REG - Premier Foods plc Premier Foods Fin - Half-Year Results
14/11/2024 07:00
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RNS Number : 1640M Premier Foods plc 14 November 2024
14 November 2024
Premier Foods plc (the "Group" or the "Company")
Half year results for the 26 weeks ended 28 September 2024
Further, strong, volume led branded revenue growth
Headline results (£m) FY24/25 H1 FY23/24 H1 change
Headline Revenue 498.7 476.7 4.6%
Headline Branded Revenue 444.7 416.5 6.8%
Headline Trading profit(1) 70.2 66.6 5.5%
Adjusted profit before taxation(4) 61.0 56.0 8.9%
Adjusted earnings per share(7) (pence) 5.3 4.9 8.1%
Net debt(11) 221.3 273.1 £51.8m lower
Statutory measures (£m) FY24/25 H1 FY23/24 H1 % change
Revenue (includes Charnwood & Knighton) 501.0 494.1 1.4%
Operating profit 65.4 69.0 (5.2%)
Profit after taxation 39.5 42.7 (7.5%)
Basic earnings per share (pence) 4.6 5.0 (8.0%)
Alternative performance measures above are defined below and reconciled to
statutory measures throughout.
Headline results presented for both periods exclude effect of Charnwood &
Knighton site closures
Statutory measures include Charnwood & Knighton results prior to closure
Financial headlines
· Headline Revenue up 4.6%; headline branded revenue up +6.8%
· Total Headline Grocery branded revenue up +7.0%, Sweet Treats
branded revenue up +6.1%
· Double digit branded volume growth in both Grocery and Sweet
Treats
· Volume and value market share(13) gains
· Non-branded revenue down (10.4%) as consumers switch to
brands from own label, and low-margin contract exits
· Headline Trading profit +5.5%; margins slightly ahead of
prior period
· Profit after tax £39.5m, £3.2m lower reflecting lower
non-cash pension credit compared to prior period
· Net debt £221.3m, £51.8m lower than prior period and Net
debt/EBITDA reduced to 1.1x
· On track to deliver on full year expectations
Strategic headlines
· UK branded revenue +5.6%, with volumes up due to strong
innovation and sharper promotional pricing
· Infrastructure investment up 63%; focus on efficiency,
automation and growth capital projects
· International revenue up +31%(8) with strong growth in all
markets
· New categories revenue increased +67% with significant growth
across all ranges
· The Spice Tailor and FUEL10K performing well, benefitting
from the strength of the branded growth model
Alex Whitehouse, Chief Executive Officer
"We've delivered another really strong branded performance in the first half,
underpinned by double-digit volume growth. This demonstrates the success of
our proven branded growth model which was also supported by sharper
promotional pricing. We gained both volume and value market share,
outperforming the market as many consumers switched into our leading brands
from own label. Our innovation programme continues apace as we brought many
new products to market in the period, including Sharwood's curry kits, Mr
Kipling Loaf cakes and Loyd Grossman Pesto."
"As inflation has begun to ease and shoppers are starting to feel more
confident, we've seen consumers treat themselves more, helping sales of both
Mr Kipling Signature Bites and Ambrosia Deluxe more than double in the first
half of the year."
"We've continued to make very good progress against all the pillars of our
growth strategy. We accelerated capital investment in our supply chain,
continuing to invest in projects to improve automation and increase
efficiency, in addition to enabling growth through new product development.
Angel Delight ice cream and Ambrosia porridge pots contributed to strong
progress in our new categories, which grew 67%, while the international
business performed very well, with revenue up 31%(8). We continue to be very
pleased by the progress of our acquired brands, The Spice Tailor and FUEL10K
and we now have the biggest selling granola product on the market."
"As we look to the second half, we have exciting plans in place across all our
brands, with our best ever Mr Kipling Signature mince pies benefitting from
expanded distribution. With this, and our continued branded momentum, we are
on track to deliver on expectations for the full year. As we look further
ahead, we expect revenue growth to continue to be generated from our strategic
priorities of growing our UK branded core, extending into new categories,
overseas expansion and M&A activity."
Outlook
The effectiveness of the Group's branded growth model and investment in
promotional pricing have delivered a strong branded volume and revenue
performance in the first half of the year. With this momentum, and strong
plans in place for further branded growth in the second half, the Group is on
track to deliver on expectations for the full year.
Strategy overview
The Group employs a five pillar strategy, to drive growth and create value,
which is outlined below.
Pillar Strategy Overview H1 Proof point
1. Continue to grow the UK core business Our Branded Growth Model leverages our leading category positions, launching UK branded revenue growth 5.6%
new products to market driven by consumer trends, supporting our brands with
sustained levels of marketing investment and fostering strong customer and
retailer partnerships.
2. Supply chain investment Investing in operational infrastructure to increase efficiency and Capital investment £22.5m, up 63%
productivity providing a virtuous cycle for brand investment. Also facilitates
growth through our innovation strategy and enhances the safety and working
conditions of our colleagues.
3. Expand UK business into new categories Leverage the strength of our brands, using our proven branded growth model to Revenue growth of 67%
launch products in adjacent, new food categories.
4. Build international businesses with critical mass Building sustainable business units with critical mass overseas, applying Revenue growth of 31%(8)
brand building capabilities to deliver growth in target markets of Australia
& New Zealand, North America and EMEA. Brands which currently drive this
expansion are Mr Kipling, Sharwood's and The Spice Tailor.
5. Inorganic opportunities Financially disciplined approach to brand acquisitions, to drive significant FUEL10K Chocolate Chunks the No.1 Granola in Q2
value through the application of our branded growth model.
Capital allocation
The Group is highly cash generative, benefits from strong EBITDA margins in
line with global branded food sector peers and has substantially reduced its
interest costs in recent years.
In March 2024, the Group announced the suspension of pension deficit
contribution payments, which historically have consumed a significant
proportion of cash. This position creates significantly increased free cash
flow from FY24/25, and presents increased options to help the Group deliver on
its growth ambitions. Management allocates capital according to a clear and
disciplined framework:
1. Capital investment: Investment at attractive paybacks to increase efficiency
and automation at our manufacturing sites and facilitate growth through
product innovation.
2. M&A: Continue to pursue branded assets which would benefit from the
application of the Group's proven branded growth model. We will maintain our
financial discipline on M&A, applying a similar approach as to the recent
acquisitions of The Spice Tailor and FUEL10K, with a focus on Return on
Invested Capital.
3. Dividends: Expect to pay a progressive dividend, growing ahead of earnings.
The Group's Net debt/EBITDA leverage target of 1.5x remains unchanged.
Environmental, Social and Governance (ESG)
The Group's 'Enriching Life Plan', encompasses the three strategic pillars of
Product, Planet and People; more details can be found in the Group's Annual
Report for the 52 weeks ended 30 March 2024 and corporate website. Highlights
in the first half of the year include 66% of Grocery portfolio sales are
non-HFSS (non-high fat, salt & sugar), a 17% reduction in Scope 1
emissions compared to last year and further plans to extend solar power
generation across the supply chain footprint.
Further information
A presentation to investors and analysts will be webcast today at 9:00am GMT.
To register for the webcast follow the link:
www.premierfoods.co.uk/investors/investor-centre
(http://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, 14
November 2024, at 1:00pm GMT. Dial in details are outlined below:
Telephone: 0800 358 1035 (UK toll free)
+44 20 3936 2999 (standard international access)
Access code: 056591
A factsheet providing an overview of the Half year results is available at:
www.premierfoods.co.uk/investors/results-centre
(http://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/
(http://www.premierfoods.co.uk/media/image-gallery/)
As one of Britain's largest food producers, we're passionate about food and
believe each and every day we have the opportunity to enrich life for
everyone. Premier Foods employs over 4,000 people operating from 13 sites
across the country, supplying a range of retail,
wholesale, foodservice and other customers with our iconic brands which
feature in millions of homes every day.
Through some of the nation's best-loved brands, including Ambrosia,
Batchelors, Bisto, Loyd Grossman, Mr Kipling, OXO and Sharwood's, we're
creating great tasting products that contribute to healthy and balanced diets,
while committing to nurturing our people and our local communities, and going
further in the pursuit of a healthier planet, in line with our Purpose of
'Enriching Life Through Food'.
Contacts:
Institutional investors and analysts:
Duncan Leggett, Chief Financial Officer
Richard Godden, Director of Investor Relations
Investor.relations@premier (mailto:Investor.relations@premier) foods.co.uk
Media enquiries:
Lisa Kavanagh, Director of Communications & Public Affairs
Headland
Ed Young +44 (0) 7884 666830
Jack Gault +44 (0) 7799 089357
- Ends -
This announcement may contain "forward-looking statements" that are based on
estimates and assumptions and are subject to risks and uncertainties.
Forward-looking statements are all statements other than statements of
historical fact or statements in the present tense, and can be identified by
words such as "targets", "aims", "aspires", "assumes", "believes",
"estimates", "anticipates", "expects", "intends", "hopes", "may", "would",
"should", "could", "will", "plans", "predicts" and "potential", as well as the
negatives of these terms and other words of similar meaning. Any
forward-looking statements in this announcement are made based upon Premier
Foods' estimates, expectations and beliefs concerning future events affecting
the Group and subject to a number of known and unknown risks and
uncertainties. Such forward-looking statements are based on numerous
assumptions regarding the Premier Foods Group's present and future business
strategies and the environment in which it will operate, which may prove not
to be accurate. Premier Foods cautions that these forward-looking statements
are not guarantees and that actual results could differ materially from those
expressed or implied in these forward-looking statements. Undue reliance
should, therefore, not be placed on such forward-looking statements. Any
forward-looking statements contained in this announcement apply only as at the
date of this announcement and are not intended to give any assurance as to
future results. Premier Foods will update this announcement as required by
applicable law, including the Prospectus Rules, the UK Listing Rules, the
Disclosure Guidance and Transparency Rules, the rules of the London Stock
Exchange and any other applicable law or regulations, but otherwise expressly
disclaims any obligation or undertaking to update or revise any
forward-looking statement, whether as a result of new information, future
developments or otherwise.
