the financial year in which the award was made 50 northern foods plc annual report and accounts 200809 
833 performance share plan 2007 psp
the committee has awarded shares under the psp conditional upon the achievement of corporate performance targets in accordance 
with section 631 as follows
       market awards  
      maximum price transferred  
     conditional potential of the by the awards conditional
     interest at award shares at nominee lapsed interest at
table 6 
     29 march granted date of during during 28 march
performance share plan     2008 2008
1
 grant p the year the year 2009 
2
s barden     683544 779984 5700 – – 1463528
a m booker     – 233995 5575 – – 233995
j k maiden     481581 – – – 481581 –
     1165125 1013979  – 481581 1697523
notes to table 6
note 1
the award for stefan barden was made on 4 july 2008 the award made to andrew booker was made on 9 december 2008 following 
his appointment as group finance director
note 2
the interest in shares at 28 march 2009 for stefan barden includes an award made on 29 august 2007 
the shares awarded under the psp will vest after three years from the date of grant subject to performance conditions being met 
further details are set out in section 631
834 award of matching shares to s barden
the committee granted a one off award of matching shares on 4 june 2007 pursuant to the exemption from the need for prior 
shareholder approval contained in listing rule 942
     maximum market price  awards  
     potential of the  transferred  
     award shares at conditional by the awards conditional
     granted date of interest at nominee lapsed interest at
table 7 
     4 june grant 29 march during during 28 march
matching share award     2007 p 2008 the year the year 2009
1
s barden     1040460 12975 1040460 – – 1040460
notes to table 7
note 1
as part of the terms of his recruitment as chief executive and fully disclosed in the 200607 annual report s barden was provided 
with the opportunity to purchase shares in the company worth up to 100 of his salary and in return receive an award of matching 
shares of up to three shares for every one share purchased the matching award is nonpensionable and nontransferable other than 
on death
note 2
the performance conditions attached to the matching award are the same as those that apply to the first psp award detailed in section 
631 save that threshold vesting of the tsr element will not occur unless the company achieves growth in tsr of 35 over the relevant 
period unvested awards lapse on cessation of employment other than in specified good leaver circumstances in which case awards 
would normally vest subject to the extent to which the performance conditions have been met and prorating
half of the matching award will vest on the third anniversary of grant with the other half vesting on the fourth anniversary of grant in 
each case to the extent that the performance conditions are met and providing s barden retains the purchased shares and remains 
employed by the group to the extent that the award vests the relevant shares will be delivered free of charge
remuneration report
continued 51 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
84 deferred share bonus plan 2006 dsbp
this table relates to the dsbp introduced in june 2006 which was subject to a one year performance period
        awards  
        transferred  
      beneficial awards by the awards beneficial
      interest at granted nominee lapsed interest at
table 8 
      29 march during during during 28 march
deferred share bonus plan      2008 the year the year the year 2009
s barden      366972 – – – 366972
j k maiden      376146 – – 376146 –
      743118 – – 376146 366972
notes to table 8
note 1
the dsbp was introduced in june 2006 so as to incentivise and retain the key talent necessary to drive the specific performance 
improvements required to deliver the business strategy at that time the dsbp provided a small number of key senior executives with 
an award of shares with a value up to 100 of base salary at the prevailing market price of 8175 pence per share on the 13 july 2006 
these shares will be satisfied by the transfer of existing shares held in trust after the vesting date in july 2009
the executives were required to remain in the employment of the group for a further two year period before any share award vested 
awards will transfer after the vesting date on 13 july 2009 and include a dividend equivalent which will be paid on vesting no further 
awards can be made under this plan
85 savingsrelated share option scheme
this table relates to the savingsrelated share option scheme launched in november 2007 full details are set out in section 64
      balance at exercised granted lapsed balance at
    date  29 march during during during 28 march
table 9 
  date of option from which expiry 2008 year the year the year 2009
savingsrelated share options  grant price p exercisable date number number number number number
s barden  20 dec 07 7600 1 mar 11 31 aug 11 11166 – – – 11166
j k maiden  20 dec 07 7600 1 mar 11 31 aug 11 11166 – – 11166 –
note to table 9
note 1
the share options listed were granted at 80 of the prevailing middle market share price under the northern foods plc savingsrelated 
share option scheme which was approved by shareholders at the company’s annual general meeting in july 2007 consistent with the 
relevant legislation there are no prevest performance conditions
86 dilution limits 
northern foods’ share plans comply with recommended guidelines on dilution limits and the company has always operated within 
these limits assuming none of the extant options lapse and will be exercised and having included all exercised options the company 
has utilised 29 of the 10 in ten years and 068 of the 5 in ten years of the dilution limits in accordance with the association of 
british insurers abi guidance on dilution limits
87 directors’ aggregate remuneration
the total amount of directors’ remuneration and other benefits was as follows
table 10
        200708 200809
directors’ aggregate remuneration       £ £
emoluments       1950802 1287020
gains on exercise of options and award of performance share plan shares    – –
        1950802 1287020 52 northern foods plc annual report and accounts 200809 
remuneration report
continued
88 directors’ interests in shares 
the interests of the directors in the share capital of the company at 29 march 2008 and 28 march 2009 are detailed below
  ordinary shares
1
 share options conditional awards saye – share options 
  number number number
2
 number
table 11 
  description 29 march 28 march 29 march 28 march 29 march 28 march 29 march 28 march
directors’ interests in shares  of interest  2008 2009 2008 2009 2008 2009 2008 2009
executive directors
s barden  beneficial 910043 1736001 414209 414209 2184726 2964710 11166 11166
a m booker  beneficial – 250000 – – – 233995 – –
j k maiden  beneficial 64387 – 585408 – 985903 – 11166 –
nonexecutive directors
r j s bell  beneficial 100000 100000 – – – – – –
a j hobson  beneficial 30000 30000 – – – – – –
a k illsley  – – – – – – – – –
o g nichionna  beneficial 25000 25000 – – – – – –
d t nish  – – – – – – – – –
notes to table 11
note 1
this includes beneficial interests in ordinary shares together with beneficial interests under the share bonus plan
note 2
this includes conditional awards made under the ltip the psp and dsbp in the case of s barden the total also includes shares under 
the matching share award
at 28 march 2009 the executive directors of northern foods as potential beneficiaries of the northern foods esot were interested 
in 7682843 200708 6697363 ordinary shares held by the trustee 
by order of the board
orna nichionna
chair of the remuneration committee
27 may 2009 53 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
other statutory and regulatory information
principal activity
the principal activity of northern foods remains unchanged as 
one of the uk’s leading food producers manufacturing a mix of 
own label and branded products for retailers reporting under 
three divisions chilled frozen and bakery the group operates 
in five businesses primarily producing chilled ready meals chilled 
sandwiches  salads biscuits puddings pizza pastry meat and 
meatfree grills
dividends
an interim dividend of 155 pence per share was paid to 
shareholders on 30 january 2009 and the directors recommend 
a final dividend of 295 pence per share subject to shareholders’ 
approval which will be paid on 28 august 2009 to shareholders 
on the register on 31 july 2009 the total dividend in respect 
of the year amounts to 450 pence per share 200708 450p 
in accordance with ifrs the final dividend has not been accrued 
in the results to 28 march 2009 
directors 
the following were directors of the company during the year
s barden
r j s bell
a m booker  appointed 17 november 2008
a j hobson
a k illsley
j k maiden  resigned 14 november 2008
o g nichionna
d t nish
 nonexecutive directors
directors’ biographical details are set out on page 32
appointment and replacement of directors
rules about the appointment and replacement of directors are 
set out in the company’s articles of association the ‘articles’ 
and on page 34 of the corporate governance section of this 
report under the articles and the provisions of the combined 
code on corporate governance any director appointed to the 
board must be elected by ordinary resolution at the next general 
meeting following their appointment and directors are required to 
stand for reelection in the third calendar year following the year of 
their appointment under these provisions a m booker is required 
to stand for election and s barden and r j s bell for reelection 
at this year’s annual general meeting
the executive directors’ service contracts are referred to in 
the remuneration report set out on pages 41 to 52 the executive 
directors’ service contracts are terminable by the company 
giving one year’s notice
other than service contracts no director has a material beneficial 
interest in any contract to which the company or any of its 
subsidiaries was a party during the year
details of the remuneration of individual directors and their 
interests in the share capital of the company are shown in 
the remuneration report on pages 41 to 52
indemnity of directors and officers
the company’s articles include provisions for the indemnity 
of directors the company secretary and other officers of 
the company to the extent permitted by law this permits the 
company to provide indemnities to cover defence costs in civil 
and criminal proceedings the director employee or officer would 
still be liable to pay damages and to repay defence costs to the 
company if hisher defence was unsuccessful the company has 
executed deeds of indemnity for the benefit of each director of the 
company in respect of liabilities which may attach to them in their 
capacity as directors of the company or associated companies 
these provisions are qualifying third party indemnity provisions 
for the purposes of the companies act 2006 and remain in 
force at the date of approval of this report copies of the deeds 
of indemnity are available to shareholders at the company’s 
registered office
structure of share capital
as at 28 march 2009 the company’s authorised share capital 
comprises ordinary shares of 25 pence each nominal value 
all of the company’s issued ordinary shares are fully paid up 
and rank equally in all respects the rights attached to them 
in addition to those conferred on their holders by law are set out 
in the articles a copy of which can be obtained on request from 
the company secretary
details of the issued ordinary share capital of the company 
and movements during the year are set out in note 28 to the 
consolidated financial statements during both the current and 
prior period the company did not issue any shares
rights and obligations of ordinary shares
on a show of hands at a general meeting every holder of ordinary 
shares present in person or by proxy and entitled to vote shall 
have one vote and on a poll every member present in person or 
by proxy and entitled to vote shall have one vote for every ordinary 
share held subject to the relevant statutory provisions and the 
articles holders of ordinary shares are entitled to a dividend where 
declared or paid out of profits available for such purposes
treasury shares
as at the date of this report 45461961 ordinary shares were held 
in treasury the rights to such shares are restricted in accordance 
with companies acts and in particular the voting rights attaching 
to these shares are automatically suspended
restrictions on transfer of securities
there are no restrictions on the transfer of ordinary shares or on 
the exercise of voting rights attached to them except i where 
the company has exercised its right to suspend their voting rights 
or to prohibit their transfer following the omission of their holder 
or any person interested in them to provide the company with 
information requested by it in accordance with part 22 of the 
companies act 2006 or ii where their holder is precluded from 
exercising voting rights by the financial services authority’s listing 
rules or the city code on takeovers and mergers 54 northern foods plc annual report and accounts 200809 
other statutory and regulatory information
continued
powers of the directors
the directors’ authority to effect purchases of the company’s 
shares on its behalf is conferred by resolution of shareholders and 
is renewed annually at the company’s annual general meeting 
at the annual general meeting in 2007 shareholders authorised 
the company to purchase up to 49220947 of its own shares this 
authority concluded at the annual general meeting in 2008 a total 
of 23546961 shares were purchased between 19 december 2007 
and 22 july 2008 for an average share price of 6909 pence 
per share and representing 502 of the company’s issued 
share capital as at 28 march 2009 the repurchased shares 
were placed in treasury at the date of this report no shares 
have been purchased under the authority granted at the 
annual general meeting in 2008 to make market purchases 
up to a further 10 of the company’s shares
at the forthcoming annual general meeting the company will 
be seeking authority again to purchase up to 10 of its ordinary 
shares although at present the directors have no plans to buy back 
any further shares it is however considered prudent to have 
the authority in place in order that the company is able to act 
at short notice if circumstances warrant
at the annual general meeting held in july 2008 the directors 
were given the power to issue new shares up to an amount of 
£40416885 this power will expire at the conclusion of the annual 
general meeting on 15 july 2009 accordingly a resolution will be 
proposed to renew the company’s authority to issue further new 
shares in accordance with the latest institutional guidelines issued 
by the association of british insurers abi the proposed new 
authority will allow the directors to allot ordinary shares equal 
to an amount of up to one third of the company’s existing issued 
ordinary share capital plus in the case of a fully preemptive rights 
issue only a further amount of up to an additional one third of the 
company’s existing issued ordinary share capital
the powers of the directors are conferred on them by uk 
legislation and the articles changes to the articles must be 
approved by shareholders passing a special resolution at a 
general meeting 
northern foods employee share ownership trust the ‘esot’
the esot holds ordinary shares in the company acquired in the 
market in order to meet obligations under the northern foods plc 
performance share plan or to provide similar employee benefits 
a further one million shares were purchased on 10 march 2009 
the trustees have waived their right to receive dividends in respect 
of the ordinary shares held by the trust
at the end of the year 7682843 shares were held in the esot 
representing 164 of the issued ordinary share capital of the 
company the trustees of the esot may vote or abstain from 
voting shares held in the trust in any way they see fit 
restrictions on voting deadlines
the notice of general meeting will specify the deadline for 
exercising voting rights and appointing a proxy or proxies to vote 
in relation to resolutions to be proposed at a general meeting 
the number of proxy votes for against or withheld in respect 
of each resolution are announced via an rns and published 
on the company’s website after the meeting
change of control – significant agreements
the company is party to significant agreements including 
commercial contracts financial and property agreements and 
employees’ share plans which contain certain termination and 
other rights for the counterparties upon a change of control 
of the company should the counterparties choose to exercise 
their rights under the arrangements on a change of control such 
arrangements would need to be renegotiated none of these are 
considered to be significant in terms of their likely impact on the 
business of the group as a whole there are no agreements 
between any group company and any of its employees or any 
director of the company which provide for compensation to be 
paid to the employee or director for termination of employment 
or for loss of office as a consequence of a takeover of the 
company other than provisions that would apply on any 
termination of employment
employees and employee involvement
northern foods takes its responsibilities to its employees seriously 
and places great emphasis on optimising the contribution made 
by employees at all levels the company recognises the value 
of its employees and seeks to create an energetic dynamic and 
responsive environment in which to work it places considerable 
importance on communications with employees which occur 
throughout the organisation on both a formal and informal 
basis the group’s policy is to provide opportunities for active 
participation and personal development with the goals of 
motivating individuals and helping them to enhance their skills 
and maximise their potential
the group is committed to
  providing equality of opportunity for all existing and potential 
employees it aims to treat all of its employees fairly in every 
aspect of employment
  ensuring that employees have access to information that 
enables them to contribute and participate fully in the group’s 
achievement of its objectives
  providing employees with clear and fair terms of employment 
and competitive remuneration packages
the company encourages involvement in the company’s 
performance in a variety of ways including senior management 
briefings and via the company’s intranet the philosophy of 
encouraging employees to contribute to the performance 
of the group is reinforced by a number of incentive schemes 
a new savingsrelated share option scheme was approved by 
shareholders at the annual general meeting in 2007 the first 
invitation aimed at maximising employees’ involvement and 
interest in the success of the company as a whole through 
share ownership was successfully launched in november 2007 55 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
further information about our employment practices and our 
commitment to learning and development can be found in 
the corporate social responsibility review on pages 26 to 31
disabled persons
applications for employment by disabled persons are fully 
considered bearing in mind the aptitudes of the applicant 
concerned in the event of members of staff becoming disabled 
every effort is made to ensure their employment with the group 
continues and appropriate training is arranged it is the policy of 
the group that training career development and promotion of 
disabled persons should as far as possible be identical to that 
of other employees
significant direct and indirect holders of securities
at the date of this report the company had been notified in 
accordance with chapter 5 of the disclosure and transparency 
rules of the following interests in 3 or more of the total voting 
rights in the issued share capital of the company
  of total voting rights
standard life investments limited 1126
gam international investment management limited 732
odey asset management 656
barclays plc and group companies 547
ubs ag 478
legal  general group plc 460
grantham mayo van otterloo  co llc 401
allianz se 400
supplier payment policy
it is the company’s policy that payments to suppliers are made 
in accordance with the terms and conditions agreed between 
the company and its suppliers provided that all trading terms 
and conditions have been met suppliers were paid on average 
52 days from receipt of invoice in line with the group’s standard 
payment terms 200708 49 days
research and development
throughout the year the company invested across the business 
in product development and research further details are set 
out in the performance review these costs comprise all directly 
attributable costs necessary to create and produce new products 
which are both brand new in design and those being modified
financial instruments
information on the group’s financial risk management objectives 
and policies and on the exposure of the group to relevant risks 
in respect of financial instruments is set out under the heading 
‘risks and uncertainties’ on pages 12 and 13 of the performance 
review and in note 25 of the financial statements
auditors
in the case of each of the persons who are directors of the 
company at the date when this report was approved
  so far as each of the directors is aware there is no relevant audit 
information as defined in the companies act 1985 of which the 
company’s auditors are unaware and
  each of the directors has taken all the steps that heshe ought 
to have taken as a director to make himselfherself aware of any 
relevant audit information as defined in the companies act 1985 
and to establish that the company’s auditors are aware of that 
information
this confirmation is given and should be interpreted in accordance 
with the provisions of section 234a of the companies act 1985
deloitte llp acted as auditors for the 52 weeks ended 
28 march 2009 and have expressed their willingness to continue 
in office as auditors of the company a resolution proposing 
their reappointment will be submitted at the company’s annual 
general meeting
annual general meeting 
the notice convening the company’s annual general meeting 
to be held at 1030am on wednesday 15 july 2009 at the 
thorpe park hotel 1150 century way leeds ls15 8zb is contained 
in the circular sent to shareholders who requested a hard copy 
together with this report and is also available on the company’s 
website at wwwnorthernfoodscom
by order of the board 
carol williams
company secretary
27 may 2009 56 northern foods plc annual report and accounts 200809 
statement of directors’ responsibilities 
in relation to the financial statements
to the members of northern foods plc
the following statement which should be read in conjunction 
with the auditors’ responsibilities set out in their report is made 
with a view to distinguishing for shareholders the respective 
responsibilities of the directors and of the auditors in relation 
to the financial statements 
the directors are responsible for preparing the annual report and 
the financial statements the directors are required to prepare the 
financial statements for the group in accordance with applicable 
law and international financial reporting standards ifrs as 
adopted by the european union and have also elected to prepare 
financial statements for the company in accordance with ifrs 
issued by the international accounting standards board iasb 
company law requires the directors to prepare such financial 
statements in accordance with ifrs the companies act 1985 and 
article 4 of the international accounting standard ias regulation 
international accounting standard 1 requires that financial 
statements present fairly for each financial period the company’s 
financial position financial performance and cash flows this 
requires the faithful representation of the effects of transactions 
other events and conditions in accordance with the definitions and 
recognition criteria for assets liabilities income and expenses set 
  out in the iasb’s ‘framework for the preparation and presentation 
of financial statements’ in virtually all circumstances a fair 
presentation will be achieved by compliance with all applicable 
ifrs the directors are also required to
 properly select and apply accounting policies
  present information including accounting policies in a manner 
that provides relevant reliable comparable and understandable 
information and
  provide additional disclosures when compliance with 
specific requirements in ifrs is sufficient to enable users to 
understand the impact of particular transactions other events 
and conditions on the entity’s financial position and financial 
performance
the directors are responsible for keeping proper accounting 
records that disclose with reasonable accuracy at any time the 
financial position of the company and enable them to ensure that 
the financial statements comply with the companies act 1985 they 
are also responsible for safeguarding the assets of the company 
and hence for taking reasonable steps for the prevention and 
detection of fraud and other irregularities and for the preparation 
of a directors’ report and directors’ remuneration report which 
comply with the requirements of the companies act 1985
the directors are responsible for the maintenance and integrity 
of the corporate and financial information included on the 
company’s website legislation in the united kingdom governing 
the preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions 
directors’ responsibility statement
we confirm to the best of our knowledge
a  the financial statements prepared in accordance with ifrs 
as adopted by the eu give a true and fair view of the assets 
liabilities financial position and profit and loss of the company 
and the undertakings included in the consolidation taken as 
a whole and
b  the management report which is incorporated into the 
directors’ report includes a fair review of the development and 
performance of the business and the position of the company 
