TIDMPFD TIDMIRSH
RNS Number : 5084W
Premier Foods plc
15 November 2017
15 November 2017
Premier Foods plc
Half year results for the 26 weeks ended 30 September
2017
Solid strategic progress in first half of the year
Headline results FY17/18 FY16/17 Change
H1 H1 (%)
-------------------------- -------- -------- -------
Revenue (GBPm) 353.3 348.0 +1.5%
Trading profit(1) (GBPm) 48.0 48.0 -
Adjusted profit before
tax(4) (GBPm) 26.4 26.3 +0.5%
Adjusted earnings per
share(6) (pence) 2.56 2.54 +0.9%
Net debt(8) (GBPm) (535.3) (556.0) +3.7%
Statutory measures FY17/18 FY16/17 Change
H1 H1 (%)
-------------------------- -------- -------- -------
Operating profit (GBPm) 22.5 22.0 +2.3%
Profit/(loss) after
taxation (GBPm) 0.3 (55.6) -
Basic earnings/(loss)
per share (pence) 0.0 (6.7) -
Headlines
-- Half year revenue up +1.5%; Q2 revenue up +6.2%
-- Return to volume driven revenue growth in Q2
-- International revenue(7) increased +23% in H1
-- Over 40% of Q2 revenue growth from Nissin and Mondelez International strategic partnerships
-- Trading profit of GBP48.0m in line with comparative period
-- Adjusted profit before tax up +0.5% to GBP26.4m
-- Statutory profit after tax GBP0.3m; basic earnings per share 0.0pence
-- Net debt GBP535.3m; GBP20.7m improvement on last year
Gavin Darby, Chief Executive Officer
-------------------------------------
"We are pleased to report a return to revenue growth of +1.5% in
the first half of the year. A key highlight was our strong
performance in the second quarter, with volume driven revenue up
+6.2% after a challenging first quarter. Our International business
continues to go from strength to strength and saw revenue growth of
+23% in the first half of the year."
"Our Strategic partnerships with Nissin and Mondelez
International are working very well, together delivering over 40%
of our revenue growth in the second quarter. We completed the
signing of the new Mondelez International Global Strategic
Partnership in the first half of the year and through our
partnership with Nissin, Batchelors is now the fastest growing
major brand in our portfolio following the launch this year of
convenient pot format products such as Super Noodle Pots."
"The cost efficiency programme we launched earlier this year is
on track to deliver the expected benefits. We completed the issue
of a new GBP210m high yield bond in June and our Net debt was
GBP21m lower than the same point last year; a little ahead of our
plans. Overall, we continue to expect the business to make progress
in the second half of the year and our expectations for the full
year remain unchanged."
Non-GAAP measures above are defined and reconciled to statutory
measures throughout
A presentation to investors and analysts will take place today,
15 November 2017, at 9:00am GMT. The presentation will be webcast
at www.premierfoods.co.uk/investors/investor-centre. A recording of
the webcast will be available on the Company's website later in the
day.
A conference call for bond investors and analysts will take
place today, 15 November 2017, at 1:30pm GMT. Dial in details are
outlined below:
Telephone: 0800 376 7922 (UK toll free)
+44 20 7192 8000 (standard international
access)
Conference ID: 96085488
A factsheet of the Preliminary results is available at:
www.premierfoods.co.uk/investors/results-centre
A Premier Foods image gallery is available using the following
link:
www.premierfoods.co.uk/media/image-gallery/
For further information, please contact:
Institutional investors
and analysts
Alastair Murray, Chief
Financial Officer +44 (0) 1727 815 850
Richard Godden, Director
of Investor Relations +44 (0) 1727 815 850
Media enquiries:
Marisa Fitch, Head of Corporate
Affairs +44 (0) 1727 815 850
Maitland +44 (0) 20 7379 5151
Sundeep Tucker
Tom Eckersley
- Ends -
This announcement may contain "forward-looking statements" that
are based on estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements are all statements other
than statements of historical fact or statements in the present
tense, and can be identified by words such as "targets", "aims",
"aspires", "assumes", "believes", "estimates", "anticipates",
"expects", "intends", "hopes", "may", "would", "should", "could",
"will", "plans", "predicts" and "potential", as well as the
negatives of these terms and other words of similar meaning. Any
forward-looking statements in this announcement are made based upon
Premier Foods' estimates, expectations and beliefs concerning
future events affecting the Group and subject to a number of known
and unknown risks and uncertainties. Such forward-looking
statements are based on numerous assumptions regarding the Premier
Foods Group's present and future business strategies and the
environment in which it will operate, which may prove not to be
accurate. Premier Foods cautions that these forward-looking
statements are not guarantees and that actual results could differ
materially from those expressed or implied in these forward-looking
statements. Undue reliance should, therefore, not be placed on such
forward-looking statements. Any forward-looking statements
contained in this announcement apply only as at the date of this
announcement and are not intended to give any assurance as to
future results. Premier Foods will update this announcement as
required by applicable law, including the Prospectus Rules, the
Listing Rules, the Disclosure and Transparency Rules, London Stock
Exchange and any other applicable law or regulations, but otherwise
expressly disclaims any obligation or undertaking to update or
revise any forward-looking statement, whether as a result of new
information, future developments or otherwise.
Financial results
------------------
Revenue
Group revenue (GBPm) Grocery Sweet Group
Treats
Branded 214.7 80.7 295.4
Non-branded 40.3 17.6 57.9
-------- -------- -------
Total 255.0 98.3 353.3
% change
Branded +0.9% (2.3%) (0.0%)
Non-branded +7.4% +17.0% +10.1%
-------- -------- -------
Total +1.9% +0.7% +1.5%
Group revenue for the 26 weeks ended 30 September 2017 was
GBP353.3m, an increase of 1.5% on the prior period. Branded revenue
was in line with last year at GBP295.4m while Non-branded revenue
increased by 10.1% to GBP57.9m.
In the second quarter of the year, Group revenue increased by
+6.2% to GBP183.2m compared to the equivalent quarter a year ago.
Branded revenue increased by +5.7% to GBP152.3m and Non-branded
revenue grew by +8.9% to GBP30.9m. Following weaker Q1 trading, the
Group's largest brands recovered in the second quarter to record
significantly improved performances in terms of both volume and
revenue.
Group revenues have been supported in the first half of the year
by a combination of benefits from the Group's strategic
partnerships with Nissin and Mondelez International. In the second
quarter, 44% of the Group's revenue growth reflected benefits
obtained through these two strategic partnerships, including
Batchelors Super Noodle Pots, Soba Noodles and Cadbury growth in
International.
The Grocery business unit reported Half year revenue of
GBP255.0m, up +1.9% on the same period a year ago.
Branded revenues grew by +0.9% to GBP214.7m and Non-branded
revenue increased by +7.4% to GBP40.3m. In the second quarter,
Grocery revenue grew +9.7%, with Branded revenue ahead +10.5% and
Non-branded revenue increasing +6.1%.
As the Group expected, and as previously reported, the first
quarter saw weaker trading in its Grocery brands. Although some
brands gained market share, revenues declined reflecting lower
overall market volumes partly due to a warmer June, lower
promotional effectiveness particularly in the Desserts category and
a move to more normalised levels of trade investment in non-retail
channels.
The second quarter displayed a significantly stronger trajectory
with a return to volume and revenue growth in many of the Group's
major brands. One of the major contributors to Grocery branded
revenue growth in the half was from Batchelors, which grew +7.8% in
the period and has also increased its category share by nearly two
percentage points over the past year. As commented previously, this
was supported significantly by the launch earlier this year of the
Batchelors Super Noodles Pot product, a product range closely
aligned to the consumer trend of snacking and on the go eating.
This product launch was accelerated by leveraging the advanced
supply chain capabilities of the Group's strategic partner, Nissin.
The Batchelors brand has also benefitted substantially from the
launch of Pasta 'n' Sauce pots, another range of convenient quick
meals perfectly suited to today's time conscious consumer.
Bisto, the Group's second largest brand by revenue, performed
consistently well during the half, delivering volume and revenue
growth and also delivering share gains. Oxo volumes and revenue
were up significantly in the second quarter following lower
category sales in the first quarter. Angel Delight, one of the
Group's smaller and historically less heavily invested brands, grew
by 30% in the period, benefitting from the launch of convenient
ready to eat pots.
The Grocery business has been impacted in recent quarters by
changing retailer promotional strategies. The Group has largely
annualised the effect of these changes and for some customers have
seen the gradual return of multi-buy promotional activities which
are generally beneficial to delivering volume growth.