Financial results
Overview
£m FY24/25 H1 FY23/24 H1 % change
Branded revenue 444.7 416.5 6.8%
Non-branded revenue 54.0 60.2 (10.4%)
Headline revenue 498.7 476.7 4.6%
Divisional contribution(2) 105.0 100.7 4.3%
Group & corporate costs (34.8) (34.1) (2.1%)
Headline Trading profit(1) 70.2 66.6 5.5%
Headline Trading profit margin 14.1% 14.0% 0.1ppt
Adjusted EBITDA(3) 82.4 78.5 5.0%
Adjusted profit before tax(4) 61.0 56.0 8.9%
Adjusted earnings per share(7) (pence) 5.3 4.9 8.1%
Basic earnings per share (pence) 4.6 5.0 (8.0%)
Headline revenue excludes Charnwood & Knighton; reconciliations are
provided in the appendices.
Headline Revenue, which excludes Charnwood and Knighton, grew by 4.6% in the
first half of the year. Divisional contribution increased by 4.3% to £105.0m
and Headline Trading profit increased by 5.5% to £70.2m. Group and corporate
costs were marginally higher in the period at £34.8m. Headline Trading profit
margins of 14.1% were slightly ahead of the prior period. Adjusted profit
before tax increased by 8.9%, while adjusted earnings per share grew by 8.1%.
Basic earnings per share for the first half of the year decreased by 8.0% to
4.6p as Headline Trading profit growth was offset by a £4.1m lower non-cash
pensions credit compared to the prior period and slightly higher net finance
costs.
Statutory overview
£m FY24/25 H1 FY23/24 H1 % change
Grocery
Branded revenue 339.0 316.9 7.0%
Non-branded revenue 37.4 55.3 (32.4%)
Total revenue 376.4 372.2 1.1%
Sweet Treats
Branded revenue 105.7 99.6 6.1%
Non-branded revenue 18.9 22.3 (15.1%)
Total revenue 124.6 121.9 2.2%
Group
Branded revenue 444.7 416.5 6.8%
Non-branded revenue 56.3 77.6 (27.4%)
Statutory revenue 501.0 494.1 1.4%
Profit before tax 53.5 58.1 (7.9%)
Basic earnings per share (pence) 4.6 5.0 (8.0%)
The table above is presented including results from Charnwood and Knighton.
Group revenue on a statutory basis increased by 1.4% in the period, led by
branded revenue which increased by 6.8%. Non-branded declined 27.4% owing to
the closure of the Charnwood and Knighton manufacturing sites, consumers
switching to brands and some contract exits. Grocery revenue was 1.1% higher
than the prior period at £376.4m and Sweet Treats grew 2.2% to £124.6m.
Profit before tax in the first half of the year was £53.5m; £4.6m lower than
the prior period as Trading profit growth was offset by a lower pensions
credit as described above. Basic earnings per share was 4.6 pence (FY23/24 H1:
5.0 pence).
Trading performance
Grocery
£m FY24/25 H1 FY23/24 H1 % change
Branded revenue 339.0 316.9 7.0%
Non-branded revenue 35.1 37.9 (7.6%)
Total headline revenue 374.1 354.8 5.4%
Divisional contribution(2) 93.3 88.6 5.3%
Divisional contribution margin 24.9% 25.0% (0.1ppt)
The table above is presented excluding the impact of Charnwood and Knighton
On a headline basis (excluding Charnwood and Knighton) Grocery revenue
increased by 5.4% in the period to £374.1m, with branded revenue leading the
growth, advancing 7.0% to £339.0m. Non-branded revenue was 7.6% lower at
£35.1m. In the second quarter, Grocery revenue (on a headline basis)
increased by 4.0%, with branded growth of 5.6% partly offset by Non-branded
revenue which declined 10.1%. Non-branded revenue trends in the period were
due to consumers switching to our brands and some contract exits.
The Grocery business delivered 12% branded volume growth in the period which
was also reflected in strong volume share gains. Promotional investment was
higher compared to the prior period, due to the lower promotional price
points, which served to support these volume trends, alongside the benefit of
the Group's branded growth model strategy. This model leverages the strength
of the Group's market leading brands, launching insightful new products,
supporting the brands with emotionally engaging advertising and building
strategic retail partnerships. This volume performance was instrumental in
delivering branded revenue growth of 7.0% in the first half of the year.
Divisional contribution increased by 5.3% to £93.3m; margins were broadly in
line with the prior period, reflecting the positive branded mix benefits of
the trading performance, offset by some salary inflation. Grocery brand
investment continued in the period, with Ambrosia, Batchelors, Bisto and OXO
all benefitting from advertising campaigns. A new OXO advertisement was
introduced under the 'Made with Love' campaign, working in conjunction with an
online competition and impactful instore execution, all of which will continue
in the second half of the year.
Nissin noodles yet again grew strongly in the period, as the Group commenced
the distribution of the Demae Ramen range supporting the momentum of the brand
which is now worth over £60m(13) in retail sales value. New product
development launched in the first half included Sharwood's curry kits, Mr
Kipling no bake cheesecake kits, and Loyd Grossman Tomato & Mascarpone
sauce and Pesto. New product development for the second half of the year
includes a range of microwaveable Batchelors Pasta n Sauce variants, OXO
Turkey stock pots for the Christmas season and The Spice Tailor pastes.
Building on the track record in previous periods, the Group's share of
distribution points, a measure of presence of brands and products on
retailers' shelves, increased by 78 basis points in the second quarter due to
the strong performance of its brands and innovation programme. Additionally,
the Group employs strategies to deliver effective and impactful instore
activity across many of its brands and categories. These activities can be
single or multi category and are often sited at the end of aisle in retailers
to deliver maximum impact and returns. Partnerships are also used to create
impactful activity; in the first half of the year this included DC Warner
Brothers' Superman with Batchelors activity and a Cluedo Who Stole The Recipe?
Campaign for Sharwood's, The Spice Tailor and Loyd Grossman cooking sauces.
Revenue growth from expanding into adjacent new categories increased by 67%,
as the Group's brands continue to demonstrate their brand stretch
capabilities. Ambrosia porridge pots grew by 62%; they now hold a 10% share of
the category, the performance in the period reflecting inclusion in wider
Ambrosia brand TV advertising and the launch of an Apple & Blueberry
variant. In the second half of the year, distribution will be extended to
include another major retailer and the launch of a new Sweet Cinnamon flavour.
Angel Delight and Mr Kipling ice-cream more than doubled revenue, up 139% year
on year, with Angel Delight benefitting from handheld formats in the summer
months. OXO marinades and Cape Herb & Spice both delivered a strong first
half of the year, with revenue up 80% and 54% respectively.
The Spice Tailor extended further beyond its Indian cuisine heartland in H1,
with the launch of Chinese kits including Spicy Kung Po and Fiery Szechuan.
Brand investment included digital activity bringing to life delicious meals to
increase brand awareness and recruit new consumers, together with instore
promotional activity alongside the Group's other cooking sauces brands.
FUEL10K's Chocolate chunks was the UK's biggest selling Granola product line
in the second quarter, with total Granola sales up 27% in H1. Out of home
media for the brand is planned for the second half of the year alongside new
products such as Multigrain Flakes and high protein Noodle pots.
Sweet Treats
£m FY24/25 H1 FY23/24 H1 % change
Branded revenue 105.7 99.6 6.1%
Non-branded revenue 18.9 22.3 (15.1%)
Total headline revenue 124.6 121.9 2.2%
Divisional contribution(2) 11.7 12.1 (3.3%)
Divisional contribution margin 9.4% 9.9% (0.5ppts)
Total revenue increased by 2.2% in Sweet Treats, led by branded revenue which
advanced 6.1% to £105.7m. The Sweet Treats business gained volume and value
share throughout the first half of the year, with both Mr Kipling and Cadbury
cake contributing strongly to these gains. Non-branded revenue was 15.1% lower
due to a combination of contract exits in Fancies and consumers switching to
brands. Sweet Treats delivered Divisional contribution of £11.7m in the
period compared to £12.1m in the prior period.
Volume growth was strong throughout the first half of the year, reflecting the
benefits of the branded growth model and also sharper promotional price points
across both the Mr Kipling and Cadbury cake ranges. Divisional contribution
margins were slightly lower reflecting elevated cocoa prices. Brand investment
in Mr Kipling continued through the period with the 'Piano' TV advert, while
new product launches included Signature collection Chocolate and Caramel layer
cakes, indulgent loaf cakes and Strawberries and Cream Fancies. Signature
bites also continued to perform strongly, with revenue more than doubling, as
they tap into the indulgence consumer trend. The Group continues to deliver
impactful, branded bay instore execution of both Mr Kipling and Cadbury cake
to assist shoppers navigate the cake category with greater ease.
In the second half of the year, seasonal ranges will include building on the
Mr Kipling best ever, indulgent, mince pies for Christmas coupled with
exceptional instore execution across the cake portfolio.
International
Overseas Revenue (on a constant currency basis) grew strongly in the period,
up 31%(8) compared to the prior year. Across the Group's target markets,
Australia & New Zealand delivered growth of 39%, North America increased
revenue by 28% and EMEA grew 9%. Much of the growth is due to increasing
distribution of the Group's brands, leveraging its growing retailer
relationships.
In Australia and New Zealand, application of the Group's branded growth model
delivered growth in both the Sweet Treats and Cooking Sauces categories. Mr
Kipling TV advertising expanded to an additional region utilising the popular
'Little Thief' advert while on pack activity included the 'Cake a Difference'
campaign, supporting families facing childhood cancer. Sharwood's cooking
sauces benefitted from innovation including family size jars and The Spice
Tailor also launched new products such as Coastal Mango Curry and Spicy Butter
Chicken. Retailer stock holdings normalised during H1 which also contributed
to revenue growth in the period.
In North America, Canada delivered a strong period of trading, as it
benefitted from increased distribution for both Mr Kipling and The Spice
Tailor, with the former now available in over 1,000 stores across two major
retailers. In the US, momentum of Mr Kipling is focused on driving rate of
sale on current distribution.
The Spice Tailor continues to gain listings in European countries; the brand
is available in over 700 stores in both France and Germany and now distributed
in a total of 11 countries. In the Middle East, the Group is exploring the
opportunity to grow cake in the medium term.
In the second half, Australia will benefit from further Mr Kipling new product
launches and Sharwood's has new listings in New Zealand. In Canada, The Spice
Tailor's distribution will be extended to two further major retailers.
