TIDMPFD TIDMIRSH
RNS Number : 0424T
Premier Foods plc
12 November 2019
12 November 2019
Premier Foods plc
Half year results for the 26 weeks ended 28 September 2019
Strong first half with growth ahead of the market and increased
debt reduction
Headline results FY19/20 H1 FY18/19 H1 Change
Revenue (GBPm) 366.7 358.0 +2.4%
Trading profit(1) (GBPm) 51.1 51.0 +0.2%
Adjusted profit before tax(4)
(GBPm) 31.7 30.2 +5.0%
Adjusted earnings per share(7)
(pence) 3.03 2.91 +4.3%
Net debt(9,11) (GBPm) (470.7) (509.5) +38.8
Other measures FY19/20 H1 FY18/19 H1 Change
Operating profit (GBPm) 35.9 28.3 +26.9%
Profit/(Loss) before taxation
(GBPm) 15.0 (2.2) -
Basic earnings/(loss) per share
(pence) 1.5 (0.1) -
Net debt(9) (GBPm) (492.9) (509.5)
Financial headlines
====================
-- Half year Group revenue up +2.4%; Q2 Group revenue up +3.6%
-- H1 Branded revenue up +4.3%; Q2 Branded revenue up +5.6%
-- Trading profit ahead in addition to increased marketing investment
-- Adjusted profit before tax up +5.0% to GBP31.7m
-- Statutory profit before tax GBP15.0m; profit after tax
GBP12.3m, both reversing prior year losses
-- Net debt GBP38.8m lower than a year ago on pre-IFRS 16 leases basis at GBP470.7m
-- On track to meet 3.0x Net debt/EBITDA(3,11) by year end
-- Combined pensions surplus GBP588.7m (30 March 2019: GBP373.1m)
Strategic & operational headlines
==================================
-- Refocused Executive Leadership Team to increase consumer, customer and operational focus
-- Sustained quarterly branded growth fuelled by successful innovation strategy
-- Consumer marketing investment increased in H1 and set to continue in H2
-- Exciting innovation pipeline for H2, including new
plant-based brand 'Plantastic' now in market
-- Increased rate of debt reduction due to strong underlying cash generation
-- International business returned to growth - Q2 revenue up +6%
-- Strategic review nearing conclusion
Alex Whitehouse, Chief Executive Officer
"In presenting my first set of results as CEO of Premier Foods
I'm encouraged by our strong start to the year with total revenue
up +2.4% and branded revenue ahead +4.3%. Our biggest brand, Mr
Kipling, has continued its momentum from last year, with sales
growth of +8% while sales of our Nissin branded ranges have more
than doubled. We have launched a number of new product ranges
including our new plant-based brand Plantastic and our
International business returned to growth in Q2. Due to our strong
cash generation, our Net debt(11) has reduced by GBP38.8m compared
to the same point last year."
"I am also announcing a new Executive Leadership team structure
which provides us with sharper consumer, customer and operational
focus. Our operational strategy is unchanged, but we now have
increased energy and impetus. We are targeting some largely
operational cost savings over the next two years and we are on
track to meet our Net debt/EBITDA target of 3.0x by the end of this
financial year. With a better H1 than planned, we are confident in
our expectations for progress in the full year. As we look a little
further ahead, and in light of our disciplined and consistent track
record of Net debt reduction, we start to see options for our
future deployment of cash."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Non-GAAP measures above are defined and reconciled to statutory
measures throughout
Net debt/EBITDA is EBITDA on an adjusted basis as defined in the
appendices
Further information
====================
A presentation to investors and analysts will take place today,
12 November 2019, at 9:00am GMT. The presentation will be webcast
at 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, 12 November 2019, at 1:30pm GMT. Dial in details are
outlined below:
Telephone: 0800 376 7922 (UK toll free)
+44 20 7192 8000 (standard international
access)
Conference ID: 8592769
A factsheet with highlights or the Interim 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/
Contacts:
Institutional investors and analysts:
Duncan Leggett, Acting Chief Financial
Officer +44 (0) 1727 815 850
Richard Godden, Director of Investor Relations
& Treasury +44 (0) 1727 815 850
Media enquiries:
Hannah Collyer, Corporate Affairs Director +44 (0) 1727 815 850
Maitland +44 (0) 20 7379 5151
Clinton Manning
Joanna Davidson
- 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
==================
Revenue
Group revenue (GBPm) Grocery Sweet Treats Group
Branded 218.2 91.5 309.7
Non-branded 45.8 11.2 57.0
-------- ------------- -------
Total 264.0 102.7 366.7
% change
Branded +3.8% +5.5% +4.3%
Non-branded (0.1%) (26.6%) (6.8%)
-------- ------------- -------
Total +3.1% +0.7% +2.4%
Group revenue for the 26 weeks ended 28 September 2019 was
GBP366.7m, up +2.4% on the same period in the prior year. Branded
revenue grew by +4.3% to GBP309.7m while Non-branded revenue was
(6.8%) lower at GBP57.0m. In the second quarter, Group revenues
accelerated to finish 3.6% higher than the comparative period.
Within this, the Group's branded revenues increased +5.6% in
Q2.
Taking the Group's top eight brands together, revenue growth was
+4.8% and +5.8% in H1 and the second quarter respectively. In both
cases, over half of this growth was volume driven; the balance
being price and mix.
Grocery
Grocery branded revenues grew +3.8% to GBP218.2m in the first
half and were up +6.2% in the second quarter. In overall terms,
this reflected benefits from the Group's innovation strategy,
favourable weather conditions in the second quarter and some Brexit
stock building by customers.
The business unit's largest brand, Bisto, saw revenue growth in
the period following benefits from the launch of convenient Bisto
gravy microwave-ready pots and earlier advertising than in previous
years.
Nissin Soba Noodles & Cup Noodles have continued to enjoy an
exceptionally strong growth trajectory in the first half of the
year, with sales growing +111% compared to the prior year.
Performance as measured by market share data is equally strong,
with the Nissin range reaching a 2.9% market share of the Quick
Meals, Snacks & Soup category in the 12 weeks ended 28
September 2019. In the narrower Pot Snacks category, the Nissin
range reached a market share of 4.8% in the same period. Sales of
Batchelors were ahead in the UK although broadly flat at a Group
level as it lapped strong comparatives in both of the previous two
years.
The Group's cooking sauces brands, particularly Sharwood's and
Loyd Grossman, saw volume growth following recent range reviews
with UK retailers. Both brands delivered double-digit percentage
growth in the UK in the first half of the year. Also in the period,
Sharwood's launched new Rice Pots, a range of convenient curry
flavoured pots in three flavour variants, building on the success
of the pots ranges under the Group's Batchelors brand. This is an
example of stretching one of the Group's brands into adjacent
categories and the Group considers there to be further similar
opportunities in the future.
Sales of Ambrosia benefitted from increased off-shelf execution
with retailers and more favourable weather conditions compared to
the prior year; particularly in the second quarter.
Collaboration with its retail customers is a high priority for
the Group. Against the backdrop of tightening retailer ranges, the
Group has delivered increased distribution of its products across
its categories in the second quarter of the year. Additionally, it
also increased the total SKU count listed by the top five retail
customers in the same time period.
Sweet Treats
Following a very good year in FY18/19 when it received a major
brand relaunch including new TV advertising, Mr Kipling continued
this strong momentum into the first half of FY19/20, delivering
revenue growth of 8% at a Group level. This progress was broadly
equally balanced across the first two quarters of the year.
Compared to the same period two years ago, Mr Kipling has grown its
Group revenue nearly 22%.
Mr Kipling benefitted from TV advertising in the period, and in
the second quarter saw the launch of its new 'Signature' range.
This new offering of premium cakes includes After Dinner Mint
Fancies; Apple, Pear & Custard Crumble Tarts and Chocolate,
Caramel & Pecan slices all of which align to one of the Group's
key consumer trends of 'indulgence' and targeting evening eating
occasions.
Cadbury cake sales grew well in the period, reflecting the
introduction of new Cadbury cake slices and also due to the later
timing of Easter compared to the prior year. This recent expansion
of the Cadbury cake portfolio includes three variants of Cadbury
Dairy Milk slices and these are on track to be one of the strongest
new product development launches in the cake category in the last
five years.
Towards the end of the first half of the year the Group launched
the first products under its new 'Plantastic' brand. First to
market are a range of delicious Flapjacks using plant-based
ingredients targeting the growing trend of consumers looking for
plant-based and vegan products. In H2, the Group plans to extend
the brand to include Dessert pots with flavours including Mango
& Passion Fruit.
In the second half of the year, the Group will be introducing a
new range of Mr Kipling mini cakes including Mince Pies, Cherry
Bakewells and Fruit Pies. The introduction of these new mini
versions of some of Mr Kipling's most popular products follows the
significant re-configuration of an existing manufacturing line at
its Stoke bakery. This has vastly improved the flexibility of
different cake sizes and types and facilitates the development of
more new products which closely match consumer trends.
International
In the first half of the year, the International business unit
saw revenue fall (6%) but returned to growth in the second quarter,
with revenue +6% ahead. The standout performer here was Mr Kipling
which again grew strongly in Australia through the benefits of
further new product development with launches of Passion Fruit
& Lemon cake, Salted Caramel cake and Chocolate Mint Fancies.
The Group is branded market leader and enjoys a 10% share of the
Australian cake market across both Mr Kipling and Cadbury cake.
Revenue from products sold in Ireland were markedly lower in the
first quarter of the year due to the unwind of Brexit related stock
in Irish customers' supply chains, however as expected, this effect
concluded by the second quarter.
The Group expects to make further revenue progress in the second
half of the year, reflecting continued momentum for cake in
Australia.
