TIDMPFD TIDMIRSH
RNS Number : 6137T
Premier Foods plc
16 November 2023
16 November 2023
Premier Foods plc (the "Group" or the "Company")
Half year results for the 26 weeks ended 30 September 2023
Full year expectations raised following strong first half
performance
Headline results (GBPm) FY23/24 FY22/23 change
H1 H1
Headline Revenue 484.4 406.5 19.2%
Trading profit(1) 67.5 56.7 19.0%
Adjusted profit before taxation(4) 56.9 47.0 21.2%
Adjusted earnings per share(7) (pence) 5.0 4.4 12.0%
GBP64.6m
Net debt(10) 273.1 337.7 lower
Statutory measures (GBPm) FY23/24 FY22/23 % change
H1 H1
-------- -------- ---------
Revenue 494.1 419.9 17.7%
Profit before taxation 58.1 42.1 38.0%
Profit after taxation 42.7 36.1 18.3%
Basic earnings per share (pence) 5.0 4.2 19.0%
Alternative performance measures above are defined and
reconciled to statutory measures throughout.
Headline Revenue presented for FY23/24 H1 excludes 'Knighton
Foods', Statutory Revenue includes Knighton Foods
Headlines
-- Branded revenue up +15.8%; Q2 branded revenue up +14.3%
-- Total Headline Grocery revenue up +24.6%, Sweet Treats revenue
up +5.4%
-- Grocery market share(12) increased +113bps
-- Trading profit +19.0%; margins continue to be in line with
prior year
-- Increased marketing investment across all major brands, expanding
Best Restaurant in Town campaign
-- Strong International progress; Mr Kipling distribution building
in USA and further market share growth in Australia
-- New categories revenue increased +21% led by continued momentum
of Ambrosia porridge pots
-- The Spice Tailor continues to build distribution and on track
to deliver returns ahead of plan
-- FUEL10K acquisition completed early in H2, accelerating expansion
into breakfast category
-- FY23/24 Trading profit now expected to be in the region of
10% ahead of prior year
Alex Whitehouse, Chief Executive Officer
"We've had a really good start to the year, making strong
progress against all our strategic pillars. We delivered branded
revenue growth of nearly 16%, again maintained our Trading profit
margins and we continue to grow faster than our markets, gaining
113 basis points of share in our Grocery categories. This
performance once again demonstrates the power of our branded growth
model and the capabilities of our team. New categories revenue
increased by 21%, driven by Ambrosia porridge pots and our
International business grew by 19%, with Mr Kipling building
distribution in the USA and taking further market share in
Australia."
"We know how challenging the past year has been for many
consumers and so it's good to see the rate of input cost inflation
falling. This has now given us the opportunity to lower promotional
prices across a number of our major branded products such as
Batchelors Super Noodles and Mr Kipling Slices."
"We're very pleased to have recently acquired the vibrant
breakfast brand FUEL10K, providing us with the ideal platform to
accelerate our expansion into breakfast and deploy our branded
growth model, while The Spice Tailor is on track this year to
deliver returns ahead of our original acquisition plan. With a
strong first half behind us, a good start to quarter 3 and exciting
plans for the rest of the year, we are again raising our Trading
profit expectations for FY23/24, following our previous upgrade
earlier this year."
Environmental, Social and Governance (ESG)
-------------------------------------------
The Group continues to make strong progress against its
'Enriching Life Plan', set out through the three key strategic
pillars of Product, Planet and People. As previously articulated,
the Group has set out a series of major sustainability targets
under each pillar and reports progress on these annually.
1. Product
In H1, Revenue growth from products with high nutritional
standards (as defined by UK Government) increased by 23% compared
to the same period a year ago. Additionally, 43% of the Group's
products have an additional health or nutrition benefit, such
as added fibre or higher in vitamins. In terms of packaging,
96% by weight of products are recyclable, reusable or compostable.
Ambrosia custard mini pots is an example of a reconfigured
product which will shortly use entirely recyclable materials.
2. Planet
The Group continues to make progress in reducing emissions,
in line with its target to reduce scope 1 and 2 by 2040. Scope
1 emissions are expected to be approximately 4% lower in FY23/24
compared to the prior year, while a new supplier engagement
programme has recently been launched to drive lower scope
3 emissions.
3. People
Embracing diversity is an important part of the Premier Foods
culture; 47% of management colleagues are female and the Group
is a key supporter of Grocery Aid Diversity in Grocery. The
five-year partnership with FareShare, now into its second
year, has seen over 500,000 meals donated in the first half
of FY23/24, while we have also increased our apprentice and
graduate positions by 16% in the period.
Outlook
========
The Group has delivered a strong first half of FY23/24 and made
a good start to its third quarter, as it continues to implement its
comprehensive programme of brand investment, new product launches
and impactful instore execution. With this strong momentum, the
Group now expects Trading profit this financial year to be in the
region of 10% ahead of last year. The full resolution of the
pension schemes is expected within three years and would open up a
range of value enhancing opportunities to further accelerate
shareholder value over the medium term.
Strategy overview
==================
The Group's five pillar strategy drives growth and creates
value, as outlined below.
1. Continue to grow the UK core business
We have a well established and growing UK business which provides
the basis for further expansion. The Group's branded growth
model is at the heart of what we do and is core to our success.
Leveraging our leading category positions, we launch new products
to market driven by consumer trends, support our brands with
sustained levels of marketing investment and foster strong
customer and retailer partnerships.
Proof point: H1 UK branded revenue growth of 15.5%.
2. Supply chain investment
We invest in operational infrastructure to increase efficiency
and productivity across our manufacturing and logistics operations,
providing a virtuous cycle for brand investment. Capital investment
in our sites also facilitates growth through our innovation
strategy and enhances the safety and working conditions of
our colleagues. We are also now investing in low energy manufacturing
solutions to drive scope 1 and 2 emission reductions, aligned
to our Enriching Life Plan.
Proof point: Significantly increasing capital investment
in FY23/24, focusing on efficiency and energy reduction
3. Expand UK business into new categories
We leverage the strength of our brands, using our proven branded
growth model to launch products in adjacent, new food categories.
Proof point: Revenue growth of products in new categories
increased by 21% compared to the prior year.
4. Build international businesses with critical mass
We are building sustainable business units with critical mass
overseas, applying our brand building capabilities to deliver
growth in our target markets of Republic of Ireland, Australia
& New Zealand, North America and Europe. Our primary brands
to drive this expansion are Mr Kipling, Sharwood's and The
Spice Tailor.
Proof point: Revenue growth of 19%(8) with further market
share growth of Australia cake and building distribution in
US cake.
5. Inorganic opportunities
We are looking to acquire brands where we believe we can drive
significant value through the application of our branded growth
model.
Proof point: Building distribution of The Spice Tailor, ahead
of original returns expectations this year and acquired FUEL10K,
the vibrant Breakfast brand.
Further information
====================
A presentation to investors and analysts will be webcast today
at 9:00am GMT.
To register for the webcast follow the link:
www.premierfoods.co.uk/investors/investor-centre
A recording of the webcast will be available on the Company's
website later in the day.
A conference call for bond investors and analysts will take
place today, 16 November 2023, at 1:30pm GMT. Dial in details are
outlined below:
Telephone: 0800 358 1035 (UK toll free)
+44 20 4587 0498 (standard international access)
Access code: 194392
A factsheet providing an overview of the Half year results is
available at:
www.premierfoods.co.uk/investors/results-centre
A Premier Foods image gallery is available using the following
link:
www.premierfoods.co.uk/media/image-gallery/
Further information on the 'Best Restaurant in Town' can be
found at:
www.bestrestaurantintown.co.uk/
As one of Britain's largest food producers, we're passionate
about food and believe each and every day we have the opportunity
to enrich life for everyone. Premier Foods employs over 4,000
people operating from 15 sites across the country, supplying a
range of retail, wholesale, foodservice and other customers with
our iconic brands which feature in millions of homes every day.
Through some of the nation's best-loved brands, including
Ambrosia, Batchelors, Bisto , Loyd Grossman, Mr Kipling, Ox o and
Sharwood's, we're creating great tasting products that contribute
to healthy and balanced diets, while committing to nurturing our
people and our local communities, and going further in the pursuit
of a healthier planet , in line with our Purpose of 'Enriching Life
Through Food'.
Contacts:
Institutional investors and analysts:
Duncan Leggett, Chief Financial Officer
Richard Godden, Director of Investor Relations
Investor.relations@premier foods.co.uk
Media enquiries:
Sarah Henderson, Director of Communications
Headland
Ed Young +44 (0) 7884 666830
Jack Gault +44 (0) 7799 089357
- Ends -
This announcement may contain "forward-looking statements" that
are based on estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements are all statements other
than statements of historical fact or statements in the present
tense, and can be identified by words such as "targets", "aims",
"aspires", "assumes", "believes", "estimates", "anticipates",
"expects", "intends", "hopes", "may", "would", "should", "could",
"will", "plans", "predicts" and "potential", as well as the
negatives of these terms and other words of similar meaning. Any
forward-looking statements in this announcement are made based upon
Premier Foods' estimates, expectations and beliefs concerning
future events affecting the Group and subject to a number of known
and unknown risks and uncertainties. Such forward-looking
statements are based on numerous assumptions regarding the Premier
Foods Group's present and future business strategies and the
environment in which it will operate, which may prove not to be
accurate. Premier Foods cautions that these forward-looking
statements are not guarantees and that actual results could differ
materially from those expressed or implied in these forward-looking
statements. Undue reliance should, therefore, not be placed on such
forward-looking statements. Any forward-looking statements
contained in this announcement apply only as at the date of this
announcement and are not intended to give any assurance as to
future results. Premier Foods will update this announcement as
required by applicable law, including the Prospectus Rules, the
Listing Rules, the Disclosure and Transparency Rules, London Stock
Exchange and any other applicable law or regulations, but otherwise
expressly disclaims any obligation or undertaking to update or
revise any forward-looking statement, whether as a result of new
information, future developments or otherwise.
Financial results
==================
Overview
GBPm FY23/24 FY22/23 % change
H1 H1
Branded revenue 416.5 359.6 15.8%
Non-branded revenue 67.9 46.9 44.8%
-------- -------- ---------
Headline revenue 484.4 406.5 19.2%
Divisional contribution(2) 101.6 83.5 21.7%
Trading profit (1) 67.5 56.7 19.0%
Trading profit margin 13.9% 13.9% 0.0ppt
Adjusted EBITDA(3) 79.4 68.5 15.9%
Adjusted profit before tax(4) 56.9 47.0 21.2%
Adjusted earnings per share(7)
(pence) 5.0 4.4 12.0%
Basic earnings per share (pence) 5.0 4.2 19.0%
Headline revenue excludes Knighton Foods, reconciliations are
provided in the appendices.
Headline Revenue, which excludes Knighton Foods, grew by 19.2%
in the first half of the year. Divisional contribution increased by
21.7% to GBP101.6m and Trading profit increased by 19.0% to
GBP67.5m. Group and corporate costs were higher in the period due
to investment to improve planning systems and support strategic
priorities, wage and salary inflation and wider management
incentive scheme costs. Trading profit margins of 13.9% were in
line with the prior period. Adjusted profit before tax increased by
21.2%, while adjusted earnings per share grew by 12.0%, reflecting
an increase in the UK corporation tax rate from 19% to 25%. Basic
earnings per share for FY23/24 H1 increased by 19.0% to 5.0p.