Operating profit
Operating profit was £65.4m in the period compared to £69.0m in the prior
period. Headline Trading profit increased by 5.5% to £70.2m, as described
above. Brand amortisation of £10.2m was broadly in line with the comparative
period. Net interest on pensions and administrative expenses was a credit of
£9.7m (FY23/24 H1: £15.6m credit), the reduction due to a lower opening
combined surplus of the pension scheme compared to the prior period of
£14.0m, partly offset by £4.3m of administrative expenses. Non-trading
items(9) of £3.8m (FY23/24 H1: £3.7m) relate to costs associated with the
closure of the Charnwood and Knighton manufacturing sites.
Finance costs
Net finance cost was £11.9m in the first half of FY24/25, an increase of
£1.0m compared to FY23/24 H1. Net regular interest(5) decreased by £1.4m to
£9.2m, largely due to £1.0m higher interest receivable reflecting increased
average cash balances over the period and slightly higher average SONIA rates.
A discount provision unwind relating to acquisition contingent consideration
was £1.0m. Write off of financing costs of £1.4m in the period relate to
write off of debt issuance costs associated with the previous revolving credit
facility (RCF). Interest on the Group's Senior secured notes of £5.8m were in
line with the prior period.
The Group completed the signing of a new five year £227.5m revolving credit
facility (RCF) in the period replacing the previous £175m facility. The new
agreement, on improved terms, currently attracts a margin of 2.0% above SONIA
and matures in May 2029.
Taxation
The taxation charge for the period was £14.0m (2023/24 H1: £15.4m) and was
largely due to a charge on operating activities of £13.4m (2023/24 H1:
£14.5m). Tax on operating activities substantially reflects the rate of UK
corporation tax (25%) owing to the predominantly UK presence of the Group's
operations. The Group has started paying modest levels of cash tax, reflecting
brought forward losses available to offset against future tax liabilities.
Earnings per share
£m FY24/25 H1 FY23/24 H1 % change
Operating profit 65.4 69.0 (5.2%)
Net finance cost (11.9) (10.9) (9.2%)
Profit before taxation 53.5 58.1 (7.9%)
Taxation (14.0) (15.4) 9.1%
Profit after taxation 39.5 42.7 (7.5%)
Average shares in issue (million) 863.3 862.5 0.1%
Basic Earnings per share (pence) 4.6 5.0 (8.0%)
The Group reported profit before tax of £53.5m in the first half of FY24/25,
£4.6m lower than the prior period, as Headline Trading profit growth was
offset by a lower net credit related to interest on pensions and
administrative expenses. Profit after tax was £39.5m (FY23/24 H1: £42.7m)
and basic earnings per share was 4.6 pence, a decrease of 8.0%.
Cash flow
Net debt as at 28 September 2024 was £221.3m, a reduction of £51.8m compared
to the same point a year ago and £14.3m lower than 30 March 2024.
Headline Trading profit was £70.2m, as described above, while depreciation
and software amortisation(10) totalled £12.2m. There was a working capital
outflow of £2.9m in the period, reflecting lower levels of inflation than
previous periods. Non-trading items were £6.4m and related to payments
associated with closure of the Knighton and Charnwood manufacturing sites. The
Group expects non-trading items to be significantly lower in the second half
of the year. Pension payments were £5.6m, of which administration costs
including government levies were £2.9m and £2.7m being the last monthly
payment of deficit contributions (relating to March 2024), prior to
suspension. A dividend match payment to the Group's pension schemes of £5.0m
was also made in the period.
On a statutory basis, cash generated from operating activities was £50.6m
(FY23/24 H1: £34.8m) after deducting net interest paid of £12.0m (FY23/24
H1: £9.7m), of which £3.7m is transaction costs related to the new RCF. The
Group paid Tax of £4.0m in the period (2023/24 H1: £0.8m).
Cash used in investing activities was £22.5m (FY23/24 H1: £13.8m), solely
due to the Group accelerating its capital expenditure in the period, and in
line with its full year guidance of £40-45m of expenditure. Such investment
includes both growth projects supporting the Group's innovation strategy and
cost release projects to deliver efficiency savings. With pension deficit
payments suspended, the Group is allocating more funds to capital investment
which will provide the fuel to deliver further branded growth. Examples of
investment in the period include a new pot filling machine at the Ambrosia
factory and a new, innovative energy efficient process to manufacture
iced-topped cake products, which increases line efficiency and also reduces
carbon emissions.
Cash used in financing activities was £16.5m in the period (FY23/24 H1:
£16.7m) which included a £14.9m dividend payment to shareholders (FY23/24
H1: £12.4m). As at 28 September 2024, the Group held cash and bank deposits
of £113.9m and its newly arranged revolving credit facility, maturing May
2029, was undrawn.
Pensions
As previously disclosed, the Group announced the suspension of deficit
contribution payments to the pension scheme Trustee with effect from 1 April
2024. Consequently, the Group now benefits from increased free cash flow for
the financial year ending 29 March 2025, and subject to the results of the
next triennial valuation, at 31 March 2025, the Group anticipates no further
contributions to be payable after this date. Administrative expenses
associated with running the scheme and the dividend match mechanism remain in
place. The scheme continues to make good progress with its investment strategy
and a full resolution, where the scheme has fully de-risked, is forecast to
take place by the end of 2026.
IAS 19 Accounting Valuation (£m) 28 September 2024 30 March 2024
RHM Premier Foods Combined RHM Premier Foods Combined
Assets 2,973.3 517.4 3,490.7 3,032.0 533.0 3,565.0
Liabilities (2,118.3) (693.4) (2,811.7) (2,232.8) (730.7) (2,963.5)
Surplus/(Deficit) 855.0 (176.0) 679.0 799.2 (197.7) 601.5
The Group's pension scheme reported a combined surplus of £679.0m as at 28
September 2024, an increase of £77.5m compared to the prior period. This is
equivalent to a surplus of £509.3m net of deferred tax of 25.0%. Asset values
fell in both sections of the schemes as a result of hedging in place. The
applicable discount rate used to value liabilities increased from 4.8% to
5.1%, as a result of rises in UK 15 year corporate bond yields. Accordingly,
the value of liabilities fell by £151.8m to £2,811.7m. The RPI inflation
rate assumption used decreased from 3.15% to 3.05%. Asset values in the scheme
reduced by £74.3m, or 2.1% in the period.
Principal risks and uncertainties
Strong risk management is key to delivery of the Group's strategic objectives.
It has an established risk management process, the Executive Leadership Team
performing a formal robust assessment of the principal risks bi-annually which
is reviewed by the Board and Audit Committee. Risks are monitored at a segment
and functional level throughout the year considering both internal and
external factors. The Group's principal risks were disclosed on page 63 to
70 of the Group's Annual Report for the 52 weeks ended 30 March 2024 and these
remain relevant for the current period. The major strategic and operational
risks are summarised under the headings of Macroeconomic and
geopolitical instability, Impact of Government legislation, Market and
retailer actions, Operational integrity, Legal compliance, Climate risk,
Technology, Product portfolio, HR and employee risk, Strategy delivery.
The nature and potential impact of the principal risks and uncertainties
facing the Group are considered essentially unchanged in the six months ended
28th September 2024 and are not expected to change during the second half of
the financial year. In accordance with the UK Corporate Governance Code 2018,
the Board also included a viability statement on page 71-72 of the Group's
Annual Report for the 52 weeks ended 30 March 2024.
Alex Whitehouse Duncan Leggett
Chief Executive Officer Chief Financial Officer
Appendices
The Company's Half year results are presented for the 26 weeks ended 28
September 2024 and the comparative period, 26 weeks ended 30 September 2023.
All references to the 'period', unless otherwise stated, are for the 26 weeks
ended 28 September 2024 and the comparative periods, 26 weeks ended 30
September 2023.
All references to the 'quarter', unless otherwise stated, are for the 13 weeks
ended 28 September 2024 and the comparative periods, 13 weeks ended 30
September 2023.
Half year and Quarter 2 Revenue
Half year revenue (£m) FY24/25
Statutory revenue Charnwood Headline revenue Headline revenue
% change vs prior year
Grocery
Branded 339.0 - 339.0 7.0%
Non-branded 37.4 (2.3) 35.1 (7.6%)
Total 376.4 (2.3) 374.1 5.4%
Sweet Treats
Branded 105.7 - 105.7 6.1%
Non-branded 18.9 - 18.9 (15.1%)
Total 124.6 - 124.6 2.2%
Group
Branded 444.7 - 444.7 6.8%
Non-branded 56.3 (2.3) 54.0 (10.4%)
Total 501.0 (2.3) 498.7 4.6%
Quarter 2 Revenue (£m) FY24/25
Statutory revenue Charnwood Headline revenue Headline revenue
% change vs prior year
Grocery
Branded 177.1 - 177.1 5.6%
Non-branded 17.8 (0.2) 17.6 (10.1%)
Total 194.9 (0.2) 194.7 4.0%
Sweet Treats
Branded 53.8 - 53.8 8.7%
Non-branded 10.9 - 10.9 (14.4%)
Total 64.7 - 64.7 4.0%
Group
Branded 230.9 - 230.9 6.3%
Non-branded 28.7 (0.2) 28.5 (11.8%)
Total 259.6 (0.2) 259.4 4.0%
Note: Headline revenue in the tables above exclude Charnwood and Knighton
Foods in both periods.