Non-branded
In the Grocery business, Non-branded revenue was broadly flat in
the first half of the year while second quarter revenue declined
(1.8%). In Sweet Treats, revenue declined (26.6%) in the period and
(17.2%) in the second quarter, as the business continues to focus
on building its brands.
The Grocery business saw lower sales at Knighton offset by a
better performance in the core business. In Sweet Treats, the sales
decline was attributed to continued effects of contract exits from
lower margin business in fruit pies and residual impacts from the
Group's logistics programme transition in FY18/19.
In overall terms, the Group's Non-branded business is one which
plays an important and supportive role and accordingly, there are
some key principles the Group employs. These principles are: to
deploy low levels of capital investment; support the recovery of
manufacturing overheads and apply strict financial hurdles on new
contracts.
Trading profit
GBPm FY19/20 FY18/19 Change
H1 H1
Divisional contribution(2)
Grocery 59.3 57.0 4.0%
Sweet Treats 10.4 11.3 (8.0%)
-------- -------- -------
Total 69.7 68.3 2.0%
Group & corporate costs (18.6) (17.3) (7.5%)
-------- -------- -------
Trading profit 51.1 51.0 0.2%
The Group reported Trading profit of GBP51.1m in the period,
just slightly ahead of the equivalent period a year ago. The
overall progress in Trading profit during the half was a little
better than the Group expected.
Divisional contribution increased by GBP1.4m to GBP69.7m and was
largely offset by Group & corporate costs which were GBP1.3m
higher than the prior year. The Grocery business delivered an
increase in Divisional contribution of GBP2.3m to GBP59.3m while
Sweet Treats Divisional contribution was GBP0.9m lower than the
prior year at GBP10.4m.
In the first half of the year, Grocery saw the good performance
across its branded portfolio as described above flowing through to
increased Divisional contribution. This was partly offset by
increased consumer marketing investment in the period, with both
Batchelors and Bisto benefitting from media advertising.
Additionally, while Knighton delivered improved margins in H1, the
International business encountered adverse product mix which
resulted in a decline in margins.
In Sweet Treats, Divisional contribution was lower due to higher
marketing costs and annualisation of filling commercial team
vacancies in prior quarters.
Group & corporate costs increased by 7.5% due to higher
depreciation charges following the adoption of IFRS 16 - leases and
a change in phasing of management incentive schemes. Consumer
marketing investment is expected to be higher in FY19/20 than the
prior year with up to five of the Group's largest brands in line to
benefit from media advertising in the year, with the continued
focus on delivering strong branded revenue growth.
Operating profit
GBPm FY19/20 FY18/19 Change
H1 H1
Adjusted EBITDA(3) 60.5 59.4 1.1
Depreciation (9.4) (8.4) (1.0)
Trading profit 51.1 51.0 0.1
Non-trading items (1.5) (5.1) 3.6
Amortisation of intangible assets (14.9) (17.8) 2.9
Fair value movements on foreign
exchange & derivatives 1.3 0.8 0.5
Net interest on pensions and administrative
expenses (0.1) (0.6) 0.5
Operating profit 35.9 28.3 7.6
------- ------- ------
The Group delivered Operating profit of GBP35.9m in the first
half of FY19/20, compared to GBP28.3m in the prior period. The
growth was largely attributable to lower restructuring costs
compared to the prior year and a lower charge for amortisation of
intangible assets.
Non-trading items were GBP1.5m in FY19/20 H1; a GBP3.6m
reduction on the equivalent period a year ago. In the prior year,
the Group experienced restructuring costs associated with the
consolidation of the Group's logistics operations to one central
location which has since been completed. The costs incurred in
FY19/20 H1 relate to the departure of previous Acting CEO Alastair
Murray and advisory costs relating to the Group's strategic
review.
Amortisation of intangibles was GBP14.9m in the period, GBP2.9m
lower than the prior year. This follows the full amortisation of
certain SAP software modules at the Group's main manufacturing
sites during the second half of FY18/19. Fair valuation of foreign
exchange and derivatives was a credit of GBP1.3m in the first half
of the year.
Net interest on pensions and administrative expenses was a
charge of GBP0.1m. Expenses for operating the Group's pension
schemes were GBP4.9m in the period, offset by a net interest credit
of GBP4.8m due to an opening surplus of the Group's combined
pension schemes.
Finance costs
GBPm FY19/20 H1 FY18/19 Change
H1
Senior secured notes interest 15.5 16.1 0.6
Bank debt interest - net 2.2 2.8 0.6
17.7 18.9 1.2
Amortisation of debt issuance costs 1.7 1.9 0.2
---------- ------- -------
Net regular interest(5) 19.4 20.8 1.4
---------- ------- -------
Write-off of financing costs &
early redemption fees 0.0 11.3 11.3
Discount unwind 1.0 (1.6) (2.6)
Other interest cost 0.5 0.0 (0.5)
---------- ------- -------
Net finance cost 20.9 30.5 9.6
---------- ------- -------
Net finance cost was GBP20.9m for the half year; a decrease of
GBP9.6m on FY18/19 H1. Net regular interest in the period was
GBP19.4m, a decrease of GBP1.4m compared to the prior year.
Consistent with recent periods, the largest component of finance
costs in the period was interest due to holders of the Group's
senior secured notes, which was GBP15.5m. The interest on the
senior secured notes was GBP0.6m lower compared to the prior year
following the re-financing in June 2018 of the June 2021 GBP325m
fixed rate notes at a coupon of 6.5% to the October 2023 GBP300m
fixed rate notes at the slightly lower coupon of 6.25%.
Bank debt interest of GBP2.2m was GBP0.6m lower in the period
due to lower levels of average debt and a lower margin on the
revolving credit facility following the refinancing completed in
May 2018. Amortisation of debt issuance costs was GBP1.7m, GBP0.2m
lower than the prior year. As there has been no re-financing of the
Group's bank debt or Senior Secured Notes in the period, there was
no repeat of the write off of financing fees and early redemption
fees incurred last year.
A charge of GBP1.0m in the period relating to a discount rewind
associated with properties held by the Group. In the prior year, a
GBP1.6m discount unwind credit was reflected in reported Net
finance cost and due to a movement in discount rates impacting
Group provisions.
Taxation
The taxation charge for the period ended 28 September 2019 of
GBP2.7m (2018/19: GBP1.5m credit) comprises a charge on operating
activities of GBP2.7m (2018/19: GBP0.5m credit) based upon
management's best estimate of the effective annual income tax rate
expected for the full financial year. In addition, a charge of
GBPnil (2018/19: GBP0.1m) relating to adjustments to prior years
and a charge of GBPnil (2018/19: GBP1.1m credit) relating to
repayment of foreign taxes paid in prior years. The corporation tax
rate and deferred tax rate applied in calculations are 19.0% and
17.0% respectively.
Earnings per share
Earnings per share (GBPm) FY19/20 FY18/19 Change
H1 H1
Operating profit 35.9 28.3 7.6
Net finance cost (20.9) (30.5) (9.6)
Profit/(loss) before taxation 15.0 (2.2) 17.2
Taxation (2.7) 1.5 (4.2)
-------- -------- -------
Profit/(loss) after taxation 12.3 (0.7) 13.0
Average shares in issue 846.1 840.8 5.3
-------- -------- -------
Basic Earnings/(loss) per
share (pence) 1.5 (0.1) 1.6
The Group reported a profit before tax of GBP15.0m in first half
of the year, compared to a loss before tax of (GBP2.2m) in FY18/19
H1. Profit after tax was GBP12.3m, compared to a loss of GBP(0.7)m
in the prior year.
Adjusted earnings per share FY19/20 FY18/19 Change
(GBPm) H1 H1 (%)
Trading profit 51.1 51.0 +0.2%
Less: Net regular interest (19.4) (20.8) +6.8%
-------- -------- -------
Adjusted profit before
tax 31.7 30.2 +5.0%
Less: Notional tax (19%) (6.0) (5.7) (5.0%)
-------- -------- -------
Adjusted profit after tax(6) 25.7 24.5 +5.0%
Average shares in issue
(millions) 846.1 840.8 +0.6%
Adjusted earnings per share
(pence) 3.03 2.91 +4.3%
Adjusted profit before tax was GBP31.7m in the period, up +5.0%
on the prior year, predominantly reflecting lower net regular
interest costs as described above. Adjusted profit after tax
increased GBP1.2m to GBP25.7m in the period after deducting a
notional 19.0% tax charge of GBP6.0m. Based on average shares in
issue of 846.1 million shares, adjusted earnings per share in the
first half of the year grew +4.3% to 3.03p.
Free cash flow
GBPm FY19/20 H1 FY18/19 H1
Statutory cash flow statement
Cash generated from operating activities 8.3 6.5
Cash used in investing activities (8.0) (7.0)
Cash generated from/(used in) financing
activities 0.6 (11.7)
----------- -----------
Net increase/(decrease) in cash
& cash equivalents 0.9 (12.2)
----------- -----------
GBPm FY19/20 H1 FY18/19 H1
Trading profit 51.1 51.0
Depreciation 9.4 8.4
Other non-cash items 1.2 1.0
Interest (17.6) (13.9)
Pension contributions (24.2) (18.8)
Capital expenditure (8.1) (7.0)
Working capital & other (8.3) (16.6)
Non-trading items (3.3) (4.6)
Proceeds from share issue 0.6 0.1
Sale of property, plant & equipment 0.1 -
Financing fees - (11.8)
----------- -----------
Free cash flow(10) 0.9 (12.2)
----------- -----------
The Group reported an inflow of Free cash in the period of
GBP0.9m. Trading profit of GBP51.1m was slightly ahead of the prior
year for the reasons outlined above, while depreciation of GBP9.4m
was GBP1.0m higher as operating leases are now treated as an asset
following the adoption of IFRS 16. Other non-cash items of GBP1.2m
was predominantly due to share based payments.
