TIDMPFD TIDMIRSH
RNS Number : 1120F
Premier Foods plc
10 November 2015
Premier Foods plc
Interim results for the 26 weeks ended 3 October
2015
-------------------------------------------------
Branded sales growth driven by innovation and investment
-- Branded sales in H1 increased +0.1% and Q2 up +1.6%; first
quarterly increase for two years
-- Trading profit(2) increased +8.4%
-- Adjusted profit before tax up +21.6% and adjusted earnings per share increased +21.9%
-- Operating profit GBP23.3m, up GBP36.1m on FY15 H1
-- Profit after tax GBP21.7m, compared to prior period loss after tax (GBP49.1m)
-- Net debt of GBP585.3m in line with expectations; will reduce significantly in H2
-- Combined pension deficit reduced to GBP32.8m from GBP211.8m
-- Announces introduction of new brand; Paul Hollywood premium baking mixes
Premier Foods today announces its Interim results for the 26
weeks ended 3 October 2015.
Gavin Darby, Chief Executive Officer
-------------------------------------
"We are pleased to see Group branded sales growth in both the
first half and second quarter of this financial year, as well as
Trading profit progression. This reflects the clear benefits from
our continued commitment to brand investment and innovation. It is
also encouraging to see strong sales growth in our International
business following the investment we've made in additional
resources."
"In the third quarter of the year, we expect to deliver positive
Group branded sales growth, with Sweet Treats performing more
strongly than Grocery. The industry backdrop remains a challenging
one, but with strategies which are delivering tangible results and
significantly higher marketing spend planned for the second half,
our profit expectations for the year remain unchanged."
"In our Sweet Treats business, we are on track to deliver double
digit margins in FY15/16 a year earlier than previously expected.
Looking further forward, we remain committed to investing for sales
and profit growth, and expect to deliver branded sales growth for
the Group of 1-2% in FY16/17 and the medium term."
Continuing operations FY16 H1 FY15 H1
-------------------------- -------- --------
Revenue (GBPm) 341.2 343.9
Operating profit/(loss)
(GBPm) 23.3 (12.8)
Profit/(loss) after
taxation (GBPm) 21.7 (49.1)
Underlying results FY16 H1 FY15 H1 Change
(%)
-------------------------- -------- -------- -------
Branded sales (GBPm) 306.6 306.4 0.1%
Trading profit (GBPm)(2) 50.6 46.7 8.4%
Adjusted profit before
tax (GBPm)(4) 28.1 23.1 21.6%
Adjusted earnings
per share (pence)(4) 2.7 2.2 21.9%
Measures above are defined on page 2 and reconciled to statutory
measures in the appendices, where necessary
A presentation to investors and analysts will take place today,
10 November 2015, at 9.00am. The presentation will be webcast at
www.premierfoods.co.uk/investors/investor-centre. A recording of
the webcast will be available on the Company's website later in the
day.
A factsheet of the Preliminary results is available at:
www.premierfoods.co.uk/investors/results-centre
For further information, please contact:
Investors and analysts:
Alastair Murray, Chief
Financial Officer +44 (0) 1727 815 850
Richard Godden, Head of
Investor Relations +44 (0) 1727 815 850
Media enquiries:
Richard Johnson, Corporate
Affairs Director +44 (0) 1727 815 850
Maitland +44 (0) 20 7379 5151
Greg Lawless
Tom Eckersley
- Ends -
Statutory and Underlying results
---------------------------------
The Company's results for the 26 weeks ended 3 October 2015 are
presented on an 'Underlying' basis, unless otherwise stated. The
'Underlying' results exclude the results of previously completed
business disposals and associate investments. 'Continuing
operations' includes the respective periods that the Company
previously maintained controlling ownership of associate
investments.
GBPm Continuing Less: Disposals Less: Associates 'Underlying'
operations business
------------ ------------ ---------------- ----------------- -------------
FY16 H1
Sales 341.2 - - 341.2
Trading
profit(2) 50.3 0.2 0.1 50.6
EBITDA(3) 58.0 0.2 0.1 58.3
FY15 H1
Sales 343.9 (0.3) (3.9) 339.7
Trading
profit(2) 45.6 0.5 0.6 46.7
EBITDA(3) 52.3 0.5 0.6 53.4
------------ ------------ ---------------- ----------------- -------------
Notes to editors:
1. The statutory accounting period is for the 26 weeks from 5 April 2015 to 3 October 2015.
2. Trading profit for the underlying business is reconciled to
Continuing operations Trading profit above and is defined as
operating profit before, amortisation and impairment of intangible
assets, fair value movements on foreign exchange and other
derivative contracts, restructuring costs, and net interest on
pensions and administration costs.
3. EBITDA is Trading profit excluding depreciation.
4. Adjusted profit before tax is defined as Trading profit less
net regular interest. Adjusted earnings per share is defined as
Adjusted profit before tax less a notional tax charge of 20.0%
(FY14/15 H1: 21.0%) divided by the weighted average of the number
of shares of 825.7 million (FY14/15 H1: 817.2 million). Net regular
interest is defined as net finance cost excluding write-off of
financing costs, fair value movements on interest rate financial
instruments and other interest.
5. Household penetration defined as a percentage of UK
households purchasing a brand once or more in a 52 week period;
Kantar Worldpanel 52 weeks ended 13 September 2015.
6. Kantar Worldpanel, 52 weeks ended 16 August 2015.
A Premier Foods image gallery is available using the following
link:
http://www.premierfoods.co.uk/media/image-gallery
Operating review
-----------------
The following commentary unless otherwise stated is on an
'Underlying' basis, which excludes all previously completed
disposals and associate investments and references the 26 weeks
ended 3 October 2015 (FY15/16 H1) and the comparative period, 26
weeks ended 4 October 2014 (FY14/15 H1). All references to the
'quarter', unless otherwise stated, are for the 13 weeks ended 3
October 2015 and the comparative period, 13 weeks ended 4 October
2014.
GBPm FY16 FY15 H1 Change
H1
(26 (26 weeks) (%)
weeks)
Sales
Branded 306.6 306.4 0.1
Non-branded 34.6 33.3 3.7
-------
Total sales 341.2 339.7 0.4
Divisional contribution 68.2 64.9 5.1
Group & corporate
costs (17.6) (18.2) 3.3
--------- ------------- -------
Trading profit(2) 50.6 46.7 8.4
EBITDA 58.3 53.4 9.2
Quarter 2 sales results
GBPm FY 16 FY15 Q2 Change
Q2
(13 weeks) (13 weeks) (%)
Sales
Branded 156.5 154.1 1.6
Non-branded 18.5 16.6 10.6
------------ ------------ -------
Total sales 175.0 170.7 2.4
Introduction
Total sales for the 26 weeks ended 3 October 2015 were GBP341.2m
compared to GBP339.7m in the prior year, an increase of 0.4%. In
the second quarter, total sales increased by 2.4%, with the
Company's branded sales growing by 1.6% and non-branded sales up
10.6%. This represents the first quarterly branded sales growth for
two years.
The Company is particularly pleased by the return to branded
sales growth demonstrated both in the half and the second quarter
of the year. This provides further evidence that the Company's
strategy of investing behind its brands, bringing exciting new
products to market and working in even closer partnership with its
customers, is delivering tangible results. Additionally, this shows
a progressively improving sales trend over the last three quarters
as the positive benefits of the strategy flow through. With an
increased focus on international, sales in the international
business unit grew by 22% at constant currency in H1 and by 38% on
the same basis in the second quarter.
Trading profit(2) for the 26 weeks ended 3 October 2015 was
GBP50.6m, 8.4% higher than the prior year. Total Divisional
contribution was GBP3.3m higher than the prior year at GBP68.2m,
partly reflecting GBP2.4m lower consumer marketing as the Company
rephases this activity towards its key trading period of the third
quarter. Consumer marketing for the year is forecast at GBP36-38m
(2014/15: GBP33m). Gross margins held up well during the first half
of the year supported by improved asset utilisation in the Sweet
Treats business and a period of benign input cost inflation. EBITDA
grew by GBP4.9m in the first half, broadly following the trend of
Trading profit.
Market overview
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
The backdrop to the UK grocery market is a well documented one.
The growth channels of discounters, convenience stores and online
have continued to gain market share, albeit the rate of growth in
some of these channels has started to slow. Food deflation,
reflecting a combination of benign input costs and a more
competitive market has been prevalent for approximately twelve
months, while grocery volumes have displayed a consistent return to
growth of 1.5-2.0% through 2015.
In overall terms, the Company has grown share in its categories
over the last 52 weeks and in particular, continued to gain share
and drive category growth in the Cake and Flavourings &
Seasonings categories. In these two categories, where the Group has
focused its investment over the last twelve months, the Group has
seen volume, value and share gains in each of the main brands;
Bisto; Oxo; Mr. Kipling and Cadbury cake. Household penetration(5)
rates have also increased for each of these four brands, reflecting
both this brand investment and their relevance to the UK
consumer.
Brand investment and innovation
Over the last twelve months, the Company has significantly
increased its consumer marketing investment and launched a number
of new products to market. Highlights have included the relaunch of
Mr. Kipling with major TV advertising campaigns, the Bisto Together
project with Simply Casserole and Rich Gravy Pastes, Oxo Herbs
& More, Cadbury dessert pots, Homepride advertising featuring
'Fred' and Sharwood's Stir Fry Melts. In the most recent quarter's
trading, branded sales increased 1.6%; a year ago branded sales
recorded a decline of 4.3%. This turnaround demonstrates that the
Company's strategy of investing behind its brands is delivering
results and reinforces the plans for further product innovation and
marketing. In the first half of the year, 15.2% of the Company's
sales were delivered from products launched in the last two years;
this compares to 11.3% for the 52 weeks ended 4 April 2015 and 6.9%
two years ago.
The Company invested GBP13m in consumer marketing in the first
half of the year, a slight decline on the prior period, although it
expects to spend GBP36m - GBP38m in the full year. A large
proportion of this investment will be focused on its key trading
period of the third quarter, when the Company expects to deliver
attractive returns on investment given the seasonal nature of its
branded portfolio. This uplift in spend represents a 10-15%
increase over the prior year and the Company expects to increase
this further in FY17; a clear demonstration of the importance it
places on brand investment as a driver of Group performance.
Additionally, the Company has been successful in delivering
improved media buying efficiency through a lower cost per
television rating. While the emergence of social and digital media
has increased relevance, television advertising remains the most
effective medium for the Company to communicate its brands to
consumers.
Customer relationships
The Company employs a category based strategy, the overall
premise of which is designed to deliver category growth for the
mutual benefit of the Company, its customers and consumers. Over
recent times, it has rationalised the range of product codes it
sells, focusing on the bigger selling lines and worked in closer
partnership with its customers, helping the Company achieve
category captaincy and advisor statuses. The Company also works in
close partnership to agree business plans and propose listings of
new products with many of its customers.