Statutory overview
GBPm FY23/24 FY22/23 % change
H1 H1
Grocery
Branded revenue 316.9 257.4 23.1%
Non-branded revenue 55.3 46.9 18.0%
-------- -------- ---------
Total revenue 372.2 304.3 22.3%
Sweet Treats
Branded revenue 99.6 102.2 (2.6%)
Non-branded revenue 22.3 13.4 66.0%
-------- -------- ---------
Total revenue 121.9 115.6 5.4%
Group
Branded revenue 416.5 359.6 15.8%
Non-branded revenue 77.6 60.3 28.7%
-------- -------- ---------
Statutory revenue 494.1 419.9 17.7%
--------
Profit before tax 58.1 42.1 38.0%
Basic earnings per share (pence) 5.0 4.2 19.0%
The table above is presented including revenue from Knighton
Foods.
Group revenue on a statutory basis increased by 17.7% in the
period, with branded revenue growing by 15.8% and non-branded
revenue ahead 28.7%. Grocery revenue was 22.3% higher than the
prior period at GBP372.2m. Non-branded Grocery revenue grew by
18.0% to GBP55.3m as price increases on existing contracts were
partly offset by managed contract exits associated with the closure
of Knighton Foods.
Trading performance
Grocery
GBPm FY23/24 FY22/23 % change
H1 H1
Branded revenue 316.9 257.4 23.1%
Non-branded revenue 45.6 33.5 36.2%
-------- -------- ---------
Total headline revenue 362.5 290.9 24.6%
Divisional contribution(2) 89.5 70.2 27.5%
Divisional contribution margin 24.7% 24.1% 0.6ppts
The table above is presented including the impact of The Spice
Tailor acquisition. Revenue excludes Knighton Foods.
On a headline basis (excluding Knighton Foods) Grocery revenue
increased by 24.6% in the period to GBP362.5m, with Branded revenue
up 23.1% to GBP316.9m. Non-branded revenue increased by 36.2% to
GBP45.6m. Market share(13) in the Group's Grocery categories
increased by 113 basis points in the first half of the year, as the
Group's brands continue to demonstrate their strength and
resilience in what has been a challenging consumer environment.
In the second quarter, Grocery revenue (on a headline basis)
increased by 23.0%, with very strong growth in both branded and
non-branded revenue. Branded growth of 21.5% was due to the benefit
of the Group's proven branded growth model across the portfolio and
price increases. Non-branded revenue grew by 35.1% and was
primarily due to pricing benefits in retailer branded product
categories compared to the prior period.
Divisional contribution increased by 27.5% to GBP89.5m; margins
expanded by 60 basis points as the strong trading performance was
partly offset by increased brand investment and salary
inflation.
Grocery volume trends improved in the second quarter, as
elasticity effects of price increases dissipated. Greater
promotional investment across a range of popular products in the
second half is expected to further underpin these volume
trends.
The Group's branded growth model leverages the strength of its
market leading brands, launching insightful new products,
supporting the brands with emotionally engaging advertising and
building strategic retail partnerships. Consistent and effective
application of this strategy has resulted in H1 Grocery branded
revenue increasing by over 50% compared to five years ago,
translating into Trading profit growth of 8.6% per annum.
All the Group's Grocery brands reported strong growth in the
period, due to further momentum driven by the proven branded growth
model. In the first half of the year, the Group upweighted
investment in its 'Best Restaurant in Town' campaign, which
highlights great value meal ideas across the Grocery portfolio. The
Grocery business's major brands, Ambrosia, Batchelors, Bisto,
Sharwood's, Oxo and Loyd Grossman all benefitted from this
impactful campaign. Oxo revenue in the first half of the year was
particularly strong, benefitting not only from increased brand
advertising but also further expansion of new Oxo Stock pots.
Nissin noodles ranges again demonstrated very strong growth in
the period, with revenue up nearly 50%, due to their strong
consumer repeat rate and launch of the Big Soba pots range. As part
of our commitment to giving consumers new healthier options, we
launched Batchelors Pasta 'n' Sauce pots, Sharwood's curry pastes
and Homepride pasta bake sauces in the period. Under the
'indulgence' trend, Ambrosia launched Deluxe creamed rice in can
and pot formats.
Another key element of the branded growth model is to build and
maintain strong, collaborative partnerships with customers. For
example, Batchelors extended its successful partnership with DC
Warner Brothers in the period, this time through its tie-up with
Batman, producing some highly impactful instore execution displays.
Illustrating the effectiveness of this strategy, the Group
increased off shelf display by 56% in its Grocery categories during
the second quarter, driving significantly improved brand visibility
and volume trends. Additionally, total distribution of Grocery
products increased by 2.6% reflecting significant gains in recent
range reviews.
One of the Group's key strategic pillars is expanding into
adjacent categories, leveraging the strong brand equities across
its brand portfolio to deliver further growth. Revenue in new
categories increased by 21% in the period and Ambrosia porridge
pots was again one of the main drivers of this progress. Market
share grew to 6.2% in a category growing at around 20% and sales
nearly doubled compared to last year. In ice-cream, new
distribution into major multiple retailers was achieved in the
second quarter, as it builds on the success of its initial launch
in 2022. These ranges exemplify the brands' respective
differentiators; Angel Delight ice-cream is available in its iconic
Butterscotch and Strawberry flavours and Mr Kipling Cherry Bakewell
ice-cream includes cherries and pieces of cake.
The Spice Tailor is now benefitting from the commercial
capabilities and category expertise of the Group which has resulted
in improved retailer distribution both in the UK and overseas and
significantly enhanced instore execution through more impactful
product displays. The brand is well on track to deliver returns
ahead of its original plan for FY23/24 and there is a strong
pipeline of product innovation planned for the next 12 months.
New product development for the second half of the year includes
Loyd Grossman pesto sauces, Ambrosia plant-based custard and
Plantastic Protein Boost curry and rice pots.
Sweet Treats
GBPm FY23/24 FY22/23 % change
H1 H1
Branded revenue 99.6 102.2 (2.6%)
Non-branded revenue 22.3 13.4 66.0%
-------- -------- ----------
Total headline revenue 121.9 115.6 5.4%
Divisional contribution(2) 12.1 13.3 (8.8%)
Divisional contribution margin 9.9% 11.5% (1.6ppts)
Total revenue increased by 5.4% in Sweet Treats, with Branded
revenue 2.6% lower than the prior period and non-branded revenue up
by 66.0% at GBP22.3m. The non-branded revenue growth was due to a
combination of contract wins in pies and tarts and price increases
on existing ranges.
Sweet Treats delivered Divisional contribution of GBP12.1m in
the first half of the year compared to GBP13.3m in the prior
period. Investment in Mr Kipling television media advertising,
broadcasting the new 'Piano' advert, demonstrates the Group's media
approach of building emotional connections with consumers and is
weighted to the first half. Revenue growth included price
increases, sales from new products such as the Mr Kipling
Deliciously Good range and Signature Brownie Bites and offset by
some lower promotional volumes owing to price elasticity effects.
Quarter 1 also benefitted from activity commemorating the King's
Coronation. In the second half of the year, the Group's promotional
pricing will be sharper, reflecting lower levels of input cost
inflation and which will assist in driving further volume
recovery.
During the course of the first half, the Group focused on
enhancing instore execution of both Mr Kipling and Cadbury cake
through developing innovative branded displays to assist shoppers
navigate the cake category with greater ease. Additionally, the
partnership with The Minions franchise was extended to Mr Kipling
in the period, with the opportunity for consumers to win prizes.
Looking forward to the second half of the year, innovation plans
include Mr Kipling launching its best ever, indulgent, all butter
mince pies and Cadbury cake is re-introducing Crème Egg cake
bars.
International
Revenue overseas (on a constant currency basis) increased by
19%(8) compared to the prior period. In the Group's strategic
target markets, particularly strong growth was delivered in USA
(+53%), Europe (+39%) and Ireland (+27%). In-market cake sales in
Australia continue to be strong, however revenue was impacted by
reduced shipping times which in turn led to lower stock holdings in
the supply chain.
Building sustainable businesses in the Group's target markets
continues to progress strongly. The Mr Kipling and Cadbury cake
brands again grew market share in Australia, reaching a record
16.0%(14) and delivering retail sales growth of 21.8%. The rollout
of the Company's branded growth model is developing well with both
brand investment and new product development launches for Mr
Kipling in the first half of the year. Mr Kipling received TV
advertising in the form of the engaging 'Little Thief' advert and
also sponsored the Great Australian Bake Off, while new products
launched in the period included Caramel Bakewell Tarts and Salted
Caramel Slices.
In the USA, the distribution of Mr Kipling to a range of
retailers is building well, with approximately 1,100 stores now
stocking the Group's largest brand, up from c.200 at the start of
the year. Further store listings are planned for the second half of
the year, expected to reach over 1,900 in quarter three, and will
be accompanied by instore activation and social media
campaigns.
Sales in Ireland were, like the UK, broad based with many brands
delivering double-digit sales growth; Ambrosia, Bisto and Oxo were
particularly strong performers due to pricing benefits and
continued application of the branded growth model. In Europe,
Sharwood's sales were strong, reflecting increased listings in
major retailers in Germany and Netherlands.
Operating profit
Operating profit increased by GBP18.1m to GBP69.0m in the
period. Trading profit increased by 19.0% to GBP67.5m, as described
above. Brand amortisation of GBP10.5m was broadly in line with the
prior year period. Net interest on pensions and administrative
expenses was a credit of GBP15.6m (FY22/23 H1: GBP8.5m credit), due
to an interest credit on the opening combined surplus of the
pension scheme of GBP18.1m, partly offset by GBP2.5m of
administrative expenses. Non-trading items of GBP3.7m were GBP1.0m
lower than the prior period and relate primarily to costs
associated with the closure of the Knighton manufacturing site.
Finance costs
Net finance cost was GBP10.9m in the first half of FY23/24, an
increase of GBP2.1m compared to FY22/23 H1. Net regular interest(5)
increased by GBP0.9m to GBP10.6m, due to a higher SONIA rate
applicable to the Group's revolving credit and debtors
securitisation facilities. Interest on the Group's Senior secured
notes of GBP5.8m were in line with the prior period. Interest
income was GBP1.7m, GBP0.3m higher than the prior period reflecting
higher interest rates on cash reserves partly offset by the
discount provision unwind which was lower than FY22/23 H1.
Taxation
The taxation charge for the period was GBP15.4m (2022/23 H1:
GBP6.0m) and was largely due to a charge on operating activities of
GBP14.5m (2022/23 H1: GBP8.0m), reflecting an increase in the UK
corporation tax rate from 19% to 25%. The Group has now recommenced
paying cash tax, albeit at low absolute levels, reflecting brought
forward losses available to offset against future tax
liabilities.
Earnings per share
GBPm FY23/24 FY22/23 % change
H1 H1
Operating profit 69.0 50.9 35.6%
Net finance cost (10.9) (8.8) (23.9%)
Profit before taxation 58.1 42.1 38.0%
Taxation (15.4) (6.0) (156.7%)
-------- -------- ---------
Profit after taxation 42.7 36.1 18.3%
Average shares in issue (million) 862.5 860.3 0.3%
-------- -------- ---------
Basic Earnings per share (pence) 5.0 4.2 19.0%
The Group reported profit before tax of GBP58.1m in the first
half of FY23/24, a 38.0% increase on the prior period. Profit after
tax increased by GBP6.6m to GBP42.7m and basic earnings per share
was 5.0 pence, an increase of 19.0%.
Cash flow
Net debt as at 30 September 2023 was GBP273.1m, a reduction of
GBP64.6m compared to the same point a year ago and GBP1.2m lower
than 1 April 2023.