EBITDA to Operating profit reconciliation (£m) FY24/25 H1 FY23/24 H1
Adjusted EBITDA(3) 82.4 78.5
Depreciation (9.5) (9.6)
Software amortisation (2.7) (2.3)
Headline Trading profit 70.2 66.6
Charnwood - 0.9
Amortisation of brand assets (10.2) (10.5)
Fair value movements on foreign exchange & derivative contracts (0.5) 0.1
Net interest on pensions and administrative expenses 9.7 15.6
Non-trading items - restructuring costs (3.8) (3.7)
Operating profit 65.4 69.0
Finance costs (£m) FY24/25 H1 FY23/24 H1 Change
Senior secured notes interest 5.8 5.8 -
Bank debt interest - net 2.5 3.9 1.4
8.3 9.7 1.4
Amortisation of debt issuance costs 0.9 0.9 -
Net regular interest(5) 9.2 10.6 1.4
Re-measurement due to discount rate change 0.9 (0.1) (1.0)
Write-off of financing costs 1.4 - (1.4)
Other finance cost 0.4 0.4 -
Net finance cost 11.9 10.9 (1.0)
Adjusted earnings per share (£m) FY24/25 H1 FY23/24 H1 Change
Headline Trading profit 70.2 66.6 5.5%
Less: Net regular interest(5) (9.2) (10.6) 12.8%
Adjusted profit before tax 61.0 56.0 8.9%
Less: Notional tax @ 25% (15.3) (14.0) (8.9%)
Adjusted profit after tax(6) 45.7 42.0 8.9%
Average shares in issue (millions) 863.3 862.5 0.1%
Adjusted earnings per share (pence) 5.3 4.9 8.1%
Net debt (£m)
Net debt(11) at 30 March 2024 235.6
Movement in cash (11.6)
Movement in debt issuance costs (1.4)
Movement in lease creditor (1.3)
Net debt at 28 September 2024 221.3
Free cash flow (£m) FY24/25 H1 FY23/24 H1
Trading profit (including Charnwood) 70.2 67.5
Depreciation & software amortisation 12.2 11.9
Other non-cash items 2.1 2.5
Capital expenditure (22.5) (13.8)
Working capital (2.9) (11.0)
Operating cash flow(14) 59.1 57.1
Interest (8.3) (9.7)
Pension contributions (5.6) (20.0)
Free cash flow(12) 45.2 27.4
Non-trading items (6.4) (2.8)
Net share issue/(repurchase) 0.4 (2.8)
Financing fees (3.7) (0.5)
Taxation (4.0) (0.8)
Dividend (including pensions match) (19.9) (16.2)
Net increase in cash and cash equivalents 11.6 4.3
The following table outlines the basis on which the Group will report Headline
revenue, Trading profit and adjusted earnings per share for FY24/25. This
includes acquisitions but excludes Revenue and Trading profit from the
Charnwood site which closed in FY24/25 H1 and the Knighton site which closed
in FY23/24. All Charnwood and Knighton Foods revenue was previously reported
in Grocery - Non-branded.
Group results ex Charnwood & Knighton (£m) FY23/24
Revenue Quarter 1 Quarter 2 Quarter 3 Quarter 4 Full Year
Statutory revenue 235.9 258.2 356.3 287.1 1,137.5
Less: Knighton (4.8) (4.9) (3.6) (1.6) (14.9)
Headline revenue (FY23/24 basis) 231.1 253.3 352.7 285.5 1,122.6
Less: Charnwood (3.9) (3.8) (3.1) (3.1) (13.9)
Headline revenue (FY24/25 basis) 227.2 249.5 349.6 282.4 1,108.7
Trading profit (£m) to adjusted eps (p) Half 1 Half 2 Full Year
Trading profit as reported 67.5 112.0 179.5
Less: Charnwood (0.9) (1.4) (2.3)
Headline Trading profit (FY24/25 basis) 66.6 110.6 177.2
Net regular interest (10.6) (11.0) (21.6)
Adjusted profit before tax 56.0 99.6 155.6
Adjusted profit after tax at 25% 42.0 74.7 116.7
Adjusted earnings per share (pence) 4.9p 8.6p 13.5p
Notes and definitions of alternative performance measures
The Company uses a number of alternative performance measures to measure and
assess the financial performance of the business. The directors believe that
these alternative performance measures assist in providing additional useful
information on the underlying trends, performance and position of the Group.
These alternative performance measures are used by the Group for reporting and
planning purposes and it considers them to be helpful indicators for investors
to assist them in assessing the strategic progress of the Group.
1. The Group uses Trading profit to review overall Group profitability. Trading
profit is defined as profit/(loss) before tax, before net finance costs,
amortisation of brand assets, non-trading items (items requiring separate
disclosure by virtue of their nature in order that users of the financial
statements obtain a clear and consistent view of the Group's underlying
trading performance), fair value movements on foreign exchange and other
derivative contracts, net interest on pensions and administration expenses and
past service costs.
2. Divisional contribution refers to Gross Profit less selling, distribution and
marketing expenses directly attributable to the relevant business segment.
3. Adjusted EBITDA is Trading profit as defined in (1) above excluding
depreciation and software amortisation.
4. Adjusted profit before tax is Trading profit as defined in (1) above less net
regular interest.
5. Net regular interest is defined as net finance cost after excluding write-off
of financing costs, early redemption fees, other finance cost and other
finance income.
6. Adjusted profit after tax is Adjusted profit before tax as defined in (4)
above less a notional tax charge of 25.0%.
7. References to Adjusted earnings per share are on a non-diluted basis and is
calculated using Adjusted profit after tax as defined in (6) above divided by
the weighted average of the number of shares of 863.3 million (26 weeks ended
30 September 2023: 862.5 million).
8. International sales remove the impact of foreign currency fluctuations and
adjusts prior year sales to ensure comparability in geographic market
destinations. The constant currency calculation is made by adjusting the
current year's sales to the same exchange rate as the prior year. The constant
currency adjustment is calculated by applying a blended rate.
£m Reported Adjustment Constant currency
FY24/25 H1 24.8 0.1 24.9
FY23/24 H1 18.9 N/A 18.9
Growth/(decline) % 31.0% N/A 31.4%
9. Non-trading items have been presented separately throughout the financial
statements. These are items that management believes require separate
disclosure by virtue of their nature in order that the users of the financial
statements obtain a clear and consistent view of the Group's underlying
trading performance. In identifying non-trading items, management have applied
judgement including whether i) the item is related to underlying trading of
the Group; and/or ii) how often the item is expected to occur.
10. Software amortisation is the annual charge related to the amortisation of the
Group's software assets during the period.
11. Net debt is defined as total borrowings, less cash and cash equivalents and
less capitalised debt issuance costs.
12. Free cash flow is Net increase or decrease in cash and cash equivalents
excluding proceeds and repayment of borrowings, less dividend payments,
disposal proceeds, re-financing fees, net proceeds from share issues, tax,
acquisitions and non-trading items
13. Circana, 24 weeks ended 28 September 2024
14. Operating cash flow excludes interest and pension contributions
15. Defined as scoring less than 4 on UK Government's Nutrient Profiling Model
Additional notes:
· The directors believe that users of the financial statements are most
interested in underlying trading performance and cash generation of the Group.
As such intangible brand asset amortisation and impairment are excluded from
Trading profit because they are non-cash items.
· Non-trading items have been excluded from Trading profit because they are
incremental costs incurred as part of specific initiatives that may distort a
user's view of underlying trading performance.
· Net regular interest is used to present the interest charge related to the
Group's ongoing financial indebtedness, and therefore excludes non-cash items
and other credits/charges which are included in the Group's net finance cost.
· Group & corporate costs refer to group and corporate expenses which are
not directly attributable to a reported segment and are disclosed at total
Group level.
· In line with accounting standards, the International operating segment, the
results of which are aggregated within the Grocery reported segment, are not
required to be separately disclosed for reporting purposes.
Statement of directors' responsibilities
The directors confirm that these condensed interim financial statements have
been prepared in accordance with UK-adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the first six
months to 28 September 2024 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 financial year; and
· material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last annual report.
The maintenance and integrity of the Premier Foods plc website is the
responsibility of the directors; the work carried out by the authors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that might have occurred to the interim
financial statements since they were initially presented on the website.