A major customer has recently completed a review of the
Company's Grocery categories, which has concluded in line with the
Company's expectations. While the Company has lost some slower
selling product codes as a result of this review, it has also
gained increased availability of some higher selling product codes;
both changes were as expected. With promotional activity always a
feature of the commercial landscape, it remains too early to
definitively gauge the overall impact of these ranging decisions,
but the company continues to enjoy good relationships across its
customer portfolio.
Grocery
GBPm FY16 FY15 H1 H1 Change Q2 Change
H1 (%)
(26 (26 weeks) (%)
weeks)
Sales
Branded 226.2 225.0 0.6% 3.1%
Non-branded 21.2 21.6 (2.4%) 5.6%
---------- ----------
Total sales 247.4 246.6 0.3% 3.3%
Divisional contribution 60.8 60.1 1.2% -
In the first half of the year, sales in the Grocery business
grew by 0.3%, with branded sales ahead 0.6%, while Divisional
contribution increased by 1.2% to GBP60.8m. In the second quarter,
total sales increased by 3.3%, of which branded sales contributed
3.1%.
The business unit's biggest brand, Bisto, again recorded a
strong performance, delivering both volume and sales growth in H1
and the second quarter. Sales benefitted from the launch of Bisto
Simply Casserole pastes, launched approximately twelve months ago,
which align strongly to key consumer trends such as convenience and
'foodieness'. This product, which has re-vitalised the category was
recently renamed 'Made Simple' and now has additional, new flavour
variants recently launched to market. Additionally, Oxo grew sales
and volumes in the half, supported by the launch of Oxo Stock Pots,
again aligned to key consumer trends.
While sales of Ambrosia were marginally down in the half and
flat in the quarter, it held share and remains the clear market
leader in the ambient desserts category. As part of its standard
brand planning cycle, the business unit has undertaken some key
usage and attitude consumer research and identified opportunities
for the Ambrosia brand to premiumise its offering and stretch into
adjacent categories. Consequently, Ambrosia is planning to launch
new 'Deluxe' premium custard products to market in early 2016 in a
variety of packaging formats. This exciting new product range is
expected to be supported by new television advertising and plays to
the premiumisation trend which has been followed with success by
other brands in the portfolio.
In cooking sauces, Sharwood's and Loyd Grossman both enjoyed
very healthy sales growth in H1 and in the second quarter.
Sharwood's benefitted from the launch of Stir Fry Melts, a product
based on gel pot technology used in other parts of the portfolio
and aligned to consumer trends of convenience and 'foodieness',
while Loyd Grossman also saw the launch of Pan Melts and continued
momentum from its 'Gastro' and 'Classics' pouch range.
The Batchelors brand continues to experience falling sales,
although this declining trend has to some extent reduced. New more
premium cup-a-soup products were launched in the second quarter,
with flavours including Thai Inspired Chicken & Sweet Potato
and Southern Style Pulled Pork while further more contemporary
Batchelors products are planned for introduction in 2016.
The Company's home-baking brands, including McDougalls, Be-Ro
and Atora, have historically received less focus than its core
categories. Given the increasing popularity of home-baking over
recent years, this category is now worth GBP387m(6) with additional
opportunities for growth in the premium segment of the market
through new innovation. To capture these opportunities and help
revitalise the category, the Company has entered into a partnership
with renowned baker, Paul Hollywood, to launch a unique range of
premium, artisanal home-baking products under the Paul Hollywood
name.
These exciting new products will be created in conjunction with
Paul according to his exacting standards and recipes and reflecting
his vision to make artisanal baking products more accessible to a
wider audience. The products will be produced at the Company's
existing facilities and Paul will be instrumental in the marketing
of the new range. The initial range of products includes 12
different bread, savoury and sweet mixes which are expected to be
available in-store early in 2016. The Company's marketing
investment plans for its existing branded portfolio remain
unaffected by the new partnership.
Sweet Treats
GBPm FY16 FY15 H1 H1 Change Q2 Change
H1 (%)
(26 (26 weeks) (%)
weeks)
Sales
Branded 80.4 81.4 (1.3%) (2.6%)
Non-branded 13.4 11.7 15.2% 18.7%
---------- ----------
Total sales 93.8 93.1 0.8% 0.2%
Divisional contribution 7.4 4.8 54.2% -
Sweet Treats delivered a strong first half performance with
sales up 0.8% and Divisional contribution ahead 54.2% at GBP7.4m,
the latter reflecting an increase in Divisional contribution margin
from 5.2% to 7.9%. In the second quarter, total sales increased
0.2%, with lower branded sales offset by higher non-branded sales
of over 18%. The lower branded sales were due to cycling the major
Mr. Kipling brand relaunch in the prior year and phasing of
promotional activity which is expected to reverse in the third
quarter. In terms of market share, Mr. Kipling was successful in
growing both volume and value share in the first half of the
year.
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
The ambient cake category continues to grow and Mr. Kipling has
maintained its momentum, delivering volume and sales increases in
both the first half of the year and the second quarter. Sales in H1
were supported by the launch of milkshake flavour snack pack
slices, while new products including Deluxe Viennese Whirls,
Fabulous Fancy and Victoria sponge and Coffee cakes were also
launched towards the end of the half. In the second half, the
business unit expects to launch an exciting new range of wholesome
oat, fruit and nut based snack pack slices which align closely to
relevant consumer trends. All the new products the Sweet Treats
business unit is introducing are based on pertinent consumer trends
and insights such as 'togetherness'; 'reward'; 'snacking' and
'nutrition' to ensure maximum consumer and customer interest.
Cadbury cake benefitted from its first television advertising in
eight years in the period, while new product development included
'Amaze Bites' and Hot Cakes. Both products have been very well
received by retail customers and initial results are
encouraging.
The increase in non-branded sales in the first half of the year
reflects a number of new business wins across a variety of
customers. One key area of focus is mince pies, of which the
Company sold approximately 150 million in FY14/15. The business
continues to evaluate all such business opportunities and while it
is very focused on driving branded sales growth, recognises that
certain non-branded business can nevertheless be attractive. One of
the benefits of such an approach is in supporting manufacturing
site utilisation which is already reflected in the increased
divisional contribution margin seen in the first half of the year.
With the delivery of this increased divisional contribution margin
already evident, the Company now expects to deliver a double-digit
Divisional contribution margin in the Sweet Treats business in the
current financial year; a year earlier than previously
indicated.
During the period, the Sweet Treats business completed the
implementation of its new Mr. Kipling snack pack slices line at its
factory in Barnsley, South Yorkshire. This new line provides
additional capacity and flexibility, so presenting opportunities to
enter the convenience channel with twin-pack format sizes where
sales and margin per slice are typically higher than the core
range.
A significant proportion of the Group's capital expenditure
allocation this year is being spent at its Stoke cake bakery, where
a number of automation projects are already delivering savings
which have supported the Divisional contribution progress in the
period.
International
In September 2014, the Company announced a new strategic
business unit structure. Since the creation of this structure, the
colleagues working in the International business unit have
increased from nine to 27, with many of these joining the Company
from other leading consumer sector companies in the last six
months.
With this increased focus on international, sales of the
business unit grew by 22% at constant currency in H1 and by 38% on
the same basis in the second quarter. Strong performances were
particularly noted in Australasia and Ireland. In Australasia,
sales in the second quarter increased by 74% as a result of new
listings of Sharwood's, gaining significant market share and moving
up to second largest brand in the Indian food market. Ireland sales
increased by 7.5% at constant currency in the quarter, growing
share in a flat market. In the third quarter, the Irish business
will benefit from Bisto and Oxo television advertising, for the
first time in over two years.
In the USA, sales of Sharwood's are performing strongly;
delivering double-digit sales growth and market share gains.
Additionally, the Company has an exciting new trial of Mr. Kipling
Apple, Fruit and Mississippi Mud Pies taking place across 250
stores of a major US retailer during November.
Group & corporate costs, efficiency and organisation
structure
The Company is planning to invest approximately GBP25m in FY16
on capital projects across its manufacturing facilities. In
particular, a number of projects have now been completed at our
Stoke cake bakery to increase automation on packing lines, reducing
a number of manual tasks and so delivering efficiency benefits.
Additionally, the Company has embarked on a process optimisation
programme at certain manufacturing facilities which involves
working with a specialist partner to identify opportunities for
sharper process control to deliver improvements in both product
cost and quality. The payback on these cost reduction projects is
expected to be just one year.
Group and corporate costs were slightly lower in the first half
of the year compared to the prior period at GBP17.6m. Following the
announcement by HM Government of the intention to implement a
National Living Wage (NLW) for all employees above the age of 25
from April 2016, the Company has undertaken an initial analysis to
assess the potential impact on its cost structure. While there is
no impact in the current financial year, the Company expects there
will be a relatively small increase in labour costs in the
following year, FY16/17. The impact is expected to be greater at
some of the Group's manufacturing sites than others. While the NLW
is expected to rise to at least GBP9.00 an hour by 2020, this level
represents the bottom of current government forecasts and the
Company is currently undertaking a more detailed assessment of the
potential cost implications by 2020.
The organisational structure of Grocery, Sweet Treats and
International is now firmly in place and working well. An integral
part of this structure has involved ensuring the right senior teams
are in place across each business unit. Consequently, the Group has
recruited some key talent from leading consumer sector companies
each with a strong track record to support in delivery of the
respective business unit objectives.
Net regular interest
GBPm FY16 H1 FY15 H1 Change
(%)
Senior secured notes
interest 15.4 16.2 4.9
Bank debt interest 4.0 4.2 4.8
Securitisation interest 0.8 1.3 38.5
-------
20.2 21.7 6.9
Amortisation of
debt issuance costs 2.3 1.9 (21.1)
-------- -------- -------
Net regular interest 22.5 23.6 4.7
-------- -------- -------
Net regular interest was GBP22.5m in the period, GBP1.1m lower
than the prior year. Aside from lower bank debt interest, interest
charges were largely unchanged and in line with the Company's
expectations. The Company's expectations for net regular interest
for the full year are also unchanged at approximately GBP45m.
Associate investments
The Company holds a 49% interest in both Hovis Limited and
Knighton Foods Limited. In the first half of the year, the Company
recognised a share of loss from associates of (GBP7.0m), of which
(GBP6.8m) is due to the share of loss from the Hovis Limited
investment. This loss primarily reflects a very competitive
environment in the bread market and certain restructuring costs.
The Company's investments in associates as at 3 October 2015 were
GBP29.3m, which includes balances relating to Hovis Limited and
Knighton Foods Limited that were previously classified as
loans.