and the undertakings included in the consolidation taken as 
a whole together with a description of the principal risks and 
uncertainties they face
by order of the board
s barden a m booker
chief executive officer group finance director
27 may 2009 27 may 2009 57 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
independent auditors’ report to the members of 
northern foods plc
we have audited the group financial statements of northern 
foods plc for the 52 weeks ended 28 march 2009 which comprise 
the consolidated income statement the consolidated balance 
sheet the consolidated cash flow statement the reconciliation 
of net cash flow to movements in net debt the consolidated 
statement of recognised income and expense and the related 
notes 1 to 37
these group financial statements have been prepared under 
the accounting policies set out therein 
we have also audited the information in the directors’ remuneration 
report that is described as having been audited
we have reported separately on the parent company financial 
statements of northern foods plc for the 52 weeks ended 
28 march 2009 
this report is made solely to the company’s members as a 
body in accordance with section 235 of the companies act 1985 
our audit work has been undertaken so that we might state to the 
company’s members those matters we are required to state to 
them in an auditors’ 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 and the company’s members 
as a body for our audit work for this report or for the opinions 
we have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report the 
directors’ remuneration report and the group financial statements 
in accordance with applicable law and international financial 
reporting standards ifrs as adopted by the european union 
are set out in the statement of directors’ responsibilities
our responsibility is to audit the group financial statements 
in accordance with relevant legal and regulatory requirements 
and international standards on auditing uk and ireland
we report to you our opinion as to whether the group financial 
statements give a true and fair view whether the group financial 
statements have been properly prepared in accordance with 
the companies act 1985 and article 4 of the ias regulation 
and whether the part of the directors’ remuneration report 
described as having been audited has been properly prepared 
in accordance with the companies act 1985 we also report to you 
whether in our opinion the information given in the directors’ report 
is consistent with the group financial statements
in addition we report to you if in our opinion we have not received 
all the information and explanations we require for our audit or if 
information specified by law regarding directors’ remuneration and 
other transactions is not disclosed
we review whether the corporate governance statement reflects 
the company’s compliance with the nine provisions of the 2006 
combined code specified for our review by the listing rules 
of the financial services authority and we report if it does not 
we are not required to consider whether the board’s statements 
on internal control cover all risks and controls or form an opinion 
on the effectiveness of the group’s corporate governance 
procedures or its risk and control procedures
we read the other information contained in the annual report 
as described in the contents section and consider whether 
it is consistent with the audited group financial statements 
we consider the implications for our report if we become aware 
of any apparent misstatements or material inconsistencies 
with the group financial statements our responsibilities do 
not extend to any further information outside the annual report
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the auditing 
practices board an audit includes examination on a test basis 
of evidence relevant to the amounts and disclosures in the group 
financial statements and the part of the directors’ remuneration 
report to be audited it also includes an assessment of the 
significant estimates and judgements made by the directors in the 
preparation of the group financial statements and of whether the 
accounting policies are appropriate to the group’s circumstances 
consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary 
in order to provide us with sufficient evidence to give reasonable 
assurance that the group financial statements and the part 
of the directors’ remuneration report to be audited are free 
from material misstatement whether caused by fraud or other 
irregularity or error in forming our opinion we also evaluated the 
overall adequacy of the presentation of information in the group 
financial statements and the part of the directors’ remuneration 
report to be audited
opinion
in our opinion
  the group financial statements give a true and fair view in 
accordance with ifrss as adopted by the european union 
of the state of the group’s affairs as at 28 march 2009 and 
of its profit for the 52 weeks then ended
  the group financial statements have been properly prepared 
in accordance with the companies act 1985 and article 4 of 
the ias regulation 
  the part of the directors’ remuneration report described 
as having been audited has been properly prepared 
in accordance with the companies act 1985 and
  the information given in the directors report is consistent 
with the group financial statements
deloitte llp
chartered accountants and registered auditors 
leeds
27 may 2009 58 northern foods plc annual report and accounts 200809
consolidated income statement
for the 52 weeks ended 28 march 2009
   before   before 
   restructuring restructuring  restructuring restructuring
   items items total items items total
   2009 2009 2009 2008 2008 2008
  notes £m £m £m £m £m £m
revenue  3 4 9752 – 9752 9319 – 9319
profit from operations  4 5 6 7 527 354 173 484 47 437
finance income   3 9 542 – 542 592 – 592
finance expense   9 594 – 594 575 – 575 
profit before taxation   475 354 121 501 47 454
taxation   66 95 29 117 08 109
movement on deferred tax due 
 to change in legislation   125 – 125 – – –
taxation  10 191 95 96 117 08 109
profit for the period  4 29 284 259 25 384 39 345
all amounts in the current and prior periods relate to continuing activities
the result for the period is all attributable to equity holders of the parent
earnings per share pence
basic   12   054   708
diluted  12   052   695 59 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
consolidated balance sheet
as at 28 march 2009
       28 march 29 march
       2009 2008
      notes £m £m
noncurrent assets
goodwill      13 571 548
other intangible assets      14 39 46
derivative financial instruments      25 266 –
property plant and equipment      15 3016 3200
retirement benefit assets      35  – 715
deferred taxation assets      27 171 –
        4063 4509
current assets
inventories      16 485 472
trading investments      17 01 01
trade and other receivables      19 1200 1113
derivative financial instruments      25 11 –
cash and cash equivalents      20 608 729
        2305 2315
total assets        6368 6824
current liabilities
trade and other payables      21 1828 1844
provisions      22 36 23
current taxation liabilities       220 260
bank loans and overdrafts      23 99 03 
        2183 2130
noncurrent liabilities
revolving credit facility 2010      23 24  1150 1300
senior loan notes 2012–2017      23 24 1620 1316
derivative financial instruments      25 – 41
retirement benefit obligations      35 715 99
deferred taxation liabilities       27 20 147
accruals and deferred income       139 137 
        3644 3040
total liabilities        5827 5170 
net assets        541 1654 
equity
share capital       28 1286 1286
share premium account      29 651 651
capital redemption reserve      29 236 236
reserve for own shares      29 505 395
employee share ownership trust reserve     29 88 83
hedging and translation reserve      29 398 214
other reserves      29 80 52
accumulated deficit      29 1517 307 
equity attributable to the equity holders of the parent      541 1654
the financial statements were approved by the board of directors and authorised for issue on 27 may 2009 they were signed on its 
behalf by
s barden a m booker
director director
27 may 2009 27 may 2009 60 northern foods plc annual report and accounts 200809
consolidated cash flow statement
for the 52 weeks ended 28 march 2009
       2009 2008
      notes £m £m
net cash from operating activities      30 541 325 
investing activities
interest received       04 13
purchase of property plant and equipment      310 215
proceeds of sale of property plant and equipment      – 44
disposal of trading investments       – 48
acquisitions of subsidiary and businesses 
 net of cash acquired acquisition costs working capital and debt adjusters    – 220
receipt of deferred consideration       – 67
grants received       07 03 
net cash used in investing activities        299 260 
financing activities
dividends paid      11 207 210
decreaseincrease in amounts drawn on revolving credit facility 2010   23 150 450
purchase of treasury shares      29 110 53
purchase of shares for employee share ownership trust     29 05 41 
net cash used infrom financing activities      472 146 
net decreaseincrease in cash and cash equivalents     230 211 
net cash and cash equivalents
at start of period       726 479
effect of foreign exchange rates       13 36 
cash and cash equivalents at end of period      509 726 
cash and cash equivalents comprise
cash and cash equivalents       608 729
bank loans overdrafts and loan notes due within one year     99 03 
        509 726 61 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
 reconciliation of net cash flow to movements in net debt
for the 52 weeks ended 28 march 2009
       2009 2008
      notes £m £m
net decreaseincrease in cash and cash equivalents     230 211
decrease in trading investments      17 – 48
decreaseincrease in amounts drawn on revolving credit facility 2010   23 150 450
decreaseincrease in finance leases      33 03 08 
        77 295
effect of foreign exchange rates       13 36
other movements       01 01
movements in net debt in period       65 260
net debt at start of period       2002 1742 
net debt at end of period      26 2067 2002 
consolidated statement of recognised income and expense
for the 52 weeks ended 28 march 2009
       2009 2008
      notes £m £m
currency translation differences on overseas investments    29 169 130
actuarial lossesgains on defined benefit pension schemes    29 35 1431 353
taxation on actuarial lossesgains taken directly to equity    27 29 401 128
fair value movement on cash flow hedge     29 340 24
transfer to profit and loss on cash flow hedge     29 325 11
net income recognised directly in equity      846 390
profit for the period from operations       25 345
total recognised income for the period      821 735
total recognised income and expense for the period is all attributable to equity holders of the parent  62 northern foods plc annual report and accounts 200809
 notes to the consolidated financial statements
1 general information
northern foods plc northern foods is a company incorporated 
in the united kingdom under the companies act 1985 the 
address of the registered office is included within the company 
information section page 114 the nature of the group’s operations 
and its principal activities are set out in the segmental reporting 
note and in the performance review 
the financial statements are presented in pounds sterling 
because that is the currency of the primary economic environment 
in which the group operates overseas operations are included in 
accordance with the accounting policies
2 significant accounting policies
basis of accounting
the financial statements have been prepared in accordance 
with ifrs these financial statements have also been prepared 
in accordance with ifrs adopted by the european union eu 
and therefore the group financial statements comply with article 4 
of the eu ias regulation
 
the financial statements have been prepared on the historical cost 
basis except for the revaluation of certain financial instruments 
further information is included in the derivative financial 
instruments and hedge accounting section on pages 83 to 87
northern foods’ management considers the following to 
be the most important accounting policies for the group in 
applying these accounting policies management makes certain 
judgements and estimates that affect the reported amounts 
of assets and liabilities at the period end date and the reported 
revenues and expenses during the financial year the financial 
statements have been prepared in accordance with the group’s 
accounting policies described below 
key accounting judgements and sources 
of estimation uncertainty 
the key accounting judgements and sources of estimation 
uncertainty with a significant risk of causing a material adjustment 
to assets and liabilities in the next 12 months include the following
pensions – movements in equity markets interest rates inflation 
and life expectancy could materially affect the level of surpluses 
and deficits in the pension schemes the key assumptions used 
to value pension assets and liabilities are set out in note 35 
retirement benefit obligations
tax – the group carries out tax planning consistent with a group of 
its size and makes appropriate provision based on best estimates 
until tax computations are agreed with the taxation authorities
useful economic life estimates – the group reviews the useful 
economic lives attributed to assets on an ongoing basis to 
ensure they are appropriate changes in economic life could 
impact the carrying value and charges to the income statement 
in future periods
provisions – using information available at the balance sheet date 
the directors make judgements based on experience on the 
level of provision required further information received after the 
balance sheet date may impact the level of provision required
share based payments – in accordance with ifrs 2 ‘sharebased 
payments’ share options and other share awards are measured 
at fair value at the date of grant the fair value determined is 
then expensed in the income statement on a straight line basis 
over the vesting period with a corresponding increase in equity 
the fair value of the options and other share awards are measured 
using the blackscholes and monte carlo option pricing models 
the valuation of these share based payments requires several 
judgements to be made in respect of the number of options that 
are expected to be exercised including behavioural considerations 
exercise restrictions and historical volatility in the share price 
details of the assumptions made in respect of each of the 
share based payment schemes are disclosed in note 34 equity 
settled share based payments changes in these assumptions 
could lead to changes in the income statement expense in 
future periods
impairment – the group reviews the carrying value of goodwill and 
fixed assets and other intangibles including acquisition intangibles 
the group has impaired certain asset values on a fair value less 
costs to sell basis using past experience and external sources 
of information future changes in performance or disposals 
could impact this value management’s assumptions for testing 
the carrying value of goodwill are included within note 13
going concern
in determining whether the group’s annual consolidated financial 
statements can be prepared on a going concern basis the 
directors considered the group’s business activities together 
with the factors likely to affect its future development performance 
and position these statements are set out in the performance 
review the review also includes the financial position of the group 
its cash flows liquidity position and borrowing facilities the key 
factors considered by the directors were as follows
  the implications of the challenging economic environment and 
future uncertainties on the group’s revenues and profits the 
group undertakes forecasts and projections of trading and 
cash flows on a regular basis this allows the group to target 
performance and identify areas of focus for management
  the impact of the competitive environment within which the 
group’s businesses operate
  the potential actions which could be taken in the event that 
revenues are worse than expected to ensure that operating 
profit and cash flows are protected 
  the group has access to overdraft facilities and a committed 
bank facility to meet daytoday working capital requirements 
following the refinancing of the bank facility in march 2009 the 
group has committed bank facilities to july 2012 in april 2009 
the existing facility was reduced from £4600m at march 2009 
to £3050m the facility will reduce to £2500m from july 2010 
as at the date of this report the directors have a reasonable 
expectation that the company and group have adequate 
resources to continue in business for the foreseeable future 
accordingly the annual report and financial statements for the 
52 weeks ended 28 march 2009 have been prepared on the 
going concern basis 63 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
2 significant accounting policies continued
basis of consolidation
the consolidated financial statements incorporate the financial 
statements of the company and entities controlled by the 
company its subsidiaries made up to 28 march 2009 together 
known as the group control is achieved where the company 
has the power to govern the financial and operating policies 
of an investee entity so as to obtain benefits from its activities
the results of subsidiaries and businesses acquired or disposed 
of during the period from the effective date of acquisition or up to 
the effective date of disposal are included in the group’s results 
as appropriate
on acquisition the assets and liabilities and contingent liabilities 
of a subsidiary or trade and assets of businesses acquired are 
measured at their fair value any excess of the cost of acquisition 
over the fair values of the identifiable net assets acquired is 
recognised as goodwill any deficiency of the cost of acquisition 
below the fair values of the identifiable net assets acquired 
ie discount on acquisition is credited to the consolidated income 
statement during the period of any acquisition
where necessary adjustments are made to the financial 
statements of subsidiaries and businesses acquired to bring the 
accounting policies used into line with those used by the group
all intragroup transactions balances income and expenses are 
eliminated on consolidation
business combinations
the acquisition of subsidiaries and businesses acquired are 
accounted for using the acquisition method the cost of the 
acquisition is measured at the aggregate of the fair values at the 
date of exchange of assets given liabilities incurred or assumed 
and equity instruments issued by the group in exchange for 
control of the acquiree plus any costs directly attributable to the 
business combination the acquiree’s identifiable assets liabilities 
and contingent liabilities that meet the conditions for recognition 
under ifrs 3 ‘business combinations’ are recognised at their 
fair value at the acquisition date except for noncurrent assets 
or disposal groups that are classified as held for sale in 
accordance with ifrs 5 ‘non current assets held for sale and 
discontinued operations’ which are recognised and measured 
at fair value less costs to sell
goodwill arising on acquisition is recognised as an asset and 
initially measured at cost being the excess of the cost of the 
business combination over the group’s interest in the net fair 
value of the identifiable assets liabilities and contingent liabilities 
recognised if after reassessment the group’s interest in the 
net fair value of the acquiree’s identifiable assets liabilities and 
contingent liabilities exceeds the cost of the business combination 
the excess is recognised immediately in the income statement 
as a profit or loss
the interest of minority shareholders in the acquiree is initially 
measured at the minority’s proportion of the net fair value 
of the assets liabilities and contingent liabilities recognised
revenue recognition
revenue is measured at the fair value of the consideration 
received or receivable and represents amounts receivable for 
goods and services provided in the normal course of business 
net of discounts value added tax vat and other sales 
related taxes
a sales of goods
sales of goods are recognised when goods are delivered and title 
has passed
b finance income
interest income is accrued on a time basis by reference to the 
principal outstanding and at the effective interest rate applicable 
which is the rate that exactly discounts estimated future cash 
receipts through the expected life of the financial asset to that 
asset’s net carrying amount
finance income includes the expected return on pension 
scheme assets 
foreign currencies
a functional and presentation currency
the individual financial statements of each group company are 
presented in the currency of the primary economic environment 
in which it operates its functional currency for the purpose of the 
consolidated financial statements the results and financial position 
of each group company are expressed in pounds sterling which 
is the functional currency of the company and the presentation 
currency for the consolidated financial statements
b transactions and balances
in preparing the financial statements of the individual companies 
transactions in currencies other than pounds sterling are 
recorded at the rates of exchange prevailing on the dates of 
the transactions at each balance sheet date monetary assets 
and liabilities that are denominated in foreign currencies are 
retranslated at the rate prevailing on the balance sheet date 
nonmonetary assets and liabilities carried at fair value that 
are denominated in foreign currencies are translated at the 
rates prevailing at the date when the fair value was determined 
exchange differences arising on the settlement of monetary 
items and on the retranslation of monetary items are included 
in the income statement for the period
goodwill and fair value adjustments arising on the acquisition of 
a foreign entity are treated as assets and liabilities of the foreign 
entity and are translated at the closing rate 
c group companies
on consolidation the assets and liabilities of the group’s overseas 
operations are translated at exchange rates prevailing on the 
balance sheet date income and expense items are translated at 
the average exchange rates for the period exchange differences 
arising if any are classified as equity and transferred to the 
group’s translation reserve such translation differences are 
recognised as income or an expense in the period in which 
the operation is disposed of
leases
leases are classified as finance leases whenever the terms of 
the lease involve the substantial transfer of the risks and rewards 
of ownership to the lessee all other leases are classified as 
operating leases 64 northern foods plc annual report and accounts 200809
 notes to the consolidated financial statements
continued
2 significant accounting policies continued
assets held under finance leases are recognised as assets of 
the group at their fair value or if lower at the present value of the 
minimum lease payments each determined at the inception of 
the lease the corresponding liability to the lessor is included in 
the balance sheet as a finance lease obligation lease payments 
are apportioned between finance charges and reduction of the 
lease obligation so as to achieve a constant rate of interest on 
the remaining balance of the liability 
rentals payable under operating leases are charged to income 
on a straight line basis over the term of the relevant lease benefits 
received and receivable as an incentive to enter into an operating 
lease are also spread on a straight line basis over the lease term
taxation
the tax expense represents the sum of the current tax payable 
and deferred tax
the current tax payable is based on the taxable profit or loss 
for the period taxable profit differs from net profit as reported 
in the income statement because it excludes items of income 
and expense that are taxable or deductible in other periods 
and it further excludes items that are never taxable or deductible 
the group’s liability for current tax is calculated using tax rates 
that have been enacted or substantively enacted by the balance 
sheet date
deferred tax is the tax expected to be payable or recoverable on 
differences between the carrying amounts of assets and liabilities 
in the financial statements and the corresponding tax bases used 
in the computation of taxable profit and is accounted for using the 
balance sheet liability method 
deferred tax liabilities are generally recognised for all taxable 
temporary differences and deferred tax assets are recognised 
to the extent that it is probable that taxable profits will be available 
against which deductible temporary differences can be utilised 
such assets and liabilities are not recognised if the temporary 
differences arise from the initial recognition of goodwill or from 
the initial recognition other than in a business combination of 
other assets and liabilities in a transaction that affects neither 
the tax profit nor the accounting profit
deferred tax liabilities are recognised for taxable temporary 
differences arising on investments in subsidiaries except 
where the group is able to control the reversal of the temporary 
difference and it is probable that the temporary difference will 
not reverse in the foreseeable future
the carrying amount of deferred tax assets is reviewed at each 
balance sheet date and reduced to the extent that it is no longer 
probable that sufficient taxable profits will be available to allow all 
or part of the assets to be recovered 
deferred tax is calculated at the tax rates that have been enacted 
or substantively enacted by the balance sheet date deferred tax 
is charged or credited to the income statement except where 
it relates to items charged or credited directly to equity in which 
case the deferred tax is also dealt with in equity
deferred tax assets and liabilities are offset when there is a legally 