Grocery Non-branded revenue increased by GBP2.8m in the period
to GBP40.3m. New contract wins from both retail and discounter
channels, and to a lesser extent, some revenue growth at Knighton
Foods contributed to this growth.
Sweet Treats delivered revenue growth of 0.7% in the first half
of the year to GBP98.3m. Branded sales were GBP1.9m lower at
GBP80.7m while Non-branded revenue continued its strong trajectory,
growing by 17.0% to GBP17.6m.
Cadbury cake revenue in the Sweet Treats business unit was
marginally ahead of the prior year and reached its highest ever
value UK market share of 8.4% in the period, according to IRI.
Total Mr Kipling revenue was slightly lower than the prior year,
although momentum is building in its margin-enhancing cake on the
go range with growth of +55% in the period.
The growth in Non-branded Sweet Treats revenues continued the
same pattern as seen in the prior year, with new contract wins
across a broad range of retail customers in various cake
sub-categories. Additionally, the business is benefitting from the
growth of the hard discounter channel with the continuation of new
retail space.
The International business unit continues to perform very
strongly and in line with the Group's medium term expectations. In
the first half of the year, revenues grew +23% on a constant
currency basis and were up +30% in the second quarter. Over the
last two years, International revenues have progressed at a
compound annual growth rate of 18%, and have posted twelve
successive quarters of year on year growth in the last three
years.
A key part of the business unit's success to date is due to the
growth of Mr Kipling and Cadbury cake in Australia. Building on
this, the Group has recently entered the New Zealand market for the
first time with a range of Mr Kipling and Cadbury cakes.
Additionally, Sharwood's, the Group's third largest brand in
international markets, is expected to benefit from further
expansion in the USA over the medium term through increased
distribution in a major USA retailer.
An important element of the International business's strategy is
the transition from a predominantly sales and distribution model to
one of building brands in some of its key international markets. In
FY16/17 the Sharwood's brand benefitted from a targeted social
media marketing campaign in Australia and this is being followed up
in the current year by similar marketing activity for Mr Kipling,
also in Australia. These are the first such marketing campaigns the
Group has undertaken in its international markets and are central
to support its growth ambitions.
Trading profit
GBPm FY17/18 FY16/17 Change
H1 H1
Divisional contribution(2)
Grocery 51.4 56.2 (8.5%)
Sweet Treats 11.5 6.6 +74.2%
-------- -------- -------
Total 62.9 62.8 +0.2%
Group & corporate
costs (14.9) (14.8) (1.2%)
-------- -------- -------
Trading profit(1) 48.0 48.0 0.0%
The Group reported Half year Trading profit of GBP48.0m, in line
with the prior year. Divisional contribution was GBP0.1m higher
than the prior year period at GBP62.9m, of which GBP51.4m was
generated from the Grocery business and GBP11.5m from Sweet Treats.
Group & corporate costs were broadly in line with the prior
period at GBP14.9m.
Grocery Divisional contribution benefitted from increased
volumes in the first half of the year from the Bisto, Batchelors,
Loyd Grossman and Sharwood's brands, although this was offset by
mix effects with higher sales of lower margin products such as
Non-branded flour. As previously commented, the Group has
experienced material input cost inflation in the past year from
both commodity cost increases and the devaluation of Sterling. The
Group takes a blended approach to managing these cost increases,
managing its own efficiencies, adjusting promotional mechanics and
formats where appropriate and finally looking at limited price
increases where these cannot be avoided.
The Group undertakes a collaborative approach when working with
its customers, and accordingly this process took longer than
expected. As a result, while Grocery Divisional contribution was
lower in the first quarter of the year, the second quarter saw a
return to more normal % margin levels following the conclusion of
this process. Input cost inflation is forecast to continue into the
second half of the year, albeit at a lower rate. As a result the
Group will continue to keep its cost recovery plans under close
review.
Grocery also saw reduced overhead recoveries in some
manufacturing sites in the period. In particular, the transition to
higher promotional price points for the core Ambrosia range
resulted in short-term reductions in volumes which in turn impacted
manufacturing overhead recoveries at the Group's Lifton site.
Entering the second half, promotional volumes in Ambrosia are
recovering and manufacturing recoveries have returned to normal
levels. A decline in volumes and lower efficiencies during the
first half of the year at Knighton Foods materially impacted
Divisional contribution.
During the year, the Group has embarked on a major
transformation of its warehousing and distribution operations. This
programme is planned to consolidate all the Group's logistics
operations at one single location in Tamworth, central England.
While the first phase of the transition has experienced some
initial implementation challenges, these are now substantially
resolved and the plan to deliver the programme benefits remains on
track.
In Sweet Treats, Divisional contribution was +GBP4.9m higher
than the comparative period at GBP11.5m. This was due to phasing of
consumer marketing investment and savings from new and ongoing
lower levels of SG&A costs. These SG&A savings in Sweet
Treats are expected to continue into the second half of the
year.
As previously stated, the Group expects to invest the majority
of its consumer marketing spend in the second half of the financial
year. Activity will be particularly focused on the third quarter -
the Group's key trading period, and hence the time of year when we
are able to deliver the best return on investment.
Operating profit
GBPm FY17/18 FY16/17 Change
H1 H1
Adjusted EBITDA(3) 56.1 56.1 0.0%
Depreciation (8.1) (8.1) 0.0%
Trading profit 48.0 48.0 0.0%
Amortisation of
intangible assets (18.0) (19.0) +5.3%
Fair value movements
on foreign exchange
and derivatives 0.9 1.0 +10.0%
Restructuring costs (3.1) (7.1) +56.3%
Net interest on
pensions and administrative
expenses (1.0) (0.9) (11.1%)
-------- -------- --------
Operating profit
before impairment 26.8 22.0 +21.8%
Impairment of goodwill (4.3) - -
-------- -------- --------
Operating profit 22.5 22.0 +2.3%
-------- -------- --------
Adjusted EBITDA in the first half of the year was GBP56.1m and
depreciation was GBP8.1m, both of which were in line with the
comparative period.
Operating profit increased by GBP0.5m to GBP22.5m in the period,
and while restructuring costs and amortisation of intangible assets
were lower in the period, these were partly offset by an impairment
of goodwill related to Knighton Foods. Restructuring costs in the
Half year of GBP3.1m related to charges associated with the Group's
logistics restructuring programme. The comparative period included
restructuring costs of GBP7.1m, a large proportion of which were
charges related to corporate activity. An impairment charge of
GBP4.3m in the period related to the write off of Knighton Foods
goodwill.
Net interest on pensions and administrative expenses was GBP1.0m
in the period, slightly higher than the comparative period. This
comprised administrative expenses incurred of GBP2.5m, partly
offset by a net interest credit of GBP1.5m owing to an opening
combined pension schemes surplus.
Finance costs
GBPm FY17/18 FY16/17 Change
H1 H1
Senior secured notes
interest 15.9 15.3 (4.0%)
Bank debt interest 3.6 4.4 18.6%
19.5 19.7 0.9%
Amortisation of debt
issuance costs 2.1 2.0 (2.9%)
-------- -------- --------
Net regular interest(5) 21.6 21.7 0.6%
-------- -------- --------
Fair value movements
on interest rate
financial instruments (0.3) (0.2) (59.9%)
Write-off of financing
costs 4.0 0.1 -
Discount unwind (2.0) 8.6
Other interest 0.4 0.5 8.6%
-------- -------- --------
Net finance cost 23.7 30.7 22.9%
-------- -------- --------
Net regular interest for the Half year was GBP21.6m, a decrease
of GBP0.1m compared to the prior period. As expected, the largest
element of finance costs was interest due to holders of the Group's
senior secured notes of GBP15.9m. Bank debt interest of GBP3.6m was
GBP0.8m lower in the period due to lower levels of average debt and
slightly lower LIBOR levels compared to the prior period.
Net finance cost was GBP23.7m for the Half year; GBP7.0m lower
than the comparative period. In the prior year, a GBP8.6m discount
unwind charge relating to long term property provisions held by the
Group due to a reduction in gilt yields was reflected in the
reported Net finance cost of GBP30.7m. In the current period, an
increase in gilt yields resulted in a benefit of GBP2.0m. Write-off
of financing costs of GBP4.0m in the Half year related to the write
off of transaction costs associated with the issue in 2014 of six
year senior secured floating rate notes due March 2020, which were
repaid during the period.