Net interest paid of GBP17.6m was GBP3.7m higher than the
comparative period. This was due to the later timing of the first
interest payment on the Group's GBP300m fixed rate notes, which
were issued in the first half of last year. As with the prior year
period, no taxation was paid in the period due to the availability
of brought forward losses and capital allowances.
Pension contributions in the period were GBP24.2m; GBP5.4m
higher than 2018/19 H1 due to earlier payment of government levies
compared to the prior year and planned increases in the deficit
contribution payments. Pension deficit contributions payments made
to the Premier Foods pension schemes of GBP17.8m were the largest
component of cash paid in the first half of the year; the balance
being expenses connected to administering both the RHM and Premier
Foods schemes and government levies. Pension deficit contribution
payments in the full year are expected to be circa GBP37m and
administration and government levy costs approximately GBP6-8m.
Capital expenditure was GBP8.1m in the period, which was GBP1.1m
higher than the comparative period. In the full year, the Group
expects to increase its capital expenditure to c.GBP25m to fund
investment in both growth projects supporting the Group's
innovation strategy and cost release projects to deliver efficiency
savings. For example, the Group is investing in one of its lines at
its Stoke cake manufacturing site which will provide enhanced and
varied product innovation capabilities.
A working capital outflow of GBP8.3m in the first half of the
year compared to an outflow of GBP16.6m in FY18/19 H1.
Non-trading items of GBP3.3m were paid in H1 and reflect the
cash impact of the final tranche of the Group's logistics
transformation programme costs and also cash outflows relating to
the departure of previous senior management. In the full year,
non-trading items are expected to be between GBP6-7m and include
costs associated with the Group's strategic review.
On a statutory basis, cash generated from operations was
GBP25.9m compared to GBP20.4m in FY18/19 H1. Cash generated from
operating activities was GBP8.3m in the year after deducting net
interest paid of GBP17.6m. Cash generated in financing activities
was GBP0.6m in the year versus GBP(11.7m) cash used in FY18/19
H1.
Net debt and sources of finance
GBPm
Net debt at 30 March 2019 469.9
Free cash inflow in period (0.9)
Movement in debt issuance costs 1.7
------
Net debt pre-IFRS 16 Leases 470.7
IFRS 16 Leases 22.2
Net debt at 28 September 2019 492.9
------
Net debt at 28 September 2019 was GBP492.9m, an increase of
GBP23.0m in the first half of the year. During the period, the
Group adopted IFRS 16 - Leases, which resulted in increasing
reported Net debt at 28 September 2019 by GBP22.2m. Free cash
inflow in the period was GBP0.9m and the movement in debt issuance
costs was GBP1.7m.
There were no changes to the Group's lending facilities or its
issued Senior Secured Notes in the period. At 28 September 2019,
the Group held cash and bank deposits of GBP28.7m and the Group's
Revolving Credit Facility was undrawn. The Group remains on track
to achieve its Net debt/EBITDA target of 3.0x by March 2020.
Pensions
The IAS 19 pension schemes valuation reported a surplus for the
combined RHM and Premier Foods' pension schemes at 28 September
2019 of GBP588.7m, GBP215.6m higher than 30 March 2019 and
equivalent to GBP488.6m net of a deferred tax charge of 17.0%. A
deferred tax rate of 17.0% 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. An increase in the RHM surplus of GBP232.2m
to GBP1,070.0m was partly offset by an increase in the deficit of
the Premier Foods' schemes of GBP16.6m to GBP481.3m.
IAS 19 Accounting 28 September 2019 30 March 2019
Valuation (GBPm)
RHM Premier Combined RHM Premier Combined
Foods Foods
Assets 4,863.0 793.6 5,656.6 4,333.6 707.1 5,040.7
Liabilities (3,793.0) (1,274.9) (5,067.9) (3,495.8) (1,171.8) (4,667.6)
---------- ---------- ---------- ----------
Surplus/(Deficit) 1,070.0 (481.3) 588.7 837.8 (464.7) 373.1
Net of deferred
tax (17.0%) 888.1 (399.5) 488.6 695.4 (385.7) 309.7
Assets in the combined schemes increased by GBP615.9m to
GBP5,656.6m in the period. RHM scheme assets increased by GBP529.4m
to GBP4,863.0m while the Premier Foods' schemes assets increased by
GBP86.5m to GBP793.6m. The most significant movement by asset class
is that of Government bonds which increased by GBP142.3m in the
period, predominantly in the RHM scheme.
Liabilities in the combined schemes increased by GBP400.3m in
the first half of the year to GBP5,067.9m. The value of liabilities
associated with the RHM scheme were GBP3,793.0m, an increase of
GBP297.2m while liabilities in the Premier Foods schemes were
GBP103.1m higher at GBP1,274.9m. The increase in the value of
liabilities in both schemes is due to a lower discount rate
assumption of 1.85% (30 March 2019: 2.45%) offset by a reduction in
the RPI inflation rate assumption; from 3.25% to 3.05%.
The Triennial actuarial valuation of the Group's Pension Schemes
remains ongoing. As previously outlined, this process typically
takes a number of months to conclude; the output of which will be
provided in due course.
Combined pensions schemes 28 September 30 March 2019
(GBPm) 2019
Assets
Equities 179.7 179.5
Government bonds 1,632.7 1,490.4
Corporate bonds 20.5 26.9
Property 418.7 436.5
Absolute return products 1,260.0 1,141.2
Cash 61.5 38.1
Infrastructure funds 303.8 256.1
Swaps 516.6 556.4
Private equity 541.5 446.1
Other 721.6 469.5
------------- --------------
Total Assets 5,656.6 5,040.7
Liabilities
Discount rate 1.85% 2.45%
Inflation rate (RPI/CPI) 3.05%/1.95% 3.25%/2.15%
The net present value of future deficit payments, to the end of
the respective recovery periods remains at c.GBP300-320m.
IFRS 16 - Leases
=================
A new accounting standard, IFRS 16 - Leases, came into effect
for accounting periods commencing on or after 1 January 2019,
replacing the previous standard, IAS 17. Accordingly, the 52 weeks
ending 28 March 2020 is the first accounting period that the Group
is adopting IFRS 16. As previously stated, the Group has elected to
transition to IFRS 16 using the Modified Retrospective Approach,
and as such, comparatives will not be re-stated at 28 March 2020.
It is important to note that there is no economic or cash impact to
the Group as a result of this accounting standard change.
As at 28 September 2019, the increase in leases held on the
Group's balance sheet compared to 30 March 2019 was GBP22.2m
following the adoption of IFRS 16. Accordingly, Net debt has
increased to reflect this change. The Group's depreciation charge
has also increased and was GBP9.4m in the first half of the year.
It should be noted that in future years, there may be a degree of
volatility in the value of assets and liabilities recognised with
respect to leases, reflecting the timing of lease renewals and any
fluctuations to discount rates.
Executive Leadership Team
==========================
The Group has changed its Executive Leadership Team (ELT) which
is designed to deliver sharper consumer, customer and operational
focus. With a more functional approach, three new appointments to
the ELT are confirmed as Chief Customer Officer, Chief Marketing
Officer and Operations Director. Consequently, the structure of the
team has changed and resulted in the removal of the UK Managing
Director and International Managing Director roles; however this
does not detract from the Group's aspirations for its International
business. These changes are expected to accelerate the pace and
agility of decision making and streamline internal processes and
reporting.
Corporate & Social Responsibility
==================================
As previously commented, the Company remains committed to
reducing sugar across its portfolio and is on track to remove 1,000
tonnes of sugar from its products by the end of 2019, compared to a
baseline date of 2015. The Group has also introduced a number of
lower fat products in its portfolio, with its Sharwood's low fat
Poppadoms receiving 'The Grocer' magazine new product award for
best new low fat product.
In packaging, 94% of the Group's packaging by weight is
recyclable and nearly 70% of the plastics used by the Group is
recyclable. Plastics account for 11% of the Group's total packaging
by weight. By the end of 2019, the Group will have removed all
black packaging from its portfolio while 100% of all the Group's
products in the UK have on pack recycling labelling.
Outlook
========
The Group's strategy is to drive sustainable and profitable
revenue growth while delivering cost efficiencies to generate cash.
The Group has a newly refocused Executive Leadership Team in place
which will increase its consumer, customer and operational focus
and will operate with enhanced energy and impetus. The first half
of this year has seen the Group increase its branded revenues ahead
of the market, deliver Trading profit ahead of its expectations and
reduce Net debt by GBP39m compared to the same point a year ago on
a pre-IFRS 16 basis.
Following this encouraging start to the year, with its marketing
investment and exciting innovation programmes, the Group has
increased confidence of building on this momentum to deliver
progress in the full year and beyond. The Company is targeting
additional, largely operational cost savings over the next two
years and is on track to meet its Net debt/EBITDA target of 3.0x by
the end of this financial year. Looking a little further ahead, the
Group is starting to see options regarding its future cash
deployment, especially in light of its disciplined and consistent
track record of Net debt reduction.
Alex Whitehouse Duncan Leggett
Chief Executive Officer Acting Chief Financial Officer
Appendices
===========
The Company's Half year results are presented for the 26 weeks
ended 28 September 2019 and the comparative period, 26 weeks ended
29 September 2018. All references to the 'quarter', unless
otherwise stated, are for the 13 weeks ended 28 September 2019 and
the comparative period, 13 weeks ended 29 September 2018.