enforceable right to set off current tax assets against current tax 
liabilities and when they relate to income taxes levied by the same 
taxation authority and the group intends to settle its current tax 
assets and liabilities on a net basis
property plant and equipment
property plant and equipment held for use in the production or 
supply of goods or for administrative purposes is stated in the 
balance sheet at historical cost or deemed cost less depreciation 
historical cost includes the expenditure that is directly attributable 
to the acquisition of the items deemed cost includes surpluses 
arising on the revaluation of certain properties to their fair values 
prior to the date of transition to ifrs land is not depreciated
subsequent costs are included in the asset’s carrying amount 
or recognised as a separate asset as appropriate only when it 
is probable that future economic benefits associated with the item 
will flow to the group and the cost of the item can be measured 
reliably all other repairs and maintenance are charged to the 
income statement during the financial period in which they 
are incurred
assets in the course of construction are carried at cost less 
any recognised impairment loss cost includes professional fees 
which are capitalised in accordance with the group’s accounting 
policy depreciation of these assets commences when the assets 
are ready for their intended use
depreciation is charged so as to write off the cost or valuation 
of assets over their estimated useful lives using the straight line 
method on the following basis
property  20–50 years
   or over the remaining life of the lease if shorter
plant and equipment 5–15 years
motor vehicles 4–10 years
assets held under finance leases are depreciated over their 
expected useful lives on the same basis as owned assets or 
where shorter over the term of the relevant lease 
the gain or loss arising on the disposal or retirement of an 
asset is determined as the difference between the sale proceeds 
and the carrying amount of the asset and is recognised in the 
income statement
intangible assets
a goodwill
goodwill arising on consolidation represents the excess of the 
cost of the business combination over the group’s interest in the 
net fair value of the identifiable assets liabilities and contingent 
liabilities at the date of acquisition 
goodwill is initially recognised as an asset at cost and is 
subsequently measured at cost less any accumulated impairment 
losses goodwill which is recognised as an asset is reviewed 
for impairment at least annually any impairment is recognised 
immediately in the income statement and is not subsequently 
reversed
on disposal of a subsidiary the attributable amount of goodwill 
is included in the determination of the profit or loss on disposal 65 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
2 significant accounting policies continued
goodwill arising on acquisitions before the date of transition to 
ifrs has been retained at the previous uk generally accepted 
accounting principles gaap amount subject to being tested 
for impairment at that date goodwill written off to reserves 
under uk gaap prior to 1998 has not been reinstated and is not 
included in determining any subsequent profit or loss on disposal
b computer software
computer software that is not integral to an item of property 
plant or equipment is classified as an intangible asset and is held 
on the balance sheet at cost net of amortisation and any provision 
for impairment these costs are amortised over their estimated 
useful lives of ten years
c customer relationships
customer relationships are included at fair value at the date 
of acquisition and are held on the balance sheet at cost net 
of amortisation and any provision for impairment these costs 
are amortised over their estimated useful lives of ten years
impairment of tangible and intangible assets excluding 
goodwill
at each balance sheet date the group reviews the carrying 
amounts of its tangible and intangible assets to determine 
whether there is any indication that those assets have suffered 
an impairment loss if any such indication exists the recoverable 
amount of the asset is estimated in order to determine the extent 
of the impairment loss if any where the asset does not generate 
cash flows that are independent from other assets the group 
estimates the recoverable amount of the cash generating unit 
cgu to which the asset belongs
recoverable amount is the higher of fair value less costs to sell 
and value in use in assessing value in use the estimated future 
cash flows are discounted to their present value using a pretax 
discount rate that reflects current market assessment of the time 
value of money and the risks specific to the asset for which the 
estimates of future cash flows have not been adjusted
if the recoverable amount of an asset or cgu is estimated to be 
less than its carrying amount the carrying amount of the asset 
or cgu is reduced to its recoverable amount an impairment loss 
is recognised as an expense immediately
where an impairment loss subsequently reverses the carrying 
amount of the asset or cgu is increased to the revised estimate 
of its recoverable amount but so that the increased carrying 
amount does not exceed the carrying amount that would have 
been determined had no impairment loss been recognised for 
the asset or cgu in prior years a reversal of an impairment loss 
is recognised as income immediately
inventories
inventories are stated at the lower of cost and net realisable value 
cost comprises direct materials and where applicable direct 
labour costs and those overheads that have been incurred 
bringing the inventories to their present location and condition 
net realisable value represents the estimated selling price less 
all estimated costs of completion and costs to be incurred in 
marketing selling and distribution
retirement benefit costs
a pension obligationsassets
the group operates a number of defined benefit schemes for 
qualifying employees principally the northern foods pension 
scheme ‘the scheme’ and northern foods pension builder 
‘pension builder’ in the united kingdom and the green isle 
foods group retirement and death benefit plan ‘the plan’ in the 
republic of ireland a defined benefit scheme is one where the 
amount of pension benefit an employee will receive on retirement 
is dependent on age years of service and compensation
for defined benefit schemes the cost of providing benefits is 
determined using the projected unit credit method with actuarial 
valuations for the purpose of the financial statements being 
carried out at each balance sheet date actuarial gains and losses 
are recognised in full in the period in which they occur they are 
recognised outside the income statement and are presented in 
the statement of recognised income and expense 
the retirement benefit obligationasset recognised in the balance 
sheet represents the present value of the defined benefit 
obligationasset as adjusted for unrecognised past service costs 
and net of the fair value of the scheme assets any asset resulting 
from this calculation is limited to the past service cost plus the 
present value of the available refunds and reductions in future 
contributions the group has considered the impact of ifric 14 
the rules of the scheme give the company an unconditional right 
to a refund of the current residual surplus and as such there is 
no restriction to the level of surplus that can be recognised in the 
balance sheet
past service cost is recognised immediately to the extent that 
the benefits are already vested and otherwise is amortised on 
a straight line basis over the average period until the benefits vest
current service cost is recognised within profit from operations 
in the income statement
the expected return on scheme assets and the interest on 
pension scheme liabilities are recognised in finance income 
and finance expense respectively
b post retirement healthcare
the group provides post retirement healthcare benefits to eligible 
retired employees an employee is eligible if granted the benefit 
and if retirement occurred on or before 31 march 1999 employees 
who were granted the benefit but retired after 31 march 1999 
will not receive this benefit in retirement post 31 march 1999 the 
benefit was not granted to any employees
the expected cost of this benefit has been computed using an 
accounting methodology similar to that for defined benefit pension 
schemes actuarial gains and losses arising from experience 
adjustments and changes in actuarial assumptions are 
recognised in full in the period in which they occur 
they are recognised outside the income statement and presented 
in the statement of recognised income and expense these 
obligations are valued annually for the purpose of the financial 
statements by independent qualified actuaries 66 northern foods plc annual report and accounts 200809
2 significant accounting policies continued
financial instruments
financial assets and financial liabilities are recognised in the 
group’s balance sheet when the group becomes a party to 
the contractual provisions of the financial instrument
financial assets
trading investments are classed as held for trading any gains 
and losses arising from the change in fair value are recognised 
in the income statement for the period
financial assets held by the company are classified as held 
for trading or loans and receivables at amortised cost the 
classification depends on the nature and purpose of the financial 
assets and is determined at the time of initial recognition
loans and receivables
trade receivables loans other receivables and cash and cash 
equivalents that have fixed or determinable payments that are not 
quoted in an active market are classified as loans and receivables 
at amortised cost loans and receivables are measured at 
amortised cost using the effective interest method less any 
impairment interest income is recognised by applying the 
effective interest rate except for short term receivables when 
the recognition of interest would be immaterial
impairment of financial assets
financial assets are assessed for indicators of impairment at each 
balance sheet date financial assets are impaired where there 
is evidence that as a result of one or more events that occurred 
after the initial recognition of the financial asset the estimated 
future cash flows of the investment have been impacted 
the carrying amount of the financial asset is reduced by the 
impairment loss directly for all financial assets with the exception 
of trade receivables where the carrying amount is reduced 
through the use of an allowance account when a trade receivable 
is considered uncollectible it is written off against the allowance 
account subsequent recoveries of amounts previously written 
off are credited against the allowance account changes in the 
carrying amount of the allowance account are recognised in 
the income statement
if in a subsequent period the amount of the impairment loss 
decreases and the decrease can be related objectively to 
an event occurring after the impairment was recognised the 
previously recognised impairment loss is reversed through 
the income statement to the extent that the carrying amount of 
the investment at the date the impairment is reversed and does 
not exceed what the amortised cost would have been had the 
impairment not been recognised
cash and cash equivalents
cash and cash equivalents comprise cash in hand deposits held 
at call with banks and other short term highly liquid investments 
with original maturities of three months or less
bank overdrafts are shown within borrowing in current liabilities 
on the balance sheet
derecognition of financial assets
the group derecognises a financial asset only when the 
contractual rights to the cash flows from the asset expire or it 
transfers the financial asset and substantially all the risks and 
rewards of ownership of the asset to another entity 
financial liabilities
financial liabilities held by the group are classified as financial 
liabilities measured at amortised cost financial liabilities held at 
amortised cost in a cash flow hedging relationship and derivatives 
that are designated and effective as hedging instruments carried 
at fair value 
financial liabilities measured at amortised cost are initially 
measured at fair value net of transaction costs and subsequently 
measured at amortised cost using the effective interest method 
interest expense is recognised on an effective yield basis the 
effective interest method is used to calculate the amortised cost 
of a financial liability by allocating interest expense over the relevant 
period the effective interest rate is the rate that exactly discounts 
estimated future cash payments through the expected life of the 
financial liability
bank borrowings 
interest bearing bank loans and overdrafts are classified as other 
financial liabilities at amortised cost they are recorded at the 
proceeds received net of direct issue costs finance charges 
including premiums payable on settlement or redemption and 
direct issue costs are accounted for on an accrual basis in the 
income statement using the effective interest rate method they 
are added to the carrying amount of the instrument to the extent 
that they are not settled in the period in which they arise
derecognition of financial liabilities
the group derecognises financial liabilities when and only when 
the group’s obligations are discharged cancelled or they expire
derivative financial instruments and hedge accounting
the group’s activities expose it primarily to the financial risks 
of changes in foreign currency exchange rates and interest 
rates the group uses foreign exchange forward contracts and 
interest rate swap contracts to hedge some of these exposures 
the group does not use derivative financial instruments for 
speculative purposes 
the use of financial derivatives is governed by the group’s 
policies approved by the board of directors which provide written 
principles on the use of financial derivatives further information 
on currency and interest rate management is provided in note 25 
financial instruments
changes in the fair value of derivative financial instruments that are 
designated and effective as hedging instruments are recognised 
directly in equity the ineffective portion is recognised immediately 
in the income statement if the cash flow hedge of a firm 
commitment or forecasted transaction results in the recognition 
of an asset or a liability then at the time the asset or liability is 
recognised the associated gains or losses on the derivative that 
had been previously recognised in equity are included in the initial 
measurement of the asset or liability for hedges that do not result 
in the recognition of an asset or a liability amounts deferred in 
equity are recognised in the income statement in the same period 
in which the hedged item affects net profit or loss
changes in the fair value of derivative financial instruments that 
do not qualify for hedge accounting are recognised in the income 
statement as they arise
 notes to the consolidated financial statements
continued 67 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
2 significant accounting policies continued
at the inception of the hedge relationship the entity documents 
the relationship between the hedging instrument and the hedged 
item along with its risk management objectives and its strategy 
for undertaking various hedge transactions furthermore at the 
inception of the hedge and on an ongoing basis the group 
documents whether the hedging instrument that is used in a 
hedging relationship is highly effective in offsetting changes in 
fair values or cash flows of the hedged item
hedge accounting is discontinued when the hedging instrument 
expires or is sold terminated or exercised or no longer qualifies 
for hedge accounting at that time any cumulative gain or loss 
on the hedging instrument recognised in equity is retained 
in equity until the forecasted transaction occurs if a hedging 
transaction is no longer expected to occur the net cumulative 
gain or loss that was recognised in equity is recognised 
immediately in profit or loss for the period
provisions
provisions are recognised when the group has a present 
obligation as a result of a past event and it is probable that the 
group will be required to settle that obligation provisions are 
measured at their present value and at the directors’ best estimate 
of the expenditure required to settle the obligation at the balance 
sheet date
share based payments
the group has applied the requirements of ifrs 2 ‘sharebased 
payments’ in accordance with the transitional provisions ifrs 2 
has been applied to all grants of equity instruments after 
7 november 2002 that were unvested at 1 january 2005 
the group issues equity settled share based payments to certain 
employees in addition to issuing an hm revenue  customs 
approved savingsrelated share option scheme for all employees 
equity settled share based payments are measured at fair value 
excluding the effect of nonmarket based vesting conditions 
at the date of grant the fair value determined at the grant date 
of the equity settled share based payments is expensed on a 
straight line basis over the vesting period based on the group’s 
estimate of shares that will eventually vest and adjusted for the 
effect of nonmarket based vesting conditions 
fair value is measured by use of the blackscholes and monte 
carlo models the expected life used in the model has been 
adjusted based on management’s best estimate for the effects 
of nontransferability exercise restrictions and behavioural 
considerations
government grants
government grants in respect of capital expenditure are credited 
to deferred income and are released to the income statement 
over the expected useful lives of the relevant assets by equal 
annual instalments grants of a revenue nature are credited to 
the income statement so as to match them with the expenditure 
to which they relate
research and development
research and development costs comprise all directly attributable 
costs necessary to create and produce new products which 
are both brand new in design and those being modified costs 
classified as research and development include raw materials 
labour costs artwork origination and market research directly 
attributable to developing the product 
equity instruments
equity instruments issued by the company are recorded at the 
proceeds received net of direct issue costs
dividends
dividend distributions to the company’s shareholders are 
recognised in the group and company financial statements 
as follows
   final dividend when approved by the company’s shareholders 
at the annual general meeting
 interim dividend when paid by the company
accounting standards in issue but not yet effective 
at the date of approval of these financial statements the following 
standards and interpretations considered relevant to the group 
were in issue but not yet effective and have not been applied in 
these financial statements
 amendments to ifrs 2 ‘share based payments’
 ifrs 3 revised ‘business combinations’
 ifrs 7 revised ‘financial instruments disclosures’
 ifrs 8 ‘operating segments’
 ias 1 revised ‘presentation of financial statements’
 ias 7 revised ‘statement of cash flows’
 ias 16 revised ‘property plant and equipment’
 ias 17 revised ‘leases’
 ias 19 revised ‘employee benefits’
 ias 20 revised ‘government grants’
 ias 23 revised ‘borrowing costs’
 ias 27 revised ‘consolidated and separate financial statements’
 ias 36 revised ‘impairment of assets’
 ias 38 revised ‘intangible assets’
  ias 39 revised ‘financial instruments recognition and 
measurement’
the directors anticipate that the adoption of these standards and 
interpretations in future periods will not have an expected material 
impact on the financial statements of the group 68 northern foods plc annual report and accounts 200809
2 significant accounting policies continued
nongaap measures
definitions of nongaap measures used by northern foods are 
shown below
a net debt
net debt is not a defined term under ifrs and may not therefore 
be comparable with other similarly titled nonifrs debt measures 
reported by other companies net debt is defined as total 
borrowings including both short term 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 us dollar denominated 
loan notes the group adopts this measure because it is used 
in calculating the banking covenants it is also the measure 
used for internal debt analysis in addition the net debt balance 
provides an indication of the net borrowings on which the 
company is required to pay interest for further information 
see note 26 analysis of net debt
b underlying revenue
underlying revenue excludes the impact of currency rate 
changes product categories no longer manufactured 
acquisitions and discontinued operations including fenland
 
c restructuring items
items which relate to significant restructuring are presented as a 
separate column within their relevant 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 include 
costs or income associated with the restructuring of businesses 
and gains or losses on the disposal or closure of businesses
d free cash flow
free cash flow is net cash from operating activities adjusted for 
special pension contributions less net capital expenditure plus 
interest received net capital expenditure is purchase of property 
plant and equipment ppe less grants received and proceeds 
from sale of ppe
e net working capital
net working capital is defined as inventories plus trade and other 
receivables less trade and other payables
f adjusted earnings per share
adjusted earnings per share is basic earnings per share before 
restructuring items movement on deferred tax due to change 
in legislation and one off release of prior year tax liability
g profit from operations
profit from operations is earnings stated before finance income 
and expense and taxes further information is provided within 
note 5 analysis of consolidated income statement 
h ebitda
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
i underlying profit before taxation
underlying profit before taxation is profit before restructuring 
items and net pensions financing this is reconciled to profit 
before taxation in note 4
j underlying earnings per share
underlying earnings per share is before restructuring items 
movement on deferred tax due to change in legislation one off 
release of prior year tax liability and net pensions financing this 
is reconciled to earnings per share in note 12
 notes to the consolidated financial statements
continued 69 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
3 revenue
the analysis of the group’s revenue is as follows
       2009 2008
continuing operations       £m £m
sale of goods        9752 9319
revenue       9752 9319
finance income       542 592
other operating income        14 09
total        10308 9920
4 segmental reporting
business segments
for management purposes the group is organised into three operating divisions chilled frozen and bakery these divisions are the 
basis on which the group reports its primary segment information the operating divisions are as follows
division major product category
chilled ready meals sandwiches  salads
frozen pizza fish  vegetables pastry meat  meatfree products
bakery  biscuits puddings
segment information
the segment information is as follows
 chilled frozen bakery total
 2009 2008 2009 2008 2009 2008 2009 2008
 £m £m £m £m £m £m £m £m
 
revenue  4868 4815 2724 2454 2160 2050 9752 9319
less revenue from 
 acquisitions 150 –  52 –  – – 202 –
product categories no 
 longer manufactured 188 526 – – – – 188 526
foreign exchange – – 126 –  – – 126 –
underlying revenue 4530 4289 2546 2454 2160 2050 9236 8793
underlying revenue allows comparability between the current and prior periods underlying revenue excludes the impact of currency 
rate changes product categories no longer manufactured acquisitions and discontinued operations including fenland
underlying revenue has been adjusted to exclude revenue earned in the current period from acquisitions which corresponds to the 
period in the prior year when the acquired operations were not part of the group 70 northern foods plc annual report and accounts 200809
4 segmental reporting continued
    external revenue profit from operations
     2009 2008 2009 2008
     £m £m £m £m
chilled     4868 4815 229 221
frozen     2724 2454 93 114
bakery     2160 2050 205 149 
      9752 9319 527 484
net finance costsincome       52 17 
profit before taxation       475 501
taxation       191 117 
profit for the period       284 384
a reconciliation of profit before taxation to underlying profit before tax is shown below
profit before taxation       475 501
net pensions financing credit       85 157 
underlying profit before tax       390 344
  before restructuring items
restructuring items from operations of £354m 200708 £47m comprised chilled £302m 200708 £13m frozen £27m 200708 £29m 
and bakery £25m 200708 £05m
intersegmental sales were charged at prevailing market prices and were immaterial for both the current and prior periods
profit from operations after restructuring items was chilled £73m loss 200708 £208m profit frozen £66m 200708 £85m and bakery 
£180m 200708 £144m
    2009   2008
   assets liabilities total assets liabilities total
assetsliabilities   £m £m £m £m £m £m
chilled   2291 740 1551 2608 768 1840
frozen   1942 676 1266 1761 590 1171
bakery   1037 365 672 998 350 648 
operating assetsliabilities   5270 1781 3489 5367 1708 3659 
unallocated corporate assets
cash at bank and in hand   608 – 608 729 – 729
trading investments   01 – 01 01 – 01
corporate other receivables   41 – 41 12 – 12
retirement benefit assets   – – – 715 – 715
deferred tax assets   171 – 171 – – –
derivative financial instruments   277 – 277 – – –
unallocated corporate liabilities
total borrowings   – 2869 2869 – 2619 2619
derivative financial instruments   – – – – 41 41
retirement benefit obligations   – 715 715 – 99 99
deferred tax liabilities   – 20 20 – 147 147
current tax liabilities   – 220 220 – 260 260
corporate other payables   – 222 222 – 296 296 
total assetsliabilities   6368 5827 541 6824 5170 1654 
 notes to the consolidated financial statements