Taxation
The taxation credit on continuing operations for the period
ended 30 September 2017 of GBP1.5m compares to a charge of GBP46.9m
in FY16/17 H1 and included a deferred tax movement of GBP0.9m based
upon management's best estimate of the effective annual income tax
rate expected for the full financial year and a credit largely
relating to the repayment of Irish taxation paid in prior
years.
Deferred tax assets at 30 September 2017 were GBP30.8m compared
to GBP32.4m at 1 April 2017. Deferred tax assets relating to
brought forward losses were approximately GBP54m which equate to
around GBP320m of future taxable profits.
The corporation tax rate and deferred tax rate applied in
calculations are 19.0% and 17.0% respectively.
Earnings per share
Statutory earnings FY17/18 FY16/17 Change
per share (GBPm) H1 H1
Operating profit 22.5 22.0 +2.3%
Net finance cost (23.7) (30.7) +22.9%
Loss before taxation (1.2) (8.7) +86.2%
Taxation credit/(charge) 1.5 (46.9) -
-------- -------- -------
Profit/(Loss) after
taxation 0.3 (55.6) -
Average shares in
issue 834.2 827.7
-------- -------- -------
Basic earnings/(loss)
per share (pence) 0.0 (6.7) -
A loss before tax of (GBP1.2m) was reported in the first half of
the year, compared to a loss before tax in the comparative period
of (GBP8.7m). After a taxation credit of GBP1.5m in the period,
profit after taxation was GBP0.3m, which resulted in a neutral
basic earnings per share in pence.
Adjusted earnings FY17/18 FY16/17 Change
per share (GBPm) H1 H1
Trading profit 48.0 48.0 0.0%
Less: Net regular
interest (21.6) (21.7) +0.6%
-------- -------- -------
Adjusted profit before
tax 26.4 26.3 +0.5%
Less: Notional tax
(19%/20%) (5.0) (5.3) 4.6%
-------- -------- -------
Adjusted profit after
tax 21.4 21.0 +1.7%
Average shares in
issue (millions) 834.2 827.7
Adjusted earnings
per share (pence) 2.56 2.54 +0.9%
Adjusted profit before tax for the Half year was GBP26.4m,
+GBP0.1m ahead of the comparative period. This was due to a
slightly lower net regular interest charge compared to the previous
period. Adjusted profit after tax was GBP21.4m after deducting a
notional 19.0% tax charge, an increase of GBP0.4m compared to
FY16/17 H1. Based on average shares in issue of 834.2 million
shares, adjusted earnings per share in the period was 2.56 pence,
+0.9% higher than the 2.54 pence reported in the previous Half
year.
Free cash flow
GBPm FY17/18 FY16/17
H1 H1
Trading profit 48.0 48.0
Depreciation 8.1 8.1
Other non-cash items 1.0 3.2
Interest (17.2) (20.2)
Taxation 1.0 -
Pension contributions (19.8) (32.1)
Capital expenditure (8.6) (6.2)
Working capital & other (12.9) (8.6)
Restructuring costs (6.9) (11.3)
Purchase of own shares - (0.7)
Disposal of fixed assets 1.3 -
Financing fees (6.8) -
--------
Free cash outflow(9) (12.8) (19.8)
--------
Statutory cash flow statement
Cash generated/(used)
in operating activities 1.2 (13.2)
Cash used in investing
activities (7.3) (6.0)
Cash generated from financing
activities 22.3 25.4
-------- --------
Net increase in cash
& cash equivalents 16.2 6.2
-------- --------
Free cash flow in the Half year was an outflow of GBP12.8m.
Trading profit and Depreciation, at GBP48.0m and GBP8.1m
respectively, were in line with the prior year period. Interest
paid in the period was GBP3.0m lower than the comparative period at
GBP17.2m due to timing differences. A taxation credit of GBP1.0m
was received in the period from Irish tax authorities in respect of
tax paid on previous period losses. Pension contributions in the
Half year were GBP19.8m, a reduction of GBP12.3m from the
comparative period principally due to the re-negotiation of deficit
contributions to the Group's pension schemes announced in March
this year. Capital expenditure was GBP2.4m higher in the period at
GBP8.6m and the Group's expectations for the Full year are
unchanged at GBP20-GBP22m. Working capital and other items was an
outflow of GBP12.9m. Restructuring costs associated with
redundancies relating to the Group's cost reduction and efficiency
programmes and implementation costs associated with the Group's
logistics transformation programme together amounted to GBP6.9m.
The Group now expects restructuring costs to be between
GBP10-GBP12m in this financial year. Financing fees of GBP6.8m
relate to costs associated with the extension of the Group's
revolving credit facility and the issue of new GBP210m Senior
secured floating rate notes in the period.
On a statutory basis, cash generated from operations was
GBP17.4m compared to GBP7.0m in FY16/17 H1. This was primarily due
to lower pension deficit contributions, as commented and identified
in the table above. Cash generated from operating activities was
GBP1.2m in the period, compared with cash used in operating
activities in the comparative period of (GBP13.2m). Cash used in
investing activities was (GBP7.3m) in the Half year compared to
(GBP6.0m) in FY16/17 H1. Cash generated from financing activities
was GBP22.3m in the period. This was principally due to proceeds
from borrowings of GBP210.0m which reflected the issue of new
Senior secured floating rate notes, the repayment of the 2014
GBP175.0m Senior secured floating rate notes and the associated
reduction in the Group's revolving credit facility.
At 30 September 2017, the Group held cash and bank deposits of
GBP9.5m and bank overdrafts of GBP11.4m.
Net debt and sources of finance
GBPm
Net debt at 1 April 2017 523.2
Free cash outflow in
period 12.8
Movement in debt issuance
costs (0.7)
------
Net debt at 30 September
2017 535.3
------
Net debt at 30 September 2017 was GBP535.3m; a GBP20.7m
reduction compared to the same point a year ago. The movement in
Net debt compared to the previous year end was an outflow of
GBP12.1m. The Group generally observes an increase in Net debt in
the first half of the financial year, reflecting the natural
working capital cycle of the business. The movement in debt
issuance costs in the period was GBP0.7m.
In the first half of the year, the Group extended the term of
its revolving credit facility with its lending syndicate from March
2019 to December 2020. The total facility, which was GBP16.0m drawn
at 30 September 2017, reduced from GBP272m to GBP217m in June 2017
and reduces further to GBP184m in March 2019. The interest margin
under the revolving credit facility is unchanged and covenants
under the facility, which are tested bi-annually, were updated to
ensure appropriate headroom in future reporting periods.
The Group also completed the issuance of new five year GBP210m
Senior Secured floating rate notes due July 2022. This new note
replaced the Group's GBP175m Senior Secured floating rate notes,
previously due to mature March 2020, and reduced the revolving
credit facility by a total of GBP55m. As previously announced, the
pricing of the new GBP210m Senior Secured floating rate notes was
confirmed at 5.00% +LIBOR, which is in line with the retired
GBP175m Senior Secured floating rate notes.
Pensions
IAS 19 Accounting 30 September 2017 1 April 2017
Valuation
(GBPm)
RHM Premier Combined RHM Premier Combined
Foods Foods
Assets 4,061.0 661.1 4,722.1 4,190.9 673.7 4,864.6
Liabilities (3,472.9) (1,122.3) (4,595.2) (3,597.0) (1,162.8) (4,759.8)
---------- ---------- ---------- ----------
Surplus/(Deficit) 588.1 (461.2) 126.9 593.9 (489.1) 104.8
Net of deferred
tax (17.0%) 488.1 (382.8) 105.3 493.0 (406.0) 87.0
The IAS 19 pension schemes valuation reported a surplus for the
combined RHM and Premier Foods' pension schemes at 30 September
2017 of GBP126.9m, equivalent to GBP105.3m net of a deferred tax
charge of 17.0%. This compares to a combined RHM and Premier Foods'
schemes surplus at 1 April 2017 of GBP104.8m and GBP87.0m net of
deferred tax. A deferred tax rate of 17.0% is deducted from the
IAS19 retirement benefit valuation of the Group's schemes to
reflect the fact that pension deficit contributions made to the
Group's pension schemes are allowable for tax.
The valuation at 30 September 2017 comprised a GBP588.1m surplus
in respect of the RHM schemes and a deficit of GBP461.2m in
relation to the Premier Foods schemes. Assets in the combined
schemes decreased by GBP142.5m in the period from GBP4,864.6m to
GBP4,722.1m. RHM scheme assets decreased by GBP129.9m and the
Premier Foods' schemes assets decreased by GBP12.6m.