Quarter 2 Sales
================
Q2 Sales (GBPm) Grocery Sweet Treats Group
Branded 116.2 44.6 160.8
Non-branded 24.5 6.5 31.0
-------- ------------- -------
Total 140.7 51.1 191.8
% change
Branded +6.2% +4.1% +5.6%
Non-branded (1.8%) (17.2%) (5.7%)
-------- ------------- -------
Total +4.7% +0.7% +3.6%
Notes and definitions of non-GAAP measures
===========================================
The Company uses a number of non-GAAP measures to measure and
assess the financial performance of the business. The Directors
believe that these non-GAAP measures assist in providing additional
useful information on the underlying trends, performance and
position of the Group. These non-GAAP 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. Trading profit is defined as profit/(loss) before tax before
net finance costs, amortisation of intangible assets, non-trading
items, fair value movements on foreign exchange and other
derivative contracts, and net interest on pensions and
administration expenses.
2. Divisional contribution refers to Gross Profit less selling,
distribution and marketing expenses directly attributable to the
relevant business unit.
3. Adjusted EBITDA is Trading profit as defined in (1) above excluding depreciation.
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, other finance income, early
redemption fee, fair value movements on interest rate financial
instruments and other interest payable.
6. Adjusted profit after tax is Adjusted profit before tax as
defined in (4) above less a notional tax charge of 19.0% (2018/19:
19.0%).
7. Adjusted earnings per share is Adjusted profit after tax as
defined in (6) above divided by the weighted average of the number
of shares of 846.1 million (26 weeks ended 29 September 2018: 840.8
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.
9. Net debt is defined as total borrowings, less cash and cash
equivalents and less capitalised debt issuance costs.
10. Free cash flow is defined as the change in Net debt as
defined in (9) above before the movement in debt issuance
costs.
11. Net debt on a pre-IFRS 16 basis.
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 asset amortisation and
impairment are excluded from Trading profit because they are
non-cash items.
-- Restructuring costs 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 business unit and
are reported at total Group level.
-- In line with accounting standards, the International and
Knighton business units, the results of which are aggregated within
the Grocery business unit, are not required to be separately
disclosed for reporting purposes.
GBPm Future pension cash payments schedule
2019/20 2020/21 2021/22 2022/23
Deficit contributions 37 38 38 38
Administration
costs 6-8 8-10 8-10 8-10
----------- ----------- ----------- -----------
Total 43-45 46-48 46-48 46-48
----------- ----------- ----------- -----------
Responsibility Statement of the Directors
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first twenty-six weeks of the financial year and their impact on
the condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first
twenty-six weeks of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
The Directors of Premier Foods plc are listed on pages 32-33 of
the Premier Foods plc annual report and accounts for the financial
period ended 30 March 2019.
On 30 August 2019, Alex Whitehouse was appointed Chief Executive
Officer and Colin Day was appointed Chairman. On the same day,
Alastair Murray departed from his role as Acting Chief Executive
Officer and Chief Financial Officer, and left the business.
Approved by the Board on 12 November 2019 and signed on its
behalf by:
Alex Whitehouse
Chief Executive Officer
Duncan Leggett
Acting Chief Financial Officer
INDEPENT REVIEW REPORT TO PREMIER FOODS PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 28 September 2019 which comprises the condensed
consolidated balance sheet, the related condensed consolidated
statement of profit or loss, statement of comprehensive income,
statement of cash flows, statement of changes in equity and the
related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 weeks ended 28
September 2019 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. 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. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
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.
The impact of uncertainties due to the UK exiting the European
Union on our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements.
Brexit is one of the most significant economic events for the UK,
and at the date of this report its effects are subject to
unprecedented levels of uncertainty of outcomes, with the full
range of possible effects unknown. An interim review cannot be
expected to predict the unknowable factors or all possible future
implications for a company and this is particularly the case in
relation to Brexit.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Richard Pinckard
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
12 November 2019
Condensed consolidated statement of profit
or loss (unaudited)
26 weeks 26 weeks
ended ended
28 Sept 2019 29 Sept
2018
Note GBPm GBPm
------------------------------------------- ----------------------- ---------------------
Revenue 4 366.7 358.0
Cost of sales (240.9) (237.0)
------------------------------------------- ----------------------- ---------------------
Gross profit 125.8 121.0
Selling, marketing and distribution costs (56.1) (52.8)
Administrative costs (33.8) (39.9)
------------------------------------------- ----------------------- ---------------------
Operating profit 4 35.9 28.3
Finance cost 5 (22.0) (32.9)
Finance income 5 1.1 2.4
Profit/(loss) before taxation 15.0 (2.2)
Taxation (charge)/credit 6 (2.7) 1.5
------------------------------------------- ----------------------- ---------------------
Profit/(loss) for the period attributable
to owners of the parent 12.3 (0.7)
------------------------------------------- ----------------------- ---------------------
Basic earnings/(loss) per share (pence) 7 1.5 (0.1)
------------------------------------------- ----------------------- ---------------------
Diluted earnings/(loss) per share (pence) 7 1.4 (0.1)
------------------------------------------- ----------------------- ---------------------
Adjusted earnings per share(1) (pence) 7 3.03 2.91
------------------------------------------- ----------------------- ---------------------
(1) Adjusted earnings per share is defined as trading profit less
net regular interest payable, less a notional tax charge at 19.0%
(2018/19: 19.0%) divided by the weighted average number of ordinary
shares of the Company.
Condensed consolidated statement of comprehensive income
(unaudited)
26 weeks ended 26 weeks
ended
28 Sept 2019 29 Sept 2018
Note GBPm GBPm
------------------------------------------------ ----- ------------------------- -------------------------
Profit/(loss) for the period 12.3 (0.7)
Other comprehensive income/(losses)
Items that will never be reclassified
to profit or loss
Remeasurements of defined benefit schemes 11 191.3 (52.5)
Deferred tax (charge)/credit (33.5) 8.9
Items that are or may be reclassified
to profit or loss
Exchange differences on translation 0.1 -
Other comprehensive income/(loss), net
of tax 157.9 (43.6)
------------------------------------------------ ----- ------------------------- -------------------------
Total comprehensive income/(loss) attributable
to owners of the parent 170.2 (44.3)
------------------------------------------------ ----- ------------------------- -------------------------
Condensed consolidated balance sheet (unaudited)
As at As at
28 Sept 30 Mar
2019 2019
Note GBPm GBPm
-------------------------------------------------- ----- ------------------ ---------------
ASSETS:
Non-current assets
Property, plant and equipment 196.8 186.0
Goodwill 646.0 646.0
Other intangible assets 352.1 366.4
Net retirement benefit assets 11 1,070.0 837.8
2,264.9 2,036.2
Current assets
Inventories 91.0 77.8
Trade and other receivables 90.8 89.2
Cash and cash equivalents 12 28.7 27.8
------------------
210.5 194.8
-------------------------------------------------- ----- ------------------ ---------------
Total assets 2,475.4 2,231.0
-------------------------------------------------- ----- ------------------ ---------------
LIABILITIES:
Current liabilities
Trade and other payables (247.7) (238.0)
Financial liabilities:
- derivative financial instruments 9 (0.3) (1.6)
- IFRS 16 lease liability 8 (3.6) -
Provisions for liabilities and charges 10 (5.8) (9.7)
------------------
(257.4) (249.3)
Non-current liabilities
Financial liabilities - long-term borrowings
- long term borrowings 8 (499.4) (497.7)
- IFRS 16 lease liability 8 (18.6) -
Net retirement benefit obligations 11 (481.3) (464.7)
Provisions for liabilities and charges 10 (9.8) (32.4)
Deferred tax liabilities (52.3) (13.5)
Other liabilities (9.3) (10.6)
------------------
(1,070.7) (1,018.9)
-------------------------------------------------- ----- ------------------ ---------------
Total liabilities (1,328.1) (1,268.2)
-------------------------------------------------- ----- ------------------ ---------------
Net assets 1,147.3 962.8
-------------------------------------------------- ----- ------------------ ---------------
EQUITY:
Capital and reserves
Share capital 84.7 84.5
Share premium 1,409.0 1,408.6
Merger reserve 351.7 351.7
Other reserves (9.3) (9.3)
Profit and loss reserve (688.8) (872.7)
-------------------------------------------------- ------------------ ---------------
Total equity 1,147.3 962.8
-------------------------------------------------- ----- ------------------ ---------------
Condensed consolidated statement of cash flows
(unaudited)
26 weeks 26 weeks
ended ended
28 Sept 2019 29 Sept 2018
Note GBPm GBPm
-------------------------------------------- ----- ----------------------- ---------------------
Cash generated from operations 12 25.9 20.4
Interest paid (18.8) (14.7)
Interest received 1.2 0.8
Taxation received - -
-------------------------------------------- ----- ----------------------- ---------------------
Cash generated from operating activities 8.3 6.5
Purchase of property, plant and equipment (6.3) (6.5)
Purchase of intangible assets (1.8) (0.5)
Sale of property, plant and equipment 0.1 -
-------------------------------------------- ----- ----------------------- ---------------------
Cash used in investing activities (8.0) (7.0)
Repayment of borrowings - (325.0)
Proceeds from borrowings - 325.0
Financing fees - (11.8)
Proceeds from share issue 0.6 0.1
Cash generated from/(used in) financing
activities 0.6 (11.7)
Net increase/(decrease) of cash and cash
equivalents 0.9 (12.2)
Cash, cash equivalents and bank overdrafts
at beginning of period 27.8 23.6
--------------------------------------------------- ----------------------- ---------------------
Cash, cash equivalents and bank overdrafts
at end of period 12 28.7 11.4
-------------------------------------------- ----- ----------------------- ---------------------
Condensed consolidated statement of changes in equity (unaudited)
Share Share Merger Other Profit Total
capital premium reserve reserves and loss equity
reserve
Note
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- ----- --------- --------- --------- ---------- ---------- ---------
At 1 April 2018 84.1 1,407.6 351.7 (9.3) (884.8) 949.3
Loss for the period - - - - (0.7) (0.7)
Remeasurements of defined
benefit schemes 11 - - - - (52.5) (52.5)
Deferred tax charge - - - - 8.9 8.9
Other comprehensive income - - - - (43.6) (43.6)
---------------------------------- ----- --------- --------- --------- ---------- ---------- ---------
Total comprehensive income - - - - (44.3) (44.3)
---------------------------------- ----- --------- --------- --------- ---------- ---------- ---------
Shares issued 0.0 0.1 - - - 0.1
Share-based payments - - - - 1.1 1.1
Deferred tax movements on share-based
payments - - - - 0.5 0.5
At 29 September 2018 84.1 1,407.7 351.7 (9.3) (927.5) 906.7
---------------------------------- ----- --------- --------- --------- ---------- ---------- ---------
At 31 March 2019 84.5 1,408.6 351.7 (9.3) (872.7) 962.8
Adjustment on initial application
of IFRS 16 (net of tax) - - - - 12.7 12.7
Adjusted balance as at 31
March 2019 84.5 1,408.6 351.7 (9.3) (860.0) 975.5
Profit for the period - - - - 12.3 12.3
Remeasurements of defined
benefit schemes 11 - - - - 191.3 191.3
Deferred tax charge - - - - (33.5) (33.5)
Exchange differences on translation - - - - 0.1 0.1
Other comprehensive income - - - - 157.9 157.9
---------------------------------- ----- --------- --------- --------- ---------- ---------- ---------
Total comprehensive income - - - - 170.2 170.2
---------------------------------- ----- --------- --------- --------- ---------- ---------- ---------
Shares issued 0.2 0.4 - - - 0.6
Share-based payments - - - - 1.0 1.0
At 28 September 2019 84.7 1,409.0 351.7 (9.3) (688.8) 1,147.3
---------------------------------- ----- --------- --------- --------- ---------- ---------- ---------
1. General information
Premier Foods plc (the "Company") is a public limited company
incorporated and domiciled in England and Wales, registered number
5160050, 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 financial period ended 30 March 2019.