Trading profit was GBP67.5m, as described above, while
depreciation and software amortisation totalled GBP11.9m. An
GBP11.0m outflow of working capital was due to higher stock
reflecting inflation of both raw materials and finished goods and
some stock build in advance of the Knighton site closure. Pension
deficit contribution payments of GBP16.7m reflected the recently
agreed reductions with the Pension Trustee and administration costs
were GBP3.3m, totalling a GBP20.0m cash outflow to the schemes.
Non-trading items were GBP2.8m and related to payments associated
with closure of the Knighton manufacturing site. In the Full year,
the Group expects non-trading items to be approximately GBP20m.
On a statutory basis, cash generated from operating activities
was GBP34.8m (FY22/23 H1: GBP6.9m) after deducting net interest
paid of GBP9.7m (FY22/23 H1: GBP9.7m). The Group paid Tax of
GBP0.8m in the period (2022/23 H1: GBP0.4m).
Cash used in investing activities was GBP13.8m (FY22/23 H1:
GBP50.1m), the reduction primarily due to consideration paid for
The Spice Tailor acquisition in the prior period of GBP43.8m,
partly offset by a planned increase in capital expenditure in the
period of GBP6.3m to GBP13.8m. In FY23/24, the Group expects to
increase its capital investment, as it looks to accelerate
investment across the supply chain and transfer some manufacturing
capability from the Knighton site to Ashford, Kent and Carlton,
South Yorkshire. Such investment includes both growth projects
supporting the Group's innovation strategy and cost release
projects to deliver efficiency savings. The strategy of investing
in supply chain infrastructure represents a virtuous cycle to
provide the fuel for the Group's branded growth model. Other
examples include replacement of new air compressors across a number
of sites which have improved efficiency and will reduce scope 2
carbon emissions. Future plans include the development of a new,
innovative energy efficient process to manufacture iced-topped cake
products which will also increase line efficiency and reduce carbon
emissions.
Cash used in financing activities was GBP16.7m in the period
(FY22/23 H1: GBP12.7m generated) which included a GBP12.4m dividend
payment to shareholders (FY22/23 H1: GBP10.3m). A dividend match
payment to the Group's pension schemes of GBP3.7m was also made in
the period. As at 30 September 2023, the Group held cash and bank
deposits of GBP67.7m and its GBP175m revolving credit facility was
undrawn.
Pensions
The Pension scheme has continued to make strong progress,
benefiting from a successful investment strategy for both the RHM
and Premier Foods sections since the segregated merger of the
scheme in June 2020. As of March 2022, the RHM section reported a
buyout valuation in excess of GBP100m and the deficit in the
Premier Foods section continued to reduce. This investment strategy
continues to deliver, such that a full resolution of the pension
scheme deficit, where an RHM section surplus would offset a Premier
Foods section deficit, is now forecast within three years. This is
expected to result in the cessation of deficit contributions paid
by the Company and in turn, opens up broader, deeper, capital
allocation opportunities.
IAS 19 Accounting 30 September 2023 1 April 2023
Valuation (GBPm)
RHM Premier Combined RHM Premier Combined
Foods Foods
Assets 2,903.6 503.1 3,406.7 3,240.2 552.6 3,792.8
Liabilities (2,077.2) (671.5) (2,748.7) (2,291.9) (735.4) (3,027.3)
-------- ---------- -------- ----------
Surplus/(Deficit) 826.4 (168.4) 658.0 948.3 (182.8) 765.5
Net of deferred
tax (25%) 619.8 (126.3) 493.5 711.2 (137.1) 574.1
The Group's pension scheme reported a combined surplus of
GBP658.0m as at 30 September 2023, a reduction of GBP107.5m
compared to the prior period. This is equivalent to a surplus of
GBP493.5m net of a deferred tax charge of 25.0%. Asset values fell
in both sections of the schemes as a result of hedging in place.
The applicable discount rate used to value liabilities increased
from 4.80% to 5.50%, as a result of further rises in UK corporate
bond yields. Accordingly, the value of liabilities fell by
GBP278.6m to GBP2,748.7m. The RPI inflation rate assumption used
was unchanged at 3.30%. Asset values reduced by GBP386.2m in the
period and were lower in Government bonds and absolute return
products.
A deferred tax rate of 25.0% is deducted from the IAS19
retirement benefit valuation of the Group's schemes to reflect the
fact that pension deficit contributions made to the Group's pension
schemes are allowable for tax.
As previously disclosed, the Company and Trustees of the pension
scheme have agreed to reduce the annual deficit contribution
payments by GBP5m per annum to GBP33m until FY25/26. Additionally,
administrative expenses (including UK Government levies) have
reduced to c.GBP6m per annum. The net present value of future
pension contributions to the end of the respective recovery periods
remains unchanged at approximately GBP125m(15) and includes the
benefit of a c.GBP100m surplus (as at 31 March 2022) from the RHM
section on a buyout valuation basis.
Capital allocation
===================
The Group is a highly cash generative business and has
substantially reduced its interest costs in recent years. Today,
the allocation of capital is split across pension contributions,
capital investment and dividends. Additionally, the Group continues
to explore M&A opportunities. In the medium term, pension
contributions are expected to reduce further, freeing up more cash
for capital investment, M&A and dividends.
Principal risks and uncertainties
==================================
Strong risk management is key to delivery of the Group's
strategic objectives. It has an established risk management
process, the Executive Leadership Team performing a formal robust
assessment of the principal risks bi-annually which is reviewed by
the Board and Audit Committee. Risks are monitored at a segment and
functional level throughout the year considering both internal and
external factors. The Group's principal risks were disclosed on
page 60 to 66 of the annual report and accounts for the financial
period ended 1 April 2023 and these remain relevant for the current
period. The major strategic and operational risks are summarised
under the headings of Macroeconomic and geopolitical instability,
Impact of Government legislation, Market and retailer actions,
Operational integrity, Legal compliance, Climate risk, Technology,
Product portfolio, HR and employee risk, Strategy delivery. The
nature and potential impact of the principal risks and
uncertainties facing the Group are considered essentially unchanged
in the six months ended 30th September and are not expected to
change during the second half of the financial year.
Alex Whitehouse Duncan Leggett
Chief Executive Officer Chief Financial Officer
Appendices
===========
The Company's Half year results are presented for the 26 weeks
ended 30 September 2023 and the comparative period, 26 weeks ended
1 October 2022. All references to the 'period', unless otherwise
stated, are for the 26 weeks ended 30 September 2023 and the
comparative periods, 26 weeks ended 1 October 2022 .
All references to the 'quarter', unless otherwise stated, are
for the 13 weeks ended 30 September 2023 and the comparative
periods, 13 weeks ended 1 October 2022 .
Half year and Quarter 2 Revenue
================================
Half year revenue FY23/24
(GBPm)
Statutory Knighton Headline Headline
revenue Foods revenue revenue %
change vs
prior year
Grocery
Branded 316.9 - 316.9 23.1%
Non-branded 55.3 (9.7) 45.6 36.2%
------------ --------- --------- -----------------
Total 372.2 (9.7) 362.5 24.6%
Sweet Treats
Branded 99.6 - 99.6 (2.6%)
Non-branded 22.3 - 22.3 66.0%
------------ --------- --------- -----------------
Total 121.9 - 121.9 5.4%
Group
Branded 416.5 - 416.5 15.8%
Non-branded 77.6 (9.7) 67.9 44.8%
------------ --------- --------- -----------------
Total 494.1 (9.7) 484.4 19.2%
-----------------
Quarter 2 Revenue FY23/24
(GBPm)
Statutory Knighton Headline Headline
revenue Foods revenue revenue %
change vs
prior year
Grocery
Branded 167.8 - 167.8 21.5%
Non-branded 28.2 (4.9) 23.3 35.1%
---------- --------- -------------- ------------
Total 196.0 (4.9) 191.1 23.0%
Sweet Treats
Branded 49.4 - 49.4 (4.7%)
Non-branded 12.8 - 12.8 53.1%
---------- --------- -------------- ------------
Total 62.2 - 62.2 3.2%
Group
Branded 217.2 - 217.2 14.3%
Non-branded 41.0 (4.9) 36.1 40.7%
---------- --------- -------------- ------------
Total 258.2 (4.9) 253.3 17.4%
--------- ------------
EBITDA to Operating profit reconciliation FY23/24 FY22/23
(GBPm) H1 H1
Adjusted EBITDA(3) 79.4 68.5
Depreciation (9.6) (9.3)
Software amortisation (2.3) (2.5)
Trading profit 67.5 56.7
Amortisation of brand assets (10.5) (10.3)
Fair value movements on foreign exchange
& derivative contracts 0.1 0.7
Net interest on pensions and administrative
expenses 15.6 8.5
Non-trading items - restructuring costs (3.7) (4.7)
Operating profit 69.0 50.9
------- -------
Finance costs (GBPm) FY23/24 FY22/23 H1 Change
H1
Senior secured notes interest 5.8 5.8 -
Bank debt interest - net 3.9 3.0 (0.9)
9.7 8.8 (0.9)
Amortisation of debt issuance
costs 0.9 0.9 -
------- ---------- ------
Net regular interest(5) 10.6 9.7 (0.9)
------- ---------- ------
Re-measurement due to discount
rate change (0.1) (1.3) (1.2)
Other finance cost 0.4 0.4 -
Net finance cost 10.9 8.8 (2.1)
------- ---------- ------
Adjusted earnings per share FY23/24 FY22/23 Change
(GBPm) H1 H1
Trading profit 67.5 56.7 19.0%
Less: Net regular interest(5) (10.6) (9.7) (8.5%)
-------- -------- --------
Adjusted profit before tax 56.9 47.0 21.2%
Less: Notional tax (25%/19%) (14.2) (8.9) (59.6%)
-------- -------- --------
Adjusted profit after tax(6) 42.7 38.1 12.2%
Average shares in issue (millions) 862.5 860.3 0.3%
-------- -------- --------
Adjusted earnings per share
(pence) 5.0 4.4 12.0%
-------- -------- --------
Net debt (GBPm)
Net debt(11) at 1 April 2023 274.3
Movement in cash (4.3)
Movement in debt issuance costs 0.4
Movement in lease creditor 2.7
Net debt at 30 September 2023 273.1
------
Free cash flow (GBPm) FY23/24 FY22/23
H1 H1
Trading profit 67.5 56.7
Depreciation & software amortisation 11.9 11.8
Other non-cash items 2.5 1.8
Capital expenditure (13.8) (6.3)
Working capital (11.0) (28.6)
-------- --------
Operating cash flow (17) 57.1 35.4
Interest (9.7) (9.7)
Pension contributions (20.0) (20.7)
Free cash flow(12) 27.4 5.0
Non-trading items (2.8) (2.7)
Net share (repurchase)/issue (2.8) 0.1
Financing fees (0.5) (0.7)
Taxation (0.8) (0.4)
Dividend (including pensions
match) (16.2) (13.0)
Acquisition - (43.8)
-------- --------
Movement in cash 4.3 (55.5)
Proceeds from borrowings - 25.0
-------- --------
Net increase in cash and cash
equivalents 4.3 (30.5)
-------- --------
The following table outlines the basis on which the Group is
reporting headline revenue for FY23/24.
This includes The Spice Tailor but excludes sales from Knighton
which is being managed for exit during the course of FY23/24,
following the decision to close the site. In FY22/23, all Knighton
revenue was all reported in Grocery - Non-branded.