The directors of Premier Foods plc are listed on pages 76-77 of the Premier
Foods plc Annual report for the 52 weeks ended 30 March 2024. A list of
current directors is maintained on the Premier Foods plc website:
www.premierfoods.co.uk
Approved by the Board on 14 November 2024 and signed on its behalf by:
Alex Whitehouse
Chief Executive Officer
Duncan Leggett
Chief Financial Officer
Independent review report to Premier Foods plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Premier Foods plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Half year results of
Premier Foods plc for the 26 week period ended 28 September 2024 (the
"period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed consolidated balance sheet as at 28 September 2024;
· the Condensed consolidated statement of profit or loss and the Condensed
consolidated statement of comprehensive income for the period then ended;
· the Condensed consolidated statement of cash flows for the period then ended;
· the Condensed consolidated statement of changes in equity for the period then
ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Half year results of Premier
Foods plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half year results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half year results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half year results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half year results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half year results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 November 2024
Condensed consolidated statement of profit or loss (unaudited)
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
Note £m £m
Revenue 4 501.0 494.1
Cost of sales (318.8) (308.0)
Gross profit 182.2 186.1
Selling, marketing and distribution costs (77.2) (84.5)
Administrative costs (39.6) (32.6)
Operating profit 4 65.4 69.0
Finance cost 5 (14.5) (12.6)
Finance income 5 2.6 1.7
Profit before taxation 53.5 58.1
Taxation 6 (14.0) (15.4)
Profit for the period attributable to owners of the parent 39.5 42.7
Basic earnings per share (pence)
Basic 7 4.6 5.0
Diluted 7 4.5 4.8
Condensed consolidated statement of comprehensive income (unaudited)
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
Note £m £m
Profit for the period 39.5 42.7
Other comprehensive income / (expense), net of tax
Items that will never be reclassified to profit or loss
Remeasurements of defined benefit schemes 8 57.5 (146.8)
Deferred tax (charge) / credit (15.3) 31.1
Current tax credit 1.2 4.8
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation (0.2) (0.3)
Other comprehensive income / (expense), net of tax 43.2 (111.2)
Total comprehensive income / (expense) attributable to owners of the parent 82.7 (68.5)
Condensed consolidated balance sheet (unaudited)
As at As at
28 Sep 2024 30 March 2024
Note £m £m
ASSETS:
Non-current assets
Property, plant and equipment 199.0 190.4
Goodwill 17 702.7 702.7
Other intangible assets 279.0 289.6
Deferred tax assets 21.2 22.4
Net retirement benefit assets 8 865.6 810.0
2,067.5 2,015.1
Current assets
Inventories 131.8 98.9
Trade and other receivables 118.5 115.7
Cash and cash equivalents 12 113.9 102.3
364.2 316.9
Total assets 2,431.7 2,332.0
LIABILITIES:
Current liabilities
Trade and other payables (299.4) (264.6)
Financial liabilities:
- derivative financial instruments 10 (1.3) (0.8)
Lease liabilities 9 (1.0) (2.7)
Provisions for liabilities and charges 11 (5.1) (9.8)
Current income tax liabilities - (0.4)
(306.8) (278.3)
Non-current liabilities
Long-term borrowings 9 (324.3) (325.7)
Lease liabilities 9 (9.9) (9.5)
Net retirement benefit obligations 8 (186.6) (208.5)
Provisions for liabilities and charges 11 (7.3) (7.3)
Deferred tax liabilities (174.4) (152.9)
Other liabilities (23.4) (22.9)
(725.9) (726.8)
Total liabilities (1,032.7) (1,005.1)
Net assets 1,399.0 1,326.9
EQUITY:
Capital and reserves
Share capital 86.9 86.9
Share premium 2.7 2.7
Merger reserve 351.7 351.7
Other reserves (9.3) (9.3)
Retained earnings 967.0 894.9
Total equity 1,399.0 1,326.9
Condensed consolidated statement of cash flows (unaudited)
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
Note £m £m
Cash generated from operations 12 66.6 45.3
Finance costs paid(1) (14.6) (11.4)
Finance income received 2.6 1.7
Taxation paid (4.0) (0.8)
Cash generated from operating activities 50.6 34.8
Purchase of property, plant and equipment (19.8) (10.8)
Purchase of intangible assets (2.7) (3.0)
Cash used in investing activities (22.5) (13.8)
Principal element of lease payments (2.0) (1.0)
Financing fees 9 - (0.5)
Dividends paid (14.9) (12.4)
Proceeds from / (purchase) of shares to satisfy share awards 0.4 (3.0)
Proceeds from share issue - 0.2
Cash used in financing activities (16.5) (16.7)
Net increase in cash and cash equivalents 11.6 4.3
Cash, cash equivalents and bank overdrafts at beginning of period 102.3 63.4
Cash, cash equivalents and bank overdrafts at end of period 12 113.9 67.7
(1) Payments in the current period include costs related to the refinancing of
the revolving credit facility. See note 9 for further details
Condensed consolidated statement of changes in equity (unaudited)
Share capital Share premium Merger reserve Other reserves Retained earnings Total equity
Note
£m £m £m £m £m £m
At 2 April 2023 86.8 2.5 351.7 (9.3) 974.3 1,406.0
Profit for the period - - - - 42.7 42.7
Remeasurements of defined benefit schemes - - - - (146.8) (146.8)
Deferred tax credit - - - - 31.1 31.1
Current tax credit - - - - 4.8 4.8
Exchange differences on translation - - - - (0.3) (0.3)
Other comprehensive expense - - - - (111.2) (111.2)
Total comprehensive expense - - - - (68.5) (68.5)
Shares issued 0.1 0.1 - - - 0.2
Share-based payments - - - - 2.4 2.4
Purchase of shares to satisfy share awards - - - - (3.0) (3.0)
Dividends 13 - - - - (12.4) (12.4)
At 30 September 2023 86.9 2.6 351.7 (9.3) 892.8 1,324.7
At 31 March 2024 86.9 2.7 351.7 (9.3) 894.9 1,326.9
Profit for the period - - - - 39.5 39.5
Remeasurements of defined benefit schemes - - - - 57.5 57.5
Deferred tax charge - - - - (15.3) (15.3)
Current tax credit - - - - 1.2 1.2
Exchange differences on translation - - - - (0.2) (0.2)
Other comprehensive income - - - - 43.2 43.2
Total comprehensive income - - - - 82.7 82.7
Share-based payments - - - - 2.2 2.2
Deferred tax movements on share-based payments - - - - 1.7 1.7
Proceeds from shares to satisfy share awards - - - - 0.4 0.4
Dividends 13 - - - - (14.9) (14.9)
At 28 September 2024 86.9 2.7 351.7 (9.3) 967.0 1,399.0
1. General information
Premier Foods plc (the "Company") is a public limited Company incorporated in
the United Kingdom and domiciled in England, registered number 05160050, with
its registered office at Premier House, Centrium Business Park, Griffiths Way,
St Albans, Hertfordshire AL1 2RE. The principal activity of the Company and
its subsidiaries (the "Group") is the manufacture and distribution of branded
and own label food products as described on page 133 in Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024.
2. Basis of preparation
This condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the UK.
Premier Foods plc Annual Report for the 52 weeks ended 29 March 2025 will be
prepared in accordance with UK-adopted international accounting standards and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. As required by the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority, this condensed set of
financial statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's published
consolidated financial statements for the 52 weeks ended 30 March 2024 which
were prepared in accordance with UK-adopted international accounting standards
in conformity with the requirements of the Companies Act 2006. There has been
no significant impact on the Group profit or net assets on adoption of new or
revised accounting standards in the period. Amounts are presented to the
nearest £0.1m, unless otherwise stated. These condensed interim financial
statements do not comprise statutory accounts within the meaning of section
434 of the Companies Act 2006.
The financial information for the 26 weeks ended 28 September 2024 is
unaudited but has been subject to an independent review by
PricewaterhouseCoopers LLP.
The Group's Annual Report for the 52 weeks ended 30 March 2024, which were
approved by the Board of Directors on 16 May 2024, were reported on by
PricewaterhouseCoopers LLP and delivered to the Registrar of Companies. The
report of the auditors was unqualified, did not contain a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain any statement under section 498
(2) or (3) of the Companies Act 2006.
This financial information was approved for issue on 14 November 2024.
Going concern
The Group's revolving credit facility includes net debt/EBITDA and
EBITDA/interest covenants as detailed in note 9. In the event these covenants
are not met then the Group would be in breach of its financing agreement and,
as would be the case in any covenant breach, the banking syndicate could
withdraw funding to the Group. The Group is required to test covenants
biannually aligned to reporting dates. The Group was compliant with its
covenant tests as at 30 March 2024 and 28 September 2024.
Having undertaken a robust assessment of the Group's forecasts with specific
consideration to the trading performance of the Group, cashflows and covenant
compliance, the directors have a reasonable expectation that the Group is able
to operate within the level of its current facilities, meet the required
covenant tests and has adequate resources to continue in operational existence
for at least 12 months from the date of approval of these financial
statements. The Group therefore continues to adopt the going concern basis in
preparing its financial information for the reasons set out below:
At 28 September 2024, the Group had total assets less current liabilities of
£2,124.9m, net current assets of £57.4m and net assets of £1,399.0m.
Liquidity as at that date was £348.4m, made up of cash and cash equivalents,
available overdrafts and undrawn committed credit facilities of £227.5m
expiring in July 2029. At the time of the approval of this report, the cash
and liquidity position of the group has not changed significantly.
The directors have rigorously reviewed the global political and economic
uncertainty driven by current conflicts, the inflationary pressures across the
industry and the cost-of-living crisis and have modelled a severe but
plausible downside case impacting future financial performance, cash flows and
covenant compliance, that cover a period of at least 12 months from the date
of approval of the financial statements. The downside case represents severe
but plausible assumptions considering the impact of inflation, the outbreak of
an infectious disease, climate change and changes in consumer preferences and
have assumed all scenarios within the downside case impact during the period
reviewed.
Whilst the downside scenario is deemed severe but plausible, it is considered
by the directors to be a robust stress test of going concern, having an
adverse impact on revenue, margin and cash flow. Should circumstances mean
there is further downside, whilst not deemed plausible, the directors, in
response have identified mitigating actions within their control, that would
reduce costs, optimise cashflow and liquidity. Among these are the following
actions: reducing capital expenditure, reducing marketing spend and delaying
or cancelling discretionary spend. The directors have assumed no significant
structural changes to the business will be needed in any of the scenarios
modelled. None of the scenarios modelled are sufficiently material to prevent
the Group from continuing as a going concern.
The directors, after reviewing financial forecasts and financing arrangements,
have a reasonable expectation that the Group has adequate resources to
continue to meet its liabilities as they fall due for at least 12 months from
the date of approval of this report. Accordingly, the directors are satisfied
that it is appropriate to continue to adopt the going concern basis (in
accordance with the guidance 'Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting' issued by the FRC) in preparing
the Group's consolidated financial statements.
3. Accounting policies
These Group condensed interim financial statements have been prepared in
accordance with the accounting policies adopted in the Group's Annual Report
for the 52 weeks ended 30 March 2024.
When preparing the Group condensed interim financial statements management
undertakes judgments, estimates and assumptions that affect the recognition
and measurement of assets and liabilities, income and expense. The actual
results may differ from the judgments, estimates and assumptions made by
management.
In preparing these Group condensed interim financial statements the
significant judgments, estimates and key sources of estimation uncertainty
made by management were the same as those that applied to the Group's Annual
Report for the 52 weeks ended 30 March 2024.
4. Segmental analysis
IFRS 8 requires operating segments to be determined based on the Group's
internal reporting to the Chief Operating Decision Maker ('CODM'). The CODM
has been determined to be the Executive Leadership Team as it is primarily
responsible for the allocation of resources to segments and the assessment of
performance of the segments.
The Group's operating segments are defined as 'Grocery', 'Sweet Treats', and
'International'. The CODM reviews the performance by operating segment. The
Grocery segment primarily sells savoury ambient food products, and the Sweet
Treats segment sells primarily sweet ambient food products. Sales to Ireland
were previously included in the International operating segment; following an
internal reorganisation these sales from 1 April 2024 are included as part of
the Grocery operating segment. The International segment has been aggregated
within the Grocery segment for reporting purposes as revenue is below 10% of
the Group's total revenue and the segment is considered to have similar
characteristics to that of Grocery as identified in IFRS 8. There has been no
change to the Group's reported segments during the period.
The CODM uses Divisional contribution as the key measure of the segments'
results. Divisional contribution is defined as gross profit after selling,
marketing and distribution costs. Divisional contribution is a consistent
measure within the Group and reflects the segments' underlying trading
performance for the period under evaluation.
The Group uses trading profit to review overall Group profitability. Trading
profit is defined as profit/loss before tax, net finance costs, amortisation
of intangible assets, fair value movements on foreign exchange and other
derivative contracts, net interest on pensions and administrative expenses,
and any material items that require separate disclosure by virtue of their
nature in order that users of the financial statements obtain a clear and
consistent view of the Group's underlying trading performance. The Group's
largest quarter in terms of Revenue is quarter three, reflecting seasonality
across both segments.