Liabilities in the combined schemes decreased by GBP164.6m in
the period to GBP4,595.2m. The value of liabilities associated with
the RHM scheme were GBP3,472.9m, a reduction of GBP124.1m while
liabilities in the Premier Foods schemes were GBP40.5m lower at
GBP1,122.3m. The reduction in the value of liabilities in both
schemes is due to a slight increase in the discount rate
assumption, from 2.65% to 2.70% and a reduction in the inflation
rate assumption; from 3.3% to 3.2%.
Combined pensions schemes 30 September 1 April 2017
(GBPm) 2017
Assets
Equities 443.1 527.0
Government bonds 867.3 519.1
Corporate bonds 22.5 23.0
Property 343.9 357.4
Absolute return products 1,244.8 1,284.2
Cash 142.7 69.1
Infrastructure funds 235.5 242.6
Swaps 707.5 1,116.1
Private equity 313.5 321.7
Other 401.3 404.4
------------- -------------
Total Assets 4,722.1 4,864.6
Liabilities
Discount rate 2.70% 2.65%
Inflation rate (RPI/CPI) 3.2%/2.1% 3.3%/2.2%
The net present value of future deficit payments, to the end of
the respective recovery periods remains at c.GBP300-320m.
Principal risks and uncertainties
The Group's principal risks and uncertainties were disclosed on
page 20 to 23 of the annual report and accounts for the financial
period ended 1 April 2017 and these remain relevant for the current
period. The major strategic and operational risks are summarised
under the headings of Delivery of strategy, Corporate risks,
Commodity prices / Foreign exchange, Weather, Commercial
arrangements, Business restructuring, Operational continuity and
Legal compliance.
Outlook
--------
The Group's strategy is to give an equal focus and weight to
growing revenue, delivering cost efficiencies and generating cash.
In the UK, a core objective for the Group continues to be to grow
ahead of its categories and for International to deliver strong
double-digit growth. The global strategic relationships presented
by the Cadbury and Nissin partnerships are already delivering
tangible benefits and the Group's cost savings programme is on
track to deliver expected benefits. The Group is focused on
reducing its leverage ratio to below 3.0x in approximately 3-4
years through profit improvement and debt reduction.
The Group is encouraged by the volume and revenue growth
performance in the second quarter of the year. Additionally,
Trading profit for the first half of this financial year was in
line with the Group's expectations. Assuming average UK temperature
trends, especially in the key third quarter trading period, the
Group anticipates progress in the second half of the year and its
expectations for the full year remain unchanged.
Gavin Darby Alastair Murray
Chief Executive Officer Chief Financial Officer
Appendices
------------
The Company's results are presented for the 26 weeks ended 30
September 2017 and the comparative period, 26 weeks ended 1 October
2016. All references to the 'quarter', unless otherwise stated, are
for the 13 weeks ended 30 September 2017 and the comparative
period, 13 weeks ended 1 October 2016.
Quarter 2 Sales
----------------
Q2 Sales (GBPm) Grocery Sweet Group
Treats
Branded 112.4 39.9 152.3
Non-branded 21.2 9.7 30.9
-------- -------- ------
Total 133.6 49.6 183.2
% change
Branded +10.5% (5.8%) +5.7%
Non-branded +6.1% +15.7% +8.9%
-------- -------- ------
Total +9.7% (2.3%) +6.2%
Notes and definitions of Non-GAAP measures
-------------------------------------------
The Company uses a number of non-GAAP measures to measure and
assess the financial performance of the business. The Directors
believe that these non-GAAP measures assist in providing additional
useful information on the underlying trends, performance and
position of the Group. These non-GAAP measures are used by the
Group for reporting and planning purposes and it considers them to
be helpful indicators for investors to assist them in assessing the
strategic progress of the Group.
1. Trading profit is defined as profit/(loss) before tax before
net finance costs, profits and losses from share of associates,
amortisation of intangible assets, impairment, fair value movements
on foreign exchange and other derivative contracts, restructuring
costs, and net interest on pensions and administration
expenses.
2. Divisional contribution refers to Gross Profit less selling,
distribution and marketing expenses directly attributable to the
relevant business unit.
3. Adjusted EBITDA is Trading profit as defined in (1) above excluding depreciation.
4. Adjusted profit before tax is Trading profit as defined in
(1) above less net regular interest.
5. Net regular interest is defined as net finance cost after
excluding write-off of financing costs, fair value movements on
interest rate financial instruments and other interest.
6. Adjusted earnings per share is Adjusted profit before tax as
defined in (4) above less a notional tax charge of 19.0% (2016/17
H1: 20.0%) divided by the weighted average of the number of shares
of 834.2million (26 weeks ended 1 October 2016: 827.7million).
7. Constant currency sales are referred to with reference to the
International business unit and remove the impact of foreign
currency fluctuations when comparing sales between two reporting
periods.
8. Net debt is defined as total borrowings, less cash and cash
equivalents and less capitalised debt issuance costs.
9. Free cash flow is defined as the change in Net debt as
defined in (8) above before the movement in debt issuance
costs.
-- Group & corporate costs refer to group and corporate
expenses which are not directly attributable to a business unit and
are reported at total Group level.
-- The International business unit is currently too small for
separate disclosure and in line with accounting standards is
aggregated within the Grocery business unit for reporting
purposes.
GBPm Future pension cash payments
schedule
2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Deficit contributions 35 35 37 38 38 38
Administration
costs 4-6 4-6 4-6 6-8 6-8 6-8
------- ------- ------- ------- ------- -------
Total 39-41 39-41 41-43 44-46 44-46 44-46
------- ------- ------- ------- ------- -------
1 - Assumes mid-point of respective administration cost
ranges
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 25 of the
Premier Foods plc annual report and accounts for the financial
period ended 1 April 2017. Keith Hamill joined the Board on 1
October 2017 as non-executive Chairman designate and was appointed
Chairman on 9 November 2017. On 9 November 2017 David Beever
stepped down as Chairman and member of the Board.
Approved by the Board on 14 November 2017 and signed on its
behalf by:
Gavin Darby
Chief Executive Officer
Alastair Murray
Chief Financial Officer
INDEPENT REVIEW REPORT TO PREMIER FOODS PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
26 weeks ended 30 September 2017 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 and the
related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26 week period ended 30
September 2017 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Richard Pinckard
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
14 November 2017
Condensed consolidated statement of profit
or loss (unaudited)
26 weeks 26 weeks
ended ended
30 Sept 1 Oct 2016
2017
Note GBPm GBPm
----------------------------------------- ----------------------- ----------------------
Revenue 4 353.3 348.0
Cost of sales (240.4) (224.3)
----------------------------------------- ----------------------- ----------------------
Gross profit 112.9 123.7
Selling, marketing and distribution
costs (50.0) (60.9)
Administrative costs (40.4) (40.8)
----------------------------------------- ----------------------- ----------------------
Operating profit 4 22.5 22.0
Operating profit before impairment 26.8 22.0
Impairment of goodwill 8 (4.3) -
----------------------------------------- ----------------------- ----------------------
Finance cost 5 (26.7) (31.7)
Finance income 5 2.7 0.8
Net movement on interest rate financial
instruments 5 0.3 0.2
----------------------------------------- ----------------------- ----------------------
Loss before taxation (1.2) (8.7)
Taxation credit/(charge) 6 1.5 (46.9)
----------------------------------------- ----------------------- ----------------------
Profit/(loss) for the period attributable
to owners of the parent 0.3 (55.6)
------------------------------------------ ----------------------- ----------------------
Basic earnings/(loss) per share
(pence) 7 0.0 (6.7)
----------------------------------------- ----------------------- ----------------------
Diluted earnings/(loss) per share
(pence) 7 0.0 (6.7)
----------------------------------------- ----------------------- ----------------------
Adjusted earnings per share(1) 7 2.56 2.54
----------------------------------------- ----------------------- ----------------------
(1) Adjusted earnings per share is defined as trading
profit less net regular interest payable, less a notional
tax charge at 19.0% (2016/17: 20.0%) divided by the
weighted average number of ordinary shares of the
Company.