Group sales ex Knighton FY22/23 revenue by quarter
Foods (GBPm)
Quarter Quarter Quarter Quarter Total
1 2 3 4
Group sales (including
The Spice Tailor) 197.0 222.9 318.0 268.5 1,006.4
Knighton (6.2) (7.2) (9.8) (7.6) (30.8)
------- ------- ------- -------
Group sales
(including The Spice
Tailor, ex Knighton) 190.8 215.7 308.2 260.9 975.6
Notes and definitions of alternative performance measures
==========================================================
The Company uses a number of alternative performance measures to
measure and assess the financial performance of the business. The
directors believe that these alternative performance measures
assist in providing additional useful information on the underlying
trends, performance and position of the Group. These alternative
performance measures are used by the Group for reporting and
planning purposes and it considers them to be helpful indicators
for investors to assist them in assessing the strategic progress of
the Group.
1. The Group uses Trading profit to review overall Group profitability.
Trading profit is defined as profit/(loss) before tax, before
net finance costs, amortisation of brand assets, non-trading
items (items requiring separate disclosure by virtue of their
nature in order that users of the financial statements obtain
a clear and consistent view of the Group's underlying trading
performance) , fair value movements on foreign exchange and
other derivative contracts, net interest on pensions and
administration expenses and past service costs.
2. Divisional contribution refers to Gross Profit less selling,
distribution and marketing expenses directly attributable
to the relevant business segment.
3. Adjusted EBITDA is Trading profit as defined in (1) above
excluding depreciation and software amortisation.
4. Adjusted profit before tax is Trading profit as defined in
(1) above less net regular interest.
5. Net regular interest is defined as net finance cost after
excluding write-off of financing costs, early redemption
fees, other finance cost and other finance income.
6. Adjusted profit after tax is Adjusted profit before tax as
defined in (4) above less a notional tax charge of 25.0%
(2022/23 H1: 19.0%).
7. References to Adjusted earnings per share are on a non-diluted
basis and is calculated using Adjusted profit after tax as
defined in (6) above divided by the weighted average of the
number of shares of 862.5 million (26 weeks ended 1 October
2022: 860.3 million).
8. International sales remove the impact of foreign currency
fluctuations and adjusts prior year sales to ensure comparability
in geographic market destinations. The constant currency
calculation is made by adjusting the current year's sales
to the same exchange rate as the prior year. The constant
currency adjustment is calculated by applying a blended rate.
GBPm Reported Adjustment Constant currency
FY23/24 H1 32.2 0.0 32.2
-------- ---------- -----------------
FY22/23 H1 27.1 N/A 27.1
-------- ---------- -----------------
Growth/(decline)
% 18.9% N/A 19.0%
-------- ---------- -----------------
9. Non-trading items have been presented separately throughout
the financial statements. These are items that management
believes require separate disclosure by virtue of their nature
in order that the users of the financial statements obtain
a clear and consistent view of the Group's underlying trading
performance. In identifying non-trading items, management
have applied judgement including whether i) the item is related
to underlying trading of the Group; and/or ii) how often
the item is expected to occur.
10. Software amortisation is the annual charge related to the
amortisation of the Group's software assets during the period.
11. Net debt is defined as total borrowings, less cash and cash
equivalents and less capitalised debt issuance costs.
12. Free cash flow is Net increase or decrease in cash and cash
equivalents excluding proceeds and repayment of borrowings,
less dividend payments, disposal proceeds, re-financing fees,
net proceeds from share issues, tax, acquisitions and non-trading
items.
13. Circana, 24 weeks ended 30 September 2023.
14. Circana, 52 weeks ended 10 September 2023
15. The schedule of future contributions are as agreed per the
2022 actuarial funding valuation for the Premier Foods sections,
discounted using the Company post tax WACC of 9.1%.
16. Acquisition accounting pertaining to The Spice Tailor acquisition
can be found in Note 17.
17. Operating cash flow excludes interest and pension contributions.
Additional notes:
-- The directors believe that users of the financial statements
are most interested in underlying trading performance and
cash generation of the Group. As such intangible brand asset
amortisation and impairment are excluded from Trading profit
because they are non-cash items.
-- Non-trading items have been excluded from Trading profit because
they are incremental costs incurred as part of specific initiatives
that may distort a user's view of underlying trading performance.
-- Net regular interest is used to present the interest charge
related to the Group's ongoing financial indebtedness, and
therefore excludes non-cash items and other credits/charges
which are included in the Group's net finance cost.
-- Group & corporate costs refer to group and corporate expenses
which are not directly attributable to a reported segment
and are disclosed at total Group level.
-- In line with accounting standards, the International operating
segment, the results of which are aggregated within the Grocery
reported segment, are not required to be separately disclosed
for reporting purposes.
Statement of directors' responsibilities
The directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the 26 weeks ended 30 September 2023 and their impact on the
condensed set of financial statements, and a description of
the principal risks and uncertainties for the remaining 26
weeks of the financial period; and
-- material related-party transactions in the first 26 weeks and
any material changes in the related-party transactions described
in the last annual report.
The maintenance and integrity of the Premier Foods plc website
is the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that might have occurred to the interim financial statements since
they were initially presented on the website.
The directors of Premier Foods plc are listed on pages 72-73 of
the Premier Foods plc annual report and accounts for the 52 weeks
ended 1 April 2023, with the exception of the resignation of Simon
Bentley on 12 July 2023. A list of current directors is maintained
on the Premier Foods plc website: www.premierfoods.co.uk
Approved by the Board on 16 November 2023 and signed on its
behalf by:
Alex Whitehouse
Chief Executive Officer
Duncan Leggett
Chief Financial Officer
Independent review report to Premier Foods plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Premier Foods plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the Half year results of Premier Foods plc for the 26 week
period ended 30 September 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed consolidated balance sheet as at 30 September
2023;
-- the Condensed consolidated statement of profit or loss and
the Condensed consolidated statement of comprehensive income
for the period then ended;
-- the Condensed consolidated statement of cash flows for the
period then ended;
-- the Condensed consolidated statement of changes in equity
for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half year
results of Premier Foods plc have been prepared in accordance with
UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half year
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the Group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half year results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Half
year results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Half year results, including
the interim financial statements, the directors are responsible for
assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the Group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half year results based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the Company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
16 November 2023
Condensed consolidated statement of profit
or loss (unaudited)
26 weeks 26 weeks ended
ended
30 Sep 2023 1 Oct 2022
Note GBPm GBPm
------------------------------------------- ----------------------- -----------------------------
Revenue 4 494.1 419.9
Cost of sales (308.0) (274.3)
------------------------------------------- ----------------------- -----------------------------
Gross profit 186.1 145.6
Selling, marketing and distribution costs (84.5) (62.2)
Administrative costs (32.6) (32.5)
------------------------------------------- ----------------------- -----------------------------
Operating profit 4 69.0 50.9
Finance cost 5 (12.6) (10.2)
Finance income 5 1.7 1.4
Profit before taxation 58.1 42.1
Taxation 6 (15.4) (6.0)
------------------------------------------- ----------------------- -----------------------------
Profit for the period attributable to
owners of the parent 42.7 36.1
------------------------------------------- ----------------------- -----------------------------
Basic earnings per share (pence) 7 5.0 4.2
Diluted earnings per share (pence) 7 4.8 4.1
------------------------------------------- ----------------------- -----------------------------
Condensed consolidated statement of comprehensive income
(unaudited)
26 weeks 26 weeks ended
ended
30 Sep 2023 1 Oct 2022
Note GBPm GBPm
------------------------------------------- ----- -------------------------- -------------------------
Profit for the period 42.7 36.1
Other comprehensive income, net of tax
Items that will never be reclassified
to profit or loss
Remeasurements of defined benefit schemes 8 (146.8) (15.7)
Deferred tax credit 31.1 -
Current tax credit on pension movements 4.8 3.5
Items that are or may be reclassified
subsequently to profit or loss
Exchange differences on translation (0.3) 0.5
Other comprehensive income, net of tax (111.2) (11.7)
------------------------------------------- ----- -------------------------- -------------------------
Total comprehensive income attributable
to owners of the parent (68.5) 24.4
------------------------------------------- ----- -------------------------- -------------------------
Condensed consolidated balance sheet (unaudited)
As at As at
30 Sep 2023 1 April
2023
Note GBPm GBPm
-------------------------------------------------- ----- ------------------------- ------------------
ASSETS:
Non-current assets
Property, plant and equipment 186.7 185.9
Goodwill 17 680.3 680.3
Other intangible assets 283.5 294.4
Deferred tax assets 21.1 22.4
Net retirement benefit assets 8 836.7 960.1
2,008.3 2,143.1
Current assets
Inventories 137.3 93.7
Trade and other receivables 111.0 103.9
Derivative financial instruments 10 0.7 0.8
Cash and cash equivalents 12 67.7 64.4
-------------------------
316.7 262.8
-------------------------------------------------- ----- ------------------------- ------------------
Total assets 2,325.0 2,405.9
-------------------------------------------------- ----- ------------------------- ------------------
LIABILITIES:
Current liabilities
Trade and other payables (296.1) (255.4)
Financial liabilities:
- short-term borrowings 9 - (1.0)
- derivative financial instruments 10 (0.3) (0.5)
Lease liabilities 9 (5.5) (2.1)
Provisions for liabilities and charges 11 (9.7) (13.3)
-------------------------
(311.6) (272.3)
Non-current liabilities
Long term borrowings 9 (324.8) (324.4)
Lease liabilities 9 (10.5) (11.2)
Net retirement benefit obligations 8 (178.7) (194.6)
Provisions for liabilities and charges 11 (7.1) (6.6)
Deferred tax liabilities (155.2) (177.9)
Other liabilities (12.4) (12.9)
-------------------------
(688.7) (727.6)
-------------------------------------------------- ----- ------------------------- ------------------
Total liabilities (1,000.3) (999.9)
-------------------------------------------------- ----- ------------------------- ------------------
Net assets 1,324.7 1,406.0
-------------------------------------------------- ----- ------------------------- ------------------
EQUITY:
Capital and reserves
Share capital 86.9 86.8
Share premium 2.6 2.5
Merger reserve 351.7 351.7
Other reserves (9.3) (9.3)
Retained earnings 892.8 974.3
-------------------------------------------------- ------------------------- ------------------
Total equity 1,324.7 1,406.0
-------------------------------------------------- ----- ------------------------- ------------------
Condensed consolidated statement of cash
flows (unaudited)
26 weeks ended 26 weeks
ended
30 Sep 2023 1 Oct 2022
Note GBPm GBPm
-------------------------------------------- ----- --------------- -----------
Cash generated from operations 12 45.3 17.0
Interest paid (11.4) (9.9)
Interest received 1.7 0.2
Taxation paid (0.8) (0.4)
-------------------------------------------- ----- --------------- -----------
Cash generated from operating activities 34.8 6.9
Purchase of property, plant and equipment (10.8) (5.5)
Purchase of intangible assets (3.0) (0.8)
Acquisition of subsidiaries, net of cash
acquired 17 - (43.8)
-------------------------------------------- ----- --------------- -----------
Cash used in investing activities (13.8) (50.1)
Proceeds from borrowings - 25.0
Principal element of lease payments (1.0) (1.4)
Financing fees(1) 9 (0.5) (0.7)
Dividends paid (12.4) (10.3)
Proceeds from share issue 0.2 0.1
Purchase of shares to satisfy share awards (3.0) -
-------------------------------------------- ----- --------------- -----------
Cash (used in)/generated from financing
activities (16.7) 12.7
Net increase/(decrease) in cash and cash
equivalents 4.3 (30.5)
Cash, cash equivalents and bank overdrafts
at beginning of period 63.4 54.3
--------------------------------------------------- --------------- -----------
Cash, cash equivalents and bank overdrafts
at end of period 12 67.7 23.8
-------------------------------------------- ----- --------------- -----------
(1 Payments in the current and prior period relate to the extension
of the revolving credit facility. See note 9 for further details.)