The segment results for the 26 weeks ended 28 September 2024 and 30 September
2023, and the reconciliation of the segment measures to the respective
statutory items included in the financial information, are as follows:
26 weeks ended 28 Sep 2024 26 weeks ended 30 Sep 2023
Grocery Sweet Total Grocery Sweet Total
Treats
Treats
£m £m £m £m £m £m
External revenues 376.4 124.6 501.0 372.2 121.9 494.1
Divisional contribution 93.3 11.7 105.0 89.5 12.1 101.6
Group and corporate costs (34.8) (34.1)
Trading profit 70.2 67.5
Amortisation of brand assets (10.2) (10.5)
Fair value movements on foreign exchange and other derivative contracts (0.5) 0.1
Net interest on pensions and administrative expenses 9.7 15.6
Non-trading items(1) (3.8) (3.7)
Operating profit 65.4 69.0
Finance cost (14.5) (12.6)
Finance income 2.6 1.7
Profit before taxation 53.5 58.1
(1)Non-trading items in the current period relate to the closures of both the
Knighton and Charnwood sites, in the prior period non-trading items related
primarily to the closure of the Knighton site.
Inter-segment transfers or transactions are entered into under the same terms
and conditions that would be available to unrelated third parties.
The Group primarily supplies the UK market, although it also supplies certain
products to other countries in Europe and the rest of the world. The following
table provides an analysis of the Group's revenue, which is allocated on the
basis of geographical market destination, and an analysis of the Group's
non-current assets by geographical location.
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
United Kingdom 465.0 461.9
Other Europe 14.5 15.2
Rest of world 21.5 17.0
Total 501.0 494.1
Non-current assets
As at As at
28 Sep 2024 30 Mar 2024
£m £m
United Kingdom 1,180.7 1,182.7
Non-current assets are all held in the United Kingdom and exclude deferred tax
assets and net retirement benefit assets.
5. Finance income and costs
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
Interest payable on bank loans and overdrafts (5.1) (5.5)
Interest payable on senior secured notes (5.8) (5.8)
Other interest payable(1) (1.3) (0.4)
Write off of financing costs (1.4) -
Amortisation of debt issuance costs (0.9) (0.9)
Total finance cost (14.5) (12.6)
Interest receivable on bank deposits 2.6 1.6
Other finance income(2) - 0.1
Total finance income 2.6 1.7
Net finance cost (11.9) (10.9)
(1) Included in other interest payable is £0.4m charge relating to non-cash
interest costs on lease liabilities under IFRS 16 and £0.9m relating to the
unwind of the Group's long-term provisions and contingent consideration
related to Group acquisitions.
(2)Other finance income in the prior period relates to the unwind of the
discount on certain of the Group's long term provisions and a change in the
discount rates used.
6. Taxation
Current tax
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
Current tax
- Current period (4.7) (5.7)
- Prior periods (0.2) -
Deferred tax
- Current period (9.1) (9.7)
Income tax charge (14.0) (15.4)
Tax relating to items recorded in other comprehensive income included:
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
Current tax credit on pension movements 1.2 4.8
Deferred tax (charge) / credit on pension movements (15.3) 31.1
(14.1) 35.9
The applicable rate of corporation tax for the period is 25%.
Tax charged for the 26 weeks ended 28 September 2024 has been calculated by
applying the effective rate of tax which is expected to apply to the Group for
the 52 weeks ended 29 March 2025 using rates substantively enacted by 28
September 2024 as required by IAS 34 'Interim Financial Reporting'. The tax
charge for the period differs from the standard rate of corporation tax in the
United Kingdom of 25.0% (26 weeks ended 30 September 2023: 25.0%). The reasons
for this are explained below:
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
Profit before taxation 53.5 58.1
Tax charge at the domestic income tax rate of 25.0% (26 weeks ended 30 (13.4) (14.5)
September: 25.0%)
Tax effect of:
Non-taxable items 0.5 -
Disposal proceeds - 0.1
Adjustments to prior years (0.2) -
Current tax relating to overseas business (0.3) -
Other disallowable items (0.6) (1.0)
Income tax charge (14.0) (15.4)
7. Earnings per share
Basic earnings per share has been calculated by dividing the profit for the 26
weeks ended 28 September 2024 attributable to owners of the parent of £39.5m
(26 weeks ended 30 September 2023: £42.7m profit) by the weighted average
number of ordinary shares of the Company.
26 weeks ended 26 weeks ended 30 Sep 2023
28 Sep 2024
Number (m) Number (m)
Weighted average number of ordinary shares for the purpose of basic earnings 863.3 862.5
per share
Effect of dilutive potential ordinary shares 22.2 22.5
Weighted average number of ordinary shares for the purpose of diluted earnings 885.5 885.0
per share
26 weeks ended 28 Sep 2024 26 weeks ended 30 Sep 2023
Basic Dilutive effect of share options Diluted Basic Dilutive effect of share options Diluted
Profit after tax (£m) 39.5 39.5 42.7 42.7
Weighted average number of shares (m) 863.3 22.2 885.5 862.5 22.5 885.0
Earnings per share (pence) 4.6 (0.1) 4.5 5.0 (0.2) 4.8
Dilutive effect of share options
The dilutive effect of share options is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The only dilutive potential ordinary
shares of the Company are share options and share awards. A calculation is
performed to determine the number of shares that could have been acquired at
fair value (determined as the average annual market share price of the
Company's shares) based on the monetary value of the share awards and the
subscription rights attached to the outstanding share options.
No adjustment is made to the profit or loss in calculating basic and diluted
earnings per share.
Adjusted earnings per share ("Adjusted EPS")
Adjusted basic earnings per share is defined as trading profit less net
regular interest payable, less a notional tax charge at 25.0% (26 weeks ended
30 September 2023: 25.0%) 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, other interest payable and other finance income.
Trading profit and Adjusted basic EPS have been reported as the directors
believe these assist in providing additional useful information on the
underlying trends and performance of the Group.
26 weeks ended 26 weeks ended
28 Sep 2024
30 Sep 2023
£m £m
Trading profit (note 4) 70.2 67.5
Less net regular interest (9.2) (10.6)
Adjusted profit before tax 61.0 56.9
Notional tax at 25% (15.3) (14.2)
Adjusted profit after tax 45.7 42.7
Average shares in issue (m) 863.3 862.5
Adjusted basic EPS (pence) 5.3 5.0
Net regular interest
Net finance cost (11.9) (10.9)
Exclude other interest payable 1.3 0.4
Exclude write-off of financing costs 1.4 -
Exclude other finance income - (0.1)
Net regular interest (9.2) (10.6)
8. Retirement benefit schemes
Defined benefit schemes
The Group operates a number of defined benefit schemes under which current and
former employees have built up an entitlement to pension benefits on their
retirement. Although the Premier Foods Section, Premier Grocery Products
Section and RHM Section identified below are no longer separate schemes
following the merger in 2020, historically, Premier Foods companies' pension
liabilities and ex-RHM companies' liabilities have been shown separately.
These are as follows:
(a) The "Premier" Schemes, which comprise:
Premier Foods Pension Section of RHM Pension Scheme
Premier Grocery Products Pension Section of RHM Pension Scheme
Premier Grocery Products Ireland Pension Scheme
Chivers 1987 Pension Scheme
(b) The "RHM" Pension Schemes, which comprise:
RHM Section of the RHM Pension Scheme
Premier Foods Ireland Pension Scheme
The exchange rates used to translate the overseas euro based schemes are
£1.00 = €1.18072 (26 weeks ended 30 September 2023: £1.00 = €1.15656)
for the average rate during the period, and £1.00 = €1.19940 (26 weeks
ended 30 September 2023: £1.00 = €1.15285) for the closing position at 28
September 2024.
All pension schemes are closed to future accrual.
At the balance sheet date, the combined principal actuarial assumptions were
as follows:
Premier schemes RHM schemes
At 28 September 2024
Discount rate 5.10% 5.10%
Inflation - RPI 3.05% 3.05%
Inflation - CPI 2.70% 2.70%
Expected salary increases n/a n/a
Future pension increases
- RPI (min 0% and max 5%) 2.85% 2.85%
- CPI (min 3% and max 5%) 3.50% 3.50%
At 30 March 2024
Discount rate 4.80% 4.80%
Inflation - RPI 3.15% 3.15%
Inflation - CPI 2.75% 2.75%
Expected salary increases n/a n/a
Future pension increases
- RPI (min 0% and max 5%) 2.90% 2.90%
- CPI (min 3% and max 5%) 3.55% 3.55%
For the smaller overseas schemes, the discount rate used was 3.35% (52 weeks
ended 30 March 2024: 3.30%) and future pension increases were 1.70% (52 weeks
ended 30 March 2024: 2.10%).
The mortality assumptions are based on the latest standard mortality tables at
the reporting date. The directors have considered the impact of the recent
Covid-19 pandemic on the mortality assumptions and consider that use of the
updated Continuous Mortality Improvement (CMI) 2023 projections for the future
improvement assumption a reasonable approach.