continued 71 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
4 segmental reporting continued
     chilled frozen bakery group
other information – 2009      £m £m £m £m
capital additions     151 66 87 304
depreciation     169 137 80 386
amortisation of other intangible assets     04 02 01 07
impairment of property plant and equipment    240 – – 240
     chilled frozen bakery group
other information – 2008      £m £m £m £m
capital additions     112 29 52 193
depreciation     197 124 90 411
amortisation of other intangible assets     03 02 01 06
impairment of property plant and equipment    09 03 03 15
geographical segments
the group operates in two main geographical areas the united kingdom and the republic of ireland the chilled and bakery divisions 
operate in the united kingdom while the frozen division operates in both the united kingdom and the republic of ireland the following 
table provides an analysis of the group’s sales by geographical market irrespective of the origin of the goodsservices
      revenue
       2009 2008
       £m £m
united kingdom       8921 8581
other       831 738
        9752 9319
the following is an analysis of the carrying amount of segment assets and additions to property plant and equipment and intangible 
assets analysed by geographical area in which the assets are located
     additions to property
     plant and equipment
    segment assets and intangible assets
     2009 2008 2009 2008
     £m £m £m £m
united kingdom     4581 5298 246 171
republic of ireland     1787 1526 58 22 
      6368 6824 304 193
5 analysis of consolidated income statement
   before   before
   restructuring restructuring  restructuring restructuring
   items items total items items total
   2009 2009 2009 2008 2008 2008
   £m £m £m £m £m £m
continuing operations      
revenue   9752 – 9752 9319 – 9319
cost of sales   7698 313 8011 7360 25 7385
gross profit   2054 313 1741 1959 25 1934
distribution costs   650 02 652 652 – 652
administrative expenses   891 39 930 832 22 854
other operating income   14 – 14 09 – 09 
profit from operations   527 354 173 484 47 437 72 northern foods plc annual report and accounts 200809
6 restructuring items
       2009 2008
       £m £m
restructuring items from operations       354 47
taxation       95 08
total        259 39
restructuring items of £354m comprised £229m relating to the impact of mothballing the fenland ready meals facility with an 
£181m noncash asset impairment a £04m curtailment gain and a £52m cash rationalisation cost other costs relate to asset 
impairments of £59m in relation to the hull site and other rationalisation charges totalling £66m across the chilled bakery and frozen 
divisions will help drive future profitability improvement 
items which relate to significant restructuring events are presented as a separate column within their relevant 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 include costs or income associated with the restructuring of businesses and gains or 
losses on the disposal or closure of businesses
7 profit from operations
profit from operations after restructuring items has been arrived at after chargingcrediting the items below
       2009 2008
       £m £m
net foreign exchange losses       09 17
research and development costs principally new product development    80 95
depreciation of property plant and equipment      386 411
impairment of property plant and equipment      240 15
amortisation of other intangibles       07 06
staff costs note 8       2168 2185
auditors’ remuneration for audit services      03 02
government grants       16 11
cost of inventories recognised as expense       7667 7318
write down of inventories recognised as an expense      31 42
loss on disposal of property plant and equipment      01 03
impairment loss recognised on trade receivables      22 10
reversal of impairment losses recognised on trade receivables     01 03
operating lease charges – plant and machinery      22 27
operating lease charges – land and buildings      08 22
a more detailed analysis of auditors’ remuneration is provided below
       2009 2008
       deloitte  deloitte 
       llp llp
       £’000  £’000
audit services
fees payable to the company’s auditors for the audit of the group’s annual report   85 80
fees payable to the company’s auditors and their associates for the audit of the
  company’s subsidiaries pursuant to legislation      173 163 
        258 243
other services
other services supplied pursuant to legislation – half year review     38 37
other services – accounting advice       – 30
other       – 20 
        38 87
tax services
advisory services       142 119
compliance       139 143 
        281 262
total       577 592
deloitte llp were appointed sole group auditors for both the current and prior periods
 notes to the consolidated financial statements
continued 73 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
8 staff costs
the average monthly number of employees including executive directors was
       2009 2008
       number number
continuing operations
production       8399 9281
distribution       565 544
administration       926 942 
        9890 10767
aggregate remuneration comprised
       2009 2008
       £m £m
continuing operations        
wages and salaries       2032 2071
social security costs       174 176
other pension income       38 62 
        2168 2185
in addition to the staff costs disclosed above redundancy costs of £73m 200708 £10m were charged to restructuring 
9 net finance expenseincome
       2009 2008
       £m £m
finance income
loans and receivables at amortised cost
 bank interest receivable        03 08
 other interest receivable       01 02
expected return on pension scheme assets      538 582 
        542 592 
finance expense
financial liability held at amortised cost in a cash flow hedging relationship
 interest on senior loan notes 2012–2017      78 78
other financial liabilities at amortised cost
 interest on bank overdrafts and loans      61 72
 other interest payables       02 –
interest on pension scheme liabilities       453 425 
        594 575 
net finance expenseincome       52 17 74 northern foods plc annual report and accounts 200809
10 taxation 
       2009 2008
        £m £m
current taxation
uk corporation tax       18 04
overseas tax       20 12
tax on restructuring items – uk       42 –
tax on restructuring items – overseas       02 02 
        06 06
deferred taxation
uk deferred tax        32 112
overseas tax       04 03
movement on deferred tax due to change in legislation      125 –
tax on restructuring items – uk       51 06 
        102 103
tax charge for the period       96 109
the movement on deferred tax due to the change in legislation arose from the amendments to the industrial buildings allowance 
regime which were substantively enacted in the finance act 2008 
uk corporation tax is calculated at 280 200708 300 of the estimated assessable profit or loss for the period overseas tax is 
taxation on profits made in the republic of ireland which is calculated at 125 200708 125
a deferred tax credit of £03m 200708 £01m charge was taken to equity relating to equity settled incentive schemes
a deferred tax credit of £401m 200708 £128m charge was taken to equity relating to the actuarial gains and losses on the retirement 
benefit assets and obligations
the charge for the year can be reconciled to the profit as per the consolidated income statement as follows
     2009 2009 2008 2008
     £m  £m 
profit before taxation     121 1000 454 1000
taxation at the uk corporation tax rate of 280 200708 300   34 280 136 300
effect of lower overseas tax rates     17 140 19 42
adjustment to tax charge in respect of prior periods
 corporation tax     47 388 07 15
 deferred tax     14 116 21 46
change in uk tax legislation     125 1033 – –
change in uk taxation rate from 300 to 280    – – 28 62
expenses not deductible in determining taxable profit and other items   15 124 06 13
tax charge and effective tax rate for the period    96 793 109 240
the adjustments in respect of prior periods relate to the finalisation of previous years’ tax computations and a switch from current to 
deferred tax with respect to capital allowance disclaimers
 notes to the consolidated financial statements
continued 75 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
11 dividends
       2009 2008
equity dividends on ordinary shares       £m £m
amounts recognised in the period
final dividend for the 52 weeks ended 29 march 2008 of 295p 200607 275p per share   136 134
interim dividend for the 52 weeks ended 28 march 2009 of 155p 200708 155p per share   71 76 
        207 210
proposed final dividend for the 52 weeks ended 28 march 2009 of 295p 200708 295p per share  136 142
the proposed final dividend is subject to approval by shareholders at the annual general meeting and accordingly has not been 
included as a liability in these financial statements
12 earnings per share
    basic diluted  basic diluted
    earnings earnings  earnings earnings
   earnings per share per share earnings per share per share
   2009 2009 2009 2008 2008 2008
earnings and earnings per share   £m pence pence £m pence pence
earnings used for calculation of earnings per share   25 054 052 345 708 695
restructuring items   259 555 540 39 080 079
movement on deferred tax due to change in legislation 125 268 261 – – –
one off release of prior year tax liability   47 101 098 – – – 
adjusted earnings per share   362 776 755 384 788 774
net pensions financing credit net of tax   61 131 127 110 226 222
underlying earnings per share   301 645 628 274 562 552
        2009 2008
number of shares       number m number m
weighted average number of shares       5142 5142
own shares held       412 225
shares held in employee share ownership trust esot     62 43
weighted average number of shares used for calculation of basic earnings 
 per share and earnings per share before restructuring items     4668 4874
savingsrelated share options       –  08
executive share options       – 07
long term incentive plan       04 07
deferred share bonus plan       28 34
matching share award       10 09
performance share plan       83 24 
weighted average number of shares used for calculation of diluted earnings
 per share and diluted earnings per share before restructuring items    4793 4963
   adjusted earnings per share is basic earnings per share before restructuring items movement on deferred tax due to change in legislation and one off 
release of prior year tax liability
  underlying earnings per share is before restructuring items movement on deferred tax due to change in legislation one off release of prior year tax liability 
and net pensions ﬁ nancing 76 northern foods plc annual report and accounts 200809
13 goodwill
        £m
cost 
at start of prior period         498
acquisitions        79
exchange movements        24
at end of prior period        601
at start of period        601
exchange movements        31
at end of period        632
accumulated impairment losses
at start of prior period        48
exchange movements        05
at end of prior period        53
at start of period        53
exchange movements        08
at end of period        61
carrying amount
at end of period        571
at start of period        548
goodwill acquired in a business combination is allocated at acquisition to the group’s cash generating units cgus that are expected 
to benefit from that business combination the cgus have been defined as the operating business to which the goodwill relates the 
carrying amount of goodwill has been allocated as follows
       2009 2008
       £m £m
solway foods       301 301
ethnic cuisine       51 51
green isle       201 178
convenience foods       18 18
        571 548
impairment tests for goodwill
the group tests for impairment of goodwill at least annually
the recoverable amounts of the cgus are determined from value in use calculations the key assumptions for the value in use 
calculations are those regarding the discount rates growth rates gross margin and expected changes to selling prices and direct 
costs during the period the key assumptions are based on past experience which has been adjusted for expected changes in 
future conditions 
the group prepares cash flow forecasts derived from the most recent financial plans approved by management for the next five years 
and extrapolates these cash flows in perpetuity using growth assumptions relevant for the business sector the growth rate used is 
not more than 30 200708 not more than 30 and is not considered to be higher than the average long term industry growth rate
the rates used to discount the forecast cash flows for all cgus are based on the group’s pretax weighted average cost of capital 
of 111 200708 111 
the recoverable amount for each cgu exceeded its carrying value at the impairment test date the group has conducted sensitivity 
analysis based on reasonably possible changes in the key assumptions used for the impairment test this has not resulted in any 
impairment of the carrying value of goodwill as at 28 march 2009 
in relation to ethnic cuisine reasonable possible changes in the key assumptions listed above would cause the recoverable amount 
of the cgu to be equal to its carrying amount the recoverable amount of ethnic cuisine is 230 higher than the carrying amount and 
a reduction of 30 in the gross margin percentage or a reduction of 30 in forecast sales would result in the recoverable amount 
being equal to the carrying amount
 notes to the consolidated financial statements
continued 77 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
14 other intangible assets 
      customer  software 
      relationships licences total 
      £m £m £m
cost
at start of prior period      – 59 59
acquisitions      17 – 17
at end of prior period      17 59 76
at start of period      17 59 76
at end of period      17 59 76
accumulated amortisation  
at start of prior period      – 24 24
charge for prior period      – 06 06
at end of prior period      – 30 30 
at start of period      – 30 30
charge for period      01 06 07
at end of period      01 36 37
carrying amount
at end of period      16 23 39
at start of period      17 29 46
the group tests for impairment of customer relationships where there is an indicator that the asset may be impaired the key 
assumptions for the value in use calculations are those regarding forecast sales volumes and prices the growth rate used is not 
more than 30 and is not considered to be higher than the average long term industry growth rate management estimates discount 
rates using the group’s weighted average cost of capital
the rate used to discount the forecast cash flows is the group’s pretax weighted average cost of capital of 111 200708 111 78 northern foods plc annual report and accounts 200809
15 property plant and equipment
     freehold leasehold plant fixtures 
     property property and vehicles total
     £m £m £m £m
cost or valuation 
at start of prior period     1679 271 5540 7490
additions     27 – 166 193
disposals     51 – 25 76
acquisition of subsidiaries and businesses    – 58 86 144
reclassifications     01 – 01 –
exchange movements     51 – 205 256
at start of period     1707 329 5971 8007
additions     07 – 297 304
disposals     – – 08 08
exchange movements     61 – 252 313
at end of period     1775 329 6512 8616
accumulated depreciation and impairment losses
at start of prior period     545 62 3673 4280
charge for prior period     32 05 374 411
restructuring provision for impairment     – – 15 15
disposals      08 – 21 29
exchange movements     09 – 121 130
at start of period     578 67 4162 4807
charge for period     20 06 360 386
restructuring provision for impairment      118 – 122 240
disposals     – – 07 07
exchange movements     12 – 162 174
at end of period     728 73 4799 5600
carrying amount
at end of period     1047 256 1713 3016
at start of period     1129 262 1809 3200
at the period end the group had entered into contractual commitments for the purchase of property plant and equipment amounting 
to £25m 200708 £20m
the carrying amount of the group’s property plant and equipment includes an amount of £nil 200708 £nil in respect of assets held 
under finance leases
impairment charges of £240m were incurred during the period of which £181m related to the mothballing of the fenland site and 
£59m related to the hull site all within the chilled division the group impaired these asset values on a fair value less costs to sell basis 
using past experience and external sources of information such as open market valuations
the group performs impairment reviews where there is an indicator of impairment the fenland site was impaired following the 
announcement to mothball the site the hull site was impaired following a poor trading performance during 200809
the impairment charges have been recognised within restructuring items in the consolidated income statement
the recoverable amounts of other items of property plant and equipment were determined from value in use calculations no 
impairments were identified on these assets the key assumptions for the value in use calculations are those regarding the discount 
rates growth rates and expected changes to selling prices and direct costs during the period management estimates discount rates 
using the group’s weighted average cost of capital 
the group prepares cash flow forecasts derived from the most recent financial plans approved by management for the next five years 
and extrapolates these cash flows in perpetuity using growth assumptions relevant for the business sector the growth rate used is 
not more than 30 200708 not more than 30 and is not considered to be higher than the average long term industry growth rate
the rates used to discount the forecast cash flows for all cgus are based on the group’s pretax weighted average cost of capital 
of 111 200708 111
 notes to the consolidated financial statements
continued 79 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
16 inventories
       2009 2008
       £m £m
raw materials        162 155
work in progress       34 43
finished goods       289 274
        485 472
the directors consider that the replacement cost of inventories is not materially different to the value shown above
17 trading investments 
trading investments stated at fair value represent investments in listed equity securities that present the group with opportunity for 
return through dividend income and trading gains they have no fixed maturity or coupon rate the fair values of these securities are 
based on quoted market prices
       2009 2008
       £m £m
trading investments at fair value        01 01
18 subsidiaries
a list of the significant subsidiary investments including the name country of incorporation and proportion of ownership interest is given 
in note 43 to the company’s separate financial statements
19 trade and other receivables
       2009 2008
       £m £m
trade receivables        1080 972
other receivables       81 107
other prepayments       39 34
        1200 1113
trade receivables of £1080m 200708 £972m are net of amounts that are individually determined to be impaired of £33m 
200708 £19m
the average credit period taken on sales of goods is 38 days 200708 31 days trade receivables are provided for based on estimated 
irrecoverable amounts from the sale of goods determined by reference to past default experience and sales documentation 80 northern foods plc annual report and accounts 200809
19 trade and other receivables continued
an ageing profile of trade receivables past due but not impaired is shown below
       past due by past due by
       1–31 days 32–90 days total
       £m £m £m
2009      64 – 64
2008      90 05 95
included within trade receivables are balances which are neither past due nor impaired of £1016m 200708 £877m in determining the 
recoverability of a trade receivable the group considers any change in the credit quality of the trade receivable from the date credit was 
initially granted up to the reporting date the directors believe that there is no further credit provision required in excess of the allowance 
for doubtful debts management believe that these balances have low credit risk because the group’s top five customers all leading uk 
retailers represent 77 of the group’s revenue this results in a high concentration of credit risk however these customers have good 
credit ratings and consequently the credit risk for the group’s overall trade receivables is considered low
before accepting any new customer the group uses an external credit scoring system and trade references to assess potential 
customer’s credit quality and defines credit limits by customer
included in the trade receivables balance are receivables with a carrying amount of £64m 200708 £95m which are past due at 
the period end for which the group has not provided as there has not been a significant change in credit quality and the amounts 
are still considered recoverable the group does not hold any collateral over these balances the average age of these receivables 
which are past due but not impaired is 11 days past due 200708 17 days the table below shows the movement in the allowance 
for doubtful debt
       2009 2008
       £m £m
at start of period       19 15
impairment losses recognised       22 10
amounts written off as uncollectible       07 03
impairment losses reversed       01 03
at end of period       33 19
the ageing profile of impaired trade receivables is shown below
     past due by past due by past due by
    current 1–31 days 32–90 days over 90 days total
    £m £m £m £m £m
2009    22 01 04 06 33
2008    – 03 10 06 19
the directors consider that the carrying amount of trade and other receivables approximates to their fair value due to their short term 
nature the directors consider the maximum credit risk at the balance sheet date is equivalent to the carrying value of trade and 
other receivables
20 cash and cash equivalents
       2009 2008
       £m £m
cash and cash equivalents       608 729
        608 729
cash comprises cash held by the group and short term bank deposits with an original maturity of three months or less the directors 
consider that the carrying amount of these assets to be approximately their fair value due to their short term nature
 notes to the consolidated financial statements
continued 81 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
21 trade and other payables
       2009 2008
       £m £m
trade payables        1120 1007
accruals and deferred income       568 635
other payables including social security      140 202
        1828 1844
trade payables principally comprise amounts outstanding for trade purchases and ongoing costs the average credit period taken for 
trade payables is 52 days 200708 49 days the group has financial risk management policies in place to ensure that all payables are 
paid within the internal credit timeframe
the directors consider that the carrying amount of trade payables approximates to their fair value due to their short term nature
22 provisions
        £m
at start of period        23
restructuring provisions – charge for period        96
utilised in period         83
at end of period        36
all of the provisions are included within current liabilities and relate to restructuring items the provisions are expected to be utilised 
in full within the next 52 week period
the restructuring provisions made during the period of £96m comprised £51m in respect of the fenland mothballing and 
£45m relating to rationalisation charges that will help drive future profitability improvement through cost saving initiatives
23 financial liabilities – borrowings
       2009 2008
current       £m £m
bank loans and overdrafts due within one year or on demand     99 03
        99 03
       2009 2008
noncurrent       £m £m
revolving credit facility 2010       1150 1300
senior loan notes 2012–2017       1620 1316
        2770 2616
borrowings are repayable as follows
       2009 2008
       £m £m
within one year or on demand       99 03
in the second year       1150 –
in the third to fifth years inclusive       527 1759
after five years       1093 857
        2869 2619 82 northern foods plc annual report and accounts 200809
23 financial liabilities – borrowings continued
bank loans and overdrafts are analysed by currency as follows
      sterling us dollars total
2009      £m £m £m
bank loans and overdrafts due within one year or on demand    99 – 99
revolving credit facility 2010      1150 – 1150
senior loan notes 2012–2017      543 1077 1620
       1792 1077 2869
   
2008
bank loans and overdrafts due within one year or on demand    03 – 03
revolving credit facility 2010      1300 – 1300
senior loan notes 2012–2017      543 773 1316
       1846 773 2619
the average interest rates paid on bank loans and overdrafts were as follows
       2009 2008
        
bank overdrafts       530 654
bank loans       439 617
senior loan notes 2012–2017       550 550
where market values are not available fair values of financial assets and financial liabilities have been calculated by discounting 
expected future cash flows at prevailing interest rates and by applying period end exchange rates
the fair value of the senior loan notes 2012–2017 is disclosed below
     2009 2009 2008 2008
     carrying value fair value carrying value fair value
     £m £m £m £m
senior loan notes 2012–2017     1620 1683 1316 1390
at the period end the group had available £3450m 200708 £3300m of undrawn committed facilities on the revolving credit facility 
2010 and £88m bank overdrafts 200708 £47m in respect of which all conditions precedent had been met 
24 financing
bank overdrafts
all bank loans and overdrafts are unsecured and repayable on demand and are arranged at floating rates thus exposing the group 
to cash flow interest rate risk the interest rate on bank overdrafts is 15 200708 10 above the bank of england base rate 
revolving credit facility 2010
the group holds a five year unsecured syndicated revolving credit facility of £4600m at the period end the amount due under 
the facility was £1150m 200708 £1300m the amount drawn down is repayable in periods of up to one year but is capable of being 
immediately refinanced as part of the committed revolving credit facility 2010 the rate of interest fluctuates in line with market rates 
thus exposing the group to cash flow interest rate risk