Condensed consolidated statement of changes in equity (unaudited)
Share Share Merger Other Retained Total
capital premium reserve reserves earnings equity
Note
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ----- --------- --------- --------- ---------- ---------- --------
At 2 April 2022 86.3 1.5 351.7 (9.3) 1,076.7 1,506.9
Profit for the period - - - - 36.1 36.1
Remeasurements of defined
benefit schemes 8 - - - - (15.7) (15.7)
Current tax credit on pension
movements - - - - 3.5 3.5
Exchange differences on translation - - - - 0.5 0.5
Other comprehensive income - - - - (11.7) (11.7)
-------------------------------- ----- --------- --------- --------- ---------- ---------- --------
Total comprehensive
income - - - - 24.4 24.4
-------------------------------- ----- --------- --------- --------- ---------- ---------- --------
Shares issued - 0.1 - - - 0.1
Share-based payments - - - - 1.8 1.8
Deferred tax movements on
share-based payments - - - - 0.5 0.5
Dividends 13 - - - - (10.3) (10.3)
At 1 October 2022 86.3 1.6 351.7 (9.3) 1,093.1 1,523.4
-------------------------------- ----- --------- --------- --------- ---------- ---------- --------
At 1 April 2023 86.8 2.5 351.7 (9.3) 974.3 1,406.0
Profit for the period - - - - 42.7 42.7
Remeasurements of defined
benefit schemes 8 - - - - (146.8) (146.8)
Deferred tax credit - - - - 31.1 31.1
Current tax credit on pension
movements - - - - 4.8 4.8
Exchange differences
on translation - - - - (0.3) (0.3)
Other comprehensive income - - - - (111.2) (111.2)
-------------------------------- ----- --------- --------- --------- ---------- ---------- --------
Total comprehensive
income - - - - (68.5) (68.5)
-------------------------------- ----- --------- --------- --------- ---------- ---------- --------
Shares issued 0.1 0.1 - - - 0.2
Share-based payments - - - - 2.4 2.4
Purchase of shares to satisfy
share
awards - - - - (3.0) (3.0)
Dividends 13 - - - - (12.4) (12.4)
At 30 Sep 2023 86.9 2.6 351.7 (9.3) 892.8 1,324.7
-------------------------------- ----- --------- --------- --------- ---------- ---------- --------
1. General information
Premier Foods plc (the "Company") is a public limited Company
incorporated in the United Kingdom and domiciled in England,
registered number 05160050, with its registered office at Premier
House, Centrium Business Park, Griffiths Way, St Albans,
Hertfordshire AL1 2RE. The principal activity of the Company and
its subsidiaries (the "Group") is the manufacture and distribution
of branded and own label food products as described in the Group's
annual report and accounts for the 52 weeks ended 1 April 2023.
2. Basis of preparation
This condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK.
The annual financial statements of the Group for the 52 weeks
ending 30 March 2024 will be prepared in accordance with UK-adopted
international accounting standards and with the requirements of the
Companies Act 2006. As required by the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority, this
condensed set of financial statements has been prepared applying
the accounting policies and presentation that were applied in the
preparation of the Company's published consolidated financial
statements for the 52 weeks ended 1 April 2023 which were prepared
in accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006. There
has been no significant impact on the Group profit or net assets on
adoption of new or revised accounting standards in the period.
Amounts are presented to the nearest GBP0.1m, unless otherwise
stated. These condensed interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006.
The financial information for the 26 weeks ended 30 September
2023 is unaudited but has been subject to an independent review by
PricewaterhouseCoopers LLP.
The Group's statutory financial statements for the 52 weeks
ended 1 April 2023, which were approved by the Board of Directors
on 18 May 2023, were reported on by PricewaterhouseCoopers LLP and
delivered to the Registrar of Companies. The report of the auditors
was unqualified, did not contain a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and did not contain any statement under
section 498 (2) or (3) of the Companies Act 2006.
This financial information was approved for issue on 16 November
2023.
Going concern
The Group's revolving credit facility includes net debt/EBITDA
and EBITDA/interest covenants as detailed in note 9. In the event
these covenants are not met then the Group would be in breach of
its financing agreement and, as would be the case in any covenant
breach, the banking syndicate could withdraw funding to the Group.
The Group is required to test covenants biannually aligned to
reporting dates. The Group was compliant with its covenant tests as
at 1 April 2023 and 30 September 2023.
Having undertaken a robust assessment of the Group's forecasts
with specific consideration to the trading performance of the
Group, cashflows and covenant compliance, the directors have a
reasonable expectation that the Group is able to operate within the
level of its current facilities, meet the required covenant tests
and has adequate resources to continue in operational existence for
at least 12 months from the date of approval of these financial
statements. The Group therefore continues to adopt the going
concern basis in preparing its financial information for the
reasons set out below:
At 30 September 2023, the Group had total assets less current
liabilities of GBP2,013.4m, net current assets of GBP5.1m and net
assets of GBP1,324.7m. Liquidity as at that date was GBP242.7m,
made up of cash and cash equivalents, and undrawn committed credit
facilities of GBP175.0m expiring in May 2026. At the time of the
approval of this report, the cash and liquidity position of the
Group has not changed significantly.
The directors have rigorously reviewed the inflationary
pressures across the industry and associated cost of living crisis,
and have modelled a severe but plausible downside case impacting
future financial performance, cash flows and covenant compliance,
that covers a period of at least 12 months from the date of
approval of these interim financial statements. This downside case
represents severe but plausible assumptions related primarily to
the impact of inflation during the review period. The directors
have also considered the impact of climate change, cyber-attacks
and changes in consumer preferences in the downside case modelled
and have assumed all scenarios within the downside case impact
concurrently during the period reviewed.
Whilst the downside scenario is deemed severe but plausible, it
is considered by the directors to be a robust stress test of going
concern, having an adverse impact on revenue, margin and cash flow
and with covenants remaining compliant. Should circumstances mean
there is further downside, whilst not deemed plausible, the
directors, in response have identified mitigating actions within
their control, that would reduce costs, optimising cashflow and
liquidity. Amongst these are the following actions: reducing
capital expenditure, reducing marketing spend and delaying or
cancelling discretionary spend. The directors have assumed no
significant structural changes to the business will be needed in
any of the scenarios modelled. None of the scenarios modelled are
sufficiently material to prevent the Group from continuing as a
going concern.
The directors, after reviewing financial forecasts and financing
arrangements, consider that the Group has adequate resources to
continue to meet its liabilities as they fall due for at least 12
months from the date of approval of this report. Accordingly, the
directors are satisfied that it is appropriate to adopt the going
concern basis in preparing its consolidated financial
information.
3. Accounting policies
These Group condensed interim financial statements have been
prepared in accordance with the accounting policies adopted in the
Group's most recent annual financial statements for the 52 weeks
ended 1 April 2023.
When preparing the Group condensed interim financial statements
management undertakes judgments, estimates and assumptions that
affect the recognition and measurement of assets and liabilities,
income and expense. The actual results may differ from the
judgments, estimates and assumptions made by management.
In preparing these Group condensed interim financial statements
the significant judgments, estimates and key sources of estimation
uncertainty made by management were the same as those that applied
to the Group financial statements for the year ended 1 April
2023.
4. Segmental analysis
IFRS 8 requires operating segments to be determined based on the
Group's internal reporting to the Chief Operating Decision Maker
('CODM'). The CODM has been determined to be the Executive
Leadership Team as it is primarily responsible for the allocation
of resources to segments and the assessment of performance of the
segments.
The Group's operating segments are defined as 'Grocery', 'Sweet
Treats', and 'International'. The CODM reviews the performance by
operating segments. The Grocery segment primarily sells savoury
ambient food products and the Sweet Treats segment sells primarily
sweet ambient food products. The International segment has been
aggregated within the Grocery segment for reporting purposes as
revenue is below 10% of the Group's total revenue and the segment
is considered to have similar characteristics to that of Grocery as
identified in IFRS 8. There has been no change to the segments
during the period.
The CODM uses Divisional contribution as the key measure of the
segments' results. Divisional contribution is defined as gross
profit after selling, marketing and distribution costs. Divisional
contribution is a consistent measure within the Group and reflects
the segments' underlying trading performance for the period under
evaluation.
The Group uses trading profit to review overall Group
profitability. Trading profit is defined as profit/loss before tax
before net finance costs, amortisation of intangible assets, fair
value movements on foreign exchange and other derivative contracts,
net interest on pensions and administrative expenses, and any
material items that require separate disclosure by virtue of their
nature in order that users of the financial statements obtain a
clear and consistent view of the Group's underlying trading
performance.
The Group's largest quarter in terms of Revenue is quarter
three, reflecting seasonality across both segments.
The segment results for the 26 weeks ended 30 September 2023 and
1 October 2022, and the reconciliation of the segment measures to
the respective statutory items included in the financial
information, are as follows:
26 weeks ended 30 Sep
2023
----------------------------------------------- ----------------------------------------
Grocery Sweet Total
Treats
GBPm GBPm GBPm
----------------------------------------------- --------- -------- -------------------
Revenue 372.2 121.9 494.1
----------------------------------------------- --------- -------- -------------------
Divisional contribution 89.5 12.1 101.6
Group and corporate costs (34.1)
----------------------------------------------- --------- -------- -------------------
Trading profit 67.5
Amortisation of brand assets (10.5)
Fair value movements on foreign exchange and other
derivative contracts 0.1
Net interest on pensions and administrative
expenses 15.6
Non-trading items(1) (3.7)
Operating profit 69.0
Finance cost (12.6)
Finance income 1.7
Profit before taxation 58.1
----------------------------------------------- --------- -------- -------------------
(1Non-trading items relate primarily to the closure costs in relation
to the Knighton site and the subsequent asset restructure costs.)
26 weeks ended 1 Oct
2022
----------------------------------------------- --------------------------------------
Grocery Sweet Total
Treats
GBPm GBPm GBPm
----------------------------------------------- --------- -------- -----------------
Revenue 304.3 115.6 419.9
----------------------------------------------- --------- -------- -----------------
Divisional contribution 70.2 13.3 83.5
Group and corporate costs (26.8)
----------------------------------------------- --------- -------- -----------------
Trading profit 56.7
Amortisation of brand assets (10.3)
Fair value movements on foreign exchange and other
derivative contracts 0.7
Net interest on pensions and administrative
expenses 8.5
Non-trading items(1) (4.7)
Operating profit 50.9
Finance cost (10.2)
Finance income 1.4
Profit before taxation 42.1
----------------------------------------------- --------- -------- -----------------
(1Non-trading items relate primarily to M&A advisory costs, and
expenses due to a short term manufacturing interruption.)
Inter-segment transfers or transactions are entered into under
the same terms and conditions that would be available to unrelated
third parties.
The Group primarily supplies the UK market, although it also
supplies certain products to other countries in Europe and the rest
of the world. The following table provides an analysis of the
Group's revenue, which is allocated on the basis of geographical
market destination, and an analysis of the Group's non-current
assets by geographical location.