Condensed consolidated statement of comprehensive
income (unaudited)
26 weeks 26 weeks
ended ended
30 Sept 1 Oct 2016
2017
Note GBPm GBPm
-------------------------------------------------- ---- ----------------------- ------------------
Profit/(loss) for the period 0.3 (55.6)
Other comprehensive income/(losses)
Items that will never be reclassified
to profit or loss
Remeasurements of defined benefit
schemes 12 3.2 (390.7)
Deferred tax (charge)/credit (0.3) 50.2
Items that are or may be reclassified
to profit or loss
Exchange differences on translation - 0.1
-------------------------------------------------- ---- ----------------------- ------------------
Other comprehensive income/(loss),
net of tax 2.9 (340.4)
-------------------------------------------------- ---- ----------------------- ------------------
Total comprehensive income/(loss)
attributable to owners of the
parent 3.2 (396.0)
-------------------------------------------------- ---- ----------------------- ------------------
Condensed consolidated balance
sheet (unaudited)
As at As at
30 Sept 1 Apr
2017 2017
Note GBPm GBPm
-------------------------------------------------- ---- ----------------------- ----------------
ASSETS:
Non-current assets
Property, plant and equipment 184.2 187.5
Goodwill 8 646.0 650.3
Other intangible assets 447.2 464.0
Net retirement benefit assets 12 588.1 593.9
Deferred tax assets 30.8 32.4
-------------------------------------------------- ---- ----------------------- ----------------
1,896.3 1,928.1
Current assets
Inventories 89.9 71.3
Trade and other receivables 79.5 65.1
Derivative financial instruments 10 0.4 0.1
Cash and cash equivalents 13 9.5 3.1
-------------------------------------------------- ---- ----------------------- ----------------
179.3 139.6
-------------------------------------------------- ---- ----------------------- ----------------
Total assets 2,075.6 2,067.7
-------------------------------------------------- ---- ----------------------- ----------------
LIABILITIES:
Current liabilities
Trade and other payables (215.0) (191.7)
Financial liabilities:
- short-term borrowings 9 (11.5) (21.3)
- derivative financial instruments 10 (2.1) (2.9)
Provisions for liabilities and
charges 11 (6.2) (10.0)
Current income tax liabilities - (0.7)
-------------------------------------------------- ---- ----------------------- ----------------
(234.8) (226.6)
Non-current liabilities
Financial liabilities - long-term
borrowings 9 (533.3) (505.0)
Net retirement benefit obligations 12 (461.2) (489.1)
Provisions for liabilities and
charges 11 (39.1) (43.1)
Other liabilities (10.2) (11.1)
-------------------------------------------------- ---- ----------------------- ----------------
(1,043.8) (1,048.3)
-------------------------------------------------- ---- ----------------------- ----------------
Total liabilities (1,278.6) (1,274.9)
-------------------------------------------------- ---- ----------------------- ----------------
Net assets 797.0 792.8
-------------------------------------------------- ---- ----------------------- ----------------
EQUITY:
Capital and reserves
Share capital 83.6 83.3
Share premium 1,406.8 1,406.7
Merger reserve 351.7 351.7
Other reserves (9.3) (9.3)
Profit and loss reserve (1,035.8) (1,039.6)
-------------------------------------------------- ---- ----------------------- ----------------
Total equity 797.0 792.8
-------------------------------------------------- ---- ----------------------- ----------------
Condensed consolidated statement of cash
flows (unaudited)
26 weeks 26 weeks
ended ended
30 Sept 1 Oct 2016
2017
Note GBPm GBPm
----------------------------------- ---- ------------------------ ------------------------
Cash generated from operations 13 17.4 7.0
Interest paid (17.9) (21.0)
Interest received 0.7 0.8
Taxation received 1.0 -
----------------------------------- ---- ------------------------ ------------------------
Cash generated/(used) in operating
activities 1.2 (13.2)
Purchase of property, plant
and equipment (7.0) (3.9)
Purchase of intangible assets (1.6) (2.1)
Sale of property, plant and 1.3 -
equipment
----------------------------------- ---- ------------------------ ------------------------
Cash used in investing activities (7.3) (6.0)
Repayment of borrowings (181.0) (1.6)
Proceeds from borrowings 210.0 34.0
Movement in securitisation funding
programme - (6.4)
Financing fees and other costs (6.8) -
of finance
Proceeds from share issue 0.1 0.1
Purchase of shares to satisfy
share awards - (0.7)
----------------------------------- ---- ------------------------ ------------------------
Cash generated from financing
activities 22.3 25.4
Net inflow of cash and cash
equivalents 16.2 6.2
Cash, cash equivalents and bank
overdrafts at beginning of period (18.1) 7.8
----------------------------------------- ------------------------ ------------------------
Cash, cash equivalents and bank
overdrafts at end of period 13 (1.9) 14.0
----------------------------------- ---- ------------------------ ------------------------
Condensed consolidated statement of
changes in equity (unaudited)
Profit
and
Share Share Merger Other loss Non-controlling Total
Note capital premium reserve reserves reserve interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ---- -------- -------- -------- --------- --------- --------------- -------
At 3 April 2016 82.7 1,406.6 351.7 (9.3) (979.3) (3.9) 848.5
Loss for the period - - - - (55.6) - (55.6)
Remeasurements
of defined benefit
schemes 12 - - - - (390.7) - (390.7)
Deferred tax credit - - - - 50.2 - 50.2
Exchange differences
on translation - - - - 0.1 - 0.1
------------------------------ -------- -------- -------- --------- --------- --------------- -------
Other comprehensive
income - - - - (340.4) - (340.4)
------------------------ ---- -------- -------- -------- --------- --------- --------------- -------
Total comprehensive
income - - - - (396.0) - (396.0)
------------------------ ---- -------- -------- -------- --------- --------- --------------- -------
Shares issued - 0.1 - - - - 0.1
Share-based payments - - - - 3.2 - 3.2
Purchase of shares
to satisfy share
awards - - - - (0.7) - (0.7)
Deferred tax movements
on share-based payments - - - - 0.9 - 0.9
Movement in non-controlling
interest - - - - (3.9) 3.9 -
------------------------------ -------- -------- -------- --------- --------- --------------- -------
At 1 October 2016 82.7 1,406.7 351.7 (9.3) (1,375.8) - 456.0
------------------------ ---- -------- -------- -------- --------- --------- --------------- -------
At 2 April 2017 83.3 1,406.7 351.7 (9.3) (1,039.6) - 792.8
Profit for the
period - - - - 0.3 - 0.3
Remeasurements
of defined benefit
schemes 12 - - - - 3.2 - 3.2
Deferred tax charge - - - - (0.3) - (0.3)
------------------------ ---- -------- -------- -------- --------- --------- --------------- -------
Other comprehensive
income - - - - 2.9 - 2.9
------------------------------ -------- -------- -------- --------- --------- --------------- -------
Total comprehensive
income - - - - 3.2 - 3.2
------------------------------ -------- -------- -------- --------- --------- --------------- -------
Shares issued 0.3 0.1 - - - - 0.4
Share-based payments - - - - 1.5 - 1.5
Deferred tax movements
on share-based payments - - - - (0.9) - (0.9)
------------------------------ -------- -------- -------- --------- --------- --------------- -------
At 30 September
2017 83.6 1,406.8 351.7 (9.3) (1,035.8) - 797.0
------------------------ ---- -------- -------- -------- --------- --------- --------------- -------
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 the Group's annual
report and accounts for the financial period ended 1 April
2017.
2. Significant accounting policies
Basis of preparation
The condensed consolidated financial statements ("financial
information") for the period ended 30 September 2017 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 30 September 2017
should be read in conjunction with the Group's financial statements
for the 52 weeks ended 1 April 2017, which have been prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union. They have been prepared
applying the accounting policies and presentation as applied in the
preparation of the Group's published consolidated financial
statements for the 52 weeks ended 1 April 2017, except where new or
revised accounting standards have been applied. There has been no
significant impact on the Group profit or net assets on adoption of
new or revised accounting standards in the period.
The financial information for the period ended 30 September 2017
is unaudited but has been subject to an independent review by KPMG
LLP.
The Group's financial statements for the 52 weeks ended 1 April
2017, which were approved by the Board of Directors on 16 May 2017,
were reported on by KPMG LLP and delivered to the Registrar of
Companies. The report of the auditor was unqualified, did not
contain a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
did not contain any statement under section 498 (2) or (3) of the
Companies Act 2006.
This financial information was approved for issue on 14 November
2017.
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 1 April 2017 and 30
September 2017. 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 next 12 months. The Group
therefore continues to adopt the going concern basis in preparing
its financial information.
3. Critical accounting policies, estimates and judgements
The following are areas of particular significance to the
Group's interim financial information and include the use of
estimates and the application of judgement, which is fundamental to
the preparation of this financial information.
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 12.
Plan assets of the defined benefit schemes include a number of
assets for which quoted prices are not available. At each reporting
date, the group determines the fair value of these assets with
reference to most recently available asset statements from fund
managers.
To the extent a surplus arises under IAS 19, the Group ensures
that it can recognise the associated asset in line with IFRIC
14.