in march 2009 the group established a forward start banking facility of £2500m to july 2012 which will replace the existing £4600m 
revolving credit facility on expiry in july 2010 in april 2009 the existing facility was reduced from £4600m to £3050m the current facility 
banking covenants are calculated under frozen uk gaap the new facility covenants will be calculated under ifrs from july 2010 the 
new financing costs agreed as part of the forward start facility were effective from 25 march 2009
the maturity profile of the revolving credit facility 2010 is shown below this assumes that the interest paid during future years is paid at 
the expected future interest rate 583 and the level of debt drawn down remains consistent with borrowings at the balance sheet date
      interest payable 
      over remaining repayment of total
      life of facility principal payable
      £m £m £m
revolving credit facility 2010      84 1150 1234
 notes to the consolidated financial statements
continued 83 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
24 financing continued
senior loan notes 2012–2017
the company has approximately £1427m of senior guaranteed loan notes in the us private placement debt market notes are in both 
us dollars 1550m and pounds sterling £543m the notes are fixed rate and unsecured 
the maturity profile below shows the annual cash flows paid in both the current and prior year the cash flow hedge is currently 
effective in consequence the interest payments are fixed and are accounted for in the consolidated income statement on an accruals 
basis the charge to the consolidated income statement corresponds to the annual interest paid the repayment of the principal 
amount will not enter into the determination of profit or loss unless the hedge becomes ineffective the effectiveness of the cash flow 
hedge is assessed at each balance sheet date 
     annual swap annual swap  
     cash flow cash flow annual annual
     paid received interest interest
  amount amount interest to banks from banks paid paid
tranche maturity m £m rate £m m m £m
series a dec 2012 350 200 563 11 20 20 11
series b dec 2015 825 471 577 25 48 48 25
series c dec 2017 375 213 587 12 22 22 12
series d dec 2012 £285 285 547 – – – 16
series e dec 2015 £258 258 547 – – – 14
    1427     78
all us dollar cash flows are hedged using cross currency swaps northern foods will receive each 20 december and 20 june 
the bond interest payment dates fixed us dollar sufficient to fully cover interest due to holders of the us dollar denominated bonds 
in exchange for payment of fixed pounds sterling on the same date the weighted average interest rate payable in pounds sterling by 
the company is approximately 55 additionally the swap contracts provide for an exchange of the principal amounts at maturity at the 
same rate of exchange as the initial principal was translated £1  1752
at the period end the carrying value of the senior loan notes 2012–2017 was £1620m 200708 £1316m and the derivative financial 
instrument on the cross currency interest rate swaps was an asset of £266m 200708 liability £41m the currency element of fair value 
of the swaps was an asset of £198m 200708 liability £105m and the interest rate element of fair value of the swaps was an asset of 
£68m 200708 £64m
25 financial instruments
capital risk management
the group manages its capital to ensure that entities in the group will be able to continue as going concerns whilst maximising the 
return to stakeholders through the optimisation of the debt and equity balance the capital structure of the group consists of net debt 
as disclosed in note 26 and equity shareholders’ funds as disclosed in notes 28 and 29 
board policy is to operate with fixed rate borrowings within a range of 20 to 50 of total net debt over the medium term although 
the group may operate outside of this range in the short term at the year end 78 of the group’s debt was fixed 200708 71 
the proportion of fixed rate borrowings increased after the business disposals made during 200607 the group’s net debt position 
is maintained daily and reviewed by management on a weekly basis 
during the period the company repurchased 17490115 shares at a cost of £110m 200708 6056846 shares at a cost of £53m  84 northern foods plc annual report and accounts 200809
25 financial instruments continued
categories of financial instruments
    carrying value fair value
     2009 2008  2009 2008
     £m £m £m £m
financial assets
held for trading
 trading investments     01 01 01 01
derivatives that are designated and effective as hedging instruments 
carried at fair value
 derivative financial instruments cross currency interest rate swaps  266 – 266 –
 derivative financial instruments currency rate swaps   11 – 11 –
loans and receivables at amortised cost
 trade receivables      1080 972 1080 972
 cash and cash equivalents     608 729 608 729
      1966 1702 1966 1702
financial liabilities
financial liability held at amortised cost in a cash flow hedging relationship
 senior loan notes 2012–2017     1620 1316 1683 1390
derivatives that are designated and effective as hedging instruments 
carried at fair value
 derivative financial instruments cross currency interest rate swaps  – 41 – 41
other financial liabilities at amortised cost
 trade payables     1120 1007 1120 1007
 bank loans and overdrafts     99 03 99 03
 revolving credit facility 2010     1150 1300 1150 1300
 finance leases     05 08 05 08 
      3994 3675 4057 3749 
the fair value of the trade receivables approximates to their carrying value due to the short term nature of the receivables the fair value 
of the trading investments and cash and cash equivalents are based on their market value
the fair values of the financial assets that are designated and effective as hedging instruments have been calculated by discounting 
expected future cash flows at prevailing interest rates and by applying period end exchange rates 
the directors use their judgement in selecting an appropriate valuation technique for derivatives that are designated and effective as 
hedging instruments carried at fair value but that are not quoted in an active market valuation techniques commonly used by market 
practitioners are applied and assumptions are made based on quoted market rates adjusted for specific features of the instrument
the fair value of the other financial liabilities at amortised cost approximates to their carrying value the trade and other payables 
approximate to their fair value due to the short term nature of the payables the bank loans and overdrafts and the revolving credit 
facility 2010 approximate to their fair value based on their variable market rate the finance lease fair value approximates to the carrying 
value based on discounted future cash flows
financial risk management objectives 
the group collates information from across the business and reports to the board of directors on key financial risks on a monthly basis 
these risks include credit risk liquidity risk interest rate risk and currency risk
the group seeks to minimise its exposure to these risks by using derivative financial instruments where applicable the use of derivative 
financial instruments is governed by group policies which have been approved by the board of directors the group only enters into 
trade financial instruments for specific purposes speculative purchases are not made see page 87 for further details
credit risk management
credit risk refers to the risk of financial loss to the group if a counterparty defaults on its contractual obligations of the loans and 
receivables at amortised cost held in the balance sheet 
the group’s credit risk is primarily attributable to its trade receivables the group’s top five customers all leading uk retailers continue 
to represent 77 of the group’s revenue these customers have favourable credit ratings and consequently reduce the credit risk 
for the group’s overall trade receivables the credit risk on liquid funds and derivative financial instruments is limited because the 
counterparties are banks with good credit ratings assigned by international credit rating agencies processes are in place to manage 
receivables and overdue debt and to ensure that appropriate action is taken to resolve issues on a timely basis credit control operating 
procedures are in place to review all new customers existing customers are reviewed as management become aware of changes 
of circumstances for specific customers during the period the amount written off in respect of credit risk was £07m 200708 £03m
 notes to the consolidated financial statements
continued 85 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
25 financial instruments continued
the amounts presented in the balance sheet are net of appropriate allowance for doubtful trade receivables specific customer risk 
and assessment of the current economic environment the carrying amount of financial assets recorded in the financial statements 
which is net of impairment losses represents the group’s maximum exposure to credit risk
liquidity risk management
liquidity risk refers to the risk that the group may not be able to fund the day to day running of the group liquidity risk is reviewed 
by the board on a monthly basis the group manages liquidity risk by monitoring actual and forecast cash flows and matching the 
maturity profiles of financial assets and liabilities the group also monitors the drawdown of debt against the available banking facilities 
and reviews the level of reserves liquidity risk management ensures sufficient debt funding is available for the group’s day to day 
needs board policy is to maintain reasonable headroom of unused committed bank facilities in a range of maturities at least 12 months 
beyond the period end
the group has two principal debt facilities notes 23 and 24
 revolving credit facility 2010 extended to 2012 through the forward start facility
 senior loan notes 2012–2017
the board also monitors the group’s banking covenants which are calculated under frozen uk gaap when the forward start 
revolving credit facility begins in july 2010 the covenants will be calculated under ifrs no breaches have been made during the 
year or prior period
the following table details the group’s maturity profile of its financial liabilities excluding derivative financial instruments
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2009   £m £m £m £m £m £m
senior loan notes 2012–2017   – 46 45 841 1189 2121
trade payables   772 348 – – – 1120
bank loans and overdrafts   99 – – – – 99
revolving credit facility 2010   06 11 50 1167 – 1234
finance leases   – – 02 03 – 05
    877 405 97 2011 1189 4579
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2008   £m £m £m £m £m £m
senior loan notes 2012–2017   – 38 37 736 982 1793
trade payables   694 313 – – – 1007
bank loans and overdrafts   03 – – – – 03
revolving credit facility 2010   06 13 57 1398 – 1474
finance leases   – – 02 06 – 08
    703 364 96 2140 982 4285
the above maturity profiles have not been discounted
the liquidity profile of the trade payables has been assumed consistent with the group’s payment terms of 45 days 200708 45 days
the repayment of the interest and principal on the us dollar denominated senior loan notes 2012–2017 has been calculated at the 
period end rate of £1  1432 200708 £1  1989
the repayment of interest on the revolving credit facility 2010 has been calculated on the principal at the period end date and the 
expected future interest rate 86 northern foods plc annual report and accounts 200809
25 financial instruments continued
the maturity profiles of the derivative financial instruments are shown below the us dollar exchange rate used is that at the balance 
sheet date of £1  1432 200708 £1  1989
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2009   £m £m £m £m £m £m
swap cash flow paid to banks   – 24 24 333 783 1164
swap cash flow received from banks   – 31 31 419 966  1447
    – 07 07 86 183 283
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2008   £m £m £m £m £m £m
swap cash flow paid to banks   – 24 24 381 783 1212
swap cash flow received from banks   – 23 23 347 696 1089
    – 01 01 34 87 123
interest rate risk management
the group is exposed to interest rate risk on borrowings drawn down on the revolving credit facility 2010 the risk is managed by 
maintaining an appropriate mix between fixed and floating rate borrowings interest risk management balances debt financing as a 
tool to improve the returns through leverage in the capital structure with the potential for an increase in interest rates to impact profits 
negatively board policy is to operate with fixed rate borrowings within a range of 20 to 50 of total net borrowings over the medium 
term although the group may operate outside this range in the short term at the year end 78 of the group’s net debt is fixed 
200708 71 board approval is required for the use of any interest rate derivative
interest rate sensitivity analysis has been performed on the financial assets and liabilities to illustrate the impact on group profits and 
equity if interest rates increaseddecreased this analysis assumes the liabilities outstanding at the period end were outstanding for the 
whole period a 100 bps increase or decrease has been used comprising management’s assessment of reasonably possible changes 
in interest rates
if interest rates had been 100 bps higherlower then profit before taxation for the 52 weeks ended 28 march 2009 would have 
decreasedincreased by £12m 200708 £13m and equity at the balance sheet date would have decreasedincreased by £12m 
200708 £13m it has been assumed that all other variables remained the same when preparing the interest rate sensitivity analysis
foreign currency risk management
foreign currency risk management occurs at a transactional level on revenues and purchases in foreign currencies and at a 
translational level in relation to the translation of overseas operations board policy is for uk businesses to hedge transactional 
exposures using forward foreign exchange contracts wherever material transactional exposure in our irish business has been 
partly hedged during the year the remaining transactional exposure is partially offset by a translation exposure the senior loan 
notes 2012–2017 have been hedged using cross currency interest rate swaps of equivalent maturity subject to a one off right for 
the counterparty bank to break the swap after seven years at the market value of the swap at that date the group monitors foreign 
exchange rates to assess the potential impact on group profits if exchange rates move significantly and a summary of hedges in 
place is reported monthly to the board 
the group’s main foreign exchange risk is to the euro during the 52 week period to 28 march 2009 the euro strengthened against 
gbp by 147 mainly in the second half of the year with the closing rate at a10765 compared to a12621 at the prior period end the 
average rate for the 52 week period to 28 march 2009 was a12058 a reduction of 151 versus prior year the net impact of the stronger 
euro on our euro manufacturing base reduced overall profitability by £50m
the overseas subsidiary whose functional currency is the euro has pounds sterling assets and liabilities at both balance sheet dates 
a sensitivity analysis has been performed on these pounds sterling financial assets and liabilities to sensitivity of a 10 increase
decrease in pounds sterling to euro exchange rate a 10 increasedecrease has been used comprising management’s assessment 
of reasonably possible changes in euro exchange rates the impact on profit for the period is an increasedecrease of £04m 200708 
increasedecrease of £03m and the impact on equity is an increasedecrease of £04m 200708 increasedecrease of £03m 
a sensitivity analysis has been performed on the financial assets and liabilities to sensitivity of a 10 increasedecrease in the pounds 
sterling to us dollar exchange rate a 10 increasedecrease has been used comprising management’s assessment of reasonably 
possible changes in us dollar exchange rates the impact on profit for the period is an increasedecrease of £nil 200708 £nil and 
on equity is an increasedecrease of £23m 200708 £11m
 notes to the consolidated financial statements
continued 87 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
25 financial instruments continued
forward foreign exchange contracts
group policy is to hedge individual capital expenditure foreign currency transactions of more than £03m during 200809 the group 
also entered into foreign exchange contracts to hedge an element of sterling sales in the irish business the contracts are fair valued 
at the period end and the group tests the effectiveness of the hedge using the hypothetical derivative method the cumulative change 
in the fair value of the hypothetical derivative is compared to the cumulative fair value changes of the hedge instrument all outstanding 
contracts at the period end will vest within one year 
an analysis of outstanding contracts is shown below
 average exchange rate foreign currency contract value fair value
 2009 2008 2009 2008 2009 2008 2009 2008
outstanding contracts   m m £m £m £m £m
buy us dollars
in less than 3 months – 1984 – 06 – 03 – 03
in 3–6 months – 1980 – 01 – 01 – 01
buy euros
in less than 3 months 1142 1264 101 13 89 10 05 10
in 3–6 months 1141 – 108 – 95 – 06 –
changes in the fair value of nonhedging currency derivatives amounting to £nil have been charged to the income statement in the year 
200708 £nil 
cross currency interest rate swaps
the company has cross currency interest rate swaps to provide a cash flow hedge against currency and interest rate movements 
on the us1550m senior loan notes 2012–2017 swap contracts with a nominal value of us1550m £885m have fixed sterling interest 
payments at an average rate of 55 for periods up to 2017 and have fixed us dollar interest receipts at an average rate of 576 
at the period end swap contracts had a fair value of £266m 200708 negative £41m
the cash flow hedge forms part of the group’s risk management strategy which is reviewed and authorised by the board the fixed 
cash flows will be achieved through the use of cross currency interest rate swaps the actual risk being hedged is the foreign 
exchange risk 
the group uses the dollar offset hypothetical derivative method to test the effectiveness of the hedge the cumulative change in the 
fair value of the hypothetical derivative is compared to the cumulative fair value changes of the hedge instrument the fair values of 
foreign currency forward contracts are measured using quoted forward foreign exchange rates and yield curves from quoted interest 
rates matching maturities of the contracts the maturity profile is shown on page 83
26 analysis of net debt 
references to net debt refer to the total borrowings of the group including both short term and long term bank loans bonds loan 
notes and finance leases after offsetting the cash and cash equivalents of the business 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 us dollar 
denominated loan notes
the table below reconciles net debt
       2009 2008
       £m £m
cash and cash equivalents       608 729
trading investments        01 01
bank loans overdrafts and loan notes due within one year      99 03
finance leases       05 08
revolving credit facility 2010        1150 1300
senior loan notes 2012–2017       1620 1316
currency element of fair value of swaps hedging the group’s us dollar  denominated loan notes  198 105 
net debt        2067 2002
net debt
net debt is not a defined term under ifrs and may not therefore be comparable with other similarly titled nonifrs debt measures 
reported by other companies the group adopts this measure because it is used in calculating the banking covenants it is also the 
measure used for internal debt analysis in addition the net debt balance provides an indication of the net borrowings on which the 
company is required to pay interest 88 northern foods plc annual report and accounts 200809
27 deferred taxation assetsliabilities
       2009 2008
       £m £m
uk deferred tax asset       171 –
uk deferred tax liability       – 124 
overseas deferred tax liability       20 23
net deferred tax assetliability       151 147
ias 12 ‘income taxes’ permits the offsetting of balances within the same tax jurisdiction all of the deferred tax assets which have been 
offset are available for offset against deferred tax liabilities in their respective tax jurisdictions
a reconciliation of the net assetliability is shown below
   retirement other  accelerated  
   benefit employee  tax revaluation 
   obligation benefits  depreciation of buildings other total
   £m £m £m £m £m £m
at start of prior period   65 19 21 11 – 94
chargedcredited to income statement in prior period 78 03 31 – 03 109
restructuring items   18 – 24 – – 06
acquisition of subsidiaries and businesses  – – 08 – – 08
chargedcredited to equity   128 01 – 01 – 128
exchange differences   01 – 03 – – 02
at start of period   158 15 03 10 03 147
chargedcredited to income statement  31 03 – – – 28
restructuring items   16 – 67 – – 51
movement on deferred tax due to change in legislation – – 125 – – 125
credited to equity    401 03 – – – 404
exchange differences   01 – 05 – – 04
at end of period   197 21 60 10 03 151
uk deferred tax assetliability   187 21 30 10 03 171
overseas deferred tax assetliability   10 – 30 – – 20
net deferred tax assetliability   197 21 60 10 03 151
the movement on deferred tax due to the change in legislation arose from the amendments to the industrial buildings allowance 
regime which were substantively enacted in the finance act 2008
the movement on the retirement benefit obligation of £401m 200708 £128m relates to the actuarial loss on the retirement benefit 
obligation see note 35 for further details 
at the balance sheet date the aggregate amount of temporary differences associated with unremitted earnings of subsidiaries for 
which deferred tax liabilities have not been recognised is £193m 200708 £174m no liability has been recognised in respect of these 
differences because the group is in a position to control the timing of the reversal of the temporary differences and it is probable that 
such differences will not reverse in the foreseeable future
no deferred tax has been provided on capital losses totalling £1519m at 28 march 2009 200708 £1555m as it is uncertain when 
these losses will be utilised against future taxable gains the unprovided deferred tax asset on these losses is £425m 200708 £435m
28 share capital
     2009 2009 2008 2008
     number m £m number m £m
authorised ordinary shares of 25p each    7600 1900 7600 1900
allotted called up and fully paid ordinary shares of 25p each
at start of period     5142 1286 5142 1286
at end of period     5142 1286 5142 1286
the company has one class of ordinary shares which carry no right to fixed income
during both the current and prior period the company did not issue any shares
 notes to the consolidated financial statements
continued 89 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
29 reserves
      hedging  
  share capital reserve  and  
  premium redemption for own esot translation other accumulated
  account reserve shares reserve reserve reserves deficit
  £m £m £m £m £m £m £m
at start of prior period  651 236 342 42 49 42 668
net profit for period  – – – – – – 345
dividends  – – – – – – 210
actuarial gains on defined benefit pension
 schemes net of deferred tax  – – – – – – 225
purchase of shares for esot  – – – 41 – – –
purchase of treasury shares  – – 53 – – – –
equity settled incentive schemes net
 of deferred tax  – – – – – 10 –
exchange differences  – – – – 130 – –
increase in fair value of cash flow hedge – – – – 24 – –
transfer to profit or loss on 
 cash flow hedge – – – – 11 – –
other movements  – – – – – – 01
at start of period  651 236 395 83 214 52 307
net profit for period  – – – – – – 25
dividends  – – – – – – 207
actuarial losses on defined benefit
 pension schemes net of deferred tax  – – – – – – 1030
purchase of shares for esot  – – – 05 – – –
purchase of treasury shares  – – 110 – – – –
equity settled incentive schemes net 
 of deferred tax  – – – – – 30 –
exchange differences  – – – – 169 – –
increase in fair value of cash flow hedge – – – – 340 – –
transfer to profit or loss on 
 cash flow hedge  – – – – 325 – –
other movements  – – – – – 02 02
at end of period  651 236 505 88 398 80 1517
share premium account
the share premium account represents amounts received in excess of the nominal value of shares on issue of new shares
capital redemption reserve
the capital redemption reserve arose on the repurchase and cancellation of ordinary shares
reserve for own shares
the reserve for own shares held by the group represents the shares in the company held in treasury the number of shares held 
in treasury at the balance sheet date was 45461961 200708 27971846
esot reserve
the esot holds shares which are primarily used to satisfy awards made under long term incentive plans the number of shares held 
in the esot at the balance sheet date was 7682843 200708 6697363
hedging and translation reserve
the hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments 
related to hedged transactions that have not yet occurred
the translation element of the reserve records exchange differences arising from the translation of the financial statements of 
foreign subsidiaries
other reserves
other reserves primarily represent the equity component of share based payment arrangements and the remaining revaluation reserve 
from when the group accounted under uk gaap
accumulated deficit
the accumulated deficit comprises the group’s annual profits and losses actuarial gains and losses on the defined benefit pension 
schemes and dividend payments 90 northern foods plc annual report and accounts 200809
30 reconciliation of net cash from operating activities
       2009 2008
      notes £m £m
 
profit from operations – continuing operations     5 173 437
adjustments for     
depreciation of property plant and equipment and amortisation of other intangible assets  14 15 393 417
impairment of property plant and equipment     15 240 15
loss on disposal of property plant and equipment      01 03
increasedecrease in provisions      22 13 54
change in retirement benefit obligation excluding special pension contributions    25 20