26 weeks 26 weeks
ended ended
30 Sep 2023 1 Oct 2022
GBPm GBPm
---------------- ------------ ---------------------
United Kingdom 461.9 392.9
Other Europe 15.2 11.9
Rest of world 17.0 15.1
Total 494.1 419.9
------------------- ------------ ---------------------
Non-current
assets
As at As at
30 Sep 1 Apr 2023
2023
GBPm GBPm
----------------- ---------------- -----------
United Kingdom 1,150.5 1,160.6
------------------ ---------------- -----------
Non-current assets are all held in the United Kingdom and
exclude deferred tax assets and retirement benefit assets.
5. Finance income and costs
26 weeks 26 weeks
ended ended
30 Sep 1 Oct
2023 2022
GBPm GBPm
---------------------------------------- -------------------- -----------------
Interest payable on bank loans and
overdrafts (5.5) (3.0)
Interest payable on senior secured
notes (5.8) (5.8)
Interest payable on revolving facility - (0.1)
Amortisation of debt issuance costs (0.9) (0.9)
Other interest payable(1) (0.4) (0.4)
Total finance cost (12.6) (10.2)
---------------------------------------- -------------------- -----------------
Interest receivable on bank deposits 1.6 0.1
Other finance income(2) 0.1 1.3
Total finance income 1.7 1.4
---------------------------------------- -------------------- -----------------
Net finance cost (10.9) (8.8)
---------------------------------------- -------------------- -----------------
(1 Other interest payable relates to the interest
payable on finance leases.)
(2 Other finance income relates to the unwind of
the discount on certain of the Group's long term provisions
and a change in the discount rates used.)
6. Taxation
Current Tax
26 weeks 26 weeks
ended ended
30 Sep 2023 1 Oct 2022
GBPm GBPm
-------------------------------- ------------ -----------
Current tax
- Current period (5.7) (3.5)
Deferred tax
- Current period (9.7) (5.0)
- Prior periods - 0.1
- Changes in tax rate on the
opening balances - 2.4
Income tax charge (15.4) (6.0)
-------------------------------- ------------ -----------
Tax relating to items recorded in other comprehensive income
included:
26 weeks 26 weeks ended
ended
30 Sep 1 Oct 2022
2023
GBPm GBPm
-------------------------------- --------- ---------------
Current tax (credit) / charge
on pension movements (4.8) 3.5
Deferred tax credit on pension (31.1) -
movements
Income tax charge (35.9) 3.5
-------------------------------- --------- ---------------
The applicable rate of corporation tax for the period is
25%.
Tax charged for the 26 weeks ended 30 September 2023 has been
calculated by applying the effective rate of tax which is expected
to apply to the Group for the 52 weeks ended 30 March 2024 using
rates substantively enacted by 30 September 2023 as required by IAS
34 'Interim Financial Reporting'. The tax charge for the period
differs from the standard rate of corporation tax in the United
Kingdom of 25.0% (26 weeks ended 1 October 2022: 19.0%). The
reasons for this are explained below:
26 weeks 26 weeks ended
ended
30 Sep 2023 1 Oct 2022
GBPm GBPm
-------------------------------------------------- ------------ ---------------
Profit before
taxation 58.1 42.1
Tax charge at the domestic income tax rate
of 25.0% (26 weeks ended 1 October 2022: 19.0%) (14.5) (8.0)
Tax effect of:
Non-taxable items - 1.7
Other disallowable
items (1.0) (1.1)
Disposal proceeds 0.1 -
Adjustment due to change in tax rate on the
opening balances - 2.4
Difference between current and deferred tax
rate - (1.1)
Adjustments to prior periods - 0.1
Income tax charge (15.4) (6.0)
--------------------------------------------------- ------------ ---------------
7. Earnings per share
Basic earnings per share has been calculated by dividing the
profit for the 26 weeks ended 30 September 2023 attributable to
owners of the parent of GBP42.7m (26 weeks ended 1 October 2022:
GBP36.1m profit) by the weighted average number of ordinary shares
of the Company.
26 weeks ended 26 weeks
30 Sep 2023 ended 1 Oct
2022
Number Number
------------------------------------------------ ------------------------------ ------------------------
Weighted average number of ordinary shares
for the purpose of basic earnings per share
(m) 862.5 860.3
Effect of dilutive potential ordinary shares
(m) 22.5 21.3
------------------------------ ------------------------
Weighted average number of ordinary shares
for the purpose of diluted earnings per share 885.0 881.6
------------------------------------------------ ------------------------------ ------------------------
26 weeks ended 30 26 weeks ended 1 Oct
Sep 2023 2022
Basic Dilutive Diluted Basic Dilutive Diluted
effect effect
of share of share
options options
----------------------------- ----------- ------------- --------------- ----------- ------------- --------------
Profit after tax (GBPm) 42.7 42.7 36.1 36.1
Weighted average number
of shares (m) 862.5 22.5 885.0 860.3 21.3 881.6
----------------------------- -----------
Earnings per share (pence) 5.0 (0.2) 4.8 4.2 (0.1) 4.1
----------------------------- ----------- ------------- --------------- ----------- ------------- --------------
Dilutive effect of share options
The dilutive effect of share options is calculated by adjusting
the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares. The
only dilutive potential ordinary shares of the Company are share
options and share awards. A calculation is performed to determine
the number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the share awards
and the subscription rights attached to the outstanding share
options.
No adjustment is made to the profit or loss in calculating basic
and diluted earnings per share.
Adjusted basic earnings per share ("Adjusted basic EPS")
Adjusted basic earnings per share is defined as trading profit
less net regular interest payable, less a notional tax charge at
25.0% (26 weeks ended 1 October 2022: 19.0%) divided by the
weighted average number of ordinary shares of the Company.
Net regular interest is defined as net finance cost after
excluding write-off of financing costs, early redemption fees,
other interest payable and other finance income.
Trading profit and Adjusted basic EPS have been reported as the
directors believe these assist in providing additional useful
information on the underlying trends and performance of the
Group.
26 weeks ended 26 weeks ended
30 Sep 2023 1 Oct 2022
GBPm GBPm
----------------------------------------------- --------------- ---------------
Trading profit (note 4) 67.5 56.7
Less net regular interest (10.6) (9.7)
--------------- ---------------
Adjusted profit before tax 56.9 47.0
Notional tax at 25% (26 weeks ended 1 October
2022: 19%) (14.2) (8.9)
----------------------------------------------- --------------- ---------------
Adjusted profit after tax 42.7 38.1
Average shares in issue (m) 862.5 860.3
Adjusted basic EPS (pence) 5.0 4.4
----------------------------------------------- --------------- ---------------
Net regular interest
Net finance cost (10.9) (8.8)
Exclude other interest payable 0.4 0.4
Exclude other finance income (0.1) (1.3)
Net regular interest (10.6) (9.7)
----------------------------------------------- --------------- ---------------
8. Retirement benefit schemes
Defined benefit schemes
The Group operates a number of defined benefit schemes under
which current and former employees have built up an entitlement to
pension benefits on their retirement. Although the Premier Foods
Section, Premier Grocery Products Section and RHM Section
identified below are no longer separate schemes following the
merger in 2020, historically, Premier Foods companies' pension
liabilities and ex-RHM companies' liabilities have been shown
separately. These are as follows:
(a) The "Premier" Schemes, which comprise:
Premier Foods Pension Section of RHM Pension Scheme
Premier Grocery Products Pension Section of RHM Pension
Scheme
Premier Grocery Products Ireland Pension Scheme ('PGPIPS')
Chivers 1987 Pension Scheme
(b) The "RHM" Pension Schemes, which comprise:
RHM Section of the RHM Pension Scheme
Premier Foods Ireland Pension Scheme
The exchange rates used to translate the overseas euro based
schemes are GBP1.00 = EUR1.15656 (26 weeks ended 1 October 2022:
GBP1.00 = EUR1.1730) for the average rate during the period, and
GBP1.00 = EUR1.15285 (26 weeks ended 1 October 2022: GBP1.00 =
EUR1.1388) for the closing position at 30 September 2023.
All pension schemes are closed to future accrual.
A t the balance sheet date, the combined principal actuarial
assumptions were as follows:
Premier RHM schemes
schemes
At 30 September 2023
Discount rate 5.50% 5.50%
Inflation - RPI 3.30% 3.30%
Inflation - CPI 2.90% 2.90%
Expected salary increases n/a n/a
Future pension increases
* RPI (min 0% and max 5%) 3.05% 3.05%
* CPI (min 3% and max 5%) 3.55% 3.55%
-------------------------------------- --------- ------------
At 1 April 2023
Discount rate 4.80% 4.80%
Inflation - RPI 3.30% 3.30%
Inflation - CPI 2.85% 2.85%
Expected salary increases n/a n/a
Future pension increases
* RPI (min 0% and max 5%) 3.05% 3.05%
* CPI (min 3% and max 5%) 3.55% 3.55%
-------------------------------------- --------- ------------
For the smaller overseas schemes, the discount rate used was
4.10% (52 weeks ended 1 April 2023: 3.65%) and future pension
increases were 2.40% (52 weeks ended 1 April 2023: 2.45%).
The mortality assumptions are based on standard mortality
tables. The directors consider that use of the updated Continuous
Mortality Improvement CMI 2022 projections released in June 2023
for the future improvement assumption is a reasonable approach,
updated from the CMI 2021 projections used in the previous
reporting period. CMI 2022 uses the same underlying data as CMI
2021 but makes some allowance for the expected negative long-term
impact of COVID-19 on life expectancy. As a result the 5%
adjustment to the scaling factors used to reflect the expected
long-term impact of COVID-19 resulting from using CMI 2021 is no
longer required and the overall impact on life expectancy is
lower.
The base mortality tables continue to use assumptions for the
base tables which are consistent with the latest scheme mortality
studies commissioned by the Trustees and have updated to allow for
the latest expected longevity projections in the UK. The life
expectancies (assuming retirement at age 65) are set out below.