The life expectancy assumptions are as follows:
Premier schemes RHM schemes
Life expectancy at 28 September 2024
Male pensioner, currently aged 65 86.3 84.5
Female pensioner, currently aged 65 88.2 87.0
Male non-pensioner, currently aged 45 87.1 85.8
Female non-pensioner, currently aged 45 89.5 88.8
Life expectancy at 30 March 2024
Male pensioner, currently aged 65 86.3 84.6
Female pensioner, currently aged 65 88.1 87.0
Male non-pensioner, currently aged 45 87.2 85.8
Female non-pensioner, currently aged 45 89.5 88.8
Premier schemes % of total RHM schemes % of total Total % of total
£m £m £m
Assets with a quoted price in an active market at 28 September 2024:
Government bonds 272.6 52.6 965.8 32.6 1,238.4 35.5
Cash 9.7 1.9 40.7 1.4 50.4 1.4
Assets without a quoted price in an active market at 28 September 2024:
Global equities - - 2.0 0.1 2.0 0.1
Government bonds 28.8 5.6 4.4 0.1 33.2 1.0
Corporate bonds 7.2 1.4 4.2 0.1 11.4 0.3
Global Property 67.8 13.1 354.3 11.8 422.1 12.1
Absolute return products 4.5 0.9 222.9 7.5 227.4 6.5
Infrastructure funds 22.1 4.3 350.5 11.7 372.6 10.7
Interest rate swaps - - 242.7 8.2 242.7 7.0
Inflation swaps - - 22.9 0.8 22.9 0.7
Private equity 41.0 7.9 312.8 10.5 353.8 10.1
LDI - - 8.1 0.3 8.1 0.2
Global credit 2.6 0.5 172.0 5.8 174.6 5.0
Illiquid credit 53.5 10.3 171.6 5.8 225.1 6.4
Cash 3.6 0.7 0.1 - 3.7 0.1
Other 4.0 0.8 98.3 3.3 102.3 2.9
Fair value of scheme assets 517.4 100% 2,973.3 100% 3,490.7 100%
as at 28 September 2024
Assets with a quoted price in an active market at 30 March 2024:
Government bonds 276.5 51.8 958.9 31.7 1,235.4 34.6
Cash 9.7 1.8 31.6 1.0 41.3 1.2
Assets without a quoted price in an active market at 30 March 2024:
Global equities - - 2.1 0.1 2.1 0.1
Government bonds 29.8 5.6 4.3 0.1 34.1 1.0
Corporate bonds 7.4 1.4 4.0 0.1 11.4 0.3
Global property 72.3 13.5 376.3 12.4 448.6 12.5
Absolute return products 5.3 1.0 239.3 7.9 244.6 6.9
Infrastructure funds 22.7 4.3 355.8 11.7 378.5 10.5
Interest rate swaps - - 241.6 8.0 241.6 6.8
Inflation swaps - - 24.0 0.8 24.0 0.7
Private equity 39.2 7.4 326.3 10.8 365.5 10.3
LDI - - 7.2 0.2 7.2 0.2
Global credit 3.2 0.6 178.0 5.9 181.2 5.1
Illiquid credit 61.7 11.6 201.6 6.6 263.3 7.4
Cash 3.6 0.7 0.6 - 4.2 0.1
Other 1.6 0.3 80.4 2.7 82.0 2.3
Fair value of scheme assets 533.0 100% 3,032.0 100% 3,565.0 100%
as at 30 March 2024
For assets without a quoted price in an active market fair value is determined
with reference to net asset value statements provided by third parties.
Pension assets have been reported using 28 September 2024 valuations where
available. As is usual practice for pension assets where valuations at this
date were not available, the most recent valuations (predominantly at 30 June
2024) have been rolled forward for cash movements to 28 September 2024 and
recognised as lagged valuations. This is considered by management the most
appropriate estimate of valuations for these assets using the information
available at the time. At 28 September 2024 the financial statements include
£397.1m of assets (30 March 2024: £363.8m) using lagged valuations and were
these lagged valuations to move by 1% there would be a £4.0m impact (30 March
2024: £3.6m) on the fair value of scheme assets. This approach is principally
relevant for Private Equity, Property Assets and Illiquid Credits asset
categories. Pension assets valuations are subject to estimation uncertainty
due to market volatility, which could result in a material movement in asset
values over the next 12 months.
The amounts recognised in the balance sheet arising from the Group's
obligations in respect of its defined benefit schemes are as follows:
Premier schemes RHM schemes Total
£m £m £m
At 28 September 2024
Present value of defined benefit obligation (693.4) (2,118.3) (2,811.7)
Fair value of plan assets 517.4 2,973.3 3,490.7
(Deficit)/surplus in schemes (176.0) 855.0 679.0
At 30 March 2024
Present value of defined benefit obligation (730.7) (2,232.8) (2,963.5)
Fair value of plan assets 533.0 3,032.0 3,565.0
(Deficit)/surplus in schemes (197.7) 799.2 601.5
The aggregate surplus of £601.5m as at 30 March 2024 has increased to a
surplus of £679.0m during the 26 weeks ended 28 September 2024. The increase
of £77.5m (52 weeks ended 30 March 2024: £164.0m decrease) is primarily the
change in financial assumptions due to the higher discount rate driving a
reduction in liabilities which is partly offset by a lower return on scheme
assets.
The disclosures in note 8 represent those schemes that are associated with
Premier Foods ('Premier schemes') and those that are associated with ex-RHM
companies ('RHM schemes'). These differ to that disclosed on the balance
sheet, in which the schemes have been split between those in an asset position
and those in a liability position. The disclosures in note 8 reconcile to
those disclosed on the balance sheet as shown below:
At 28 Sep 2024 At 30 March 2024
Premier Schemes RHM Total Premier Schemes RHM Total
Schemes
Schemes
£m £m £m £m £m £m
Schemes in net asset position 10.7 854.9 865.6 10.8 799.2 810.0
Schemes in net liability position (186.6) - (186.6) (208.5) - (208.5)
Net (deficit)/surplus in schemes (175.9) 854.9 679.0 (197.7) 799.2 601.5
Changes in the present value of the defined benefit obligation were as
follows:
Premier schemes RHM schemes Total
£m £m £m
Defined benefit obligation at 1 April 2023 (735.4) (2,291.9) (3,027.3)
Interest cost (33.9) (105.8) (139.7)
Remeasurement (loss) / gain (1.9) 18.5 16.6
Exchange differences 0.9 0.5 1.4
Benefits paid 39.6 145.9 185.5
Defined benefit obligation at 30 March 2024 (730.7) (2,232.8) (2,963.5)
Interest cost (16.9) (51.9) (68.8)
Remeasurement gain 34.6 100.7 135.3
Exchange differences 1.0 0.4 1.4
Benefits paid 18.6 65.3 83.9
Defined benefit obligation at 28 September 2024 (693.4) (2,118.3) (2,811.7)
Changes in the fair value of plan assets were as follows:
Premier RHM schemes Total
schemes
£m £m £m
Fair value of scheme assets at 1 April 2023 552.6 3,240.2 3,792.8
Interest income on scheme assets 25.9 151.0 176.9
Remeasurement losses (40.5) (213.8) (254.3)
Administrative costs (2.7) (2.9) (5.6)
Contributions by employer 34.8 3.9 38.7
Additional employer contribution¹ 3.8 - 3.8
Exchange differences (1.3) (0.5) (1.8)
Benefits paid (39.6) (145.9) (185.5)
Fair value of plan assets at 30 March 2024 533.0 3,032.0 3,565.0
Interest income on scheme assets 12.1 70.7 82.8
Remeasurement losses (15.2) (62.6) (77.8)
Administrative costs (1.2) (3.1) (4.3)
Contributions by employer 3.5 2.1 5.6
Additional employer contribution(1) 5.0 - 5.0
Exchange differences (1.2) (0.5) (1.7)
Benefits paid (18.6) (65.3) (83.9)
Fair value of plan assets at 28 September 2024 517.4 2,973.3 3,490.7
(¹ Contribution by the Group to the Premier schemes due to the payment of ( ) ( )
dividends during the year.)
The reconciliation of the net defined benefit (deficit) / surplus over the
period is as follows:
Premier RHM schemes Total
schemes
£m £m £m
(Deficit)/surplus in schemes at 1 April 2023 (182.8) 948.3 765.5
Amount recognised in profit or loss (10.7) 42.3 31.6
Remeasurements recognised in other comprehensive income (42.4) (195.3) (237.7)
Contributions by employer 34.8 3.9 38.7
Additional employer contribution¹ 3.8 - 3.8
Exchange differences recognised in other comprehensive income (0.4) - (0.4)
(Deficit)/surplus in schemes at 30 March 2024 (197.7) 799.2 601.5
Amount recognised in profit or loss (6.0) 15.7 9.7
Remeasurements recognised in other comprehensive income 19.4 38.1 57.5
Contributions by employer 3.5 2.1 5.6
Additional employer contribution(1) 5.0 - 5.0
Exchange differences recognised in other comprehensive income (0.2) (0.1) (0.3)
(Deficit)/surplus in schemes at 28 September 2024 (176.0) 855.0 679.0
(¹) (Contribution by the Group to the Premier schemes due to the payment of
dividends during the year.)
An agreement was reached with the RHM Pension Scheme Trustee to suspend
deficit contributions payments from 1 April 2024, as a result of this
agreement the Group has entered into Letters of Credit in favour of the
Scheme, equal to the suspended deficit contributions.
The Virgin Media Limited v NTL Pension Trustees II Limited decision, handed
down by the High Court on 16 June 2023, considered the implications of Section
37 of the Pension Schemes Act 1993. Section 37 of the Pension Schemes Act 1993
only allowed the rules of contracted-out schemes in respect to benefits, to be
altered where certain requirements were met.
Following an appeal on 25 July 2024, the Court of Appeal upheld the High
Court's decision, that the statutory actuarial confirmation was required, and
without this, alterations to schemes were void. There is also potential for
legislative intervention following industry lobbying efforts that may
retrospectively validate certain rule amendments.
As at the date of signing, the Trustee has not identified any matters which
indicate an increased risk of non-compliance with Section 37 of the Pension
Schemes Act 1993. Management has also confirmed that the required actuarial
confirmation was obtained for the most significant rule change, the change to
career average salary, which further mitigates the risk of a significant
impact on the value of defined benefit obligations.
The total amounts recognised in the consolidated statement of profit or loss
are as follows:
Premier schemes RHM schemes Total
£m £m £m
26 weeks ended 28 September 2024
Operating profit
Administrative costs (1.2) (3.1) (4.3)
Net interest (cost)/credit (4.8) 18.8 14.0
Total (cost)/credit (6.0) 15.7 9.7
26 weeks ended 30 September 2023
Operating profit
Administrative costs (1.0) (1.5) (2.5)
Net interest (cost)/credit (4.3) 22.4 18.1
Total (cost)/credit (5.3) 20.9 15.6
52 weeks ended 30 March 2024
Operating profit
Administrative costs (2.7) (2.9) (5.6)
Net interest (cost)/credit (8.0) 45.2 37.2
Total (cost)/credit (10.7) 42.3 31.6
9. Bank and other borrowings
As at As at
28 Sep 2024 30 March 2024
£m £m
Current:
Lease liabilities (1.0) (2.7)
Total borrowings due within one year (1.0) (2.7)
Non-current:
Transaction costs(1) 5.7 4.3
Senior secured notes (330.0) (330.0)
(324.3) (325.7)
Lease liabilities (9.9) (9.5)
Total borrowings due after more than one year (334.2) (335.2)
Total bank and other borrowings (335.2) (337.9)
(1)Included in transaction costs is £3.6m (30 March 2024: £1.6m) relating to
the revolving credit facility.