Goodwill and other intangible assets
Impairment reviews in respect of goodwill are performed annually
unless an event indicates that an impairment review is necessary.
Impairment reviews in respect of 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. In performing its impairment analysis, the Group
takes into consideration these indicators including the difference
between its market capitalisation and net assets.
The Group reviews its identified CGUs for the purposes of
testing goodwill on an annual basis, taking into consideration
whether assets generate independent cash inflows. 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 value in use
calculations of the CGUs carrying values for the purposes of
testing goodwill.
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. The brands, trademarks and licences are
deemed to be individual CGUs.
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 promotional buy-in as a
deduction from revenue. Accruals for each individual promotion or
rebate arrangement are based on the type and length of
promotion
and nature of customer agreement. At the time an accrual is made
the nature and timing of the promotion is typically known. Areas of
estimation include 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.
4. Segmental analysis
IFRS 8 requires operating segments to be determined based on the
Group's internal reporting to the Chief Operating Decision Maker
("CODM"). The CODM has been determined to be the Executive
Leadership Team as it is primarily responsible for the allocation
of resources to segments and the assessment of performance of the
segments.
The Group's operating segments are defined as "Grocery", "Sweet
Treats", "International" and "Knighton". The Grocery segment
primarily sells savoury ambient food products and the Sweet Treats
segment sells sweet ambient food products. The International and
Knighton segments have been aggregated within the Grocery segment
for reporting purposes as revenue is below 10 percent of the
Group's total revenue and the segments are considered to have
similar characteristics to that of Grocery. This is in accordance
with the criteria set out in IFRS 8.
The CODM uses Divisional contribution as the key measure of the
segments' results. Divisional contribution is defined as gross
profit after selling, marketing and distribution costs. Divisional
contribution is a consistent measure within the Group and reflects
the segments' underlying trading performance for the period under
evaluation.
The Group uses trading profit to review overall group
profitability. Trading profit is defined as profit/loss before tax
before net finance costs, profits and losses from share of
associates, amortisation of intangible assets, impairment, 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 period ended 30 September 2017 and 1
October 2016, and the reconciliation of the segment measures to the
respective statutory items included in the financial information,
are as follows:
26 weeks ended
30 Sept 2017
-------------------------------------------- ---------------------------------------------
Grocery Sweet Total
Treats
GBPm GBPm GBPm
-------------------------------------------- ----------- -------------- ----------------
Revenue 255.0 98.3 353.3
-------------------------------------------- ----------- -------------- ----------------
Divisional contribution 51.4 11.5 62.9
Group and corporate costs (14.9)
-------------------------------------------- ----------- -------------- ----------------
Trading profit 48.0
Amortisation of intangible assets (18.0)
Fair value movements on foreign exchange
and other derivative contracts 0.9
Restructuring costs (3.1)
Net interest on pensions and administrative
expenses (1.0)
-------------------------------------------- ----------- -------------- ----------------
Operating profit before impairment 26.8
Impairment of goodwill (4.3)
-------------------------------------------- ----------- -------------- ----------------
Operating profit 22.5
Finance cost (26.7)
Finance income 2.7
Net movement on interest rate financial
instruments 0.3
-------------------------------------------- ----------- -------------- ----------------
Loss before taxation (1.2)
-------------------------------------------- ----------- -------------- ----------------
Depreciation (3.7) (4.4) (8.1)
-------------------------------------------- ----------- -------------- ----------------
26 weeks ended
1 Oct 2016
-------------------------------------------- ---------------------------------------------
Grocery Sweet Total
Treats
GBPm GBPm GBPm
-------------------------------------------- ----------- -------------- ----------------
Revenue 250.3 97.7 348.0
-------------------------------------------- ----------- -------------- ----------------
Divisional contribution 56.2 6.6 62.8
Group and corporate costs (14.8)
-------------------------------------------- ----------- -------------- ----------------
Trading profit 48.0
Amortisation of intangible assets (19.0)
Fair value movements on foreign
exchange and other derivative contracts 1.0
Restructuring costs (7.1)
Net interest on pensions and administrative
expenses (0.9)
-------------------------------------------- ----------- -------------- ----------------
Operating profit 22.0
Finance cost (31.7)
Finance income 0.8
Net movement on interest rate financial
instruments 0.2
-------------------------------------------- ----------- -------------- ----------------
Loss before taxation (8.7)
-------------------------------------------- ----------- -------------- ----------------
Depreciation (3.9) (4.2) (8.1)
-------------------------------------------- ----------- -------------- ----------------
Inter-segment transfers or transactions are entered into under
the same terms and conditions that would be available to unrelated
third parties.
5. Finance income and costs
26 weeks 26 weeks
ended ended
30 Sept 1 Oct 2016
2017
GBPm GBPm
-------------------------------------------- -------- -----------
Interest payable on bank loans and
overdrafts (3.1) (2.9)
Interest payable on senior secured
notes (15.9) (15.3)
Interest payable on revolving facility (0.9) (1.9)
Interest payable on interest rate
financial instruments (0.3) (0.4)
Other interest payable(1) (0.4) (9.1)
Amortisation of debt issuance costs (2.1) (2.0)
-------------------------------------------- -------- -----------
(22.7) (31.6)
Write off of financing costs (4.0) (0.1)
-------------------------------------------- -------- -----------
Total finance cost (26.7) (31.7)
-------------------------------------------- -------- -----------
Interest receivable on bank deposits 0.7 0.8
Other interest receivable(2) 2.0 -
-------------------------------------------- -------- -----------
Total finance income 2.7 0.8
-------------------------------------------- -------- -----------
Fair value movements on interest
rate financial instruments 0.3 0.2
-------------------------------------------- -------- -----------
Net finance cost (23.7) (30.7)
-------------------------------------------- -------- -----------
(1) Included in other interest payable is GBPnil
(2016/17: GBP8.6m) relating to the unwind of the
discount on certain of the Group's long term provisions
and a change in the discount rates used.
(2) Included in other interest receivable is GBP2.0m
(2016/17: GBPnil) relating to the unwind of the discount
on certain of the Group's long term provisions which
has been more than offset by the change in discount
rates used.
6. Taxation
The taxation credit for the period ended 30 September
2017 of GBP1.5m (2016/17: GBP46.9m charge) includes
a deferred tax movement of GBP0.9m (2016/17: GBP1.0m
credit), which is based upon management's best estimate
of the effective annual income tax rate expected
for the full financial year and a credit largely
relating to repayment of foreign taxes paid in prior
years.
Charges arising on derecognising deferred tax assets
in respect of losses (2016/17: GBP44.9m) and restatement
of deferred tax balances at 17% (2016/17: GBP3.0m)
did not arise in the period.
7. Earnings/(loss) per share
Basic earnings/(loss) per share has been calculated by dividing
the profit for the period ended 30 September 2017 attributable to
owners of the parent of GBP0.3m (2016/17: GBP55.6m loss) by the
weighted average number of ordinary shares of the Company.
26 weeks 26 weeks
ended ended
30 Sept 1 Oct 2016
2017
Number Number
-------------------------------------- ------------------- ---------------
Weighted average number of ordinary
shares for the purpose of basic
earnings/(loss) per share 834,183,666 827,687,105
Effect of dilutive potential ordinary
shares 9,134,664 15,381,217
-------------------------------------- ------------------- ---------------
Weighted average number of ordinary
shares for the purpose of diluted
earnings/(loss) per share 843,318,330 843,068,322
-------------------------------------- ------------------- ---------------
26 weeks ended 26 weeks ended
30 Sept 2017 1 Oct 2016
--------------------- ------------------------- -------------------------------------
Basic Dilutive Diluted Basic Dilutive Diluted
effect effect
of share of share
options options
--------------------- ----- --------- ------- ----------- ----------- -----------
Profit/(loss) after
tax (GBPm) 0.3 0.3 (55.6) (55.6)
--------------------- ----- --------- ------- ----------- ----------- -----------
Earnings/(loss) per
share (pence) 0.0 0.0 0.0 (6.7) - (6.7)
--------------------- ----- --------- ------- ----------- ----------- -----------
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.
No adjustment is made to the profit/(loss) in calculating basic
and diluted earnings/(loss) per share.
There is no dilutive effect of share options or share awards in
the 26 weeks ended 1 October 2016 as the Group made a loss in the
period.
Adjusted earnings per share ("Adjusted EPS")
Adjusted earnings per share is defined as trading profit less
net regular interest, less a notional tax charge at 19.0% (2016/17:
20.0%) 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 and provides a more meaningful comparison of how the
business is managed and measured on a day to day basis.