2. Significant accounting policies
Basis of preparation
The condensed consolidated financial information ("financial
information") for the period ended 28 September 2019 has been
prepared in accordance with the Disclosure and Transparency Rules
of the Financial Conduct Authority and with IAS 34, "Interim
Financial Reporting" as adopted by the European Union. The
financial information for the 26 weeks ended 28 September 2019
should be read in conjunction with the Group's financial statements
for the 52 weeks ended 30 March 2019, which have been prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union. They have been prepared
applying the accounting policies and presentation as applied in the
preparation of the Group's published consolidated financial
statements for the 52 weeks ended 30 March 2019, except where new
or revised accounting standards have been applied. There has been
no significant impact on the Group profit or net assets on adoption
of new or revised accounting standards in the period.
The financial information for the period ended 28 September 2019
is unaudited but has been subject to an independent review by KPMG
LLP.
The Group's financial statements for the 52 weeks ended 30 March
2019, which were approved by the Board of Directors on 14 May 2019,
were reported on by KPMG LLP and delivered to the Registrar of
Companies. The report of the auditor 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 12 November
2019.
Changes to accounting policies
This is the first set of accounts in which IFRS 16 Leases has
been applied. IFRS 16 introduced a single, on-balance sheet
accounting model for lessees and sets out the principles for the
recognition, measurement, presentation and disclosure of leases. As
a result, the Group, as a lessee, has recognised right-of-use
assets representing its rights to use the underlying assets and
lease liabilities representing its obligation to make lease
payments. Lessor accounting remains similar to previous accounting
policies.
The Group has applied IFRS 16 using the modified retrospective
approach, discounted at the Group's incremental borrowing rate at
31 March 2019. Accordingly the comparative information presented
for 2018 has not been restated - i.e. it is presented as previously
reported under IAS 17 and related interpretations. The Group had
previously provided for some of these costs under IAS 37 therefore
the Group has reviewed these provisions and made adjustments as
necessary.
Details of the changes in accounting policies arising from the
implementation of IFRS16 are as follows:
Lease recognition
Previously, the Group determined at the inception of a contract
whether an arrangement was or contained a lease under IFRIC 4
Determining Whether an Arrangement contains a Lease. The Group now
assesses whether a contract is or contains a lease based on the new
definition of a lease. Under IFRS 16, a contract is, or contains, a
lease if the contract conveys a right to control the use of an
identified asset for a period of time in exchange for
consideration.
On transition to IFRS 16, the Group elected to apply the
practical expedient allowing the standard to be applied only to
contracts that were previously identified as leases under IAS17 and
IFRIC 4. Therefore, the definition of a lease under IFRS 16 has
been applied only to contracts entered into or changed on or after
31 March 2019.
The Group also elected to use the recognition exemptions for
lease contracts that, at the commencement date, have a lease term
of 12 months or less and do not contain a purchase option, and
lease contracts for which the underlying asset is of low value
('low-value assets').
For leases of properties in which the Group is a lessee, it has
applied the practical expedient permitted by IFRS16 and will
account for each lease component and any associated non-lease
components as a single lease component.
Right of use assets
The Group recognises right-of-use assets at the commencement
date of the lease. Right-of-use assets are measured at cost, less
accumulated depreciation and impairment losses and adjusted for any
re-measurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised,
adjusted for any lease payments made at or before the commencement
date, less any lease incentives received. Right-of-use assets are
depreciated over the shorter of the asset's useful life or the
lease term on a straight-line basis. Right-of-use assets are
subject to and reviewed regularly for impairment. Depreciation on
right-of-use assets is predominantly recognised in cost of sales in
the consolidated income statement.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of the lease
payments to be made over the lease term. Lease payments include
fixed and variable lease payments that depend on an index or rate
less any lease incentives receivable. Any variable lease payments
that do not depend on an index or rate are recognised as an expense
in the period in which the event or condition that triggers the
payment occurs.
In calculating the present value of lease payments, the Group
uses its incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. Generally the Group uses its incremental borrowing
rate as the discount rate.
After the commencement date, the lease liability is increased to
reflect the accretion of interest and reduced for lease payments
made. In addition, the carrying amount of lease liabilities is
re-measured if there is a modification, a change in the lease term
or a change in the fixed lease payments. Interest charges are
included in finance costs in the consolidated income statement.
Short-term leases and leases of low-value items
The Group has elected not to recognise right-of-use assets and
lease liabilities for short-term leases of machinery and equipment
that have a lease term of less than 12 months and leases of
low-value assets. Lease payments relating to short-term leases and
leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term.
Significant judgement in determining the lease term of property
leases
At the commencement date of property leases the Group determines
the lease term to be the full term of the lease, assuming that any
option to break or extend the lease is unlikely to be exercised.
Leases are regularly reviewed and will be revalued if it becomes
likely that a break clause or option to extend the lease is
exercised.
Previously, the Group classified property leases as operating
leases under IAS 17. In England, the majority of its property
leases are protected by the Landlord and Tenant Act 1954 ("LTA")
which affords protection to the lessee at the end of an existing
lease term.
If the lease is subsequently renewed, judgement is required in
respect of those property leases where the current lease term has
expired but the Group remains in negotiation with the landlord for
potential renewal. Where the Group believes renewal to be
reasonably certain and the lease is protected by the LTA it will be
treated as having been renewed at the date of termination of the
previous lease term and on the same terms as the previous lease.
Where renewal is not considered to be reasonably certain the leases
are included with a lease term which reflects the anticipated
notice period under relevant legislation. The lease will be
revalued when it is renewed to take account of the new terms.
Impact of IFRS 16 on financial statements
The Group leases many assets including properties, cars and
other equipment. As a lessee, the Group previously classified
leases as operating leases or finance leases based on its
assessment of whether the lease transferred substantially all of
the risks and rewards of ownership.
Balance sheet
The impact on the balance sheet on transition is summarised
below:
GBPm
Operating lease commitments as at 30 March
2019 18.3
Reclassification of provisions for non-operational
property lease costs 8.9
Discounted using incremental borrowing rate (3.8)
Other adjustment relating to implementation
of IFRS 16 0.1
Lease liabilities recognised at 31 March
2019 23.5
------
The Group presents lease liabilities separately in the
consolidated balance sheet.
Income statement
The Group has recognised depreciation and interest costs in
respect of leases that were previously classified as operating
leases in the income statement for the period, rather than rental
charges. During the 26 weeks ended 28 September 2019, the Group
recognised GBP1.2m of depreciation charges and GBP0.5m of interest
costs in respect of these leases.
Reserves
The Group has previously provided for property costs under IAS
37 Provisions, Contingent Liabilities and Contingent Assets. On
transition to IFRS 16, the Group recognised right-of-use assets in
respect of its non operational leasehold properties which were
immediately impaired through reserves. Elements of the Group's
provisions for non-operational properties cannot be recognised as
lease creditors under IFRS 16 and have therefore been credited to
reserves.
Cash flow statement
The implementation of IFRS 16 is an accounting change only and
does not impact cash flows.
Basis for preparation of financial statements on a going concern
basis
The Group's revolving credit facility includes net debt/EBITDA
and EBITDA/interest covenants. 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 was in
compliance with its covenant tests as at 30 March 2019 and 28
September 2019. The Group's forecasts, taking into account
reasonably possible changes in trading performance, show that the
Group should be able to operate within the level of its current
facilities including covenant tests. Notwithstanding the net
current liabilities position of the Group, the directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the next 12 months. The Group
therefore continues to adopt the going concern basis in preparing
its financial information.
3. Critical accounting policies, estimates and judgements
The following are areas of particular significance to the
Group's interim financial information and may include the use of
estimates, which is fundamental to the compilation of this
financial information. Results may differ from actual amounts.