Cash flow
GBPm FY16 H1 FY15 H1
Trading profit 50.6 46.7
Depreciation 7.7 6.7
Share based payments 2.1 1.8
Interest (20.7) (21.0)
Pension contributions (6.0) (28.6)
Capital expenditure (13.7) (15.1)
Working capital & other (13.7) 3.0
Restructuring costs (2.8) (4.9)
-------- --------
Operating cash inflow/(outflow) 3.5 (11.4)
-------- --------
Disposal proceeds - 10.0
Financing fees & other items - (58.6)
Net equity proceeds - 242.2
Loan notes - (15.7)
Purchase of own shares (1.5) (1.5)
-------- --------
Movement in cash in period 2.0 165.0
-------- --------
Total cash inflows in the half were GBP2.0m, offset by movement
in debt issuance costs of (GBP2.4m). Trading profit was GBP50.6m,
while depreciation in H1 was GBP7.7m which is broadly in line with
the Company's expectations for its ongoing rate of depreciation.
Interest paid was (GBP20.7m) and reflects a bi-annual payment of
interest relating to the senior secured notes in the half. Capital
expenditure of GBP13.7m is also broadly as expected; as previously
stated, the Company plans to spend approximately GBP25m in the full
year. The working capital outflow of (GBP13.7m) is due to stock
build in advance of the Group's key third quarter trading period;
this is expected to partly unwind by the year end. Pension
contributions of (GBP6.0m) are in line with the previously agreed
schedule of pension deficit contributions and costs associated with
administering the pension schemes. Restructuring costs of GBP2.8m
in the period principally reflect costs associated with
restructuring the Group's IT function and are expected to be
approximately GBP5m in the full year.
Net debt
GBPm
Reported Net debt at
4 April 2015 584.9
Movement in cash in
period (2.0)
Movement in debt issuance
costs 2.4
------
Reported Net debt at
3 October 2015 585.3
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
Net debt at 3 October 2015 was GBP585.3m, which is broadly in
line with the position as at 4 April 2015. Given the seasonal
nature of the business, the Company's cash generation is higher in
the second half of its financial year. The Company expects to
deliver a significant reduction in Net debt by year end. The Net
debt/EBITDA ratio at 3 October 2015, based on the last twelve
months EBITDA is 3.9x, down from 4.0x at 4 April 2015.
Pensions
Combined pensions schemes 3 October 4 April
(GBPm) 2015 2015
Assets
Equities 378.8 348.5
Government bonds 503.0 547.5
Corporate bonds 179.9 329.8
Property 298.8 260.0
Absolute return products 1,306.2 1,332.9
Cash 158.0 294.4
Infrastructure funds 217.7 196.6
Swaps 596.2 430.0
Private equity 246.1 250.9
Other 233.7 257.9
---------- ----------
Total Assets 4,118.4 4,248.5
Liabilities
Discount rate 3.70% 3.30%
Inflation rate (RPI/CPI) 3.1%/2.0% 3.0%/1.9%
Mortality rate LTI +1.0% LTI +1.0%
Total Liabilities (4,151.2) (4,460.3)
Combined deficit (32.8) (211.8)
Deferred tax (20.0%/21.4%) 6.6 45.3
---------- ----------
Combined deficit net
of deferred tax (26.2) (166.5)
---------- ----------
The IAS 19 combined pension deficit at 3 October 2015 was
(GBP32.8m), equivalent to (GBP26.2m) net of deferred tax. This is
GBP179.0m lower than the valuation as at 4 April 2015. The
valuation at 3 October 2015 comprised a GBP383.2m surplus in
respect of the RHM schemes and a deficit of (GBP416.0m) in relation
to the Premier Foods schemes. This reduction is principally a
result of changes in assumptions used for evaluating the
liabilities of the schemes. The net impact of the movement in
liabilities assumptions was approximately GBP140m lower than the
position at 4 April 2015 and reflects an increase in the discount
rate from 3.3% to 3.7%, partly offset by a slightly higher
inflation rate assumption from 3.0% to 3.1%.
The reduction in the pension valuation between these dates has
no impact on the previously agreed pension deficit cash
contributions which are fixed until 2019. One approach in valuing
the pension liabilities as part of the Enterprise value of the
Company is to discount the post tax future cash flows of the agreed
deficit contribution payment schedule. On this basis, the pension
schemes deficit is valued at approximately GBP390m.
Pension sensitivities
Pension sensitivities Increase/ Increase/ Increase/
(IAS 19 basis, GBPm) (Reduction) (Reduction) (Reduction)
in assets in liabilities in deficit
25 basis point decrease
in government gilts 165 182 17
25 basis point increase
in credit spreads - (170) (170)
25 basis point increase
in RPI 55 67 12
Life expectancy increase
by 1 year - 146 146
The above table intends to provide assistance in understanding
the sensitivity of the valuation of pension assets and liabilities
to market movements of government gilts, credit spreads and the
retail price index (RPI). It is stressed that these sensitivities
are indicative only and may change over time as the schemes'
execution of its investment strategy may evolve to maximise asset
performance.
Outlook
The Company is particularly pleased to report Group branded
sales growth in both the first half and second quarter of the year,
as well as Trading profit(2) and adjusted earnings progression.
This reflects clear benefits of the Company's continued commitment
to its brand investment and innovation programmes.
In the third quarter of the year, the Group expects to deliver
positive branded sales growth, with Sweet Treats anticipated to
perform more strongly than Grocery. The industry backdrop remains a
challenging one, but with strategies which are delivering tangible
results, and significantly higher marketing spend planned for the
second half, the Group's profit expectations for the year remain
unchanged.
In the Sweet Treats business, the Company is on track to deliver
double digit divisional contribution margins in FY15/16; a year
earlier than previously indicated. Looking further forward, the
Company remains committed to investing for sales and profit growth
and expects to deliver branded sales growth of 1-2% in FY16/17 and
the medium term.
Financial review
-----------------
Within this financial review, the Company presents its results
for the 26 weeks from 5 April 2015 to 3 October 2015 (FY15/16 H1)
with comparative information for the 26 weeks ended 4 October 2014
(FY14/15 H1). All commentary on the performance of the Company
included below refers to continuing operations unless otherwise
stated and therefore reflects the respective periods that the
Company maintained ownership of completed disposals and associate
investments.
In the prior period, the company completed two corporate
transactions; the bread business on 26 April 2014 ("Hovis Limited")
and the powdered beverages and desserts business ("Knighton Foods
Limited") on 28 June 2014. Consequently, results for Hovis Limited
and Knighton Foods Limited are reported as associates in the
financial statements for the 26 weeks ended 3 October 2015.
As previously disclosed, the results of the International
business unit are aggregated within the results of the Grocery
segment, in line with IFRS 8.
Income statement
Revenue from continuing operations in the period was GBP341.2m
compared to GBP343.9m in the prior year. Revenue in the prior
period benefitted from sales from Knighton Foods Limited of GBP3.9m
until the completion of the transaction as described above. This
impact was partly offset by improved sales in both the Grocery and
Sweet Treats businesses. Revenues of the Grocery segment in the
period were GBP247.4m (FY14/15 H1: GBP250.8m), while revenues in
the Sweet Treats segment increased by GBP0.7m to GBP93.8m (FY14/15
H1: GBP93.1m).
The Group employs a category based strategy, the core of which
involves investing behind its brands and launching new products to
market, while working in even closer partnership with its
customers. The Group considers the benefits of this strategy are
delivering results, evidenced by increasing sales and volumes of
brands where it is investing most in. Further details of this
progress are provided in the Operating review.
Gross profit was GBP126.7m in the period, an increase of
GBP11.7m compared to the prior year and included the benefits to
manufacturing overheads of higher utilisation of bakery sites in
the Sweet Treats business, benefits to manufacturing costs from
automation projects and relatively benign input costs. Gross margin
increased by 3.7 percentage points to 37.1% for the 26 weeks ended
3 October 2015, reflecting the points identified above.
Divisional contribution for the Group was GBP68.2m in the
period, an increase of GBP4.1m compared to the prior period.
Grocery Divisional contribution was GBP60.8m, an increase of
GBP1.5m on the 26 weeks ended 3 October 2015, while Sweet Treats
Divisional contribution was GBP7.4m, a GBP2.6m increase on the
prior period. The increased Divisional contribution partly reflects
lower levels of consumer marketing investment in the Half year.
This year, a larger proportion of the Group's consumer marketing
investment will be focused on its key trading period of the third
quarter.
Operating profit
Operating profit for the 26 weeks ended 3 October 2015 was
GBP23.3m, compared to an Operating loss in the prior period of
(GBP12.8m). Before impairment and loss on disposal of operations,
Group Operating profit was also GBP23.3m in the period, compared to
GBP9.2m for the 26 weeks ended 4 October 2014.
The main driver of the Group generating an Operating profit in
the period compared to the Operating loss recorded in the prior
year was the non-repeat of an impairment charge relating to certain
of the Group's assets at its Lifton manufacturing site of GBP16.0m
and a loss on disposal of operations of GBP6.0m due to the Knighton
Foods Limited transaction which completed on 28 June 2014.
Additionally, net interest on pensions and administrative expenses
was GBP7.0m in the period (FY14/15 H1: GBP13.4m). This decrease
reflects a lower opening combined pension deficit valuation for the
current period compared to the prior year.
Trading profit(2) in the period was GBP4.7m higher at GBP50.3m,
partly due to timing effects of consumer marketing expenditure
during the period and partly due to increased sales and
manufacturing efficiency benefits.
Restructuring costs of GBP2.5m in the period (FY14/15 H1:
GBP3.9m) were principally due to redundancy costs associated with
restructuring the Group's IT function. Amortisation of intangible
assets was GBP18.7m in the Half year (FY14/15 H1: GBP18.9m) and the
Group expects the annual run rate for intangible asset amortisation
to be unchanged at approximately GBP38-40m per annum.
Finance costs
Net finance cost for the 26 weeks ended 3 October 2015 was
(GBP21.4m) (FY14/15 H1: (GBP36.6m)). During the prior year period,
the Group entered into a new set of financing arrangements
following the completion of its Capital Refinancing Plan. The
principal driver of the lower finance cost compared to the prior
year period was the non-repeat of the write-off of debt issuance
costs of GBP14.6m associated with the Group's previous financing
arrangements.
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
Interest payable on the senior secured notes was GBP15.4m in the
period (FY14/15 H1: GBP16.2m); interest payable on the Group's
revolving facility was GBP3.2m in the period (FY14/15 H1: GBP2.5m)
and interest payable on bank loans and overdrafts in the period was
GBP2.5m (FY14/15 H1: GBP3.4m). Amortisation of debt issuance costs
was GBP2.3m in the period (FY14/15 H1: GBP1.9m).
Associate investments
The Company holds a 49% interest in both Hovis Limited and
Knighton Foods Limited. In the first half of the year, the Company
recognised a share of loss from associates of (GBP7.0m), of which
(GBP6.8m) is due to the share of loss from the Hovis Limited
investment. This loss primarily reflects a very competitive
environment in the bread market and certain restructuring costs.
The Company's investments in associates as at 3 October 2015 were
GBP29.3m, which includes balances relating to Hovis Limited and
Knighton Foods Limited that were previously classified as
loans.
Profit before taxation
The Group made a loss before tax of (GBP5.1m) for the period
ended 3 October 2015 compared to a prior year loss of (GBP54.7m).