equity settled incentive scheme       27 11
grants and other noncash movements      15 09
operating cash flow before movement in working capital and special pension contributions   807 840
special pension contributions       – 220
operating cash flow before movement in working capital     807 620
movement in inventories       13 15
movement in trade and other receivables      28 37
movement in trade and other payables       85 168
cash from operations       707 504
interest paid       156 149
net taxation paid       10 30
net cash from operating activities       541 325
31 contingent liabilities
a number of subsidiary companies and northern foods plc are guarantors in respect of the senior loan notes 2012–2017 whereby they 
absolutely and unconditionally guarantee the principal and interest on the senior loan notes 2012–2017 additionally the same subsidiary 
companies are cross guarantors in respect of the five year syndicated revolving credit facility 2010 
a subsidiary undertaking is party to a letter of credit issued by barclays bank plc for £nil 200708 £45m secured against the assets 
of the subsidiary undertaking 
northern foods plc is the guarantor in respect of the obligations of several subsidiary undertakings with allied irish bank as at 
28 march 2009 northern foods plc guaranteed £07m 200708 £nil
32 operating lease commitments
the group recognised the following lease payments under operating leases as an expense in the year
       2009 2008
       £m £m
plant and machinery       22 27
land and buildings       08 22
        30 49
at the balance sheet date the group had outstanding commitments for future minimum lease payments under noncancellable 
operating leases fall due as follows
       2009 2008
       £m £m
within one year       42 48
in the second to fifth years inclusive       120 94
after five years       32 105
        194 247
the group leases various offices and warehouses under noncancellable operating lease agreements the leases have various terms 
escalation clauses and renewal rights the group also leases plant and machinery and vehicles under noncancellable operating 
lease agreements
 notes to the consolidated financial statements
continued 91 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
33 finance leases
the group’s finance lease obligations are shown below
       2009 2008
       £m £m
within one year       02 02
in the second to fifth years inclusive       03 06
        05 08
the fair value of the group’s finance lease obligations approximates to their carrying value
34 equity settled share based payments 
equity settled share option plan
the group has applied the requirements of ifrs 2 ‘sharebased payments’ in accordance with the transitional provisions ifrs 2 
has been applied to all grants of equity instruments after 7 november 2002 that were unvested at 1 january 2005
the group operates long term incentive schemes for executive directors and senior management within the group in addition to 
issuing an hm revenue  customs savingsrelated share option scheme for all employees options are granted with a fixed exercise 
price options lapse when an employee leaves the group subject to certain ‘good leaver’ provisions
the fair value per option granted and the assumptions used in the calculations are as follows
  grant of share  grant of share  grant of share  grant of share
executive share options  options  options  options  options
date of grant  19 dec 2003  17 dec 2004  14 dec 2005  4 july 2006
number of instruments granted  3375195  2313123  2059231  4218455
exercise price pence  1370  1697  1533  797
share price at date of grant pence  1350  1665  1535  840
contractual life years  10  10  10  10
performance conditions  note a  note b  note b  note b
settlement  equity  equity  equity  equity
expected volatility  37  33  30  30
expected option life at grant date years 5  5  5  5
risk free interest rate  478  444  430  470
expected dividend dividend yield  679  525  600  540
fair value per granted instrument
 determined at the grant date pence  275  360  264  153
valuation model  blackscholes  blackscholes  blackscholes  blackscholes 92 northern foods plc annual report and accounts 200809
34 equity settled share based payments continued
     long term long term share bonus share bonus deferred share
other arrangements    incentive plan incentive plan plan plan bonus plan
date of grant    12 dec 2005 4 july 2006 4 july 2006 13 june 2007 13 july 2006
number of instruments granted    474442 1013523 408809 357028 4928287
exercise price pence    nil nil nil nil nil
share price at date of grant pence    1537 840 840 1235 818
contractual life years    5 5 3 3 3
performance conditions    note c note c note d note d note e
settlement    equity equity equity equity equity
expected volatility    300 300 300 250 300
expected life at grant date years    3 3 3 3 3
risk free interest rate    430 470 470 577 470
expected dividend dividend yield    600 540 540 478 540
fair value per granted instrument 
 determined at the grant date pence    1281 611 610 889 409
valuation model    blackscholes blackscholes blackscholes blackscholes blackscholes
      matching performance performance deferred share
other arrangements     share award share plan share plan bonus plan
date of grant     4 june 2007  29 aug 2007 5 dec 2007 26 sept 2007
number of instruments granted     1040460 2441010 3350000 194586
exercise price pence     nil nil nil nil
share price at date of grant pence     1297 988 870 1017
contractual life years     3 and 4 3 3 2
performance conditions     note g  note f  note f note e
settlement     equity  equity  equity  equity
expected volatility     252 272 309 300
expected life at grant date years     3 and 4 3 3 2
risk free interest rate     577 526 441 511
expected dividend dividend yield     0 0 0 0
fair value per granted instrument 
  determined at the grant date pence     8914 5890 4917 10170
valuation model     monte carlo  monte carlo monte carlo blackscholes
      save as you save as you  performance performance
other arrangements     earn earn share plan share plan
date of grant     20 dec 2007 20 dec 2007 4 july 2008 9 dec 2008
number of instruments granted     4607258 5390539 4238949 310625
exercise price pence     760 760 nil nil
share price at date of grant pence     900 900 570 558
contractual life years     35 55 3 3
performance conditions     note h note h note i note i
settlement     equity equity equity equity
expected volatility     275 274 326 405
expected life at grant date years     325  525 3 3
risk free interest rate     445 456 497 226
expected dividend dividend yield     478 478 0 0
fair value per granted instrument 
  determined at the grant date pence     2011 2153 3764 3747
valuation model     monte carlo monte carlo monte carlo monte carlo
expected volatility was determined by calculating the historical volatility of the group’s share price over a period commensurate with the 
expected term of the relevant award the expected life used in the model has been adjusted based on management’s best estimate 
for the effects of nontransferability exercise restrictions and behavioural considerations
 notes to the consolidated financial statements
continued 93 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
34 equity settled share based payments continued
performance conditions – notes
a  performance condition measured by reference to earnings per share the target requires that the real growth in earnings per share 
over the three year performance period is greater than 3 per annum compound the performance condition allowed for retesting 
after years four and five against the full period from the grant
b  performance condition measured by reference to earnings per share the target requires that the real growth in earnings per share 
over the three year performance period is greater than 3 per annum compound the performance condition does not allow 
for retesting
c  the ltip has two performance conditions
  tsr the total number of shares that will vest will be up to 50 dependent on how the tsr in relation to an ordinary share of 
northern foods over the relevant performance period compares with tsr in relation to the ordinary shares of the companies 
in the comparator group in the same period where the tsr of northern foods over the performance period places it between 
the median and the upper quartile the number of shares will be calculated on a straight line basis with 20 of the shares being 
received when northern foods is placed above median and 50 being received where northern foods is placed in the upper 
quartile where northern foods growth in tsr places it below median no shares will vest in relation to this element of the award
  return on invested capital roic 50 of the total award vests on achievement of a minimum growth in roic over the performance 
period growth in roic over the period has to be 100 or more basis points the number of shares that each participant receives is 
calculated on a straight line basis with 75 of the shares being received if northern foods achieves growth of 100 basis points and 
maximum of 50 being received if the company achieves growth of 200 basis points
d  under the share bonus plan 80 of annual bonus opportunity is linked to specific financial targets including targets for profit 
from operations and profit before tax both measured before restructuring items the other 20 is directly related to individual 
performance against personal performance contracts set at the start of the financial year which contain six individual and business 
performance targets which are considered appropriately stretching
e  the deferred share bonus plan dsbp was introduced in june 2006 so as to incentivise and retain the key talent necessary to drive 
the specific performance improvements required performance was assessed against key milestones over the 12 month period 
to 31 march 2007 these four key milestones related to improving free cash flow and reducing net debt as at 1 april 2006 by £125m 
reducing the run rate for central costs by £12m per annum compared to 200506 and the successful resolution of the pension 
deficit this dsbp provided a smaller number of key senior executives with an award of shares with a value up to 100 of base 
salary at the prevailing market price of 8175 pence per share on 13 july 2006 these shares will be satisfied by the transfer of 
existing shares held in trust after the vesting date in july 2009
f  the performance share plan was introduced to incentivise the group’s senior executives there are two performance conditions 
which will align the interests of senior executives with those of shareholders
  tsr the total number of shares that will vest will be up to 50 dependent on tsr growth over the performance period tsr is 
required to grow by 30 from the effective base of £124 for 75 of the shares to vest up to a maximum of 50 being received 
if the tsr grows by 80 or more
  roic 50 of the total award vests on achievement of a minimum growth in roic over the performance period the number of 
shares that each participant receives is calculated on a straight line basis with 75 of the shares being received if the group 
achieves growth of 100 basis points and maximum of 50 being received if the group achieves growth of 200 basis points or more
g  the award of matching shares to s barden was made as part of his recruitment as chief executive the performance conditions 
attached to the matching share award are the same as those for the performance share plan see f save that threshold vesting 
of the tsr element will not occur unless the group achieves growth in tsr of 35 over the relevant period half the matching award 
will vest on the third anniversary of the grant with the other half vesting on the fourth anniversary of the grant to the extent that the 
performance conditions are met and providing he retains the purchased shares and remains employed by the group
h  the group introduced a hm revenue  customs approved savingsrelated share option plan for all employees there are no 
performance conditions attached to these options
i  this relates to the second year of awards under the performance share plan the two performance conditions which will align the 
interests of senior executives with those of shareholders are
  tsr the total number of shares that will vest will be up to 50 dependent on tsr growth over the performance period tsr is 
required to grow by 30 from the effective base of £0659 for 75 of the shares to vest up to a maximum of 50 being received 
if the tsr grows by 80 or more
  roic 50 of the total award vests on achievement of a minimum growth in roic over the performance period the number 
of shares that each participant receives is calculated on a straight line basis with 75 of the shares being received if the group 
achieves growth of 100 basis points and maximum of 50 being received if the group achieves growth of 200 basis points or more
for further information on share incentive schemes see the remuneration report on pages 41 to 52 94 northern foods plc annual report and accounts 200809
34 equity settled share based payments continued
details of movements in share options during the period are as follows
      weighted   weighted 
      average   average 
     options exercise price options exercise price
     2009 2009 2008 2008
     number £ number £
outstanding at start of period     1920865 080 8533451 123
forfeited during period     517762 080 5410637 134
expired during period     – – 1201949 146
outstanding at end of period     1403103 080 1920865 080
exercisable at end of period     1403103 080 1920865 080
forfeiture arises when the employee leaves within the vesting period expiration of shares occurs when the last date for exercise has 
passed and the option has not been exercised
there were no share options exercised during the period 200708 nil the options outstanding had a weighted average remaining 
contractual life of 727 years 200708 827 years the weighted average fair value of the share options outstanding is £015 200708 £015 
per share the exercise price of options outstanding at the period end was £080 200708 £080 
the group recognised total expenses of £27m 200708 £11m in the period relating to equity settled share based payment transactions
35 retirement benefit obligations 
defined benefit schemes
the group operates a number of defined benefit schemes for qualifying employees principally the northern foods pension scheme 
‘the scheme’ and northern foods pension builder ‘pension builder’ in the united kingdom and the green isle foods group 
retirement and death benefit plan ‘the plan’ in the republic of ireland under the scheme pension builder and the plan employees 
are entitled to retirement benefits based on pay and service the scheme pension builder and the plan are funded schemes whilst 
the group’s post retirement medical benefit scheme is unfunded the scheme and the plan are final salary schemes the assets of 
the scheme pension builder and the plan are held in trustee administered funds separate from the finances of the group 
on 22 march 2005 the company announced the closure of the scheme to new entrants and withdrew its agreement to allow 
early retirement on an enhanced basis pension builder was introduced on 1 may 2005 and is available to all uk based employees 
pension builder is a defined benefit scheme based on the career average principle 
northern foods has reviewed the future cost of delivering benefits against a challenging background of social and economic changes in 
order to maintain competitiveness and long term success this has resulted in approximately 300 of the senior management population 
moving from the scheme and pension builder to a defined contribution scheme from 29 march 2009
the most recent valuation of the scheme for the purpose of the financial statements and the present value of defined benefit obligations 
was carried out at 28 march 2009 by an independent qualified actuary pricewaterhousecoopers llp the present value of the defined 
benefit obligationasset the related current service cost and past service cost was measured using the projected unit credit method 
the principal assumptions used for the purpose of the actuarial valuation of the scheme and pension builder are detailed below
     valuation date
       2009 2008
rate of increase in salaries       30 39
rate of increase to pensions in payment      27 31
rate of increase to deferred pensions       30 34
discount rate       68 64
inflation assumption       28 34
 notes to the consolidated financial statements
continued 95 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
35 retirement benefit obligations continued
sensitivities 
the mortality assumptions used are based on mortality experience of the scheme and anticipated mortality experience the 
assumptions are below the national average reflecting the socioeconomic make up of the scheme membership for the valuation 
at 28 march 2009 the company has adopted the medium cohort principle for the scheme and pension builder 200708 medium 
cohort if life expectancy is increased or decreased by one year liabilities are estimated to increase or decrease by £150m respectively 
the impact of a 01 increase or decrease in the discount rate would decrease or increase liabilities by £110m respectively the impact 
of a 01 increase or decrease in the rate of increase to pensions would increase or decrease liabilities by £52m respectively the impact 
of a 01 increase or decrease in the inflation assumption would increase or decrease liabilities by £15m respectively
the life expectancy in years for a member aged 65 is as follows
     valuation date
       2009 2008
current pensioner  – male       187 187
 – female       210 210
future pensioner  – male      200 200
 – female       222 222
post retirement medical benefit scheme
until 31 march 1999 the group operated a post retirement medical benefit scheme the method of accounting assumptions and 
the frequency of valuations are similar to those used for defined benefit pension schemes detailed on page 94 the main actuarial 
assumptions are the underlying medical cost inflation of 48 per annum 200708 54 and the discount rate of 68 per annum 
200708 64 
if the assumed rate of underlying medical cost inflation increased or decreased by 10 per annum then the valuation of the liabilities 
is estimated to increase or decrease by approximately £05m 200708 £04m respectively 
amounts recognised in the income statement in respect of the group’s defined benefit schemes and post employment medical 
benefit scheme are as follows 
  defined benefit post retirement total retirement
  schemes medical benefit scheme  benefit schemes
   2009 2008 2009 2008  2009 2008
   £m £m £m £m  £m £m
current service cost   62 97 – – 62 97
interest on obligation   450 423 03 02 453 425
expected return on scheme assets   538 582 – – 538 582
curtailment gain   12 – – – 12 –
    38 62 03 02 35 60
the service cost for the period has been included within cost of sales £54m 200708 £84m distribution costs £03m 200708 £05m 
and administrative expenses £05m 200708 £08m the interest on obligation and expected return on scheme assets is included 
within financing actuarial gains and losses have been reported in the consolidated statement of recognised income and expense
the curtailment gain of £12m consists of a £04m gain following the mothballing of the fenland site and a £08m gain on moving 
300 members of the leadership population out of the defined benefit schemes to a defined contribution scheme effective 1 april 2009 96 northern foods plc annual report and accounts 200809
35 retirement benefit obligations continued
the amounts recognised in the consolidated balance sheet in respect of the group’s defined benefit schemes and post retirement 
medical benefit scheme are as follows
  defined benefit post retirement total retirement
  schemes medical benefit scheme  benefit schemes
   2009 2008 2009 2008  2009 2008
   £m £m £m £m  £m £m
present value of obligations    7051 7182 36 44 7087 7226
fair value of scheme assets    6372 7842 – – 6372 7842 
    679 660 36 44 715 616
the following table shows the split of the group’s defined benefit schemes and post retirement medical benefit scheme between 
retirement benefit assets and retirement benefit obligations
  defined benefit post retirement total retirement
  schemes medical benefit scheme  benefit schemes
   2009 2008 2009 2008  2009 2008
   £m £m £m £m  £m £m
retirement benefit assets   – 715 – – – 715
retirement benefit obligations   679 55 36 44 715 99 
    679 660 36 44 715 616
the table above does not include the related deferred tax assets and liabilities
movements in the present value of obligations are as follows
  defined benefit post retirement total retirement
  schemes medical benefit scheme  benefit schemes
   2009 2008 2009 2008  2009 2008
   £m £m £m £m  £m £m
at start of period   7182 8054 44 47 7226 8101
current service cost   62 97 – – 62 97
interest on obligation   450 423 03 02 453 425
actuarial gains   361 1092 08 03 369 1095
curtailment gain   12 – – – 12 –
contributions from scheme members   48 51 – – 48 51
benefits paid   349 375 03 02 352 377
exchange differences   31 24 – – 31 24 
at end of period   7051 7182 36 44 7087 7226
movements in the fair value of scheme assets are as follows
     defined benefit schemes
       2009 2008
       £m £m
at start of period       7842 8015
expected return on scheme assets       538 582
actuarial losses       1800 742
contributions from sponsoring companies       71 295
contributions from scheme members       48 51
benefits paid       349 375
exchange differences       22 16
at end of period       6372 7842
 notes to the consolidated financial statements
continued 97 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
35 retirement benefit obligations continued
the fair value of scheme assets at the balance sheet date and the expected rate of return are analysed as follows
     2009 2008 2009 2008
     £m £m  
defined benefit schemes
equity     3389 4980 81 79
bonds     2845 2840 68 64
other     138 22 05 53 
      6372 7842
the expected return on individual classes of pension scheme assets are determined by reference to external indices and after taking 
advice from external advisers the overall expected rate of return is the weighted average of the returns above allowing for anticipated 
balances held in each asset class according to the scheme’s investment strategy the actual return on scheme assets was a loss of 
£1262m 200708 £160m
work has continued to reduce future funding volatility of the scheme as the revised investment strategy agreed in 200809 is 
implemented paragraph 106 of ias 19 requires the expected return on plan assets to be based on market expectations of returns 
over the entire life of the related obligation and as such the revised expected returns have been reflected the weighted average 
expected return of the revised investment strategy is 71 and this will be used to calculate the expected return on assets for 200910 
 
the history of experience adjustments is as follows
    2009 2008 2007 2006 2005
    £m £m £m £m £m
defined benefit schemes
present value of obligations     7051 7182 8054 8130 7293
fair value of scheme assets     6372 7842 8015 7278 5629
deficit in the scheme    679 660 39 852 1664
experience adjustments on scheme obligations
amount lossgain    560 – – 302 07
percentage of scheme obligations    79 – – 37 01
experience adjustments on scheme assets
amount lossgain    1800 742 155 996 142
percentage of scheme obligations    255 95 19 137 25
the cumulative effect of the experience adjustments on scheme liabilities as included in the consolidated statement of recognised 
income and expense is a loss of £265m 200708 gain of £295m
the cumulative effect of the experience adjustments on scheme assets as included in the consolidated statement of recognised 
income and expense is a loss of £1702m 200708 gain of £98m
the group expects to make contributions of approximately £5m to its defined benefit schemes in 200910 98 northern foods plc annual report and accounts 200809
36 events after the balance sheet date 
on 27 may 2008 the group announced that following the conclusion of negotiations to seek mutually acceptable and commercially 
viable terms for business supplied from northern foods’ hull ready meals facility northern foods and its main customer served by 
the site have agreed to terminate the existing supply contracts  
as a result we will be commencing consultation with employees on a proposal to cease production and close the site in accordance 
with our strategy to continue with business only where terms generate an adequate return the proposal includes consultation to move 
a proportion of production to other facilities the net profit impact in 200910 will be minimal and the company will incur a one off cash 
restructuring cost in the 200910 financial year which is expected to be less than £5m our 200809 accounts include a noncash 
impairment of £59m  
the group has also proposed a final dividend outlined in note 11 which is a nonadjusting post balance sheet event
there have been no other post balance sheet events
37 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are not 
disclosed in this note 
remuneration of key management personnel
the remuneration of the board of directors who are the key management personnel of the group is set out below in aggregate for 
each of the categories specified in ias 24 ‘related party disclosures’ further information about the remuneration of individual directors 
is provided in the audited section of the directors’ remuneration report
       2009 2008
       £m £m
salaries and other short term employee benefits       13 18
post employment benefits        01 –
compensation for loss of office       – 02
share based payments       06 04
        20 24
 notes to the consolidated financial statements
continued 99 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
independent auditors’ report to the members of 
northern foods plc
we have audited the parent company financial statements of 
northern foods plc for the 52 weeks ended 28 march 2009 
which comprise the company balance sheet the company 
cash flow statement the company statement of recognised 
income and expense and the related notes 38 to 57 
these parent company financial statements have been prepared 