Employee benefits
The present value of the Group's defined benefit pension
obligations depends on a number of actuarial assumptions. The
primary assumptions used include the discount rate applicable to
scheme liabilities, the long-term rate of inflation and estimates
of the mortality applicable to scheme members. Each of the
underlying assumptions is set out in more detail in note 11.
At each reporting date, and on a continuous basis, the Group
reviews the macro-economic, Company and scheme specific factors
influencing each of these assumptions, using professional advice,
in order to record the Group's ongoing commitment and obligation to
defined benefit schemes in accordance with IAS 19 (Revised).
Plan assets of the defined benefit schemes include a number of
assets for which quoted prices are not available. At each reporting
date, the Group determines the fair value of these assets with
reference to most recently available asset statements from fund
managers.
Where statements are not available at the reporting date, a roll
forward of cash transactions between statement date and balance
sheet date is performed.
Goodwill
Impairment reviews in respect of goodwill are performed annually
unless an event indicates that an impairment review is necessary.
Examples of such triggering events include a significant planned
restructuring, a major change in market conditions or technology,
expectations of future operating losses, or a significant reduction
in cash flows. In performing its impairment analysis, the Group
takes into consideration these indicators including the difference
between its market capitalisation and net assets.
The Group has considered the impact of the assumptions used on
the calculations and conducts sensitivity analysis on the value in
use calculations of the CGUs carrying values for the purposes of
testing goodwill.
Commercial arrangements
Sales rebates and discounts are accrued on each relevant
promotion or customer agreement and are charged to the statement of
profit or loss at the time of the relevant promotional buy-in as a
deduction from revenue. Accruals for each individual promotion or
rebate arrangement are based on the type and length of promotion
and nature of customer agreement. At the time an accrual is made
the nature and timing of the promotion is typically known. Areas of
estimation are sales volume/activity, phasing and the amount of
product sold on promotion.
For short term promotions, the Group performs a true up of
estimates where necessary on a monthly basis, using real time sales
information where possible and finally on receipt of a customer
claim which typically follows 1-2 months after the end of a
promotion. For longer term discounts and rebates, the Group uses
actual and forecast sales to estimate the level of rebate. These
accruals are updated monthly based on the latest actual and
forecast sales.
Judgements
The following are considered to be the key judgements within the
financial information:
Non-trading items
Non-trading items have been presented separately throughout this
financial information. These are items that management believes
require separate disclosure by virtue of their nature in order that
the users of the financial information 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.
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", "International" and "Knighton". The Grocery segment
primarily sells savoury ambient food products and the Sweet Treats
segment sells sweet ambient food products. The International and
Knighton segments have been aggregated within the Grocery segment
for reporting purposes as revenue is below 10 percent of the
Group's total revenue and the segments are considered to have
similar characteristics to that of Grocery. This is in accordance
with the criteria set out in IFRS 8.
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,
non-trading items and net interest on pensions and administrative
expenses.
The segment results for the period ended 28 September 2019 and
29 September 2018, and the reconciliation of the segment measures
to the respective statutory items included in the financial
information, are as follows:
26 weeks ended 28 Sept
2019
----------------------------------------------------- -----------------------------------------------
Grocery Sweet Total
Treats
GBPm GBPm GBPm
----------------------------------------------------- ------------ -------------- -----------------
Revenue 264.0 102.7 366.7
----------------------------------------------------- ------------ -------------- -----------------
Divisional contribution 59.3 10.4 69.7
Group and corporate costs (18.6)
----------------------------------------------------- ------------ -------------- -----------------
Trading profit 51.1
Amortisation of intangible assets (14.9)
Fair value movements on foreign exchange and other derivative
contracts 1.3
Non-trading items:
Restructuring costs (0.7)
Other non-trading (0.8)
Net interest on pensions and administrative
expenses (0.1)
----------------------------------------------------- ------------ -------------- -----------------
Operating profit 35.9
Finance cost (22.0)
Finance income 1.1
Profit before taxation 15.0
----------------------------------------------------- ------------ -------------- -----------------
Depreciation (5.4) (4.0) (9.4)
----------------------------------------------------- ------------ -------------- -----------------
26 weeks ended 29 Sept
2018
-----------------------------------------------
Grocery Sweet Total
Treats
GBPm GBPm GBPm
----------------------------------------------------- ------------ -------------- -----------------
Revenue 256.0 102.0 358.0
----------------------------------------------------- ------------ -------------- -----------------
Divisional contribution 57.0 11.3 68.3
Group and corporate costs (17.3)
----------------------------------------------------- ------------ -------------- -----------------
Trading profit 51.0
Amortisation of intangible assets (17.8)
Fair value movements on foreign exchange and
other derivative contracts 0.8
Non-trading items:
Restructuring costs (5.1)
Net interest on pensions and administrative
expenses (0.6)
----------------------------------------------------- ------------ -------------- -----------------
Operating profit before impairment 28.3
Impairment of property, plant and equipment -
Operating profit 28.3
Finance cost (32.9)
Finance income 2.4
Net movement on interest rate financial instruments -
Loss before taxation (2.2)
----------------------------------------------------- ------------ -------------- -----------------
Depreciation (4.1) (4.3) (8.4)
----------------------------------------------------- ------------ -------------- -----------------
Inter-segment transfers or transactions are entered into under
the same terms and conditions that would be available to unrelated
third parties.
5. Finance income and costs
26 weeks ended 26 weeks ended
28 Sept 2019 29 Sept 2018
GBPm GBPm
----------------------------------------------- ----------------------------- -------------------------
Interest payable on bank loans and overdrafts (3.3) (3.1)
Interest payable on senior secured notes (15.5) (16.1)
Interest payable on revolving facility - (0.5)
Amortisation of debt issuance costs (1.7) (1.9)
(20.5) (21.6)
Write off of financing costs(1) - (5.7)
Early redemption fee(2) - (5.6)
Other interest payable(3) (1.5) -
Total finance cost (22.0) (32.9)
----------------------------------------------- ----------------------------- -------------------------
Interest receivable on bank deposits 1.1 0.8
Other interest receivable(4) - 1.6
Total finance income 1.1 2.4
----------------------------------------------- ----------------------------- -------------------------
Net finance cost (20.9) (30.5)
----------------------------------------------- ----------------------------- -------------------------
(1) Relates to the refinancing of the senior secured fixed rate
notes due 2021 and revolving credit facility in the previous period.
(2) Relates to a non-recurring payment arising on the early redemption
of the GBP325m senior secured fixed rate notes due 2021 as part
of the refinancing of the Group's debt in the previous period.
(3) Included in other interest payable is GBP0.5m (2018/19: GBPnil)
relating to non-cash interest costs arising following the adoption
of IFRS 16 and GBP1.0m (2018/19: GBPnil) relating to the discount
on certain of the Group's long term provisions.
(4) Included in other interest receivable is GBPnil (2018/19: GBP1.6m)
relating to the unwind of the discount on certain of the Group's
long term provisions.
6. Taxation
The taxation charge for the period ended 28 September 2019 of
GBP2.7m (2018/19: GBP1.5m credit) comprises of a charge on
operating activities of GBP2.7m (2018/19: GBP0.5m credit) based
upon managements best estimate of the effective annual income tax
rate expected for the full financial year. In addition, a charge of
GBPnil (2018/19: GBP0.1m) relating to adjustments to prior years
and a charge of GBPnil (2018/19: GBP1.1m credit) relating to
repayment of foreign taxes paid in prior years. The adjustment to
the brought forward profit and loss reserve in respect of the
implementation of IFRS 16 includes a tax charge of GBP2.6m
(2018/19: GBPnil).
7. Earnings/(loss) per share
Basic earnings per share has been calculated by dividing the
profit for the period ended 28 September 2019 attributable to
owners of the parent of GBP12.3m (2018/19: GBP0.7m loss) by the
weighted average number of ordinary shares of the Company.
26 weeks ended 26 weeks ended
28 Sept 2019 29 Sept 2018
Number Number
------------------------------------------------ ------------------- --------------------
Weighted average number of ordinary shares
for the purpose of basic earnings per share 846,120,970 840,823,495
Effect of dilutive potential ordinary shares 10,933,622 4,927,124
------------------- --------------------
Weighted average number of ordinary shares
for the purpose of diluted earnings per share 857,054,592 845,750,619
------------------------------------------------ ------------------- --------------------
26 weeks ended 28 Sept 26 weeks ended 29 Sept
2019 2018
Basic Dilutive Diluted Basic Dilutive Diluted
effect effect
of share of share
options options
--------------------------------- ----------- ------------- ----------- ----------- ------------- ------------
Profit/(loss) after tax (GBPm) 12.3 12.3 (0.7) (0.7)
Weighted average number of
shares (m) 846.1 10.9 857.1 840.8 4.9 845.8
--------------------------------- -----------
Earnings/(loss) per share
(pence) 1.5 (0.1) 1.4 (0.1) - (0.1)
--------------------------------- ----------- ------------- ----------- ----------- ------------- ------------
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/(loss) per share.
There was no dilutive effect of share options or share awards in
the 26 weeks ended 29 September 2018 as the Group made a loss in
the prior period.
Adjusted earnings per share ("Adjusted EPS")
Adjusted earnings per share is defined as trading profit less
net regular interest payable, less a notional tax charge at 19.0%
(2018/19: 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, the early redemption fee
paid in the prior period, fair value movements on interest rate
financial instruments and other interest.