An Operating profit of GBP23.3m, net finance costs of (GBP21.4m)
and a share of loss from associates was (GBP7.0m), all as outlined
above are the principal reasons for this performance.
Taxation
A taxation credit of GBP26.8m is reported for the period
(FY14/15 H1: GBP5.6m credit), which is due to movements in the
components of the deferred tax asset. The applicable rate of
corporation tax for the period was 20.0% (FY14/15 H1: 21.0%).
The Group's net deferred tax asset as at 3 October 2015 was
GBP33.2m which includes tax benefits from future pension deficit
contributions and benefits from prior year losses. Additionally,
the Group has approximately GBP145m of unrecognised brought forward
corporation tax losses which equates to approximately GBP29m of
unrecognised deferred tax assets. In total, the Group has GBP94.0m
of recognised deferred tax assets and unrecognised deferred tax
assets which are available to offset over GBP450m of taxable
profits in future periods. These losses can generally be carried
forward indefinitely.
The corporation tax rate for the full year is expected to be
unchanged at 20.0%.
Earnings per share
The Group reports a basic earnings per share on continuing
operations for the 26 weeks ended 3 October 2015 of 2.6 pence,
compared to a basic loss per share on continuing operations for the
prior period of (6.0 pence). Earnings/(loss) per share is
calculated by dividing the earnings/(loss) attributed to ordinary
shareholders of GBP21.7m (FY14/15 H1: (GBP49.1m)) by the weighted
number of shares in issue during the period. The weighted number of
shares in the period were 825.7 million (FY14/15 H1: 817.2
million).
Adjusted earnings per share for continuing operations were 2.7
pence (FY14/15 H1: 2.1 pence). Adjusted earnings per share on
continuing operations has been calculated by dividing the adjusted
earnings (defined as Trading profit less net regular interest and
notional taxation) attributed to ordinary shareholders of GBP22.2m
(FY14/15 H1: GBP17.4m) by the weighted number of ordinary shares in
issue during each period. These earnings have been calculated by
reflecting tax at a notional rate of 20.0% (FY14/15 H1: 21.0%).
Cash flow and borrowings
Company net borrowings as at 3 October 2015 were GBP585.3m, a
slight increase of GBP0.4m since 4 April 2015. The cash inflow from
operations to 3 October 2015 was GBP42.2m (FY14/15 H1:
GBP24.8m).This included a cash inflow from continuing operations of
GBP43.2m (FY14/15 H1: GBP17.6m inflow) and cash outflow from
discontinued operations of (GBP1.0m) (FY14/15 H1: GBP7.2m inflow).
The Group recorded an increase in inventories of GBP13.8m in the
Half year, as it builds stock in advance of its key trading period
of the year; the third quarter.
Net cash interest paid was GBP20.7m in the period (FY14/15 H1:
GBP21.0m) and the purchase of property, plant and equipment was
GBP13.9m in the period.
At 3 October 2015, the Group's revolving credit facility of
GBP272.0m recorded drawings of GBP112.0m and the Group's GBP80m
securitisation facility was undrawn. Cash and bank deposits were
GBP21.1m (4 April 2015: GBP44.7m) and the Senior secured notes were
unchanged at GBP500.0m.
Retirement benefit schemes
At 3 October 2015, the Company's pension schemes under the IAS
19 accounting valuation showed a combined gross deficit of
(GBP32.8m), compared to (GBP211.8m) at 4 April 2015. The valuation
at 3 October 2015 comprised a GBP383.2m surplus in respect of the
RHM schemes and a deficit of (GBP416.0m) in relation to the Premier
Foods schemes. Further detail on the pension schemes is provided in
the Operating review.
Principal risks and uncertainties
The Group's principal risks and uncertainties were disclosed on
page 23 to 25 of the annual report and accounts for the financial
period ended 4 April 2015. The major strategic and operational
risks are summarised under the headings of market conditions,
organisational structure and capability, responsibility and
stakeholder perception, commercial arrangements, pension fund
deficit, operational continuity and legal and regulatory
compliance.
Alastair Murray
Chief Financial Officer
APPENDICES
'Continuing operations' includes the respective periods that the
Company maintained ownership of previously completed disposals and
associate investments.
'Underlying' results exclude the results of previously completed
business disposals and associate investments and are presented to
illustrate the performance of the Company on the new reporting
calendar methodology.
Continuing operations earnings per share is calculated as set
out below:
GBPm 3 October 4 October
2015 2014
(26 weeks) (26 weeks)
Underlying business Trading
profit 50.6 46.7
Previously completed disposals (0.3) (1.1)
Continuing Trading profit 50.3 45.6
Amortisation of intangible
assets (18.7) (18.9)
Foreign exchange fair value
movements 1.2 (0.2)
Net interest on pension and
administrative expenses (7.0) (13.4)
Restructuring costs (2.5) (3.9)
Loss on disposal - (6.0)
Impairment of goodwill, property,
plant & equipment - (16.0)
------------ -------------
Operating profit/(loss) 23.3 (12.8)
Net finance expense (21.4) (36.6)
Share of loss from associates (7.0) (5.3)
(Loss) before tax (5.1) (54.7)
Taxation 26.8 5.6
------------ -------------
Profit/(loss) after tax 21.7 (49.1)
Divided by:
Average shares in issue (millions) 825.7 817.2
Basic earnings/(loss) per
share 2.6p (6.0p)
Adjusted earnings per share is calculated as set out below:
GBPm 3 October 4 October Change
2015 2014
(26 weeks) (26 weeks) (%)
Underlying Trading
profit 50.6 46.7 8.4%
Less net regular
interest (22.5) (23.6) 4.7%
Adjusted profit
before tax 28.1 23.1 21.6%
Less notional tax
at 20.0%/21.0% (5.6) (4.9) (15.9%)
------------ ------------- --------
Adjusted profit
after tax 22.5 18.2 23.2%
Divided by:
Average shares
in issue (millions) 825.7 817.2 1.0%
Adjusted earnings
per share 2.7p 2.2p 21.9%
Pro forma results for 52 weeks to 4 April 2015
GBPm 52 weeks to 4 April 2015
------------------- ----------------------------------------------------------------
Q1 Q2 H1 Q3 Q4 FY
(13 (13 (26 (13 (13 (52
weeks) weeks) weeks) weeks) weeks) weeks)
------------------- --------- --------- --------- --------- --------- ---------
Grocery
Branded sales 112.4 112.6 225.0 160.1 123.4 508.5
Non-branded
sales 11.3 10.3 21.6 11.3 10.3 43.2
Total sales 123.7 122.9 246.6 171.4 133.7 551.7
Divisional
contribution - - 60.1 - - 145.2
Sweet Treats
Branded sales 39.9 41.5 81.4 50.0 43.8 175.2
Non-branded
sales 5.4 6.3 11.7 23.4 5.4 40.5
Total sales 45.3 47.8 93.1 73.4 49.2 215.7
Divisional
contribution - - 4.8 - - 18.0
Group
Branded sales 152.3 154.1 306.4 210.1 167.2 683.7
Non-branded
sales 16.7 16.6 33.3 34.7 15.7 83.7
Total sales 169.0 170.7 339.7 244.8 182.9 767.4
Divisional
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
contribution - - 64.9 - - 163.2
Group & corporate - - (18.2) - - (32.2)
Trading profit - - 46.7 - - 131.0
EBITDA - - 53.4 - - 144.9
------------------- --------- --------- --------- --------- --------- ---------
-- The Company has changed its financial year end to the beginning of April.
-- It will report its next financial year for the 52 weeks to 2 April 2016.
-- Interim results are presented on a 26 week basis.
-- The comparatives for the prior year, 52 weeks to 4 April
2015, are set out in the table above.
-- Divisional contribution, Trading profit(2) and EBITDA(3) will
be reported at Interim and Preliminary results only.
-- The term divisional contribution refers to Gross Profit less
selling, distribution and marketing expenses directly attributable
to the relevant business unit.
-- Group & corporate costs refer to group and corporate
expenses which are not directly attributable to a business unit and
will be reported at total Group level.
-- Quarterly trading updates will be presented on a 13 week
basis (compared to previous 3 month basis).
-- Power Brands and support brands definitions have been removed.
-- New reported segments to be Grocery and Sweet Treats with
branded sales, non-branded sales and divisional contribution
disclosure.
-- International currently too small for separate disclosure and
in line with accounting standards will be aggregated within
Grocery.
Pension deficit contribution schedule
The table below shows the phasing of previously agreed deficit
contributions in the context of the Company's new financial
calendar.
GBPm 2015/16 2016/17 2017/18 2018/19 2019/20
----------------------- -------- -------- -------- -------- --------
Deficit contributions 6 48 49 44 44
----------------------- -------- -------- -------- -------- --------
Administration
costs + PPF
levy 8-10 8-10 8-10 8-10 8-10
----------------------- -------- -------- -------- -------- --------
Total cash
outflow 14-16 56-58 57-59 52-54 52-54
----------------------- -------- -------- -------- -------- --------
Responsibility Statement of the Directors
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements ; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
The Directors of Premier Foods plc are listed on page 36 of the
Premier Foods plc annual report and accounts for the financial
period ended 4 April 2015. Charles Miller-Smith resigned from the
board as non-executive director with effect from 1 June 2015.
Approved by the Board on 9 November 2015 and signed on its
behalf by:
Gavin Darby
Chief Executive Officer
Alastair Murray
Chief Financial Officer
INDEPENDENT REVIEW REPORT TO PREMIER FOODS PLC
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
twenty six weeks ended 3 October 2015 which comprises the condensed
consolidated balance sheet, the related condensed consolidated
statement of profit and loss, statement of comprehensive income,
statement of cash flows and statement of changes in equity for the
twenty six week period then ended and the related explanatory
notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the Disclosure and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA"). Our review
has been undertaken so that we might state to the company those
matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we
have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the EU.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) 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.
In the last financial year the company changed its accounting
reference date from 31 December to the closest Saturday to 31
March. The previous interim results were prepared for the six
months to 30 June 2014. As a consequence, the review procedures set
out above have not been performed in respect of the comparative
period for the twenty six weeks ended 4 October 2014.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the twenty six weeks ended
3 October 2015 is not prepared, in all material respects, in
accordance with IAS 34 as adopted by the EU and the DTR of the UK
FCA.