The life expectancy assumptions are as follows:
Premier RHM schemes
schemes
------------------------------------------------------ -------------------- -------------- ------------
Life expectancy at 30 September 2023
Male pensioner, currently aged 65 86.2 84.5
Female pensioner, currently aged 65 88.0 86.9
Male non-pensioner, currently aged
45 87.1 85.7
Female non-pensioner, currently aged
45 89.4 88.7
Life expectancy at 1 April 2023
Male pensioner, currently aged 65 86.5 84.7
Female pensioner, currently aged 65 88.2 87.1
Male non-pensioner, currently aged
45 87.4 86.0
Female non-pensioner, currently aged
45 89.7 89.0
------------------------------------------------------ -------------------- -------------- ------------
Premier % of RHM schemes % of Total % of total
schemes total total
GBPm % GBPm % GBPm
------------------------ --------- ------- -------------- -------------------- -------- ----------------------
Assets with a quoted price in an active market at 30 September
2023:
Government bonds 199.8 39.6 721.6 24.8 921.4 27.0
Cash 13.2 2.6 65.7 2.3 78.9 2.3
Assets without a quoted price in an active market at 30 September
2023:
UK equities - - 0.2 - 0.2 -
Global equities - - 3.6 0.1 3.6 0.1
Government bonds 27.5 5.5 2.2 0.1 29.7 0.9
Corporate bonds 6.7 1.3 4.6 0.2 11.3 0.3
Global Property 93.0 18.5 387.8 13.3 480.8 14.1
Absolute return
products 5.9 1.2 312.9 10.8 318.8 9.4
Infrastructure funds 25.9 5.1 354.9 12.1 380.8 11.2
Interest rate swaps - - 251.5 8.7 251.5 7.4
Inflation swaps - - 33.5 1.2 33.5 1.0
Private equity 45.7 9.1 314.2 10.8 359.94 10.6
LDI - - 5.4 0.2 5.4 0.2
Global credit 3.3 0.7 181.5 6.3 184.8 5.4
Illiquid credit 78.3 15.6 197.3 6.8 275.6 8.1
Cash 3.4 0.7 0.8 - 4.2 0.1
Other 0.4 0.1 65.9 2.3 66.3 1.9
Fair value of scheme
assets 503.1 100% 2,903.6 100% 3,406.7 100%
as at 30 September 2023
----------------------------------- ------- -------------- -------------------- -------- ----------------------
Assets with a quoted price in an active market at 1 April 2023:
Government bonds 197.8 35.8 815.1 25.2 1,012.9 26.7
Cash 8.2 1.5 59.1 1.8 67.3 1.8
Assets without a quoted price in an active market at 1 April 2023:
UK equities 0.1 0.0 - - 0.1 0.0
Global equities 2.3 0.4 4.6 0.1 6.9 0.2
Government bonds 30.5 5.5 2.1 0.1 32.6 0.9
Corporate bonds 7.4 1.4 4.9 0.2 12.3 0.3
Global Property 113.4 20.5 418.6 12.9 532.0 14.0
Absolute return
products 6.8 1.2 426.6 13.2 433.4 11.4
Infrastructure funds 27.4 5.0 342.5 10.6 369.9 9.8
Interest rate swaps - - 286.6 8.8 286.6 7.6
Inflation swaps - - 43.4 1.3 43.4 1.1
Private equity 48.8 8.8 310.8 9.6 359.6 9.5
LDI - - 7.1 0.2 7.1 0.2
Global credit 4.3 0.8 205.9 6.4 210.2 5.5
Illiquid credit 101.4 18.3 227.5 7.0 328.9 8.7
Cash 0.5 0.1 0.1 0.0 0.6 0.0
Other 3.7 0.7 85.3 2.6 89.0 2.3
------------------------ --------- ------- -------------- -------------------- -------- ----------------------
Fair value of scheme
assets 552.6 100% 3,240.2 100% 3,792.8 100%
as at 1 April 2023
------------------------ --------- ------- -------------- -------------------- -------- ----------------------
For assets without a quoted price in an active market fair value
is determined with reference to net asset value statements provided
by third parties.
Pension assets have been reported using 30 September 2023
valuations where available. As is usual practice for pension assets
where valuations at this date were not available, the most recent
valuations ( predominantly at 30 June 2023) have been rolled
forward for cash movements to 30 September 2023 and recognised as
lagged valuations. This is considered by management the most
appropriate estimate of valuations for these assets using the
information available at the time. At 30 September 2023 the
financial statements include GBP355.3m of assets using lagged
valuations and were these lagged valuations to move by 1% there
would be a GBP3.6m impact on the fair value of scheme assets. This
approach is principally relevant for Private Equity, Property
Assets, Illiquid Credits and Global Credits asset categories.
Pension assets valuations are subject to estimation uncertainty due
to market volatility, which could result in a material movement in
asset values over the next 12 months.
The amounts recognised in the balance sheet arising from the
Group's obligations in respect of its defined benefit schemes are
as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
---------------------------------- --------- ------------ ----------
At 30 September 2023
Present value of defined benefit
obligation (671.5) (2,077.2) (2,748.7)
Fair value of plan assets 503.1 2,903.6 3,406.7
---------------------------------- --------- ------------ ----------
(Deficit)/surplus in schemes (168.4) 826.4 658.0
---------------------------------- --------- ------------ ----------
At 1 April 2023
Present value of defined benefit
obligation (735.4) (2,291.9) (3,027.3)
Fair value of plan assets 552.6 3,240.2 3,792.8
---------------------------------- --------- ------------ ----------
(Deficit)/surplus in schemes (182.8) 948.3 765.5
---------------------------------- --------- ------------ ----------
The aggregate surplus of GBP765.5m has decreased to a surplus of
GBP658.0m during the 26 weeks ended 30 September 2023. The decrease
of GBP107.5m (52 weeks ended 1 April 2023: GBP179.4m decrease) is
primarily due to a lower return on scheme assets partly offset by
changes in financial assumptions, largely the higher discount
rate.
The disclosures in note 8 represent those schemes that are
associated with Premier Foods ('Premier schemes') and those that
are associated with ex-RHM companies ('RHM schemes'). These differ
to that disclosed on the balance sheet, in which the schemes have
been split between those in an asset position and those in a
liability position. The disclosures in note 8 reconcile to those
disclosed on the balance sheet as shown below:
At 30 September 2023 At 1 April 2023
Premier RHM Total Premier RHM Total
Schemes Schemes Schemes Schemes
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- --------- --------- -------- ---------- --------- --------
Schemes in net
asset position 10.3 826.4 836.7 11.8 948.3 960.1
Schemes in net
liability position (178.7) - (178.7) (194.6) - (194.6)
----------------------- --------- --------- -------- ---------- --------- --------
Net (Deficit)/surplus
in schemes (168.4) 826.4 658.0 (182.8) 948.3 765.5
----------------------- --------- --------- -------- ---------- --------- --------
Changes in the present value of the defined benefit obligation
were as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
-------------------------------------------- ---------- ------------ ----------
Defined benefit obligation at 2 April
2022 (1,020.2) (3,134.9) (4,155.1)
Interest cost (27.0) (83.9) (110.9)
Settlement 0.3 - 0.3
Remeasurement gain 271.9 787.3 1,059.2
Exchange differences (1.6) (1.1) (2.7)
Benefits paid 41.2 140.7 181.9
Defined benefit obligation at 1 April
2023 (735.4) (2,291.9) (3,027.3)
Interest cost (17.0) (53.1) (70.1)
Remeasurement gain 60.7 198.0 258.7
Exchange differences 0.5 0.3 0.8
Benefits paid 19.7 69.5 89.2
-------------------------------------------- ---------- ------------ ----------
Defined benefit obligation at 30 September
2023 (671.5) (2,077.2) (2,748.7)
-------------------------------------------- ---------- ------------ ----------
Changes in the fair value of plan assets were as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
------------------------------------------- --------- ------------ ----------
Fair value of scheme assets at 2 April
2022 826.3 4,273.7 5,100.0
Interest income on scheme assets 22.1 115.1 137.2
Remeasurement losses (295.7) (1,009.1) (1,304.8)
Administrative costs (4.2) (4.4) (8.6)
Settlement (0.3) - (0.3)
Contributions by employer 40.6 4.5 45.1
Additional employer contribution(1) 2.7 - 2.7
Exchange differences 2.3 1.1 3.4
Benefits paid (41.2) (140.7) (181.9)
------------------------------------------- --------- ------------ ----------
Fair value of scheme assets at 1 April
2023 552.6 3,240.2 3,792.8
Interest income on scheme assets 12.7 75.5 88.2
Remeasurement losses (62.5) (343.0) (405.5)
Administrative costs (1.0) (1.5) (2.5)
Contributions by employer 17.8 2.2 20.0
Additional employer contribution(1) 3.8 - 3.8
Exchange differences (0.6) (0.3) (0.9)
Benefits paid (19.7) (69.5) (89.2)
------------------------------------------- --------- ------------ ----------
Fair value of plan assets at 30 September
2023 503.1 2,903.6 3,406.7
------------------------------------------- --------- ------------ ----------
(1) (Contribution by the Group to the Premier schemes due to the
payment of dividends during the year) .
The reconciliation of the net defined benefit surplus over the
period is as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
-------------------------------------------------- --------- ------------ --------
(Deficit)/surplus in schemes at 2 April
2022 (193.9) 1,138.8 944.9
Amount recognised in profit or loss (9.1) 26.8 17.7
Remeasurements recognised in other comprehensive
income (23.8) (221.8) (245.6)
Contributions by employer 40.6 4.5 45.1
Additional employer contribution(1) 2.7 - 2.7
Exchange differences recognised in other
comprehensive income 0.7 - 0.7
(Deficit)/surplus in schemes at 1 April
2023 (182.8) 948.3 765.5
Amount recognised in profit or loss (5.3) 20.9 15.6
Remeasurements recognised in other comprehensive
income (1.8) (145.0) (146.8)
Contributions by employer 17.8 2.2 20.0
Additional employer contribution(1) 3.8 - 3.8
Exchange differences recognised in other
comprehensive income (0.1) - (0.1)
-------------------------------------------------- --------- ------------ --------
(Deficit)/surplus in schemes at 30 September
2023 (168.4) 826.4 658.0
-------------------------------------------------- --------- ------------ --------
(1) (Contribution by the Group to the Premier schemes due to the
payment of dividends during the year.)
The total amounts recognised in the consolidated statement of
profit or loss are as follows:
Premier RHM Total
schemes schemes
GBPm GBPm GBPm
----------------------------- --------- --------- ------
26 weeks ended 30 September
2023
Operating profit
Administrative costs (1.0) (1.5) (2.5)
Net interest (cost)/credit (4.3) 22.4 18.1
----------------------------- --------- --------- ------
Total (cost)/credit (5.3) 20.9 15.6
----------------------------- --------- --------- ------
26 weeks ended 1 October
2022
Operating profit
Administrative costs (2.1) (2.2) (4.3)
Net interest (cost)/credit (2.7) 15.5 12.8
Total (cost)/credit (4.8) 13.3 8.5
----------------------------- --------- --------- ------
52 weeks ended 1 April
2023
Operating profit
Administrative costs (4.2) (4.4) (8.6)
Net interest (cost)/credit (4.9) 31.2 26.3
----------------------------- --------- --------- ------
Total (cost)/credit (9.1) 26.8 17.7
----------------------------- --------- --------- ------
9. Bank and other borrowings
As at As at
30 Sep 1 April
2023 2023
GBPm GBPm
-------------------------------------------------- --------- --------
Current:
Bank overdrafts - (1.0)
Lease liabilities (5.5) (2.1)
-------------------------------------------------- --------
Total borrowings due within one year (5.5) (3.1)
-------------------------------------------------- --------- --------
Non-current:
Lease liabilities (10.5) (11.2)
Transaction costs(1) 5.2 5.6
Senior secured notes (330.0) (330.0)
-------------------------------------------------- --------- --------
Total borrowings due after more than one year (335.3) (335.6)
Total bank and other borrowings (340.8) (338.7)
-------------------------------------------------- --------- --------
1Included in transaction costs is GBP1.9m (1 April 2023: GBP1.7m)
relating to the revolving credit facility.
Revolving credit facility
During the period, the Group extended the period of its GBP175m
revolving credit facility (RCF) by one year to May 2026.
Transactions costs of GBP0.5m were capitalised in relation to this
extension. The RCF of GBP175m attracts a leverage-based margin of
between 2.0% and 4.0% above SONIA.
Banking covenants of net debt / EBITDA and EBITDA / interest are
in place and are tested biannually and remain unchanged. The
covenant package attached to the revolving credit facility is:
Net debt EBITDA
/ EBITDA(1) / Interest(1)
------------- ----------------------
2023/24 FY 3.50x 3.00x
2024/25 FY 3.50x 3.00x
------------------ ------------- ----------------------
(1Net debt, EBITDA and Interest are as
defined under the revolving credit facility.)
Senior secured notes
The senior secured notes are listed on the Irish GEM Stock
Exchange. The notes totalling GBP330m mature in October 2026 and
attract an interest rate of 3.5%.