under the accounting policies set out therein
we have reported separately on the group financial statements 
of northern foods plc for the 52 weeks ended 28 march 2009 
and on the information in the directors’ remuneration report that 
is described as having been audited 
this report is made solely to the company’s members as a body 
in accordance with section 235 of the companies act 1985 our 
audit work has been undertaken so that we might state to the 
company’s members those matters we are required to state to 
them in an auditors’ 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 and the company’s members 
as a body for our audit work for this report or for the opinions we 
have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report 
and the parent company financial statements in accordance 
with applicable law and international financial reporting standards 
ifrs as adopted by the european union are set out in the 
statement of directors’ responsibilities
our responsibility is to audit the parent company financial 
statements in accordance with relevant legal and regulatory 
requirements and international standards on auditing uk 
and ireland
we report to you our opinion as to whether the parent company 
financial statements give a true and fair view and whether 
the parent company financial statements have been properly 
prepared in accordance with the companies act 1985 we also 
report to you whether in our opinion the information given in 
the directors’ report is consistent with the parent company 
financial statements
in addition we report to you if in our opinion the company has 
not kept proper accounting records if we have not received all
the information and explanations we require for our audit or if 
information specified by law regarding directors’ remuneration 
and other transactions is not disclosed
we read the other information contained in the annual report 
as described in the contents section and consider whether it is 
consistent with the audited parent company financial statements 
we consider the implications for our report if we become aware 
of any apparent misstatements or material inconsistencies with 
the parent company financial statements our responsibilities do 
not extend to any further information outside the annual report
basis of audit opinion
we conducted our audit in accordance with international 
standards on auditing uk and ireland issued by the auditing 
practices board an audit includes examination on a test basis 
of evidence relevant to the amounts and disclosures in the parent 
company financial statements it also includes an assessment of 
the significant estimates and judgements made by the directors in 
the preparation of the parent company financial statements and of 
whether the accounting policies are appropriate to the company’s 
circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary 
in order to provide us with sufficient evidence to give reasonable 
assurance that the parent company financial statements are free 
from material misstatement whether caused by fraud or other 
irregularity or error in forming our opinion we also evaluated the 
overall adequacy of the presentation of information in the parent 
company financial statements
opinion
in our opinion
  the parent company financial statements give a true and fair 
view in accordance with ifrs as adopted by the european 
union as applied in accordance with the provisions of the 
companies act 1985 of the state of the company’s affairs 
as at 28 march 2009
  the parent company financial statements have been properly 
prepared in accordance with the companies act 1985 and
  the information given in the directors’ report is consistent with 
the parent company financial statements
deloitte llp
chartered accountants and registered auditors 
leeds
27 may 2009
  100 northern foods plc annual report and accounts 200809
company balance sheet
as at 28 march 2009
       28 march 29 march
       2009 2008
      notes £m £m
noncurrent assets
property plant and equipment      42 726 882
investments in subsidiaries      43 10280 10803
retirement benefit assets      56 – 715
derivative financial instruments      49 266 –
deferred tax assets      50 138 –
        11410 12400
current assets 
trade and other receivables      44 4171 3492
derivative financial instruments      49 01 –
cash and cash equivalents      45 485 583
        4657 4075
total assets        16067 16475
current liabilities  
trade and other payables      46 2245 1097
provisions      47 14 20
current taxation liabilities       126 184
bank loans and overdrafts      48 99 03
        2484 1304
noncurrent liabilities   
revolving credit facility 2010      48 1150 1300
senior loan notes 2012–2017      48 1620 1316
derivative financial instruments      49 – 41
long term loans due to subsidiary undertakings      4902 4991
retirement benefit obligations      56 631 44
deferred taxation liabilities       50 – 162
accruals and deferred income        26 –
        8329 7854
total liabilities        10813 9158 
net assets        5254 7317
equity       
share capital       51 1286 1286
share premium account      52 651 651
capital redemption reserve      52 236 236
reserve for own shares      52 505 395
employee share ownership trust reserve     52 88 83
hedging and translation reserve      52 69 64
other reserves      52 72 43
retained earnings      52 3533 5515
total equity        5254 7317
the financial statements were approved by the board of directors and authorised for issue on 27 may 2009 they were signed on its 
behalf by
s barden a m booker
director director
27 may 2009 27 may 2009 101 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
company cash flow statement
for the 52 weeks ended 28 march 2009
       2009 2008
      notes £m £m
net cash from operating activities      53 287 127
investing activities      
interest received       02 06
purchase of property plant and equipment      11 01
proceeds of sale of property plant and equipment      – 41
net cash used infrom investing activities       09 46
financing activities
dividends paid      11 207 210
decreaseincrease in amounts drawn on revolving credit facility 2010   23 150 450
purchase of treasury shares      52 110 53
purchase of shares for employee share ownership trust    52 05 41
net cash used infrom financing activities      472 146
net decreaseincrease in cash and cash equivalents     194 319
cash and cash equivalents at start of period      580 261
cash and cash equivalents at end of period      386 580
cash and cash equivalents comprise 
cash and cash equivalents       485 583
bank overdrafts       99 03
        386 580
company statement of recognised income and expense
for the 52 weeks ended 28 march 2009
       2009 2008
      notes £m £m
actuarial lossesgains on defined benefit pension schemes    52 56 1413 355
taxation on actuarial lossesgains taken directly to equity    50 52 399 128
fair value movement on cash flow hedge     52 308 24
transfer to profit or loss on cash flow hedge     52 303 11
net lossincome recognised directly in equity      1009 262
lossprofit for the period        761 996
net lossincome recognised directly in equity      1770 1258
total recognised income and expense for the period is all attributable to equity holders of the parent 102 northern foods plc annual report and accounts 200809
38 significant accounting policies
the separate financial statements of the company are presented as required by the companies act 1985 as permitted by that act 
the separate financial statements have been prepared in accordance with ifrs 
the financial statements have been prepared on the historical cost basis the principal accounting policies adopted are the same 
as those detailed in note 2 of the consolidated financial statements except as set out below
investments in subsidiaries are stated at cost less any provision for impairment
39 loss for the period
of the group profit for the period a loss of £761m 200708 profit of £996m has been dealt with in the accounts of the parent company 
in accordance with the exemptions allowed by section 2303 of the companies act 1985 the parent company has not presented 
its own income statement
40 lossprofit from operations 
a detailed analysis of auditors’ remuneration is provided below
       2009 2008
       deloitte llp deloitte llp 
       £’000 £’000
audit services
fees payable to the company’s auditors for the audit of the group’s annual report    85 80
        85 80
other services  
other services supplied pursuant to such legislation – half year review    38 37
other services – accounting advice       – 30
other       – 20
        38 87
tax services  
advisory services       142 119
compliance       139 143
        281 262
total       404 429
deloitte llp were appointed sole group auditors for both the current and prior period
41 staff costs
the average monthly number of employees including executive directors was
       2009 2008
       number number
administration       260 284
aggregate remuneration comprised
       2009 2008
       £m £m
wages and salaries       89 90
social security costs       11 11
other pension costs        08 08
        108 109
 notes to the company financial statements 103 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
42 property plant and equipment 
       plant 
     freehold  leasehold fixtures and
     property property vehicles total
     £m £m £m £m
cost or valuation 
at start of prior period     1131 161 246 1538
additions     – – 01 01
disposals     51 – – 51
reclassifications     01 – 01 –
group transfers     – – 01 01 
at start of period     1081 161 247 1489
additions     – – 12 12
at end of period     1081 161 259 1501
accumulated depreciation and impairment losses
at start of prior period     371 37 149 557
charge for period     21 03 20 44
restructuring provision for impairment     – – 13 13
disposals     07 – – 07
at start of period     385 40 182 607
charge for period     17 03 17 37
restructuring provision for impairment     131 – – 131
at end of period     533 43 199 775
carrying amount        
at end of period     548 118 60 726
at start of period     696 121 65 882
at the period end the company had entered into contractual commitments for the purchase of property plant and equipment 
amounting to £nil 200708 £nil
impairment charges of £131m were incurred during the period relating to properties that are used within the chilled segment 
the company impaired these asset values on a fair value less costs to sell basis using past experience and external sources of 
information such as open market valuations the company performs impairment reviews where there is an indicator of impairment 
the recoverable amounts of other items of property plant and equipment were determined from value in use calculations no 
impairments were identified on these assets the key assumptions for the value in use calculations are those regarding the discount 
rates growth rates and expected changes to selling prices and direct costs during the period management estimates discount rates 
using the group’s weighted average cost of capital
the company prepares cash flow forecasts derived from the most recent financial plans approved by management for the next five 
years and extrapolates these cash flows in perpetuity using growth assumptions relevant for the business sector the growth rate does 
not exceed 30 200708 does not exceed 30 and is not considered to be higher than the average long term industry growth rate
the rate used to discount the forecast cash flows for all cgus are based on the group’s pretax weighted average cost of capital of 
111 200708 111 104 northern foods plc annual report and accounts 200809
43 investments in subsidiaries
the company’s principal subsidiaries at the period end are as follows
directly owned
convenience foods limited
northern foods grocery group limited
indirectly owned
f w farnsworth limited
green isle foods limited
cavaghan  gray group limited
cavaghan  gray limited
solway foods limited
ethnic cuisine limited
the above companies are all wholly owned ordinary shares and their principal activities are food manufacture all are incorporated in 
the uk except for green isle foods limited which is incorporated in the republic of ireland
       2009 2008
subsidiary undertakings       £m £m
at start of period       8725 8895
impairment of investments       – 170
at end of period       8725 8725
long term loans due from subsidiary undertakings      1555 2078
        10280 10803
the directors consider the value of investments to be supported by their underlying assets
44 trade and other receivables
       2009 2008
       £m £m
receivables from subsidiary undertakings      4143 3440
other receivables       16 42
other prepayments       12 10
        4171 3492
the directors consider that the carrying amount of trade and other receivables approximates to their fair value the directors consider 
that the maximum credit risk at the balance sheet date is equivalent to the carrying value of trade and other receivables none of the 
above are considered past due or impaired at the period end
45 cash and cash equivalents 
       2009 2008
       £m £m
cash and cash equivalents       485 583
        485 583
cash and cash equivalents comprises cash held by the company and short term bank deposits with an original maturity of three 
months or less the directors consider that the carrying amount of these assets to be approximately their fair value
 notes to the company financial statements
continued 105 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
46 trade and other payables
       2009 2008
       £m £m
 
trade payables       42 30
payables due to subsidiary undertakings      2058 868
accruals and deferred income       38 33
other payables including social security      107 166 
        2245 1097
trade payables principally comprise amounts outstanding for trade purchases and ongoing costs the average credit period taken for 
trade payables is 33 days 200708 33 days the company has financial risk management policies in place to ensure that all payables 
are paid within the internal credit timeframe the directors consider that the carrying amount of trade payables approximates to their 
fair value
47 provisions
        £m
at start of period        20
restructuring provisions – charge for period        06
utilised in period         12
at end of period        14
all of the £14m provisions are included within current liabilities and relate to restructuring items the provision is expected to be utilised 
in full within the next 52 week period 
the restructuring provisions made during the period of £06m are in respect of central cost reduction initiatives
48 financial liabilities – borrowings
       2009 2008
current       £m £m
bank loans and overdrafts due within one year or on demand     99 03
        99 03
       2009 2008
noncurrent       £m £m
revolving credit facility 2010       1150 1300
senior loan notes 2012–2017       1620 1316
        2770 2616
borrowings are repayable as follows
       2009 2008
       £m £m
within one year or on demand       99 03
in the second year       1150 –
in the third to fifth years inclusive       527 1759
after five years       1093 857
        2869 2619 106 northern foods plc annual report and accounts 200809
48 financial liabilities – borrowings continued
bank loans and overdrafts are analysed by currency as follows
      sterling us dollars total
2009      £m £m £m
bank loans and overdrafts due within one year or on demand    99 – 99
revolving credit facility 2010      1150 – 1150
senior loan notes 2012–2017      543 1077 1620
       1792 1077 2869
2008
bank loans and overdrafts due within one year or on demand    03 – 03
revolving credit facility 2010      1300 – 1300
senior loan notes 2012–2017      543 773 1316
       1846 773 2619
for further detail regarding the bank loans see notes 23 and 24 within the group disclosure notes
49 financial instruments
categories of financial instruments
    carrying value fair value
     2009 2008  2009 2008
     £m £m £m £m
financial assets
derivatives that are designated and effective as hedging instruments 
carried at fair value
 derivative financial instruments cross currency interest rate swaps  266 – 266 –
 derivative financial instruments currency rate swaps   01 – 01 –
loans and receivables at amortised cost
 long term loans due from subsidiary undertakings   1555 2078 1555 2078
 receivables from subsidiary undertakings    4143 3440 4143 3440
 cash and cash equivalents     485 583 485 583
      6450 6101 6450 6101
financial liabilities
financial liability held at amortised cost in a cash flow hedging relationship
 senior loan notes 2012–2017     1620 1316 1683 1390
derivatives that are designated and effective as hedging instruments 
carried at fair value
 derivative financial instruments cross currency interest rate swaps  – 41 – 41
other financial liabilities at amortised cost
 trade payables     42 30 42 30
 long term loans due to subsidiary undertakings    4902 4991 4902 4991
 payables due to subsidiary undertakings    2058 868 2058 868
 bank loans and overdrafts     99 03 99 03
 revolving credit facility 2010     1150 1300 1150 1300 
      9871 8549 9934 8623
the intercompany receivable balance has been reviewed for recoverability at the balance sheet date the fair value of the receivables 
from subsidiary undertakings approximate to their carrying value due to their short term nature the fair value of the cash and cash 
equivalents are based on their market value
the fair values of the financial assets that are designated and effective as hedging instruments have been calculated by discounting 
expected future cash flows at prevailing interest rates and by applying period end exchange rates 
the directors use their judgement in selecting an appropriate valuation technique for derivatives that are designated and effective as 
hedging instruments carried at fair value but that are not quoted in an active market valuation techniques commonly used by market 
practitioners are applied and assumptions are made based on quoted market rates adjusted for specific features of the instrument
the fair value of the other financial liabilities at amortised cost approximates to their carrying value the trade and other payables 
approximate to their fair value due to the short term nature of the payables the fair value of the bank loans and overdrafts and the 
revolving credit facility 2010 approximate to their fair value based on their variable market rate
long term loans due to subsidiary undertakings are interest free and have no fixed date of redemption
payables due to subsidiary undertakings carry a fixed interest rate linked to market rates
 notes to the company financial statements
continued 107 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
49 financial instruments continued
the following table details the company’s maturity profile of its financial liabilities excluding derivative financial instruments
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2009   £m £m £m £m £m £m
senior loan notes 2012–2017   – 46 45 841 1189 2121 
trade payables   39 03 – – – 42
long term loans due to subsidiary undertakings  – – – – 4902 4902
payables due to subsidiary undertakings  2058 – – – – 2058
bank loans and overdrafts   99 – – – – 99
revolving credit facility 2010   06 11 50 1170 – 1237
    2202 60 95 2011 6091 10459
      
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2008   £m £m £m £m £m £m
senior loan notes 2012–2017   – 38 37 736 982 1793
trade payables   28 02 – – – 30
long term loans due to subsidiary undertakings  – – – – 4991 4991
payables due to subsidiary undertakings  868 – – – – 868
bank loans and overdrafts   03 – – – – 03
revolving credit facility 2010   06 13 57 1398 – 1474
    905 53 94 2134 5973 9159
the liquidity profile of the trade payables has been assumed consistent with the company’s average credit period taken for trade 
payables of 33 days 200708 33 days
payables due to subsidiary undertakings can be repayable on demand and as such have been classified as less than one month
the repayment of the interest and principal on the us dollar denominated senior loan notes 2012–2017 has been calculated at the 
period end rate of £1  1432 200708 £1  1989
the repayment of interest on the revolving credit facility 2010 has been calculated on the principal at the period end date and the 
interest rate at that date
the maturity profiles of the derivative financial instruments are shown below the us dollar exchange rate used is that at the balance 
sheet date of £1  1432 200708 £1  1989
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2009   £m £m £m £m £m £m
swap cash flow paid to banks   – 24 24 333 783 1164
swap cash flow received from banks   – 31 31 419 966 1447
     – 07 07 86 183 283
   less than  3 months to
   1 month 1–3 months 1 year 1–5 years 5 years total
2008   £m £m £m £m £m £m
swap cash flow paid to banks   – 24 24 381 783 1212
swap cash flow received from banks   – 23 23 347 696 1089
    – 01 01 34 87 123
for further detail regarding the financial instruments see note 25 within the group disclosure notes 108 northern foods plc annual report and accounts 200809
50 deferred taxation assetsliabilities
   retirement  other accelerated  
   benefit  employee tax revaluation 
   obligation benefits depreciation of buildings other total
   £m £m £m £m £m £m
at start of prior period   60 04 03 11 – 56
chargedcredited to income statement  78 – 02 – 03 73
restructuring items   18 – 01 – – 17
charged to equity    128 01 – 01 – 128
at start of period   164 03 06 10 03 162
chargedcredited to income statement  30 09 25 – – 46
restructuring items   16 – 32 – – 16
movement on deferred tax due to change in legislation – – 73 – – 73
charged to equity    399 03 – 01 – 403
at end of period   189 15 60 09 03 138
ias 12 ‘income taxes’ permits the offsetting of balances within the same tax jurisdictions all of the deferred tax assets were available for 
offset against deferred tax liabilities
the movement on deferred tax due to the change in legislation arose from the amendments to the industrial buildings allowance 
regime which were substantively enacted in the finance act 2008
no deferred tax has been provided on capital losses totalling £560m at 28 march 2009 200708 £560m as it is uncertain when 
these losses will be utilised against future taxable gains the unprovided deferred tax asset on these losses is £157m 200708 £157m
51 share capital
for further detail regarding the share capital see note 28 within the group disclosure notes
52 reserves 
  share capital reserve    
  premium redemption for own esot hedging other retained
  account reserve shares reserve reserve reserves earnings
  £m £m £m £m £m £m £m
at start of period  651 236 342 42 29 33 4501
net profit for period  – – – – – – 996
dividends  – – – – – – 210
actuarial gains on defined benefit 
 pension schemes net of deferred tax – – – – – – 227
purchase of equity share capital  – – 53 – – – –
equity settled incentive schemes 
 net of deferred tax  – – – – – 10 –
increase in fair value of cash flow hedge – – – – 24 – –
transfer to profit or loss on cash flow hedge – – – – 11 – –
purchase of shares for esot  – – – 41 – – –
other movements  – – – – – – 01
at start of period  651 236 395 83 64 43 5515
net profit for period  – – – – – – 761
dividends  – – – – – – 207
actuarial gains on defined benefit 
 pension schemes net of deferred tax – – – – – – 1014
purchase of equity share capital  – – 110 – – – –
equity settled incentive schemes 
 net of deferred tax  – – – – – 30 –
increase in fair value of cash flow hedge – – – – 308 – –
transfer to profit or loss on 
 cash flow hedge  – – – – 303 – –
purchase of shares for esot  – – – 05 – – –
other movements  – – – – – 01  –
at end of period  651 236 505 88 69 72 3533
for further detail regarding reserves see note 29 within the group disclosure notes retained earnings include £1924m 200708 £1924m 
of undistributable reserves 
 notes to the company financial statements
continued 109 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
53 reconciliation of net cash from operating activities 
       2009  2008 
      notes £m £m
lossprofit from operations       809 121
adjustments for      
depreciation of property plant and equipment     42 37 44
impairment of property plant and equipment     42 131 13
loss on disposal of property plant and equipment      – 02
impairment of investments in subsidiaries      – 170
decrease in provisions       06 20
change in retirement benefit obligation excluding special contributions    26 18
equity settled incentive schemes       27 11
other noncash movements       02 –
operating cash flow before movement in working capital and special pension contributions   644 359
special pension contributions       – 220
operating cash flow before movement in working capital     644 139
movement in trade and other receivables including movement on intercompany balances   338 2608
movement in trade and other payables including movement on intercompany balances   739 2472 
cash from operations       433 275
interest paid       138 149
taxation recovered       08 01 
net cash from operating activities       287 127
54 operating lease commitments
outstanding commitments for future minimum lease payments under noncancellable operating leases fall due as follows
       2009  2008 
       £m £m
within one year       13 13
in the second to fifth years inclusive       55 44
after five years       27 53
        95 110
the company leases various offices and warehouses under noncancellable operating lease agreements the leases have various 
terms escalation clauses and renewal rights the company also leases plant and machinery and vehicles under noncancellable 
operating lease agreements
55 equity settled share based payments
for further detail regarding share based payments see note 34 within the group disclosure notes 110 northern foods plc annual report and accounts 200809
56 retirement benefit obligations
the amounts recognised in the company balance sheet in respect of the company’s defined benefit schemes and post employment 
medical benefit scheme are as follows
  defined benefit post retirement total retirement
  schemes medical benefit scheme  benefit schemes
   2009 2008 2009 2008  2009 2008
   £m £m £m £m  £m £m
present value of obligations    6865 7011 36 44 6901 7055