Richard Pinckard
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
9 November 2015
Condensed consolidated statement of profit or loss
(unaudited)
Period Period
ended ended
3 Oct 4 Oct
2015 2014
Note GBPm GBPm
-------------------------------------- ----- -------- --------
Continuing operations
Revenue 4 341.2 343.9
Cost of sales (214.5) (228.9)
-------------------------------------- ----- -------- --------
Gross profit 126.7 115.0
Selling, marketing and distribution
costs (58.5) (50.9)
Administrative costs (44.9) (76.9)
-------------------------------------- ----- -------- --------
Operating profit/(loss) 4 23.3 (12.8)
Operating profit before impairment
and loss on disposal of operations 23.3 9.2
Impairment of property, plant
and equipment 10 - (16.0)
Loss on disposal of businesses 9 - (6.0)
-------------------------------------- ----- -------- --------
Finance cost 5 (24.1) (39.0)
Finance income 5 2.2 1.1
Fair value movements on interest
rate financial instruments 5 0.5 1.3
Share of loss from associates 11 (7.0) (5.3)
-------------------------------------- ----- -------- --------
Loss before taxation from continuing
operations (5.1) (54.7)
Taxation credit 6 26.8 5.6
-------------------------------------- ----- -------- --------
Profit/(loss) after taxation
from continuing operations 21.7 (49.1)
Loss from discontinued operations 8 (0.2) (21.8)
-------------------------------------- ----- -------- --------
Profit/(loss) for the period
attributable to owners of the
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
parent 21.5 (70.9)
-------------------------------------- ----- -------- --------
Basic earnings/(loss) per share
From continuing operations (pence) 7 2.6 (6.0)
From discontinued operations
(pence) 7 - (2.7)
-------------------------------------- ----- -------- --------
From profit/(loss) for the period 2.6 (8.7)
-------------------------------------- ----- -------- --------
Diluted earnings/(loss) per share
From continuing operations (pence) 7 2.5 (6.0)
From discontinued operations
(pence) 7 - (2.7)
-------------------------------------- ----- -------- --------
From profit/(loss) for the period 2.5 (8.7)
-------------------------------------- ----- -------- --------
Adjusted earnings per share(1)
From continuing operations (pence) 7 2.7 2.1
-------------------------------------- ----- -------- --------
(1) Adjusted earnings per share is defined as trading
profit less net regular interest payable, less a
notional tax charge at 20.0%
(2014: 21.0%) divided by the weighted average number
of ordinary shares of the Company.
The following notes form an integral part of the condensed
consolidated interim financial information
Condensed consolidated statement of comprehensive income
(unaudited)
Period Period
ended ended
3 Oct 4 Oct
2015 2014
Note GBPm GBPm
--------------------------------------- ----- ------- -------
Profit/(loss) for the period 21.5 (70.9)
Other comprehensive income/(losses)
Items that will never be reclassified
to profit or loss
Remeasurements of defined benefit
schemes 15 179.8 19.7
Deferred tax charge (35.5) (3.9)
Items that are or may be reclassified
to profit or loss
Exchange differences on translation 0.4 (3.2)
--------------------------------------- ----- ------- -------
Other comprehensive income, net
of tax 144.7 12.6
--------------------------------------- ----- ------- -------
Total comprehensive income/(losses)
attributable to owners of the parent 166.2 (58.3)
---------------------------------------------- ------- -------
The following notes form an integral part of the condensed
consolidated interim financial information
Condensed consolidated balance sheet (unaudited)
As at As at
3 Oct 4 Apr
2015 2015
Note GBPm GBPm
---------------------------------------- ----- ---------- ----------
ASSETS:
Non-current assets
Property, plant and equipment 10 186.9 183.3
Goodwill 646.0 646.0
Other intangible assets 512.0 528.4
Retirement benefit assets 15 383.2 241.6
Investments in associates(1) 11 29.3 35.2
Deferred tax assets 33.2 41.9
---------------------------------------- ----- ---------- ----------
1,790.6 1,676.4
Current assets
Inventories 82.6 68.8
Trade and other receivables 125.1 123.5
Financial assets - derivative
financial instruments 13 0.4 -
Cash and cash equivalents 16 21.1 44.7
---------------------------------------- ----- ---------- ----------
229.2 237.0
---------------------------------------- ----- ---------- ----------
Total assets 2,019.8 1,913.4
---------------------------------------- ----- ---------- ----------
LIABILITIES:
Current liabilities
Trade and other payables (218.5) (212.6)
Financial liabilities:
- short-term borrowings 12 (17.6) (42.0)
- derivative financial instruments 13 (2.4) (3.7)
Provisions for liabilities and
charges 14 (8.6) (8.6)
Current income tax liabilities (0.7) (0.7)
---------------------------------------- ----- ---------- ----------
(247.8) (267.6)
Non-current liabilities
Financial liabilities - long-term
borrowings 12 (588.8) (587.6)
Retirement benefit obligations 15 (416.0) (453.4)
Provisions for liabilities and
charges 14 (47.7) (51.6)
Other liabilities (12.5) (13.0)
---------------------------------------- ----- ---------- ----------
(1,065.0) (1,105.6)
---------------------------------------- ----- ---------- ----------
Total liabilities (1,312.8) (1,373.2)
---------------------------------------- ----- ---------- ----------
Net assets 707.0 540.2
---------------------------------------- ----- ---------- ----------
EQUITY:
Capital and reserves
Share capital 82.6 82.6
Share premium 1,406.4 1,406.4
Merger reserve 351.7 351.7
Other reserves (9.3) (9.3)
Profit and loss reserve (1,124.4) (1,291.2)
---------------------------------------- ----- ---------- ----------
Total equity 707.0 540.2
---------------------------------------- ----- ---------- ----------
(1) Loans to associates with a carrying amount of GBP20.5m at 3
October 2015 (4 April 2015: GBP20.8m) were reclassified to
investments in associates during the period, in order to reflect
the fact that in substance they form part of the carrying value of
the Group's respective investments. Further details are disclosed
in note 11.
The following notes form an integral part of the condensed
consolidated interim financial information
Condensed consolidated statement of cash flows (unaudited)
Period Period
ended ended
3 Oct 4 Oct
2015 2014
Note GBPm GBPm
--------------------------------------- ----- -------- --------
Cash generated from operations 16 42.2 24.8
Interest paid (22.3) (21.8)
Interest received 1.6 0.8
--------------------------------------- ----- -------- --------
Cash generated from operating
activities 21.5 3.8
Sale of businesses - 8.3
Loan notes issued - (15.7)
Purchase of property, plant and
equipment (13.9) (10.9)
Purchase of intangible assets (4.1) (4.2)
Sale of property, plant and equipment - 1.7
--------------------------------------- ----- -------- --------
Cash used in investing activities (18.0) (20.8)
Repayment of borrowings (1.0) (711.4)
Proceeds from borrowings - 500.0
Movement in securitisation funding
programme (19.7) (46.0)
Financing fees and other costs
of finance - (58.6)
Proceeds from share issue - 253.4
Share issue costs - (11.2)
Purchase of own shares (1.5) (1.5)
--------------------------------------- ----- -------- --------
Cash used in financing activities (22.2) (75.3)
Net outflow of cash and cash
equivalents (18.7) (92.3)
Cash, cash equivalents and bank
overdrafts at beginning of period 21.7 98.8
--------------------------------------- ----- -------- --------
Cash, cash equivalents and bank
overdrafts at end of period 16 3.0 6.5
--------------------------------------- ----- -------- --------
The following notes form an integral part of the condensed
consolidated interim financial information
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
Condensed consolidated statement of changes in equity
(unaudited)
Profit
and
Share Share Merger Other loss Non-controlling Total
capital premium reserve reserves reserve interest equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- -------- ----- --------- --------- ---------- ---------- ---------------- --------
At 5 April
2015 82.6 1,406.4 351.7 (9.3) (1,291.2) - 540.2
Profit for the
period - - - - 21.5 - 21.5
Remeasurements
of defined
benefit schemes 15 - - - - 179.8 - 179.8
Deferred tax
charge - - - - (35.5) - (35.5)
Exchange differences
on translation - - - - 0.4 - 0.4
-------------------------------- ----- --------- --------- ---------- ---------- ---------------- --------
Other comprehensive
income - - - - 144.7 - 144.7
--------------------------------------- --------- --------- ---------- ---------- ---------------- --------
Total comprehensive
income - - - - 166.2 - 166.2
-------------------------------- ----- --------- --------- ---------- ---------- ---------------- --------
Share-based payments - - - - 2.1 - 2.1
Own shares acquired
and held as Treasury
shares - - - - (1.5) - (1.5)
-------------------------------- ----- --------- --------- ---------- ---------- ---------------- --------
At 3 October
2015 82.6 1,406.4 351.7 (9.3) (1,124.4) - 707.0
-------------------------------- ----- --------- --------- ---------- ---------- ---------------- --------
At 6 April
2014 31.7 1,215.0 404.7 (9.3) (1,533.0) 0.1 109.2
Loss for the
period - - - - (70.9) - (70.9)
Remeasurements
of defined benefit
schemes - - - - 19.7 - 19.7
Deferred tax
charge - - - - (3.9) - (3.9)
Exchange differences
on translation - - - - (3.2) - (3.2)
-------------------------------- ----- --------- --------- ---------- ---------- ---------------- --------
Other comprehensive
income - - - - 12.6 - 12.6
--------------------------------------- --------- --------- ---------- ---------- ---------------- --------
Total comprehensive
losses - - - - (58.3) - (58.3)
-------------------------------- ----- --------- --------- ---------- ---------- ---------------- --------
Shares
issued 50.7 202.7 - - - - 253.4
Cost of shares
issued - (11.2) - - - - (11.2)
Share-based payments - - - - 1.8 - 1.8
Own shares acquired
and held as Treasury
shares - - - - (1.5) - (1.5)
Disposal of non-controlling
interest - - - - - (0.1) (0.1)
--------------------------------------- --------- --------- ---------- ---------- ---------------- --------
At 4 October
2014 82.4 1,406.5 404.7 (9.3) (1,591.0) - 293.3
-------------------------------- ----- --------- --------- ---------- ---------- ---------------- --------
The following notes form an integral part of the condensed
consolidated interim financial information
1. General information
Premier Foods plc (the "Company") is a public limited company
incorporated and domiciled in England and Wales, registered number
5160050, with its registered office at Premier House, Centrium
Business Park, Griffiths Way, St Albans, Hertfordshire AL1 2RE. The
principal activity of the Company and its subsidiaries (the
"Group") is the manufacture and distribution of branded and own
label ambient food products as described in note 15 of the Group's
annual report and accounts for the financial period ended 4 April
2015.
2. Significant accounting policies
Basis of preparation
The condensed consolidated financial information ("financial
information") for the 26 weeks ended 3 October 2015 has been
prepared in accordance with the Disclosure and Transparency Rules
of the Financial Conduct Authority and with IAS 34, "Interim
Financial Reporting" as adopted by the European Union. The
financial information for the 26 weeks ended 3 October 2015 should
be read in conjunction with the Group's financial statements for
the 15 months ended 4 April 2015, which have been prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union. They have been prepared
applying the accounting policies and presentation as applied in the
preparation of the Group's published consolidated financial
statements for the 15 months ended 4 April 2015, except where new
or revised accounting standards have been applied. There has been
no significant impact on the Group profit or net assets on adoption
of new or revised accounting standards in the period.