Trading profit and Adjusted 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
28 Sept 2019 29 Sept 2018
GBPm GBPm
-------------------------------------- -------------------------- ---------------
Trading profit 51.1 51.0
Less net regular interest (19.4) (20.8)
-------------------------- ---------------
Adjusted profit before tax 31.7 30.2
Notional tax at 19% (2018/19: 19%) (6.0) (5.7)
-------------------------------------- -------------------------- ---------------
Adjusted profit after tax 25.7 24.5
Average shares in issue (m) 846.1 840.8
Adjusted EPS (pence) 3.03 2.91
-------------------------------------- -------------------------- ---------------
Net regular interest
Net finance cost (20.9) (30.5)
Exclude write off of financing costs - 5.7
Exclude early redemption fee - 5.6
Exclude other interest 1.5 (1.6)
Net regular interest (19.4) (20.8)
-------------------------------------- -------------------------- ---------------
8. Bank and other borrowings
As at As at
28 Sept 2019 30 Mar 2019
GBPm GBPm
----------------------------------------------- ------------------- -------------------
Current:
IFRS 16 lease liability (3.6) -
----------------------------------------------- -------------------
Total borrowings due within one year (3.6) -
----------------------------------------------- ------------------- -------------------
Non-current:
Secured senior credit facility - revolving - -
Transaction costs 5.0 5.8
-------------------
5.0 5.8
IFRS 16 lease liability (18.6) -
----------------------------------------------- ------------------- -------------------
(18.6) -
Senior secured notes (510.0) (510.0)
Transaction costs 5.6 6.5
(504.4) (503.5)
Total borrowings due after more than one year (518.0) (497.7)
Total bank and other borrowings (521.6) (497.7)
----------------------------------------------- ------------------- -------------------
Revolving credit facility
The revolving credit facility of GBP177m is due to mature in
December 2022 and attracts a leverage based margin of between 2.25%
and 3.75% above LIBOR. Banking covenants of net debt / EBITDA and
EBITDA / interest are in place and are tested biannually.
Senior secured notes
The senior secured notes are listed on the Irish GEM Stock
Exchange. The notes totalling GBP510m are split between fixed and
floating tranches. The fixed note of GBP300m matures in October
2023 and attracts an interest rate of 6.25%. The floating note of
GBP210m matures in July 2022 and attracts an interest rate of 5.00%
above LIBOR.
9. 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 28 Sept As at 30 Mar 2019
2019
Carrying Fair Carrying Fair
amount value amount value
GBPm GBPm GBPm GBPm
---------------------------------------- --------------- --------------- --------------- ---------------
Loans and receivables:
Cash and cash equivalents 28.7 28.7 27.8 27.8
Financial assets at amortised cost:
Trade and other receivables 56.4 56.4 62.5 62.5
Financial assets at fair value through
profit or loss:
Trade and other receivables 3.2 3.1 4.6 4.5
Derivative financial instruments
- Forward foreign currency exchange - - - -
contracts
- Commodity and energy derivatives - - - -
Financial liabilities at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange
contracts (0.2) (0.2) (1.5) (1.5)
- Commodity and energy derivatives (0.1) (0.1) (0.1) (0.1)
IFRS 16 financial liabilities (22.2) (22.2) - -
Financial liabilities at amortised
cost:
Trade and other payables (242.9) (242.9) (233.1) (233.1)
Senior secured notes (510.0) (518.5) (510.0) (515.0)
---------------------------------------- --------------- --------------- --------------- ---------------
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 28 Sept As at 30 Mar 2019
2019
Level Level Level Level
1 2 1 2
---------------------------------------- ------------ --------------- ------------ ---------------
GBPm GBPm GBPm GBPm
Financial assets at fair value through
profit or loss:
Derivative financial instruments
- Forward foreign currency exchange - - - -
contracts
- Commodity and energy derivatives - - - -
Financial liabilities at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange
contracts - (0.2) - (1.5)
- Commodity and energy derivatives - (0.1) - (0.1)
Financial liabilities at amortised
cost:
Senior secured notes (518.5) - (515.0) -
---------------------------------------- ------------ --------------- ------------ ---------------
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. Methods and
assumptions used to estimate the fair values are consistent with
those used in the 52 weeks ended 30 March 2019.
10. Provisions for liabilities and charges
As at As at
28 Sept 2019 30 Mar 2019
GBPm GBPm
------------- ------------------- -------------------
Non-current (9.8) (32.4)
Current (5.8) (9.7)
------------- ------------------- -------------------
Total (15.6) (42.1)
------------- ------------------- -------------------
Total provisions for liabilities and charges of GBP15.6m at 28
September 2019 (30 March 2019: GBP42.1m) comprise primarily
provisions for site costs, dilapidations and environmental
liabilities related to lease hold properties and provisions for
insurance and legal matters. The reduction in provisions since 30
March 2019 is driven by the adoption of IFRS 16 where provisions
for lease costs for non-operational properties are accounted for as
lease creditors.
11. 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. These are as follows:
(a) The Premier schemes, which comprise:
Premier Foods Pension Scheme ("PFPS")
Premier Grocery Products Pension Scheme ("PGPPS")
Premier Grocery Products Ireland Pension Scheme ("PGPIPS")
Chivers 1987 Pension Scheme
Chivers 1987 Supplementary Pension Scheme.
Hillsdown Holdings Limited Pension Scheme(1)
(1) Hillsdown Holdings Limited Pension Scheme has transferred in
during the year, this scheme has previously been excluded from the
Group's IAS 19 results on the basis of materiality.
(b) The RHM schemes, which comprise:
RHM Pension Scheme
Premier Foods Ireland Pension Scheme
The most recent triennial actuarial valuations of the PFPS, the
PGPPS and the RHM pension scheme were carried out on 31 March 2016
/ 5 April 2016 to establish ongoing funding arrangements. Deficit
recovery plans have been agreed with the Trustees of each of the
PFPS and PGPPS. The RHM Pension Scheme was in surplus and no
deficit contributions are payable. Actuarial valuations as at 31
March 2019/5 April 2019 are ongoing.
Actuarial valuations for the schemes based in Ireland took place
during the course of 2016 and 2017.
The exchange rates used to translate the overseas euro based
schemes are GBP1.00 = EUR1.1240 for the average rate during the
period, and GBP1.00 = EUR1.1245 for the closing position at 28
September 2019.
At the balance sheet date, the combined principal actuarial
assumptions were as follows:
Premier RHM schemes
schemes
At 28 September 2019
Discount rate 1.85% 1.85%
Inflation - RPI 3.05% 3.05%
Inflation - CPI 1.95% 1.95%
Expected salary increases n/a n/a
Future pension increases 2.05% 2.05%
---------------------------- --------- ------------
At 30 March 2019
Discount rate 2.45% 2.45%
Inflation - RPI 3.25% 3.25%
Inflation - CPI 2.15% 2.15%
Expected salary increases n/a n/a
Future pension increases 2.10% 2.10%
---------------------------- --------- ------------
For the smaller overseas schemes, the discount rate used was
0.80% (2018/19: 1.50%) and future pension increases were 1.30%
(2018/19: 1.30%).
The mortality assumptions are based on standard mortality tables
and allow for future mortality improvements. The assumptions are as
follows:
Premier RHM schemes
schemes
--------------------------------------- --------- ------------
Life expectancy at 28 September 2019
Male pensioner, currently aged 65 87.4 85.3
Female pensioner, currently aged 65 89.3 87.8
Male non-pensioner, currently aged 45 88.4 86.1
Female non-pensioner, currently aged
45 90.5 88.9
Life expectancy at 30 March 2019
Male pensioner, currently aged 65 87.4 85.3
Female pensioner, currently aged 65 89.3 87.8
Male non-pensioner, currently aged 45 88.4 86.1
Female non-pensioner, currently aged
45 90.5 88.9
---------------------------------------- --------- ------------
The fair values of plan assets split by type of asset are as
follows:
Premier schemes % of total RHM schemes % of total Total % of total
GBPm % GBPm % GBPm %
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
Assets with a quoted price in an active market at 28 September 2019:
UK equities 0.3 0.0 0.3 0.0 0.6 0.0
Global equities 6.9 0.9 172.2 3.5 179.1 3.2
Government bonds 38.1 4.8 1,594.6 32.9 1,632.7 28.8
Corporate bonds 20.5 2.6 - - 20.5 0.4
Property 31.8 4.0 386.9 8.0 418.7 7.4
Absolute return products 333.0 42.0 927.0 19.1 1,260.0 22.3
Cash 8.8 1.1 52.7 1.1 61.5 1.1
Other 336.5 42.4 5.2 0.1 341.7 6.0
Assets without a quoted price in an active market at 28 September 2019:
Infrastructure funds - - 303.8 6.2 303.8 5.4
Swaps - - 516.6 10.6 516.6 9.1
Private equity - - 541.5 11.1 541.5 9.6
Other 17.7 2.2 362.2 7.4 379.9 6.7
Fair value of scheme assets
as at 28 September 2019 793.6 100 4,863.0 100 5,656.6 100
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
Assets with a quoted price in an active market at 30 March 2019:
UK equities 0.4 0.1 0.3 0.0 0.7 0.0
Global equities 7.5 1.1 171.3 4.0 178.8 3.5
Government bonds 29.9 4.2 1,460.5 33.6 1,490.4 29.7
Corporate bonds 26.9 3.8 - - 26.9 0.5
Property 31.3 4.4 405.2 9.4 436.5 8.7
Absolute return products 365.7 51.7 775.5 17.9 1,141.2 22.6
Cash 8.0 1.1 30.1 0.7 38.1 0.8
Other 224.8 31.8 2.8 0.1 227.6 4.5
Assets without a quoted price in an active market at 30 March 2019:
Infrastructure funds - - 256.1 5.9 256.1 5.1
Swaps - - 556.4 12.8 556.4 11.0
Private equity - - 446.1 10.3 446.1 8.8
Others 12.6 1.8 229.3 5.3 241.9 4.8
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
Fair value of scheme assets
as at 30 March 2019 707.1 100 4,333.6 100 5,040.7 100
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
The schemes invest in interest rate and inflation swaps to
protect from fluctuations in interest and inflation.