fair value of scheme assets    6270 7726 – – 6270 7726
    595 715 36 44 631 671
the table above does not include the related deferred tax assets and liabilities 
movements in the present value of obligations are as follows
  defined benefit post retirement total retirement
  schemes medical benefit scheme  benefit schemes
   2009 2008 2009 2008  2009 2008
   £m £m £m £m  £m £m
at start of period   7011 7907 44 47 7055 7954
current service cost   53 88 – – 53 88
interest on obligation   441 415 03 02 444 417
curtailment gain   12 – – – 12 –
actuarial gains   327 1065 08 03 335 1068
contributions from scheme members   44 38 – – 44 38
benefits paid   345 372 03 02 348 374
at end of period   6865 7011 36 44 6901 7055
movements in the fair value of scheme assets are as follows
     defined benefit schemes
       2009 2008
       £m £m
at start of period       7726 7909
expected return on scheme assets       529 574
actuarial losses       1748 713
contributions from the sponsoring company      64 290
contributions from scheme members       44 38
benefits paid       345 372
at end of period       6270 7726
for further detail on the retirement benefit obligations see note 35 within the group disclosure notes the group disclosure includes 
information on the scheme pension builder the plan and the post retirement medical benefit scheme the scheme pension builder 
and the post retirement medical benefit scheme are included within the company financial statements
 notes to the company financial statements
continued 111 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
57 related party transactions
transactions with subsidiaries
details of transactions which comprise group recharges and net interest receivable on intercompany balances between the company 
and its subsidiary undertakings are set out below
       2009  2008 
       £m £m
group recharges       403 579
net interest receivable       191 225
        594 804
the group recharges include special pension contributions of £nil 200708 £220m
a summary of the balances outstanding at the period end is shown below
       2009  2008 
       £m £m
receivables from subsidiary undertakings due in less than one year    4143 3440
long term loans due from subsidiary undertakings      1555 2078
        5698 5518
payables due to subsidiary undertakings in less than one year     2058 868
long term loans due to subsidiary undertakings      4902 4991
        6960 5859
total       1262 341
remuneration of key management personnel
the remuneration of the directors who are the key management personnel of the company is set out within note 37 112 northern foods plc annual report and accounts 200809
five year record
    2005 2006 2007 2008 2009
 
continuing operations
consolidated income statement
revenue   £m 8789 8620 8885 9319 9752
profit from operations††   £m 696 554 457 484 527
operating margin††    79 64 51 52 54
net finance expenseincome††   £m 268 224 57 17 52
profit before taxation   £m 428 330 400 501 475
profit after taxation†   £m 347 277 319 384 284
earnings per share
adjusted earnings per share   pence 708 568 652 788 776
return on operating assets
average net operating assets   £m  4073 3756 3531 3574
return on net assets     136 122 137 147
return on invested capital††‡
profit from operations   £m   457 484 527
average invested capital   £m   4482 4420 4504
return on continuing average invested capital     102 110 117
discontinued operations
consolidated income statement
revenue   £m 5699 5762 3174 – –
profit from operations    £m 194 121 13 – –
continuing and discontinued operations as reported
earnings per share
adjusted earnings per share   pence 1027 777 672 788 776
earnings per share   pence 466 103 460 708 054
dividend per share   pence 905 425 425 450 450
dividend cover   times 11 18 16 18 17
ebitda debt   times 20 25 18 20 21
capital expenditure   £m 622 553 281 193 304
invested capital 
net equity    £m 1556 1521 1212 1654 541
add back deficitless surplus on retirement benefit schemes  £m 1712 902 86 616 715
less deferred tax assetadd back deferred tax 
 liability on retirement benefit schemes   £m 504 264 65 158 197
adjusted net equity    £m 2764 2159 1233 1196 1059
net debt   £m 3263 3631 1742 2002 2067
trading capital employed    £m 6027 5790 2975 3198 3126
accumulated goodwill written off   £m 2110 2110 1166 1166 1166
total invested capital    £m 8137 7900 4141 4364 4292
total invested capital excluding net debt   £m 4874 4269 2399 2362 2225
return on invested capital      
profit from operations††   £m 890 675 470 484 527
average invested capital   £m 8401 8019 6021 4253 4328
return on average invested capital    106 84 78 114 122
 stated before restructuring items
† the effective taxation rate for continuing operations for each period has been assumed to be the same as that for the group
‡   continuing return on invested capital is calculated using continuing profit from operations divided by continuing average invested capital continuing average invested 
capital has been calculated using a 13 month average used for performance share plan this includes the benefit of asset impairments
†† restated for the change in presentation of the pensions finance chargecredit from within profit from operations to net finance costs 113 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
113 northern foods plc annual report and accounts 200809
shareholder analysis
at 20 may 2009
    holders shares held
     number  number 
by classification
individuals     32824 956967 45466570 88435
bank or nominees     1282 37375 408669560 794884
investment trust     15 00437 188389 00366
pension trust     4 00116 8041 00016
other corporate body     175 05101 59791911 116298
total     34300 10000 514124471 10000
by size of holding
1–100     5958 173703 271628 00528
101–500     12029 350700 3144745 06116
501–1000     5553 161895 4187324 08141
1001–2000     4679 136414 6930754 13481
2001–5000     3875 112974 12497644 24322
5001–50000     1883 54898 22524827 43383
50001–100000     100 02915 7317712 14329
100001 and over     223 06501 457249837 889700
total     34300 10000 514124471 10000
 this includes 4546m shares held in treasury
percentage of shares held
01 individuals – 884
02 other – 9116
02
01
01 individuals – 9570
02 other – 430
01 02
percentage of shareholders 114 northern foods plc annual report and accounts 200809
financial calendar
         2009
full year results announcement        27 may
annual report issued        12 june
half yearly interest payment on senior loan notes 2012–2017      20 june
latest date for receipt of forms of proxy        13 july
annual general meeting        15 july
first interim management statement        15 july
shares quoted exdividend        29 july
record date for final dividend        31 july
final dividend payment on ordinary shares       28 aug
half year results announcement        10 nov
half yearly interest payment on senior loan notes 2012–2017      20 dec
         2010
second interim management statement       14 jan
interim dividend payment on ordinary shares       jan
financial year end        27 march
company information
registered office
2180 century way
thorpe park 
leeds ls15 8zb
telephone 0113 390 0110
facsimile 0113 390 0211
website wwwnorthernfoodscom
registered in england and wales
no 471864
auditors
deloitte llp
merchant bankers
n m rothschild  sons limited
stockbrokers
ubs investment bank 
registrar to the ordinary shareholders
capita registrars limited
northern house
woodsome park
fenay bridge
huddersfield hd8 0ga
telephone 0871 664 0444 calls cost 10p per minute including vat 
plus network extras
email northernfoodscapitaregistrarscom
website wwwcapitaregistrarscomshareholders 115 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
115 northern foods plc annual report and accounts 200809
shareholder services and helpline
shareholders who change address or who want to have 
their dividends paid directly into their bank account may do so 
on the following website wwwcapitaregistrarscomshareholders 
or can write to the registrar capita registrars northern house 
woodsome park fenay bridge huddersfield hd8 0ga if they 
require other information about their holding shareholders 
can contact the registrar on the dedicated northern foods 
shareholder information telephone line 0871 664 0444 calls cost 
10p per minute including vat plus network extras or email their 
enquiry indicating that they are a northern foods shareholder 
to northernfoodscapitaregistrarscom
shareholder information on the internet
the northern foods website wwwnorthernfoodscom provides 
access to shareholder information including our annual and 
half year reports share price and recent share price trends 
financial highlights and results presentations to analysts as well 
as a link to our registrar wwwcapitaregistrarscomshareholders
the link to our registrar allows shareholders to access their 
individual shareholder details shareholders will be required 
to pass an identity check to access their personal information 
this link also allows shareholders to download stock transfer 
dividend mandate and change of address forms
ecommunications
shareholders may also now receive reports electronically 
by logging onto the registrar’s website at wwwcapitaregistrars
comshareholders and follow the instructions by clicking on 
manage my ecomms or simply follow the link from the northern 
foods website if you have any problems registering or would 
like further information please contact the registrar’s helpdesk 
on 0871 664 0444 calls cost 10p per minute including vat plus 
network extras
electronic proxy voting 
shareholders wishing to appoint a proxy electronically via the 
internet should refer to the instructions contained in the circular 
sent to shareholders with this report
dividend mandates
shareholders may choose to have dividends paid electronically 
into their united kingdom bank or building society account 
using the bacs system this process ensures that the amount 
of the dividend is passed directly into their account as cleared 
funds on the date the payment is due confirmation of payment 
is contained in a dividend tax voucher which is posted to 
shareholders’ registered addresses at the time of payment 
this voucher should be kept safely for future reference 
any shareholder wishing to adopt this method of payment 
should complete a dividend mandate form which can be found 
attached to the last dividend warrant alternatively a form can 
be downloaded from the registrar’s website or requested by 
calling the telephone helpline on 0870 664 0444 calls cost 
10p per minute including vat plus network extras
the following share dealing services are available through 
our registrar
online and telephone share dealing
this service is provided by capita share dealing services 
and offers shareholders a quick and easy way to buy or sell 
northern foods plc ordinary shares at the latest price available 
on the london stock exchange you can buy or sell shares 
by phone or online the commission to deal online is just 1 
subject to a minimum charge of £20 and 15 to deal by phone 
with a minimum charge of £25 in addition stamp duty currently 
05 is payable on purchases there is no need to open an 
account in order to deal and you will be able to buy and sell at 
live prices during market hours in addition there is a convenient 
facility to place your order outside of market hours up to 90 day 
limit orders are available for sales to find out more or to use the 
service simply log on at wwwcapitadealcom or call 0870 458 4577 
please have your share certificate to hand when you login or 
call together with a bank debit card if you wish to purchase 
additional shares
these services are offered on an execution only basis and 
terms and conditions will apply  this is not a recommendation 
to buy sell or hold shares in northern foods plc shareholders 
who are unsure of what action to take should obtain independent 
financial advice share values may go down as well as up 
which may result in a shareholder receiving less than heshe 
originally invested
capital gains tax
the base cost of a northern foods ordinary share at 31 march 
1982 for capital gains tax purposes is 758 pence this figure 
is the adjusted price to reflect the effect of the rights issue 
in january 1992 the oneforone capitalisation issue in august 
of the same year and the demerger of express dairies plc 
now arla foods uk on 30 march 1998
any gain arising on disposal may also need to be adjusted 
to take account of indexation allowances and since these 
adjustments will depend on individual circumstances shareholders 
are recommended to consult their financial advisers
boiler rooms
shareholders are advised to be very wary of any unsolicited 
advice offers to buy shares at a discount or offers of free 
company reports these are typically from overseas based 
“brokers” who target uk shareholders offering to sell them 
what often turn out to be worthless or high risk shares in 
us or uk investments these operations are commonly known 
as “boiler rooms”
if you receive any unsolicited investment advice
  make sure you get the correct name of the person and 
organisation
  check that they are properly authorised by the fsa before 
getting involved by visiting wwwfsagovukregister
  report the matter to the fsa either by calling 0845 606 1234 
or visiting wwwmoneymadeclearfsagovuk
  if the calls persist hang up
if you deal with an unauthorised firm you will not be eligible to 
receive payment under the financial services compensation 
scheme the fsa can be contacted by completing an online 
form at wwwfsagovukpagesdoingregulatedlawalerts
overseasshtml
details of any sharedealing facilities that the company endorses 
will only be included in company mailings
more detailed information can be found on the fsa website 
wwwmoneymadeclearfsagovuk
shareholder information 116 northern foods plc annual report and accounts 200809
principal operations
central functions
northern foods plc
2180 century way thorpe park leeds ls15 8zb
telephone 0113 390 0110
northern foods support services
trinity park house trinity business park fox way
wakefield west yorkshire wf2 8ee
telephone 01924 831300
northern foods technical services
biocity nottingham pennyfoot street nottingham ng1 1gf
telephone 0115 912 4424
chilled division
cavaghan  gray
brunel house brunel way carlisle cumbria ca1 3nq
telephone 01228 518200
operations at carlisle and hull
convenience foods grimsby
unit 1 pegasus way europarc grimsby
north east lincolnshire dn37 9ts
telephone 01472 243600
ethnic cuisine
viking way winch wen industrial estate winch wen
swansea sa1 7de
telephone 01792 772064
fenland foods
turnpike close swingbridge road earlesfield industrial estate
grantham lincolnshire ng31 7xu
telephone 01476 567733
gunstones bakery
stubley lane dronfield south yorkshire s18 1pf
telephone 01246 414651
pennine foods
drakehouse crescent waterthorpe sheffield
south yorkshire s20 7jg
telephone 0114 247 6864
solway foods
3 godwin road earlstrees industrial estate corby
northants nn17 4ds
telephone 01536 464400
operations at corby and manton wood worksop 
the pizza factory
gateside road nottingham ng2 1lt
telephone 0115 986 8204
frozen division 
dalepak foods
dale house leeming bar northallerton north yorkshire dl7 9ul
telephone 01677 424111
green isle foods
ida industrial estate monread road naas co kildare ireland
telephone 00 353 45 848000
operations at gurteen longford naas and portumna 
walter holland  sons
baxenden accrington lancashire bb5 2sa
telephone 01706 213591
bakery division
fox’s biscuits
wellington street batley west yorkshire wf17 5je
telephone 01924 444333
operations at batley kirkham and uttoxeter 
matthew walker
heanor gate road heanor derbyshire de75 7rj
telephone 01773 760121  designed and produced by 35 communications
food photography rob white
people and location photography simon kreitem and philip gatward
we would like to thank our employees at the following sites for their 
assistance in the photography featured within this report gunstones bakery 
northern foods grimsby thorpe park northern foods swansea 
fox’s biscuits kirkham cavaghan  gray carlisle matthew walker 
the pizza factory solway foods worksop
printed at the colourhouse iso14001 and carbonneutral
®
this report is printed on hello silk which is produced using wood ﬁ bre from fully 
sustainable forests in europe canada the usa and chile with fsc certiﬁ cation 
all pulps used are elemental chlorine free ecf and manufactured at a mill 
that has been awarded the iso14001 and emas certiﬁ cates for environmental 
management the use of the fsc logo identiﬁ es products which contain wood 
from wellmanaged forests certiﬁ ed in accordance with the rules of the forest 
stewardship council
financial highlights
  good sales growth increasing total revenue by 46 to £9752m 200708 £9319m
  proﬁ t from operations up 89 at £527m 200708 £484m after £42m of incremental 
investment in the business
  proﬁ t before tax pbt at £475m 200708 £501m reﬂ ecting a reduced pension credit
  proﬁ t for the period
1
 of £25m 200708 £345m after restructuring costs of £354m 200708 £47m 
and tax allowance changes
  underlying eps
2
 of 645 pence per share 200708 562p
  proposed dividend maintained at 450 pence per share 200708 450p
  robust balance sheet with new revolving credit facility rcf in place through to 2012 
net debt
3
 £2067m 200708 £2002m
 highlights
ifc financial and operating highlights
 directors’ report
02  chairman’s review
04  chief executive’s review
08  performance review
10 operational review
26  corporate social responsibility review
32  board of directors and company secretary
33  corporate governance
41  remuneration report
53  other statutory and regulatory information
56   statement of directors’ responsibilities
 financial statements
57  independent auditors’ report – group
58  consolidated income statement
59  consolidated balance sheet
60  consolidated cash ﬂ ow statement
61    reconciliation of net cash ﬂ ow to 
movements in net debt 
  consolidated statement of recognised 
income and expense
62 notes to the consolidated ﬁ nancial
 statements
99 independent auditors’ report – company
100 company balance sheet
101  company cash ﬂ ow statement
  company statement of recognised 
income and expense
102  notes to the company ﬁ nancial statements
112 five year record
 shareholder information
113 shareholder analysis
114  financial calendar
 company information
115 shareholder information
116 principal operations
footnote deﬁ nitions throughout this report
  items which relate to signiﬁ cant restructuring events are presented as a separate column within their relevant 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
1  proﬁ t for the period includes restructuring costs of £354m 200708 £47m – including £229m for fenland mothballing – and an exceptional tax charge of £125m following the withdrawal 
of industrial buildings allowances
2  underlying earnings per share eps is before restructuring items movement on deferred tax due to change in legislation oneoff release of prior year tax liability and the net pension 
ﬁ nancing this is reconciled to earnings per share in the ﬁ nancial statements
3  net debt is deﬁ ned as total borrowings including both short and long term bank loans bonds loan notes and ﬁ nance 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 us dollar denominated loan notes
4  underlying proﬁ t before taxation reﬂ ects group proﬁ t before tax before restructuring items and net pension ﬁ nancing this is reconciled to pbt in the ﬁ nancial statements 
5  roic is proﬁ t from operations before restructuring items for continuing operations divided by a 13 month average invested capital net equity adjusted to exclude retirement beneﬁ t 
obligations net of deferred tax and net debt together with accumulated goodwill previously written off
6  adjusted earnings per share eps is basic eps before restructuring items movement on deferred tax due to change in legislation and oneoff release of prior year tax liability this is 
reconciled to earnings per share in the ﬁ nancial statements
go online…
wwwnorthernfoodscom
 200809 200708
 £m £m
revenue 9752 9319
proﬁ t from operations 527 484
proﬁ t before taxation 475 501
underlying pbt
4
 390 344
proﬁ t for the period
1
  25 345
operating margin 54 52
return on invested capital roic
5
 117 110
underlying earnings per share eps
2
 645p 562p
adjusted earnings per share eps
6
 776p 788p
dividend per share proposed 450p 450p northern foods plc
2180 century way
thorpe park
leeds
ls15 8zb
tel 0113 390 0110
fax 0113 390 0211
wwwnorthernfoodscom
 northern foods plc annual report 200809
annual report 200809
making great tasting food


Summary:
 2 northern foods plc annual report and accounts 200809 
chairman’s 
review
anthony hobson
chairman 3 northern foods plc annual report and accounts 200809
shareholder information highlights directors’ report financial statements
and acquisition led investments the board 
has considered that the prudent approach 
is to maintain the dividend at the prior year 
level of 450p per share giving a dividend 
cover of 17 times from prerestructuring 
cash ﬂ ows the ﬁ nal dividend of 295p 
per share will be payable in august 2009
key to our future success is attracting 
and retaining the right management talent 
we have made a number of important and 
high quality appointments during the year 
and enhanced our performance culture 
a focus on efﬁ ciency and innovation is 
at the heart of everything we do and is a 
key building block in our reward structures 
during the year we took the difﬁ cult 
decision to mothball our fenland foods 
site when we were unable to reach 
agreement with the main customer of that 
site which would ensure its ﬁ nancial viability 
at our hull ready meals site the conclusion 
of negotiations with our main customer 
of that site has led to a termination of 
the supply contracts as a result we are 
consulting with our employees on a 
proposal to cease production and close 
the site our decision to discontinue supply 
contracts reﬂ ects the need for the group 
to eliminate unproﬁ table or marginal 
business and ensure that northern foods 
is best placed to succeed in this very 
competitive environment
we also continue to evaluate a proposal 
to invest in a new world class biscuit 
manufacturing facility in a highly 
competitive market this is a signiﬁ cant 
initiative for us but the current volatile and 
difﬁ cult economic conditions mean that the 
decision process is complex the board 
fully recognises the impact these difﬁ cult 
choices have on our employees and their 
local communities our top priority is 
to continue our timely communication 
with all those affected and to ensure 
that the consequences of our decisions 
are mitigated as far as possible
overview 
in a tough market and set against a 
backdrop of a recessionary environment 
northern foods has continued to grow into 
a stronger and more effective business 
which is well placed in our sector we 
are delivering growth in value products 
alongside our traditional premium ranges 
maintaining our drive towards lowering 
costs and increasing efﬁ ciency and 
targeting investment and new channels 
to develop our business
performance and dividend 
despite very challenging trading conditions 
continued high commodity costs the 
impact of the stronger euro for our nonuk 
operations and investment to build our 
brands we have reported a proﬁ t from 
operations of £527m an increase of 
nearly 9 on the previous year after a 
lower pension ﬁ nancing credit reﬂ ecting 
reduced asset returns we reported a 
proﬁ t before tax of £475m 200708 £501m 
underlying proﬁ t before tax
4
 increased 
by 13 to £390m 200708 £344m 
during the year we spent £110m on a share 
buyback programme which beneﬁ ted 
our earnings per share adjusted eps
6
 
was 776p 200708 788p whilst underlying 
eps
2
 increased by 15 to 645p 200708 
562p proﬁ t for the period
1
 was £25m 
200708 £345m after restructuring 
items of £354m 200708 £47m and the 
withdrawal of tax allowances of £125m 
our balance sheet is strong with a new 
revolving credit facility in place to 2012 
your board is strongly committed to 
enhancing shareholder value and 
maintaining a strong balance sheet 
we have in this challenging and uncertain 
economic environment to be prudent 
and ensure that we have the capacity to 
maintain the appropriate levels of organic 
these are challenging market conditions 
but our operational and ﬁ nancial strengths 
position us favourably to address these 
markets to continue our good progress 
and to build a strong business
in other initiatives we succeeded in winning 
a major contract jointly with dhl to supply 
british airways with onboard catering for 
its short haul ﬂ eet starting in 2010 this 
takes us into a new market which plays to 
our strength in providing high quality and 
innovative convenience food we have also 
been enhancing our customer base by 
building strong relationships with discount 
retailers and developing our range of value 
products which are becoming increasingly 
important in these difﬁ cult times 
our employees
the challenging market in which we 
operate requires the very best from our 
colleagues within northern foods our loyal 
employees have contributed greatly to our 
results in this challenging year and i would 
like to thank them for their continuing efforts
your board
your board has continued to beneﬁ t from 
the skills and depth of experience available 
to support the management team and 
i thank colleagues for their continued 
commitment and support andy booker 
group finance director joined the board 
in november 2008 replacing jez maiden 
who left the group to take up a role at 
national express group plc jez made 
a very important contribution during his 
three years at northern foods and we 
wish him well
summary
we have much still to do to realise our 
potential and deliver value for all our 
stakeholders however we have made 
good progress over the past few years 
in restructuring and repositioning your 
business for success we are operationally 
and ﬁ nancially stronger have a high quality 
management team and are a better 
balanced and more resilient business 
these are challenging market conditions 
but our operational and ﬁ nancial strengths 
position us favourably to address these 
markets to continue our good progress 
and to build a strong business
anthony hobson
chairman
27 may 2009