Following a competitive tender process, KPMG LLP were appointed
as the Group's auditor for the 52 weeks ended 2 April 2016. The
financial information for the twenty six weeks ended 3 October 2015
is unaudited but has been subject to an independent review by KPMG
LLP.
In the last financial period the Group changed its accounting
reference date from 31 December to the closest Saturday to 31
March. The previous interim results were prepared for the six
months to 30 June 2014. As a consequence, the review procedures
have not been performed in respect of the comparative period for
the 26 weeks ended 4 October 2014.
The Group's financial statements for the 15 months ended 4 April
2015, which were approved by the Board of Directors on 18 May 2015,
were reported on by PricewaterhouseCoopers LLP and delivered to the
Registrar of Companies. The report of the auditor was unqualified,
did not contain a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report
and did not contain any statement under section 498 (2) or (3) of
the Companies Act 2006.
This financial information was approved for issue on 9 November
2015.
Basis for preparation of financial statements on a going concern
basis
The Group's revolving credit facility includes net debt/EBITDA
and EBITDA/interest covenants. In the event these covenants are not
met then the Group would be in breach of its financing agreement
and, as would be the case in any covenant breach, the banking
syndicate could withdraw funding to the Group. The Group was in
compliance with its covenant tests as at 4 April 2015 and 3 October
2015. The Group's forecasts, taking into account reasonably
possible changes in trading performance, show that the Group should
be able to operate within the level of its current facilities
including covenant tests. The directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Group
therefore continues to adopt the going concern basis in preparing
its consolidated financial statements.
3. Critical accounting policies, estimates and judgements
The following are areas of particular significance to the
Group's interim financial information and include the use of
estimates and the application of judgement, which is fundamental to
the completion of this condensed consolidated interim financial
information. There have been no significant changes to critical
estimates and judgements since the 4 April 2015 financial period
end.
Employee benefits
The present value of the Group's defined benefit pension
obligations depends on a number of actuarial assumptions. The
primary assumptions used include the discount rate applicable to
scheme liabilities, the long-term rate of inflation and estimates
of the mortality applicable to scheme members.
At each reporting date, and on a continuous basis, the Group
reviews the macro-economic, Company and scheme specific factors
influencing each of these assumptions, using professional advice,
in order to record the Group's ongoing commitment and obligation to
defined benefit schemes in accordance with IAS 19 (Revised). Key
assumptions used are mortality rates, discount rates and inflation
set with reference to bond yields. Each of the underlying
assumptions is set out in more detail in note 15.
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
In addition, the recognition of any defined benefit asset is
assessed in accordance with IFRIC 14.
Goodwill and other intangible assets
Impairment reviews in respect of infinite life intangible
assets, such as goodwill, are performed annually unless an event
indicates that an impairment review is necessary. Impairment
reviews in respect of finite life intangible assets are performed
when an event indicates that an impairment review is necessary.
Examples of such triggering events include a significant planned
restructuring, a major change in market conditions or technology,
expectations of future operating losses, or a significant reduction
in cash flows. The recoverable amounts of CGUs are determined based
on the higher of net realisable value and value in use
calculations. These calculations require the use of estimates.
The Group considers the impact of the assumptions used on the
calculations and conducts sensitivity analysis on the impairment
tests of the CGUs carrying values.
Acquired brands, trademarks and licences are considered to have
finite lives that range from 20 to 40 years for brands and
trademarks and 10 years for licences. The determination of the
useful lives takes into account certain quantitative factors such
as sales expectations and growth prospects, and also many
qualitative factors such as history and heritage, and market
positioning, hence the determination of useful lives are subject to
estimates and judgement.
Advertising and promotion costs
Sales rebates and discounts are accrued on each relevant
promotion or customer agreement and are charged to the statement of
profit or loss at the time of the relevant promotion as a deduction
from revenue. Accruals for each individual promotion or rebate
arrangement are based on the type and length of promotion and
nature of customer agreement. At the time an accrual is made the
nature and timing of the promotion is typically known. Areas of
estimation are sales volume/activity and the amount of product sold
on promotion.
For short term promotions, the Group performs a true up of
estimates where necessary on a monthly basis, using real time sales
information where possible and finally on receipt of a customer
claim which typically follows 1-2 months after the end of a
promotion. For longer term discounts and rebates the Group uses
actual and forecast sales to estimate the level of rebate. These
accruals are updated monthly based on latest actual and forecast
sales.
Expenditure on advertising is charged to the statement of profit
or loss when incurred, except in the case of airtime costs when a
particular campaign is used more than once. In this case they are
charged in line with the airtime profile.
Deferred tax
When assessing whether the recognition of a deferred tax asset
can be justified, and if so at what level, the directors take into
account the following:
-- Projected profits or losses included in the latest management
approved forecast and other relevant information that allow profits
chargeable to corporation tax to be derived.
-- The total level of recognised and unrecognised losses that
can be used to reduce future forecast taxable profits.
-- The period over which there is sufficient certainty that
profits can be made that would support the recognition of an
asset.
Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting, under
which the investment is initially recognised at cost and the
carrying amount is increased or decreased to recognise the Group's
share of the profit or loss of the investee after the date of
acquisition. Impairment reviews of the carrying amount of
investments in associates are performed when an event indicates
that an impairment review is necessary. The Group's share of profit
or loss is recognised in the statement of profit or loss.
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 Chief Executive
Officer and Chief Financial Officer as they are 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 Grocery segment primarily sells
savoury ambient food products and the Sweet Treats segment sells
sweet ambient food products. The International segment has been
aggregated within the Grocery segment for reporting purposes, in
accordance with the criteria set out in IFRS 8.
The CODM uses divisional contribution as the key measure of the
segments' results. Divisional contribution is defined as gross
profit after selling, marketing and distribution costs. Divisional
contribution is a consistent measure within the Group and reflects
the segments' underlying trading performance for the period under
evaluation.
The Group uses trading profit to review overall group
profitability. Trading profit is defined as operating profit before
amortisation and impairment of intangible assets, fair value
movements on foreign exchange and other derivative contracts,
restructuring costs, and net interest on pensions and
administrative costs.
The segment results for the 26 weeks ended 3 October 2015 and 4
October 2014, and the reconciliation of the segment measures to the
respective statutory items included in the consolidated financial
statements, are as follows:
Period ended 3 Oct 2015
------------------------------- --------------------------------------------------
Grocery Sweet Continuing
Treats operations
GBPm GBPm GBPm
------------------------------- -------------------- -------------- ------------
Revenue 247.4 93.8 341.2
------------------------------- -------------------- -------------- ------------
Divisional contribution 60.8 7.4 68.2
Group and corporate costs (17.9)
------------------------------- -------------------- -------------- ------------
Trading profit 50.3
Amortisation of intangible
assets (18.7)
Fair value movements on foreign exchange and
other derivative contracts 1.2
Restructuring costs (2.5)
Net interest on pensions
and administrative expenses (7.0)
------------------------------- -------------------- -------------- ------------
Operating profit 23.3
Finance cost (24.1)
Finance income 2.2
Fair value movements on interest rate
financial instruments 0.5
Share of loss from associates (7.0)
------------------------------- -------------------- -------------- ------------
Loss before taxation from
continuing operations (5.1)
------------------------------- -------------------- -------------- ------------
Depreciation (4.1) (3.6) (7.7)
------------------------------- -------------------- -------------- ------------
Period ended 4 Oct 2014
-------------------------------- --------------------------------------------
Grocery Sweet Continuing
Treats operations
GBPm GBPm GBPm
-------------------------------- -------------------- -------- ------------
Revenue 250.8 93.1 343.9
-------------------------------- -------------------- -------- ------------
Divisional contribution 59.3 4.8 64.1
Group and corporate costs (18.5)
-------------------------------- -------------------- -------- ------------
Trading profit 45.6
Amortisation of intangible
assets (18.9)
Fair value movements on foreign exchange
and other derivative contracts (0.2)
Restructuring costs (3.9)
Net interest on pensions
and administrative expenses (13.4)
-------------------------------- -------------------- -------- ------------
Operating profit before impairment and
loss on disposal of operations 9.2
Impairment of property, plant
and equipment (16.0)
Loss on disposal of operations (6.0)
-------------------------------- -------------------- -------- ------------
Operating loss (12.8)
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
Finance cost (39.0)
Finance income 1.1
Fair value movements on interest rate
financial instruments 1.3
Share of loss from associates (5.3)
-------------------------------- -------------------- -------- ------------
Loss before taxation from
continuing operations (54.7)
-------------------------------- -------------------- -------- ------------
Depreciation (3.4) (3.3) (6.7)
-------------------------------- -------------------- -------- ------------
Inter-segment transfers or transactions are entered into under
the same terms and conditions that would be available to unrelated
third parties.
5. Finance income and costs
Period Period
ended ended
3 Oct 4 Oct
2015 2014
GBPm GBPm
----------------------------------------- ------------------ -------
Interest payable on bank loans and
overdrafts (2.5) (3.4)
Interest payable on senior secured
notes (15.4) (16.2)
Interest payable on revolving facility (3.2) (2.5)
Interest payable on interest rate
financial instruments (0.7) (0.4)
Amortisation of debt issuance costs (2.3) (1.9)
----------------------------------------- ------------------ -------
(24.1) (24.4)
Write off of financing costs(1) - (14.6)
----------------------------------------- ------------------ -------
Total finance cost (24.1) (39.0)
----------------------------------------- ------------------ -------
Interest receivable on bank deposits 1.6 0.8
Other interest receivable 0.6 0.3
----------------------------------------- ------------------ -------
Total finance income 2.2 1.1
----------------------------------------- ------------------ -------
Fair value movements on interest
rate financial instruments 0.5 1.3
----------------------------------------- ------------------ -------
Net finance cost (21.4) (36.6)
----------------------------------------- ------------------ -------
(1) Relates to the write-off of debt issuance costs
relating to the Group's previous financing arrangements.
6. Taxation
The taxation credit on continuing operations for the 26 weeks
ended 3 October 2015 of GBP26.8m (2014: GBP5.6m) includes a credit
of GBP1.7m (2014: GBP5.6m) relating to the loss for the period,
which is based upon management's best estimate of the effective
annual income tax rate expected for the full financial year, and a
credit of GBP25.1m (2014: GBPnil) relating to the recognition of
previously unrecognised assets following a review of the overall
deferred tax asset and the level of taxable profits anticipated in
the future.
The taxation credit on discontinued operations for the 26 weeks
ended 4 October 2014 of GBP1.9m relates to a credit on the disposal
of the Bread business.
7. Earnings/(loss) per share
Basic earnings/(loss) per share has been calculated by dividing
the profit for the 26 weeks ended 3 October 2015 attributable to
owners of the parent of GBP21.5m (2014: GBP70.9m loss) by the
weighted average number of ordinary shares of the Company.