26 weeks 26 weeks
ended ended
30 Sept 1 Oct
2017 2016
GBPm GBPm
------------------------------------- -------- --------
Trading profit 48.0 48.0
Less net regular interest (21.6) (21.7)
-------- --------
Adjusted profit before tax 26.4 26.3
Notional tax at 19% (2016/17: 20%) (5.0) (5.3)
------------------------------------- -------- --------
Adjusted profit after tax 21.4 21.0
Average shares in issue (m) 834.2 827.7
Adjusted EPS (pence) 2.56 2.54
------------------------------------- -------- --------
Net regular interest
Net finance cost (23.7) (30.7)
Exclude fair value movements on
interest rate financial instruments (0.3) (0.2)
Exclude write off of financing costs 4.0 0.1
Exclude other interest (1.6) 9.1
Net regular interest (21.6) (21.7)
------------------------------------- -------- --------
8. Impairment of goodwill
An impairment charge of GBP4.3m was recognised during the period
(2016/17: GBPnil). This is related to the write off of goodwill
relating to Knighton Foods Investments Limited ('Knighton'). The
impairment reflects the challenging trading conditions faced by
Knighton.
9. Bank and other borrowings
As at As at
30 Sept
2017 1 Apr 2017
GBPm GBPm
------------------------------------- ------------------- -------------------
Current:
Bank overdrafts (11.4) (21.2)
Finance lease obligations (0.1) (0.1)
------------------------------------- -------------------
Total borrowings due within one year (11.5) (21.3)
------------------------------------- ------------------- -------------------
Non-current:
Secured senior credit facility -
revolving (16.0) (22.0)
Transaction costs 4.2 5.6
-------------------
(11.8) (16.4)
Senior secured notes (535.0) (500.0)
Transaction costs 13.5 11.4
(521.5) (488.6)
Total borrowings due after more than
one year (533.3) (505.0)
Total bank and other borrowings (544.8) (526.3)
------------------------------------- ------------------- -------------------
Revolving credit facility
The revolving credit facility of GBP217m is due to mature
between March 2019 and December 2020 and attracts an initial bank
margin of 4.00% above LIBOR. Banking covenants of net debt / EBITDA
and EBITDA / interest are in place and are tested biannually.
The Group entered into a floating to fixed interest rate swap in
June 2014, with a nominal value of GBP150m, attracting a swap rate
of 1.44%. It has amortised to a current value of GBP50m and expires
in December 2017.
Senior secured notes
The senior secured notes are listed on the Irish GEM Stock
Exchange. The notes totalling GBP535m 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
GBP210m matures in July 2022 and attracts an interest rate of 5.00%
above LIBOR.
10. Financial instruments
The following table shows the carrying amounts (which
approximate to fair value except as noted below) of the Group's
financial assets and financial liabilities. Fair value is the price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. Set out below is a summary of methods and
assumptions used to value each category of financial
instrument.
As at 30 Sept As at 1 Apr
2017 2017
Carrying Fair Carrying Fair
amount value amount value
GBPm GBPm GBPm GBPm
----------------------------------- --------------- --------------- --------------- ---------------
Loans and receivables:
Cash and cash equivalents 9.5 9.5 3.1 3.1
Trade and other receivables 56.6 56.6 47.5 47.5
Financial assets at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency
exchange contracts 0.3 0.3 - -
- Commodity and energy derivatives 0.1 0.1 0.1 0.1
Financial liabilities at fair
value through profit or loss:
Derivative financial instruments
- Forward foreign currency
exchange contracts - - (0.5) (0.5)
- Interest rate swaps (0.1) (0.1) (0.4) (0.4)
- Other financial liabilities (2.0) (2.0) (2.0) (2.0)
Financial liabilities at amortised
cost:
Trade and other payables (210.4) (210.4) (186.7) (186.7)
Senior secured notes (535.0) (541.7) (500.0) (502.9)
Senior secured credit facility
- revolving (16.0) (16.0) (22.0) (22.0)
Bank overdraft (11.4) (11.4) (21.2) (21.2)
Finance lease obligations (0.1) (0.1) (0.1) (0.1)
----------------------------------- --------------- --------------- --------------- ---------------
The following table presents the Group's assets and liabilities
that are measured at fair value using the following fair value
measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
As at 30 Sept As at 1 Apr
2017 2017
Level Level Level Level
1 2 1 2
----------------------------------- ------------- --------------- ------------- ---------------
GBPm GBPm GBPm GBPm
Financial assets at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency
exchange contracts - 0.3 - -
- Commodity and energy derivatives - 0.1 - 0.1
Financial liabilities at fair
value through profit or loss:
Derivative financial instruments
- Forward foreign currency
exchange contracts - - - (0.5)
- Interest rate swaps - (0.1) - (0.4)
Financial liability - (2.0) - (2.0)
Financial liabilities at amortised
cost:
Senior secured notes (541.7) - (502.9) -
----------------------------------- ------------- --------------- ------------- ---------------
11. Provisions for liabilities and charges
As at As at
30 Sept 1 Apr
2017 2017
GBPm GBPm
------------ ------------------- ------------------
Non-current (39.1) (43.1)
Current (6.2) (10.0)
------------ ------------------- ------------------
Total (45.3) (53.1)
------------ ------------------- ------------------
Total provisions for liabilities and charges of GBP45.3m at 30
September 2017 (1 April 2017: GBP53.1m) comprise property
provisions of GBP31.3m (1 April 2017: GBP34.0m) which primarily
relate to provisions for non-operational leasehold properties and
dilapidations provisions which will be incurred over a number of
years in accordance with the length of the leases and other
provisions of GBP14.0m (1 April 2017: GBP19.1m) which relate
primarily to insurance claims and provisions for restructuring
costs.
12. 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 triennial actuarial valuations of the PFPS, the
PGPPS and RHM pension schemes were carried out on 31 March 2016 / 5
April 2016 to establish ongoing funding arrangements. Deficit
recovery plans have been agreed with the Trustees of each of the
PFPS and PGPPS. The RHM Pension Scheme was in surplus and no
deficit contributions are payable. On 28 March 2017, and following
the finalisation of the triennial actuarial valuation, the Group
announced it had agreed a revised schedule of pension payments with
the Trustees of the pension schemes.
Actuarial valuations for the schemes based in Ireland took place
during the course of 2013 and 2014. They are all due further
valuations in 2016 and 2017, the results of which will not be known
until late 2017/early 2018.
The exchange rates used to translate the overseas Euro based
schemes are GBP1.00 = EUR1.1345 for the average rate during the
period, and GBP1.00 = EUR1.1329 for the closing position at 30
September 2017.
At the balance sheet date, the combined principal actuarial
assumptions were as follows:
Premier RHM schemes
schemes
At 30 September 2017
Discount rate 2.70% 2.70%
Inflation - RPI 3.20% 3.20%
Inflation - CPI 2.10% 2.10%
Expected salary increases n/a n/a
Future pension increases 2.10% 2.10%
---------------------------- --------- ------------
At 1 April 2017
Discount rate 2.65% 2.65%
Inflation - RPI 3.30% 3.30%
Inflation - CPI 2.20% 2.20%
Expected salary increases n/a n/a
Future pension increases 2.15% 2.15%
---------------------------- --------- ------------
For the smaller overseas schemes the discount rate used was
1.95% (2016/17: 1.80%) and future pension increases were 1.45%
(2016/17: 1.45%).
At 1 April 2017 and 30 September 2017 the discount rate was
derived based on a bond curve expanded to include bonds rated AA by
one credit agency (and which might for example be rated A or AAA by
other agencies).
This presents a change in methodology compared to the discount
rate derived for 2 April 2016 or 1 October 2016 which were derived
from a bond curve where all bonds had been rated AA by at least two
credit agencies.
