interim results 6 september 2007

Interim Results6 September 2007

John Neilson

Finance Director

Sales analysis 2007Sales change vs 2006

1st half

Volume 3.8%

Price / Mix(3.0)%

Operations0.8%

Exchange(3.4)%

Total(2.6)%

Regional sales by destination 2007Change vs 2006

1st Half 2007 (£m) Volume Price / Mix Operations Exchange Total

Europe 43.2 (0.2)% (2.1)% (2.3)% (1.0)% (3.3)%

Americas 14.2 (1.4)% 2.0% 0.6% (9.2)% (8.6)%

Asia/Pacific 15.9 22.4% (12.2)% 10.2% (4.4)% 5.8%

Total 73.3 3.8% (3.0)% 0.8% (3.4)% (2.6)%

Income statement6 months to June 2007

£m2007

1st half2006

1st half

Group sales73.3 75.2

Operating profit before exceptional items8.1 9.0

Operating margin 11.0% 12.0%

Exceptional items(0.3) (1.0)

Net interest(1.3) (0.9)

Profit before tax6.4 7.1

Tax1.9 2.0

Profit for the year4.5 5.1

Earnings and Dividend6 months to June 2007

20071st half

20061st half

Earnings per share

Basic 2.8p 3.1p

Diluted 2.8p 3.1p

Before exceptional items 3.0p 3.6p

Dividend per ordinary share 1.425p 1.425p

Balance sheet

£mJune2007

December 2006

Non-current assets109.6 118.9

Net current assets30.7 22.3

Non-current liabilities(55.7) (68.0)

84.6 73.2

Share capital and reserves68.2 70.7

Retained earnings16.4 2.5

84.6 73.2

Net debt(36.7) (27.0)

Gearing43.4% 36.9%

Cash flow6 months to June 2007

£m2007

1st half2006

1st half

Net cash inflow from operating activities4.8 6.5

Net interest paid(1.2) (0.9)

Tax paid(2.5) (3.1)

Capital expenditure(5.3) (9.6)

Equity dividend paid(4.9) (4.9)

Exchange(0.6) 0.3

Increase in net debt(9.7) (11.7)

Interest cover* 6.4 10.0

*Calculated on operating profits before exceptional items

Peter Page

Chief Executive

Key features6 months to June 2007

Developed markets– UK: slow 6 months– USA: technology changes in beefstick sector– Australia & NZ: mixed sales

Strong volume growth in emerging markets– China: benefit of Cutisin investments

– Russia: selling all products through various channels

Manufacturing– Negative impact of product changes

– Positive impact of recent investments in Czech Republic

Adverse foreign exchange impact– Currencies hedged to maximum practicable level

Financial highlights6 months to June 2007

£m2007

1st half2006

1st half

Group sales73.3

75.2

Operating profit before exceptional items8.1

9.0

Operating margin 11.0%

12.0%

Exceptional items(0.3)

(1.0)

Net interest(1.3)

(0.9)

Profit before tax6.4

7.1

Earnings per share2.8p

3.1p

Earnings per share before exceptional items3.0p

3.6p

Dividend per share1.425p

1.425p

Fresh sausage marketsNorth America, United Kingdom, Ireland, Australia, New Zealand

Traditional area of strength for the Devro brand

Mature markets, customer consolidation, price pressure

New products aimed at the gut market

Maintain position in market with continuing improvement in customer productivity

Total Gut Market

Total Collagen Market

Other

Devro Sales 2006

Processed sausage marketsGermany, Eastern Europe, Japan

Cutisin Fine product leading brand outside the Japanese market

Gut sector not easily converted because of traditional consumer and retail attitudes

Devro Plus also to be used to develop new market opportunities

Total Gut Market

Total Collagen Market

Devro Sales 2006

Other

Developing marketsLatin America, Russia, China, other Asia

Increasing market share in 2007, particularly China

Significant gut conversion opportunities based on productivity of Cutisin Fine and Devro Plus

Total Collagen Market

Total Gut Market

Devro Sales 2006

Other

Collagen marketsCustomer Concentration

4

Supplied byDevro Group

4UK & Ireland

Producers accounting for 50% of market

57USA

11China

55Australia

Strength and depth of technology

Global market leader

Summary

Strong market position

Confident about long term prospects

Analyst and Investor update by mid January 2008