Revolving credit facility
During the period, the Group signed a new five-year revolving credit facility
(RCF) agreement with an increased facility limit of £227.5m. Transactions
costs of £3.7m were capitalised in relation to this extension. The RCF
attracts a leverage-based margin of between 1.8% and 3.5% above SONIA.
Banking covenants of net debt / EBITDA and EBITDA / interest are in place and
are tested biannually and remain unchanged. The covenant package attached to
the revolving credit facility is:
Net debt / EBITDA(1) EBITDA / Interest(1)
2024/25 FY 3.50x 3.00x
2025/26 FY 3.50x 3.00x
(1)Net debt, EBITDA and Interest are as defined under the revolving credit
facility.
Senior secured notes
The senior secured notes are listed on the Irish GEM Stock Exchange. The notes
totalling £330m mature in October 2026 and attract an interest rate of 3.5%.
10. Financial instruments
The following table shows the carrying amounts (which approximate to fair
value except as noted below) of the Group's financial assets and financial
liabilities. Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Set out below is a summary of methods
and assumptions used to value each category of financial instrument.
As at 28 Sep 2024 As at 30 March 2024
Carrying amount Fair Carrying amount Fair
value
value
£m £m £m £m
Financial assets at amortised cost:
Trade and other receivables 72.5 72.5 72.7 72.7
Cash and cash equivalents 113.9 113.9 102.3 102.3
Financial assets at fair value through profit or loss:
Trade and other receivables 9.1 9.1 7.8 7.8
Financial liabilities at fair value through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange contracts (1.3) (1.3) (0.8) (0.8)
Other financial liabilities at fair value through profit or loss:
- Deferred contingent consideration (20.2) (20.2) (19.1) (19.1)
Financial liabilities at amortised cost:
Trade and other payables (290.6) (290.6) (255.8) (255.8)
Senior secured notes (330.0) (321.1) (330.0) (315.0)
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 Sep 2024 As at 30 March 2024
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
£m £m £m £m £m
Financial assets at fair value through profit or loss:
Trade and other receivables - 6.5 2.6 - 4.9 2.9
Financial liabilities at fair value through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange contracts - (1.3) - - (0.8) -
Other financial liabilities at fair value through profit or loss:
- Deferred contingent consideration - - (20.2) - - (19.1)
Financial liabilities at amortised cost:
Senior secured notes (321.1) - - (315.0) - -
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.
The Group recognised other receivables with a fair value of £2.6m (30 March
2024: £2.9m) and deferred contingent consideration with a fair value of
£20.2m (30 March 2024: £19.1m) as a result of previous acquisitions. The
fair values for both are based on unobservable inputs and are classified as a
level 3 fair value estimate under the IFRS fair value hierarchy.
Methods and assumptions used to estimate all other fair values are consistent
with those used in the Group's Annual Report for the 52 weeks ended 30 March
2024.
11. Provisions for liabilities and charges
As at As at
28 Sep 2024 30 March 2024
£m £m
Within one year (5.1) (9.8)
Between one and five years (6.2) (5.6)
After 5 years (1.1) (1.7)
Total (12.4) (17.1)
During the 26 weeks ended 28 September 2024 provisions for liabilities and
charges decreased by £4.7m. The decrease of £4.7m is due primarily to the
utilisation of the restructuring costs provision. Total provisions for
liabilities and charges of £12.4m (30 March 2024: £17.1m) comprise primarily
of provisions for site costs and legal matters, dilapidations and
environmental liabilities related to leasehold properties.
12. Notes to the cash flow statement
Reconciliation of profit before taxation to cash flows from operating
activities
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
Profit before taxation 53.5 58.1
Net finance cost 11.9 10.9
Operating profit 65.4 69.0
Depreciation of property, plant and equipment 9.5 9.6
Amortisation of intangible assets 12.9 12.8
Impairment of non-current assets - 2.6
Fair value movements on financial instruments 0.5 (0.1)
Net interest on pensions and administrative expenses (9.7) (15.6)
Equity settled employee incentive schemes 2.2 2.4
Increase in inventories (32.9) (43.6)
Increase in trade and other receivables (2.9) (7.2)
Increase in trade and other payables and provisions 32.2 39.2
Additional employer contribution(1) (5.0) (3.8)
Contribution to defined benefit pension schemes (5.6) (20.0)
Cash generated from operations 66.6 45.3
(1)Contribution by the Group to the Premier sections of the RHM pension
schemes due to the payment of dividends during the period.
Analysis of movement in borrowings
As at Cash flows Non-cash interest expense Other As at
30 March 2024
non-cash movements
28 Sep 2024
£m £m £m £m £m
Cash and bank deposits 102.3 11.6 - - 113.9
Net cash and cash equivalents 102.3 11.6 - - 113.9
Borrowings - Senior Secured Fixed Rate Notes maturing October 2026 (330.0) - - - (330.0)
Lease liabilities (12.2) 2.4 (0.4) (0.7) (10.9)
Gross borrowings net of cash(1) (239.9) 14.0 (0.4) (0.7) (227.0)
Debt issuance costs(2) 4.3 3.7 (0.9) (1.4) 5.7
Total net borrowings(1) (235.6) 17.7 (1.3) (2.1) (221.3)
(1) Borrowings excludes derivative financial instruments.
(2) The non-cash interest movement relates to the amortisation of capitalised
borrowing costs only, the other non-cash movements relate to the write off of
financing costs arising on the refinancing of the revolving credit facility in
the period.
13. Dividends
The following final dividends were declared and paid by the Group during the
period.
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
1.728 pence per ordinary share (26 weeks ended 30 September 2023: 1.44 pence) 14.9 12.4
14. Capital commitments
The Group has capital expenditure on property, plant and equipment contracted
for at the end of the reporting period but not yet incurred at 28 September
2024 of £17.7m (30 March 2024: £17.3m).
15. Contingencies
There were no material contingent liabilities as at 28 September 2024 and 30
March 2024.
16. Related party transactions
The Group's related party transactions and relationships for the 52 weeks
ended 30 March 2024 were disclosed on page 171-172 in the Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024.
As at 28 September 2024 the following are also considered to be related
parties under the Listing Rules due to their shareholdings exceeding 10% of
the Group's total issued share capital:
- Nissin Foods Holding Co., Ltd. ('Nissin') is considered to be a related party
by virtue of its 24.84% (30 March 2024: 24.84%) equity shareholding in Premier
Foods plc and its right to appoint a member to the Board of directors.
Transactions with related parties
Transactions with associates and major shareholders during the period are set
out below.
26 weeks ended 26 weeks ended
28 Sep 2024 30 Sep 2023
£m £m
Sale of services:
- Nissin 0.1 0.1
Total sales 0.1 0.1
Purchase of goods:
- Nissin 20.3 15.1
Total purchases 20.3 15.1
As at As at
28 Sep 2024 30 March 2024
£m £m
Trade receivables:
- Nissin 0.1 0.2
Total receivables 0.1 0.2
Trade payables:
- Nissin (4.2) (3.6)
Total payables (4.2) (3.6)
Retirement benefit obligations
The Group has entered into an arrangement with the Pension Scheme Trustees as
part of the funding requirements for any actuarial deficit in the scheme.
17. Acquisition of subsidiary
In the prior period, the Group acquired 100% of the ordinary share capital of
FUEL 10K Limited ('FUEL10K') for initial consideration of £29.6m. A minimum
further deferred consideration of £4.0m will be payable in 2026/27, with any
increment to this dependent upon certain growth targets, and subject to a
maximum cap of total consideration (comprising initial consideration and
additional deferred consideration) of £55m. The acquisition provides an ideal
platform to accelerate the Group's expansion into the Breakfast category,
building on the recent successful launch of Ambrosia porridge pots and
possessing a differentiated category position, with its protein enriched
product range and appealing to a younger demographic.
The following table summarises the Group's provisional assessment of the
consideration for FUEL10K, and the amounts of the assets acquired and
liabilities assumed.
IFRS book value at acquisition Fair value adjustments Fair value
Recognised amounts of identifiable assets acquired and liabilities assumed £m £m £m
Brands and other intangible assets - 14.4 14.4
Deferred tax asset - 1.5 1.5
Inventories 2.0 0.3 2.3
Trade and other receivables¹ 3.7 1.1 4.8
Cash and cash equivalents 0.3 - 0.3
Trade and other payables (4.8) - (4.8)
Deferred tax liability - (3.6) (3.6)
Provisions - (1.1) (1.1)
Total identifiable net assets 1.2 12.6 13.8
Goodwill on acquisition 22.4
Initial consideration transferred in cash 29.6
Initial deferred contingent consideration 6.6
Total consideration 36.2
¹Fair value adjustment relates to the recognition of indemnification assets
in relation to contingent liabilities acquired.
On acquisition, the Group recognised provisions of £1.4m in relation to the
fair value of contingent liabilities acquired which related primarily to
future tax liabilities in line with IAS 37. As at 28 September 2024, the value
has reduced to £1.1m.
The fair value of the trade and other receivables acquired included an
indemnification asset of £1.4m in relation to the contingent liabilities
assumed. As at 28 September 2024, the value has reduced to £1.1m in line with
the above.
Goodwill
Goodwill amounting to £22.4m was recognised on acquisition and while FUEL10K
brand forms much of the enterprise value of the business, there is a premium
associated to the purchase of a pre-existing, well positioned business. This
goodwill is not expected to be deductible for tax purposes and is allocated to
the Group's Grocery CGU.
The carrying amount of goodwill at the beginning and end of the period is as
follows:
£m
Carrying value
At 1 April 2023 680.3
Acquisition of subsidiary 22.4
At 28 September / 30 March 2024 702.7
18. Subsequent events
There are no reportable subsequent events after the date of the balance sheet.
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