The amounts recognised on 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 28 September 2019
Present value of funded obligations (1,274.9) (3,793.0) (5,067.9)
Fair value of plan assets 793.6 4,863.0 5,656.6
------------------------------------- ---------- ------------ ----------
(Deficit)/surplus in schemes (481.3) 1,070.0 588.7
------------------------------------- ---------- ------------ ----------
At 30 March 2019
Present value of funded obligations (1,171.8) (3,495.8) (4,667.6)
Fair value of plan assets 707.1 4,333.6 5,040.7
------------------------------------- ---------- ------------ ----------
(Deficit)/surplus in schemes (464.7) 837.8 373.1
------------------------------------- ---------- ------------ ----------
The aggregate surplus of GBP373.1m has increased to a surplus of
GBP588.7m during the period ended 28 September 2019 (52 weeks ended
30 March 2019: GBP56.1m increase) primarily due to the impact of a
remeasurement gains on plan assets.
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 31 March
2018 (1,116.1) (3,430.5) (4,546.6)
Interest cost (29.1) (90.3) (119.4)
Past service cost (11.1) (26.5) (37.6)
Remeasurement losses (53.9) (94.6) (148.5)
Exchange differences 0.8 0.5 1.3
Benefits paid 37.6 145.6 183.2
Defined benefit obligation at 30 March
2019 (1,171.8) (3,495.8) (4,667.6)
Recognition of Hillsdown Holdings Limited
Pension Scheme (0.5) - (0.5)
Interest cost (13.8) (41.8) (55.6)
Settlement 0.7 - 0.7
Remeasurement losses (107.1) (331.3) (438.4)
Exchange differences (1.1) (1.0) (2.1)
Benefits paid 18.7 76.9 95.6
-------------------------------------------- ---------- ------------ ----------
Defined benefit obligation at 28 September
2019 (1,274.9) (3,793.0) (5,067.9)
-------------------------------------------- ---------- ------------ ----------
Changes in the fair value of plan assets were as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
---------------------------------------------- ------------ ------------ --------
Fair value of plan assets at 31 March
2018 679.1 4,184.5 4,863.6
Interest income on plan assets 17.7 110.7 128.4
Remeasurement gains 14.2 187.5 201.7
Administrative costs (6.5) (3.8) (10.3)
Contributions by employer 41.1 0.8 41.9
Exchange differences (0.9) (0.5) (1.4)
Benefits paid (37.6) (145.6) (183.2)
---------------------------------------------- ------------ ------------ --------
Fair value of plan assets at 30 March
2019 707.1 4,333.6 5,040.7
Recognition of Hillsdown Holdings Limited
Pension Scheme 0.6 - 0.6
Interest income on plan assets 8.4 52.0 60.4
Settlement (0.8) - (0.8)
Remeasurement gains 74.7 554.9 629.6
Administrative costs (2.7) (2.1) (4.8)
Contributions by employer 23.7 0.5 24.2
Exchange differences 1.3 1.0 2.3
Benefits paid (18.7) (76.9) (95.6)
---------------------------------------------- ------------ ------------ --------
Fair value of plan assets at 28 September
2019 793.6 4,863.0 5,656.6
---------------------------------------------- ------------ ------------ --------
The reconciliation of the net defined benefit liability over the
period is as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
-------------------------------------------------- --------- ------------ -------
(Deficit)/surplus in schemes at 31 March
2018 (437.0) 754.0 317.0
Amount recognised in profit or loss (29.0) (9.9) (38.9)
Remeasurements recognised in other comprehensive
income (39.7) 92.9 53.2
Contributions by employer 41.1 0.8 41.9
Exchange differences recognised in other
comprehensive income (0.1) - (0.1)
(Deficit)/surplus in schemes at 30 March
2019 (464.7) 837.8 373.1
Recognition of Hillsdown Holdings Limited
Pension Scheme 0.1 - 0.1
Amount recognised in profit or loss (8.2) 8.1 (0.1)
Remeasurements recognised in other comprehensive
income (32.4) 223.6 191.2
Contributions by employer 23.7 0.5 24.2
Exchange differences recognised in other
comprehensive income 0.2 - 0.2
-------------------------------------------------- --------- ------------ -------
(Deficit)/surplus in schemes at 28 September
2019 (481.3) 1,070.0 588.7
-------------------------------------------------- --------- ------------ -------
The total amounts recognised in the consolidated statement of
profit or loss are as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
---------------------------------- --------- ------------ -------
26 weeks ended 28 September 2019
Operating profit
Settlement cost (0.1) - (0.1)
Administrative costs (2.7) (2.1) (4.8)
Net interest (cost)/credit (5.4) 10.2 4.8
---------------------------------- --------- ------------ -------
Total for the period (8.2) 8.1 (0.1)
---------------------------------- --------- ------------ -------
26 weeks ended 29 September 2018
Operating profit
Administrative costs (3.1) (1.9) (5.0)
Net interest (cost)/credit (5.7) 10.1 4.4
Total for the period (8.8) 8.2 (0.6)
---------------------------------- --------- ------------ -------
52 weeks ended 30 March 2019
Operating profit
Past service costs
GMP Equalisation (26.5) (15.0) (41.5)
Other - 3.9 3.9
Administrative costs (6.5) (3.8) (10.3)
Net interest (cost)/credit (11.4) 20.4 9.0
---------------------------------- --------- ------------ -------
Total (cost)/credit (44.4) 5.5 (38.9)
---------------------------------- --------- ------------ -------
12. Notes to the cash flow statement
Reconciliation of loss before taxation to cash flows from operating
activities
26 weeks ended 26 weeks ended
28 Sept 2019 29 Sept 2018
GBPm GBPm
----------------------------------------------- -------------------------- ------------------------
Profit/(loss) before taxation 15.0 (2.2)
Net finance cost 20.9 30.5
Operating profit 35.9 28.3
Depreciation of property, plant and equipment 9.4 8.4
Amortisation of intangible assets 14.9 17.8
Loss/(gain) on disposal of property, plant
and equipment 0.2 0.3
Fair value movements on financial instruments (1.3) (0.8)
Equity settled employee incentive schemes 1.0 1.1
Increase in inventories (13.2) (23.2)
(Increase)/decrease in trade and other
receivables (1.5) 9.0
Increase/(decrease) in trade and other
payables and provisions 4.8 (1.7)
Movement in retirement benefit obligations (24.3) (18.8)
--------------------------
Cash generated from operations 25.9 20.4
----------------------------------------------- -------------------------- ------------------------
Analysis of
movement
in borrowings
As at Implementation As at Cash Other As at
30 Mar of IFRS 16 30 Mar flows non-cash 28 Sept
2019 2019 (revised) movements 2019
GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------------------- ------------------------ --------------------- --------------------- --------------------- ---------------------
Bank - - - - - -
overdrafts
Cash and bank
deposits 27.8 - 27.8 0.9 - 28.7
--------------- --------------------- ------------------------ --------------------- --------------------- --------------------- ---------------------
Net cash and
cash
equivalents 27.8 - 27.8 0.9 - 28.7
Borrowings - - - - - -
revolving -
credit
facilities
Borrowings -
senior
secured notes (510.0) - (510.0) - - (510.0)
Finance lease
obligations - (23.5) (23.5) 1.8 (0.5) (22.2)
--------------------- ------------------------ --------------------- ---------------------
Gross
borrowings
net
of cash(1) (482.2) (23.5) (505.7) 2.7 (0.5) (503.5)
Debt issuance
costs 12.3 - 12.3 - (1.7) 10.6
--------------- ---------------------
Total net
borrowings(1) (469.9) (23.5) (493.4) 2.7 (2.2) (492.9)
--------------- --------------------- ------------------------ --------------------- --------------------- --------------------- ---------------------
(1) Borrowings excludes derivative financial
instruments.
13. Contingencies
There were no material contingent liabilities as at 28 September
2019 and 30 March 2019.
14. Related party transactions
The Group's related party transactions and relationships for the
52 weeks ended 30 March 2019 were disclosed on page 117 of the
annual report and accounts for the financial period ended 30 March
2019.
Transactions with associates and major shareholders during the
period are set out below.
26 weeks ended 26 weeks ended
28 Sept 2019 29 Sept 2018
GBPm GBPm
-------------------- ----------------------- ------------------
Sale of goods:
- Hovis - 0.1
Sale of services:
- Hovis 0.4 0.2
Total sales 0.4 0.3
-------------------- ----------------------- ------------------
Purchase of goods:
- Hovis 0.0 5.7
- Nissin 4.9 5.7
Total purchases 4.9 11.4
-------------------- ----------------------- ------------------
As at 28 September 2019 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 19.44% (2018/19: 19.56%) equity
shareholding in Premier Foods plc and of its power to appoint a
member to the Board of directors. There have been recharges of
GBP0.1m (2018/19: GBP0.1m) in the period.
- Oasis Management Company Ltd ("Oasis") is considered to be a
related party to the Group by virtue of its 11.97% (2018/19:
11.99%) equity shareholding in Premier Foods plc and of its power
to appoint a member to the Board of directors.
- Paulson Investment Company LLC, ("Paulson") is considered to
be a related party to the Group by virtue of its 11.96% (2018/19:
11.98%) equity shareholding in Premier Foods plc, of which 4.42% is
a total return swap and of its power to appoint a member to the
Board of directors.
15. Subsequent events
There were no reportable events after the balance sheet
date.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FFUEDFFUSEDF
(END) Dow Jones Newswires
November 12, 2019 02:01 ET (07:01 GMT)
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