Period ended Period ended
3 Oct 2015 4 Oct 2014
------------------------- ---------------------------- ------------------------------------
Basic Dilutive Diluted Basic Dilutive Diluted
effect effect
of share of share
options options
------------------------- ------ ---------- -------- ----------- ---------- -----------
Continuing operations
Profit/(loss) after
tax (GBPm) 21.7 21.7 (49.1) (49.1)
Weighted average
number of shares (m) 825.7 26.6 852.3 817.2 - 817.2
------------------------- ------ ---------- -------- ----------- ---------- -----------
Earnings/(loss) per
share (pence) 2.6 (0.1) 2.5 (6.0) - (6.0)
------------------------- ------ ---------- -------- ----------- ---------- -----------
Discontinued operations
Loss after tax (GBPm) (0.2) (0.2) (21.8) (21.8)
Weighted average
number of shares (m) 825.7 26.6 852.3 817.2 - 817.2
------------------------- ------ ---------- -------- ----------- ---------- -----------
Loss per share (pence) - - - (2.7) - (2.7)
------------------------- ------ ---------- -------- ----------- ---------- -----------
Total
Profit/(loss) after
tax (GBPm) 21.5 21.5 (70.9) (70.9)
Weighted average
number of shares (m) 825.7 26.6 852.3 817.2 - 817.2
------------------------- ------ ---------- -------- ----------- ---------- -----------
Earnings/(loss) per
share (pence) 2.6 (0.1) 2.5 (8.7) - (8.7)
------------------------- ------ ---------- -------- ----------- ---------- -----------
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.
There is no dilutive effect of share options in the 26 weeks to
4 October 2014 as the Group made a loss for that period.
No adjustment is made to the profit/(loss) in calculating basic
and diluted earnings/(loss) per share.
Period Period
ended ended
3 Oct 4 Oct
2015 2014
Number Number
-------------------------------------------------- ------------ ------------------
Weighted average number of ordinary
shares for the purpose of basic earnings/(loss)
per share 825,741,256 817,196,222
Effect of dilutive potential ordinary
shares 26,585,640 -
-------------------------------------------------- ------------ ------------------
Weighted average number of ordinary
shares for the purpose of diluted
earnings/(loss) per share 852,326,896 817,196,222
-------------------------------------------------- ------------ ------------------
Adjusted earnings per share ("Adjusted EPS")
Adjusted earnings per share is defined as trading profit less
net regular interest payable, less a notional tax charge at 20.0%
(2014: 21.0%) 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, fair value movements on
interest rate financial instruments and other interest.
Trading profit and Adjusted EPS have been reported as the
directors believe these provide an alternative measure by which the
shareholders can better assess the Group's underlying trading
performance.
Period
ended
3 Oct
2015
-------------------------------------------- ------------
Continuing
operations
GBPm
-------------------------------------------- ------------
Operating profit 23.3
Net interest on pension and administrative
expenses 7.0
Fair value movements on foreign exchange
and other derivative contracts (1.2)
Amortisation of intangible assets 18.7
Restructuring costs 2.5
------------
Trading profit 50.3
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
Less net regular interest payable (22.5)
------------
Adjusted profit before tax 27.8
Notional tax at 20.0% (5.6)
-------------------------------------------- ------------
Adjusted profit after tax 22.2
Average shares in issue (m) 825.7
Adjusted EPS (pence) 2.7
-------------------------------------------- ------------
Net regular interest
Net finance cost (21.4)
Exclude fair value movements on interest
rate financial instruments (0.5)
Exclude other interest (0.6)
Net regular interest (22.5)
-------------------------------------------- ------------
Period
ended
4 Oct
2014
--------------------------------------------- ------------
Continuing
operations
GBPm
--------------------------------------------- ------------
Operating loss (12.8)
Impairment of property, plant and equipment 16.0
Loss on disposal of operations 6.0
------------
Operating profit before impairment and loss
on disposal of operations 9.2
Net interest on pension and administrative
expenses 13.4
Fair value movements on foreign exchange
and other derivative contracts 0.2
Amortisation of intangible assets 18.9
Restructuring costs 3.9
--------------------------------------------- ------------
Trading profit 45.6
Less net regular interest payable (23.6)
--------------------------------------------- ------------
Adjusted profit before tax 22.0
Notional tax at 21.0% (4.6)
--------------------------------------------- ------------
Adjusted profit after tax 17.4
Average shares in issue (m) 817.2
Adjusted EPS (pence) 2.1
--------------------------------------------- ------------
Net regular interest
Net finance cost (36.6)
Exclude fair value movements on interest
rate financial instruments (1.3)
Exclude other interest (0.3)
Exclude write-off of financing costs 14.6
Net regular interest (23.6)
--------------------------------------------- ------------
8. Discontinued operations
Income and expenditure incurred on discontinued operations for
the 26 weeks ended 3 October 2015 and 4 October 2014 comprises the
Bread business, in light of the completion of the sale of the
Group's majority share in this business on 26 April 2014.
Period Period
ended ended
3 Oct 4 Oct
2015 2014
GBPm GBPm
------------------------------------- -------------------- -------
Revenue - 31.3
Operating expenses (0.2) (34.2)
------------------------------------- -------------------- -------
Operating loss before impairment
and loss on disposal of operations (0.2) (2.9)
Impairment - (11.7)
Loss on disposal of operations - (8.6)
------------------------------------- -------------------- -------
Operating loss (0.2) (23.2)
Finance cost - (0.5)
-------------------- -------
Loss before taxation (0.2) (23.7)
Taxation credit - 1.9
------------------------------------- -------------------- -------
Loss after taxation on discontinued
operations for the period (0.2) (21.8)
------------------------------------- -------------------- -------
During the 26 weeks ended 3 October 2015, discontinued
operations contributed a GBP1.0m outflow (2014: GBP7.2m inflow) to
the Group's operating cash flows, GBPnil (2014: GBP2.0m inflow) to
investing activities and GBPnil (2014: GBPnil) to financing
activities.
9. Disposal of businesses
On 26 April 2014 the Group completed the transaction with the
Gores Group which led to the disposal of the Group's majority share
in the Bread business. The Bread business is classified as a
discontinued operation for the period up to the date of sale and
the loss on disposal is included in discontinued operations. The
investment in associates of GBP14.4m was recognised at the fair
value of the 49% retained share in the Bread business, based on the
initial cash consideration of GBP15.0m being received for 51% of
the business.
On 28 June 2014 the Group completed the transaction with
Specialty Powders Holdings Limited which led to the disposal of the
Group's majority share in the Powdered Beverages and Desserts
business. This is not a discontinued operation as it was previously
integrated and reported as part of the Grocery business. The loss
on disposal is included within continuing operations. The
investment in associates and loans to associates totalling GBP13.1m
were recognised at the fair value of the assets that transferred to
the associate as part of the disposal transaction.
Period
ended
4 Oct
2014
------------------------------------ ------- --------------
Bread Powdered
Beverages
and Desserts
GBPm GBPm
------------------------------------ ------- --------------
Net cash flow arising on disposal:
- Initial consideration 15.0 -
- Working capital adjustments and
transaction costs (12.7) (0.7)
Net cash inflow/(outflow) for the
period 2.3 (0.7)
------------------------------------ ------- --------------
Property, plant and equipment 3.5 13.9
Inventories 22.5 4.5
Trade and other receivables 0.6 -
Trade and other payables (1.3) -
------------------------------------ ------- --------------
Net assets disposed 25.3 18.4
------------------------------------ ------- --------------
Investments in associates 14.4 13.1
Loss on disposal before tax (8.6) (6.0)
------------------------------------ ------- --------------
10. Property, plant and equipment
During the 26 weeks ended 4 October 2014 an impairment charge of
GBP16.0m was recognised against property, plant and equipment
relating to a reduction in the recoverable value of certain assets
in the Grocery business. There were no impairments to property,
plant and equipment in the 26 weeks ended 3 October 2015.
11. Investment in associates
The Group disposed of its majority interest in the Bread
business and Powdered Beverages and Desserts business in the 26
weeks ended 4 October 2014, as disclosed in note 9. The Group's 49%
retained interest in the share capital of these businesses was
recognised as an investment in associates and the carrying value of
these investments are given in the table below.
The Group issued a loan note to Hovis Limited for GBP15.7m in
the 26 weeks ended 4 October 2014. As part of the Powdered
Beverages and Desserts business disposal transaction, the Group
holds a promissory note from Knighton Foods of GBP3.5m. These loans
were reclassified to investments in associates during the period,
in order to reflect the fact that in substance they form part of
the carrying value of the Group's respective investments, in
accordance with "IAS 28 Investments in Associates and Joint
Ventures". The carrying value of investments at 3 October 2015
includes interest accrued on these loans to date.
Hovis Limited Knighton Total
Foods Limited
GBPm GBPm GBPm
--------------------- -------------- --------------- --------------------------
At 1 January 2014 - - -
Additions 30.1 13.1 43.2
Interest receivable 1.4 0.2 1.6
Share of loss from
associates (8.9) (0.7) (9.6)
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
At 4 April 2015 22.6 12.6 35.2
Interest receivable 0.9 0.2 1.1
Share of loss from
associates (6.8) (0.2) (7.0)
--------------------- -------------- --------------- --------------------------
At 3 October 2015 16.7 12.6 29.3
--------------------- -------------- --------------- --------------------------
12. Bank and other borrowings
As at As at
3 Oct 4 Apr
2015 2015
GBPm GBPm
--------------------------------- -------- --------
Current:
Bank overdrafts (18.1) (23.0)
Securitisation facility - (19.7)
Transaction costs 0.5 0.7
--------------------------------- -------- --------
Total borrowings due within one
year (17.6) (42.0)
--------------------------------- -------- --------
Non-current:
Revolving credit facility (112.0) (113.0)
Transaction costs 7.6 8.3
--------
(104.4) (104.7)
Senior secured notes (500.0) (500.0)
Transaction costs 15.6 17.1
--------------------------------- --------
(484.4) (482.9)
--------------------------------- -------- --------
Total borrowings due after more
than one year (588.8) (587.6)
Total bank and other borrowings (606.4) (629.6)
--------------------------------- -------- --------
Revolving credit facility
The revolving credit facility of GBP272m is due to mature in
March 2019 and attracts a bank margin in the range of 2.50% to
4.00% above LIBOR, depending on the Group's leverage ratio. Banking
covenants of net debt/EBITDA and EBITDA/interest are in place and
are tested biannually.
The Group entered into a three year floating to fixed interest
rate swap in June 2014, with a nominal value of GBP150m amortising
to GBP50m, attracting a swap rate of 1.44%.
Securitisation facility
The debtor's securitisation facility is secured against the
Group's trade receivables. It is a three year programme maturing in
December 2016, with a GBP80m facility priced at 2.75% above the
cost of commercial paper.
Senior secured notes
The senior secured notes totalling GBP500m are split between
fixed and floating tranches. The fixed note of GBP325m matures in
March 2021 and attracts an interest rate of 6.50%. The floating
note of GBP175m matures in March 2020 and attracts an interest rate
of 5.00% above LIBOR.