10. Financial instruments
The following table shows the carrying amounts (which
approximate to fair value except as noted below) of the Group's
financial assets and financial liabilities. Fair value is the price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. Set out below is a summary of methods and
assumptions used to value each category of financial
instrument.
As at 30 Sep As at 1 April
2023 2023
Carrying Fair Carrying Fair
amount value amount value
GBPm GBPm GBPm GBPm
-------------------------------------------- ---------------- ---------------- ---------------- ----------------
Loans and receivables:
Cash and cash equivalents 67.7 67.7 64.4 64.4
Financial assets at amortised cost:
Trade and other receivables 69.6 69.6 63.7 63.7
Financial assets at fair value through
profit or loss:
Trade and other receivables 3.7 3.7 4.2 4.2
Derivative financial instruments
- Forward foreign currency exchange
contracts 0.2 0.2 0.7 0.7
- Commodity and energy derivatives 0.5 0.5 0.1 0.1
Financial liabilities at fair value through
profit or loss:
Derivative financial instruments
- Forward foreign currency exchange
contracts (0.3) (0.3) (0.5) (0.5)
Other financial liabilities at fair value through
profit or loss:
- Deferred contingent consideration
(note 17) (8.2) (8.2) (8.2) (8.2)
Financial liabilities at amortised
cost:
Trade and other payables (288.3) (288.3) (248.3) (248.3)
Senior secured notes (330.0) (299.5) (330.0) (297.8)
Senior secured credit facility - revolving - - (1.0) (1.0)
-------------------------------------------- ---------------- ---------------- ---------------- ----------------
The following table presents the Group's assets and liabilities
that are measured at fair value using the following fair value
measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
As at 30 Sep 2023 As at 1 April 2023
Level Level Level Level Level Level
1 2 3 1 2 3
------------------------------------- -------- ------ ------ -------- ------ ------
GBPm GBPm GBPm GBPm GBPm
Financial assets at fair value
through profit or loss:
Trade and other receivables - 2.2 1.5 - 1.8 2.4
Derivative financial instruments
- Forward foreign currency exchange
contracts - 0.2 - - 0.7 -
- Commodity and energy derivatives - 0.5 - - 0.1 -
Financial liabilities at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange
contracts - (0.3) - - (0.5) -
Other financial liabilities at fair
value through profit or loss:
- Deferred contingent consideration
(note 17) - - (8.2) - - (8.2)
Financial liabilities at amortised
cost:
Senior secured notes (299.5) - - (297.8) - -
------------------------------------- -------- ------ ------ -------- ------ ------
The fair value of trade and other receivables and trade and
other payables is considered to be equal to the carrying amount of
these items due to their short-term nature.
Calculation of fair values
The fair values of the financial assets and liabilities are
defined as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The Group recognised other receivables with a fair value of
GBP1.5m (1 April 2023: GBP2.4m) and deferred contingent
consideration with a fair value of GBP8.2m (1 April 2023: GBP8.2m)
as a result of the acquisition in the prior period of The Spice
Tailor. The fair values for both are based on unobservable inputs
and are classified as a level 3 fair value estimate under the IFRS
fair value hierarchy. See note 17 for further details.
Methods and assumptions used to estimate all other fair values
are consistent with those used in the 52 weeks ended 1 April
2023.
11. Provisions for liabilities and charges
As at As at
30 Sep 1 Apr 2023
2023
GBPm GBPm
---------------------------- ------- -----------
Within one year (9.7) (13.3)
Between two and five years (5.2) (4.9)
After 5 years (1.9) (1.7)
---------------------------- ------- -----------
Total (16.8) (19.9)
---------------------------- ------- -----------
During the 26 weeks ended 30 September 2023 provisions for
liabilities and charges decreased by GBP3.1m. The decrease of
GBP3.1m is due primarily to the utilisation of the restructuring
costs provision. Total provisions for liabilities and charges of
GBP16.8m (1 April 2023: GBP19.9m) comprise primarily of provisions
for restructuring costs and legal matters, dilapidations and
environmental liabilities related to leasehold properties.
12. Notes to the cash flow statement
Reconciliation of profit before taxation to cash flows from
operating activities
26 weeks 26 weeks ended
ended
30 Sep 1 Oct 2022
2023
GBPm GBPm
----------------------------------------------- -------------------------- ------------------------
Profit before taxation 58.1 42.1
Net finance cost 10.9 8.8
Operating profit 69.0 50.9
Depreciation of property, plant and
equipment 9.6 9.3
Amortisation of intangible assets 12.8 12.7
Impairment of non-current assets 2.6 -
Fair value movements on financial instruments (0.1) (0.7)
Net interest on pensions and administrative
expenses (15.6) (8.5)
Equity settled employee incentive schemes 2.4 1.8
Increase in stocks (43.6) (35.4)
(Increase)/decrease in trade and other
receivables (7.2) 6.6
Increase in trade and other payables
and provisions 39.2 3.7
Dividend match pension contribution(1) (3.8) (2.7)
Contribution to defined benefit pension
schemes (20.0) (20.7)
Cash generated from operations 45.3 17.0
--------------------------
(1Contribution by the Group to the Premier sections of the
RHM pension schemes due to the payment of dividends during
the period.)
Analysis of movement in
borrowings
As at Cash flows Non-cash Other As at
1 April interest non-cash 30 Sept
2023 expense movements 2023
GBPm GBPm GBPm GBPm GBPm
Bank overdrafts (1.0) 1.0 - - -
Cash and bank deposits 64.4 3.3 - - 67.7
Net cash and cash equivalents 63.4 4.3 - - 67.7
Borrowings - Senior Secured
Fixed Rate Notes maturing
October 2026 (330.0) - - - (330.0)
Lease liabilities (IFRS
16) (13.3) 1.4 (0.4) (3.7) (16.0)
Gross borrowings net of
cash(1) (279.9) 5.7 (0.4) (3.7) (278.3)
Debt issuance costs(2) 5.6 0.5 - (0.9) 5.2
Total net borrowings(1) (274.3) 6.2 (0.4) (4.6) (273.1)
(1 Borrowings excludes derivative financial instruments.)
(2 The non-cash movement in debt issuance costs relates to the amortisation
of capitalised borrowing costs only.)
13. Dividends
The following final dividends were declared and paid by the
Group during the period.
26 weeks 26 weeks
ended ended
30 Sep 1 Oct
2023 2022
GBPm GBPm
1.44 pence per ordinary share (26 weeks ended
1 October 2022: 1.2 pence) 12.4 10.3
A final dividend of 1.44 pence per share for the 52 weeks ended
1 April 2023 was approved by the shareholders at the Company's
Annual General Meeting on 20 July 2023 and was subsequently paid on
28 July 2023.
14. Capital commitments
The Group has capital expenditure on property, plant and
equipment contracted for at the end of the reporting period but not
yet incurred at 30 September 2023 of GBP14.9m (1 April 2023:
GBP8.9m).
15. Contingencies
There were no material contingent liabilities as at 30 September
2023 and 1 April 2023.
16. Related party transactions
The Group's related party transactions and relationships for the
52 weeks ended 1 April 2023 were disclosed on page 168 of the
annual report and accounts for the 52 weeks ended 1 April 2023.
As at 30 September 2023 the following are also considered to be
related parties under the Listing Rules due to their shareholdings
exceeding 10% of the Group's total issued share capital:
- Nissin Foods Holding Co., Ltd. ('Nissin') is considered to be
a related party by virtue of its 24.84% (1 April 2023: 24.86%)
equity shareholding in Premier Foods plc and its right to appoint a
member to the Board of directors.
Transactions with related parties
Transactions with associates and major shareholders during the
period are set out below.
26 weeks 26 weeks
ended ended
30 Sep 2023 1 Oct 2022
GBPm GBPm
Sale of services:
- Nissin 0.1 0.1
Total sales 0.1 0.1
Purchase of goods:
- Nissin 15.1 10.8
Total purchases 15.1 10.8
Retirement benefit obligations
The Group has entered into an arrangement with the Pension
Scheme Trustees as part of the funding requirements for any
actuarial deficit in the scheme.
17. Acquisition in 26 weeks ending 1 October 2022
On 31 August 2022, the Group acquired 100% of the ordinary share
capital of The Spice Tailor Limited ('Spice Tailor') and its wholly
owned subsidiaries, The Spice Tailor (Direct) Limited, The Spice
Tailor (Canada) Limited and The Spice Tailor (Australia) Pty Ltd
for initial consideration of GBP43.8m. Additional consideration is
dependent on future performance with an earn out structure over a
three year period from FY2024, subject to further growth targets
with a maximum cap of total consideration of GBP72.5m.
The following table summarises the consideration paid for Spice
Tailor, and the amounts of the assets acquired and liabilities
assumed.
IFRS book Fair value Fair
value at acquisition adjustments value
Recognised amounts of identifiable GBPm GBPm GBPm
assets acquired and liabilities assumed
Property, plant & equipment 0.1 - 0.1
Brands and other intangible assets - 20.5 20.5
Inventories 3.0 0.2 3.2
Trade and other receivables(1) 2.4 2.4 4.8
Trade and other payables (3.4) - (3.4)
Provisions (0.1) (2.4) (2.5)
Cash and cash equivalents 0.7 - 0.7
Deferred tax liability - (5.0) (5.0)
Total identifiable net assets 2.7 15.7 18.4
Goodwill on acquisition 34.3
Initial consideration transferred in
cash 44.5
Deferred contingent consideration 8.2
Total consideration 52.7
(1 Fair value adjustment relates to the recognition of indemnification
assets in relation to contingent liabilities acquired)
Consideration transferred
Consideration included cash of GBP44.5m transferred on
completion of the acquisition. An additional GBP8.2m was recognised
in relation to the fair value of deferred contingent consideration.
The deferred contingent consideration is included within
non-current other liabilities.
The fair value of deferred contingent consideration represents
the present value of estimate payments measured at the time of
acquisition based on the Group's estimate of future performance.
The fair value is based on unobservable inputs and is classified as
a level 3 fair value estimate under the IFRS fair value hierarchy.
See note 10 for further details.
Acquisition-related costs amounting to GBP2.7m which were not
included as part of consideration transferred were recognised as an
expense in the consolidated statement of profit or loss, as part of
administrative expenses.
Goodwill
Goodwill amounting to GBP34.3m was recognised on acquisition
which was not expected to be deductible for tax purposes and is
allocated to the Group's Grocery CGU.
The carrying amount of goodwill at the beginning and end of the
period is as follows:
GBPm
Carrying value
As at 4 April 2022 646.0
Acquisition of subsidiary 34.3
At 30 September 2023 and 1 October 2022 680.3
18. Subsequent events
On 29 October 2023 the Group acquired 100% of the ordinary share
capital of FUEL 10K Limited ('FUEL10K') for an enterprise value of
GBP34.0m, with initial consideration of GBP29.6m. FUEL10K is a
differentiated, protein enriched Breakfast brand which
substantially increases the Group's position in the Breakfast
category. Had the acquisition occurred on 2 April 2023, on a pro
forma basis, the Group's Revenue for the 26 weeks ended 30
September 2023 would have been GBP504.0m and profit before taxation
for the same period would have been GBP58.0m. Given the proximity
of the transaction completion date to the announcement of the
Group's interim results, the acquisition accounting will follow
with the Group's full year results for the 52 weeks ended 30 March
2024.
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END
IR FLFFTLRLELIV
(END) Dow Jones Newswires
November 16, 2023 02:00 ET (07:00 GMT)
Premier Foods (LSE:PFD)
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