13. Financial instruments
The following table shows the carrying amounts and fair values
of the Group's financial assets and financial liabilities. Fair
value is the amount at which a financial instrument could be
exchanged in an arm's length transaction between informed and
willing parties, other than a forced or liquidation sale and
excludes accrued interest. Set out below is a summary of methods
and assumptions used to value each category of financial
instrument.
As at 3 Oct 2015 As at 4 Apr
2015
Carrying Fair Carrying Fair
amount value amount value
GBPm GBPm GBPm GBPm
------------------------------------- ---------------------- -------- --------- --------
Loans and receivables:
Cash and cash equivalents 21.1 21.1 44.7 44.7
Trade and other receivables 114.2 114.2 105.7 105.7
Financial assets at fair value through profit or
loss:
Derivative financial instruments
- Forward foreign currency
exchange contracts 0.4 0.4 - -
Financial liabilities at fair value through profit
or loss:
Derivative financial instruments
- Forward foreign currency
exchange contracts - - (0.9) (0.9)
- Commodity and energy derivatives (1.2) (1.2) (1.1) (1.1)
- Interest rate swaps (1.2) (1.2) (1.7) (1.7)
Financial liabilities at amortised cost:
Trade and other payables (210.3) (210.3) (207.5) (207.5)
Senior secured notes (500.0) (450.2) (500.0) (497.9)
Senior secured credit facility
- revolving (112.0) (112.0) (113.0) (113.0)
Bank overdraft (18.1) (18.1) (23.0) (23.0)
Securitisation facility - - (19.7) (19.7)
------------------------------------- ---------------------- -------- --------- --------
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 3 Oct 2015 As at 4 Apr
2015
Level 1 Level Level Level
2 1 2
GBPm GBPm GBPm GBPm
------------------------------------------------- ------- --------- -------
Financial assets at fair value through profit or
loss:
Derivative financial instruments
- Forward foreign currency - 0.4 - -
exchange contracts
Financial liabilities at fair value through profit
or loss:
Derivative financial instruments
- Forward foreign currency
exchange contracts - - - (0.9)
- Commodity derivatives - (1.2) - (1.1)
- Interest rate swaps - (1.2) - (1.7)
Financial liabilities at amortised cost:
Senior secured notes (450.2) - (497.9) -
------------------------------ ------------------ ------- --------- -------
14. Provisions for liabilities and charges
As at As at
3 Oct 4 Apr
2015 2015
GBPm GBPm
------------- ------------------- --------
Non-current (47.7) (51.6)
Current (8.6) (8.6)
------------- ------------------- --------
Total (56.3) (60.2)
------------- ------------------- --------
Total provisions for liabilities and charges of GBP56.3m at 3
October 2015 (4 April 2015: GBP60.2m) comprise restructuring
provisions of GBP23.6m (4 April 2015: GBP25.9m) which primarily
relate to provisions for non-operational leasehold properties, and
other provisions of GBP32.7m (4 April 2015: GBP34.3m) which
primarily relate to insurance claims, dilapidations against
leasehold properties and environmental liabilities.
15. Retirement benefit schemes
Defined benefit schemes
The Group operates a number of defined benefit schemes under
which current and former employees have built up an entitlement to
pension benefits on their retirement. These are as follows:
(a) The Premier schemes, which comprise:
Premier Foods Pension Scheme ("PFPS")
Premier Grocery Products Pension Scheme ("PGPPS")
Premier Grocery Products Ireland Pension Scheme ("PGPIPS")
Chivers 1987 Pension Scheme
Chivers 1987 Supplementary Pension Scheme.
(b) The RHM schemes, which comprise:
RHM Pension Scheme
Premier Foods Ireland Pension Scheme
The most recent full actuarial valuation of the PFPS, the PGPPS
and RHM pension schemes was carried out on 31 March 2013 / 5 April
2013 to establish ongoing funding arrangements. Deficit recovery
plans have been agreed with the Trustees of each of the schemes.
Actuarial valuations for the schemes based in Ireland were carried
out in 2014.
The exchange rates used to translate the overseas Euro based
schemes are GBP1.00 = 1.3893 Euros for the average rate during the
period, and GBP1.00 = 1.3540 Euros for the closing position at 3
October 2015.
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
At the balance sheet date, the combined principal actuarial
assumptions used for all the schemes were as follows:
Premier RHM schemes
schemes
At 3 October 2015:
Discount rate 3.70% 3.70%
Inflation - RPI 3.10% 3.10%
Inflation - CPI 2.00% 2.00%
Expected salary increases n/a n/a
Future pension increases 2.05% 2.05%
---------------------------- --------- ------------
At 4 April 2015:
Discount rate 3.30% 3.30%
Inflation - RPI 3.00% 3.00%
Inflation - CPI 1.90% 1.90%
Expected salary increases n/a n/a
Future pension increases 2.00% 2.00%
---------------------------- --------- ------------
The fair values of plan assets split by type of asset are as
follows:
Premier schemes % of total % of total % of total
RHM schemes Total
GBPm % GBPm % GBPm
----------------------------- ---------------- ----------- -------------- ----------- -------- -----------
Assets with a quoted price in an active market at 3 October 2015:
UK equities 1.6 0.3 - - 1.6 -
Global equities 17.5 3.0 359.7 10.2 377.2 9.2
Government bonds 19.5 3.4 483.5 13.7 503.0 12.2
Corporate bonds - - 179.9 5.1 179.9 4.4
Property 8.1 1.4 290.7 8.2 298.8 7.3
Absolute return products 395.3 68.4 910.9 25.7 1,306.2 31.6
Cash 4.9 0.8 153.1 4.3 158.0 3.8
Other 131.1 22.7 - - 131.1 3.2
Assets without a quoted price in an active market at 3 October 2015:
Infrastructure funds - - 217.7 6.1 217.7 5.3
Swaps - - 596.2 16.8 596.2 14.5
Private equity - - 246.1 7.0 246.1 6.0
Other - - 102.6 2.9 102.6 2.5
----------------------------- ---------------- ----------- -------------- ----------- -------- -----------
Fair value of scheme assets
as at 3 October 2015 578.0 100 3,540.4 100 4,118.4 100
----------------------------- ---------------- ----------- -------------- ----------- -------- -----------
Assets with a quoted price in an active market at 4 April 2015:
UK equities 0.9 0.1 51.7 1.4 52.6 1.2
Global equities 21.4 3.5 274.5 7.5 295.9 7.0
Government bonds 21.4 3.5 526.1 14.5 547.5 12.9
Corporate bonds 4.4 0.7 325.4 8.9 329.8 7.8
Property 7.5 1.3 252.5 7.0 260.0 6.1
Absolute return products 391.0 63.8 941.9 25.9 1,332.9 31.4
Cash 13.8 2.3 280.6 7.7 294.4 6.9
Other 152.1 24.8 - - 152.1 3.6
Assets without a quoted price in an active market at 4 April 2015:
Infrastructure funds - - 196.6 5.4 196.6 4.6
Swaps - - 430.0 11.9 430.0 10.1
Private equity - - 250.9 6.9 250.9 5.9
Other - - 105.8 2.9 105.8 2.5
----------------------------- ---------------- ----------- -------------- ----------- -------- -----------
Fair value of scheme assets
as at 4 April 2015 612.5 100 3,636.0 100 4,248.5 100
----------------------------- ---------------- ----------- -------------- ----------- -------- -----------
The schemes invest in interest rate and inflation swaps to
protect from fluctuations in interest and inflation.
The amounts recognised in the balance sheet arising from the
Group's obligations in respect of its defined benefit schemes are
as follows:
Premier RHM schemes
schemes Total
GBPm GBPm GBPm
------------------------------------- ---------- ------------ ----------
At 3 October 2015
Present value of funded obligations (994.0) (3,157.2) (4,151.2)
Fair value of plan assets 578.0 3,540.4 4,118.4
------------------------------------- ---------- ------------ ----------
(Deficit)/surplus in schemes (416.0) 383.2 (32.8)
------------------------------------- ---------- ------------ ----------
At 4 April 2015
Present value of funded obligations (1,065.9) (3,394.4) (4,460.3)
Fair value of plan assets 612.5 3,636.0 4,248.5
------------------------------------- ---------- ------------ ----------
(Deficit)/surplus in schemes (453.4) 241.6 (211.8)
------------------------------------- ---------- ------------ ----------
The aggregate deficit has decreased by GBP179.0m during the 26
weeks ended 3 October 2015 (15 months ended 4 April 2015: GBP391.5m
decrease) primarily due to an increase in the discount rate
assumption.
Changes in the present value of the defined benefit obligation
were as follows:
Premier RHM schemes
schemes Total
GBPm GBPm GBPm
---------------------------- ---------- ------------ ----------
Defined benefit obligation
at 1 January 2014 (916.9) (2,904.8) (3,821.7)
Current service cost (0.1) - (0.1)
Interest cost (49.4) (156.5) (205.9)
Remeasurement losses (149.4) (521.5) (670.9)
Exchange differences 6.6 3.5 10.1
Benefits paid 43.3 184.9 228.2
Defined benefit obligation
at 4 April 2015 (1,065.9) (3,394.4) (4,460.3)
Interest cost (16.8) (54.7) (71.5)
Remeasurement gains 71.4 224.7 296.1
Exchange differences (0.3) (0.2) (0.5)
Benefits paid 17.6 67.4 85.0
---------------------------- ---------- ------------ ----------
Defined benefit obligation
at 3 October 2015 (994.0) (3,157.2) (4,151.2)
---------------------------- ---------- ------------ ----------
Changes in the fair value of plan assets were as follows:
Premier RHM schemes
schemes Total
GBPm GBPm GBPm
--------------------------------- ------- ------------ --------
Fair value of plan assets
at 1 January 2014 531.4 2,687.0 3,218.4
Interest income on plan assets 28.5 145.4 173.9
Remeasurement gains 81.7 968.5 1,050.2
Administrative costs (7.8) (8.1) (15.9)
Contributions by employer 28.2 31.1 59.3
Exchange differences (6.2) (3.0) (9.2)
Benefits paid (43.3) (184.9) (228.2)
--------------------------------- ------- ------------ --------
Fair value of plan assets
at 4 April 2015 612.5 3,636.0 4,248.5
Interest income on plan assets 9.4 58.8 68.2
Remeasurement losses (29.7) (86.6) (116.3)
Administrative costs (1.3) (2.4) (3.7)
Contributions by employer 4.2 1.8 6.0
Exchange differences 0.5 0.2 0.7
Benefits paid (17.6) (67.4) (85.0)
--------------------------------- ------- ------------ --------
Fair value of plan assets
at 3 October 2015 578.0 3,540.4 4,118.4
--------------------------------- ------- ------------ --------
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 02:00 ET (07:00 GMT)
Premier Foods (LSE:PFD)
Historical Stock Chart
From Aug 2024 to Sep 2024
Premier Foods (LSE:PFD)
Historical Stock Chart
From Sep 2023 to Sep 2024