The mortality assumptions are based on standard mortality tables
and allow for future mortality improvements. The assumptions are as
follows:
Premier RHM schemes
schemes
--------------------------------- --------- ------------
Life expectancy at 30 September
2017
Male pensioner, currently aged
65 87.6 85.6
Female pensioner, currently
aged 65 89.4 88.2
Male non-pensioner, currently
aged 45 88.7 86.7
Female non-pensioner, currently
aged 45 90.6 89.4
Life expectancy at 1 April 2017
Male pensioner, currently aged
65 87.7 85.9
Female pensioner, currently
aged 65 89.5 88.3
Male non-pensioner, currently
aged 45 88.8 86.8
Female non-pensioner, currently
aged 45 90.8 89.5
---------------------------------- --------- ------------
The fair values of plan assets split by type of asset are as
follows:
Premier schemes % of total RHM schemes % of total Total % of total
GBPm % GBPm % GBPm %
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
Assets with a quoted price in an active market at 30 September 2017:
UK equities 0.3 0.0 0.5 0.0 0.8 0.0
Global equities 8.0 1.2 434.3 10.7 442.3 9.4
Government bonds 23.8 3.6 843.5 20.8 867.3 18.4
Corporate bonds 22.5 3.4 - - 22.5 0.5
Property 8.4 1.3 335.5 8.3 343.9 7.3
Absolute return products 401.4 60.7 843.4 20.7 1,244.8 26.4
Cash 12.2 1.9 130.5 3.2 142.7 3.0
Other 184.5 27.9 3.0 0.1 187.5 4.0
Assets without a quoted price in an active market at 30 September 2017:
Infrastructure funds - - 235.5 5.8 235.5 5.0
Swaps - - 707.5 17.4 707.5 14.9
Private equity - - 313.5 7.7 313.5 6.6
Other - - 213.8 5.3 213.8 4.5
Fair value of scheme assets
as at 30 September 2017 661.1 100 4,061.0 100 4,722.1 100
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
Assets with a quoted price in an active market at 1 April 2017:
UK equities 0.3 0.0 0.6 0.0 0.9 0.0
Global equities 7.1 1.1 519.0 12.4 526.1 10.8
Government bonds 22.4 3.3 496.7 11.9 519.1 10.7
Corporate bonds 23.0 3.4 - - 23.0 0.5
Property 8.1 1.2 349.3 8.3 357.4 7.3
Absolute return products 399.7 59.3 884.5 21.1 1,284.2 26.4
Cash 13.4 2.0 55.7 1.3 69.1 1.4
Other 199.7 29.7 2.8 0.1 202.5 4.2
Assets without a quoted price in an active market at 1 April 2017:
Infrastructure funds - - 242.6 5.8 242.6 5.0
Swaps - - 1,116.1 26.6 1,116.1 22.9
Private equity - - 321.7 7.7 321.7 6.6
Others - - 201.9 4.8 201.9 4.2
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
Fair value of scheme assets
as at 1 April 2017 673.7 100 4,190.9 100 4,864.6 100
------------------------------ ----------------- ----------- ------------ ----------- -------- -----------
The schemes invest in interest rate and inflation swaps to
protect from fluctuations in interest and inflation
The amounts recognised on the balance sheet arising from the
Group's obligations in respect of its defined benefit schemes are
as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
------------------------------------- ---------- ------------ ----------
At 30 September 2017
Present value of funded obligations (1,122.3) (3,472.9) (4,595.2)
Fair value of plan assets 661.1 4,061.0 4,722.1
------------------------------------- ---------- ------------ ----------
(Deficit)/surplus in schemes (461.2) 588.1 126.9
------------------------------------- ---------- ------------ ----------
At 1 April 2017
Present value of funded obligations (1,162.8) (3,597.0) (4,759.8)
Fair value of plan assets 673.7 4,190.9 4,864.6
------------------------------------- ---------- ------------ ----------
(Deficit)/surplus in schemes (489.1) 593.9 104.8
------------------------------------- ---------- ------------ ----------
The aggregate surplus of GBP104.8m has increased to a surplus of
GBP126.9m during the period ended 30 September 2017 (52 weeks ended
1 April 2017: GBP26.1m decrease) primarily due to the impact of an
increase in the discount rate assumption on the defined benefit
obligations.
Changes in the present value of the defined benefit obligation
were as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
---------------------------- ---------- ------------ ----------
Defined benefit obligation
at 2 April 2016 (1,004.2) (3,207.8) (4,212.0)
Interest cost (34.2) (110.6) (144.8)
Current service cost - (0.1) (0.1)
Remeasurement losses (155.1) (437.8) (592.9)
Exchange differences (3.8) (2.0) (5.8)
Benefits paid 34.5 161.3 195.8
Defined benefit obligation
at 1 April 2017 (1,162.8) (3,597.0) (4,759.8)
Interest cost (15.0) (46.8) (61.8)
Remeasurement gains 35.5 88.2 123.7
Exchange differences (1.7) (0.9) (2.6)
Benefits paid 21.7 83.6 105.3
---------------------------- ---------- ------------ ----------
Defined benefit obligation
at 30 September 2017 (1,122.3) (3,472.9) (4,595.2)
---------------------------- ---------- ------------ ----------
Changes in the fair value of plan assets were as follows:
Premier RHM Total
schemes schemes
GBPm GBPm GBPm
--------------------------------- ------- --------- --------
Fair value of plan assets
at 2 April 2016 584.2 3,758.7 4,342.9
Interest income on plan assets 20.2 130.2 150.4
Remeasurement gains 54.0 462.3 516.3
Administrative costs (3.0) (3.3) (6.3)
Contributions by employer 49.2 2.5 51.7
Exchange differences 3.6 1.8 5.4
Benefits paid (34.5) (161.3) (195.8)
--------------------------------- ------- --------- --------
Fair value of plan assets
at 1 April 2017 673.7 4,190.9 4,864.6
Interest income on plan assets 8.7 54.6 63.3
Remeasurement losses (19.0) (101.5) (120.5)
Administrative costs (1.5) (1.0) (2.5)
Contributions by employer 19.1 0.7 19.8
Exchange differences 1.8 0.9 2.7
Benefits paid (21.7) (83.6) (105.3)
--------------------------------- ------- --------- --------
Fair value of plan assets
at 30 September 2017 661.1 4,061.0 4,722.1
--------------------------------- ------- --------- --------
The reconciliation of the net defined benefit liability over the
period is as follows:
Premier RHM Total
schemes schemes
GBPm GBPm GBPm
------------------------------ --------- --------- -------
(Deficit)/surplus in schemes
at 2 April 2016 (420.0) 550.9 130.9
Amount recognised in profit
or loss (17.0) 16.2 (0.8)
Remeasurements recognised in
other comprehensive income (101.1) 24.5 (76.6)
Contributions by employer 49.2 2.5 51.7
Exchange differences (0.2) (0.2) (0.4)
(Deficit)/surplus in schemes
at 1 April 2017 (489.1) 593.9 104.8
Amount recognised in profit
or loss (7.8) 6.8 (1.0)
Remeasurements recognised in
other comprehensive income 16.5 (13.3) 3.2
Contributions by employer 19.1 0.7 19.8
Exchange differences 0.1 - 0.1
------------------------------ --------- --------- -------
(Deficit)/surplus in schemes
at 30 September 2017 (461.2) 588.1 126.9
------------------------------ --------- --------- -------
The total amounts recognised in the consolidated statement of
profit or loss are as follows:
Premier RHM schemes Total
schemes
GBPm GBPm GBPm
------------------------------- --------- ------------ ------
26 weeks ended 30 September
2017
Operating profit
Administrative costs (1.5) (1.0) (2.5)
Net interest (cost)/credit (6.3) 7.8 1.5
------------------------------- --------- ------------ ------
Total for the period (7.8) 6.8 (1.0)
------------------------------- --------- ------------ ------
26 weeks ended 1 October 2016
Operating profit
Administrative costs (1.4) (2.2) (3.6)
Net interest (cost)/credit (7.0) 9.7 2.7
Total for the period (8.4) 7.5 (0.9)
------------------------------- --------- ------------ ------
52 weeks ended 1 April 2017
Operating profit
Current service costs - (0.1) (0.1)
Administrative costs (3.0) (3.3) (6.3)
Net interest (cost)/credit (14.0) 19.6 5.6
------------------------------- --------- ------------ ------
Total (17.0) 16.2 (0.8)
------------------------------- --------- ------------ ------
13. Notes to the cash flow statement
Reconciliation of loss before taxation to cash
flows from operating activities
26 weeks 26 weeks
ended ended
30 Sept 1 Oct 2016
2017
GBPm GBPm
---------------------------------- ------------------------- -----------------------
Continuing operations
Loss before taxation (1.2) (8.7)
Net finance cost 23.7 30.7
------------------------- -----------------------
Operating profit 22.5 22.0
Depreciation of property, plant
and equipment 8.1 8.1
Amortisation of intangible assets 18.0 19.0
Impairment of goodwill 4.3 -
Gain on disposal of property, (0.5) -
plant and equipment
Fair value movements on financial
instruments (0.9) (1.0)
Equity settled employee incentive
schemes 1.5 3.2
Increase in inventories (18.7) (17.4)
(Increase)/decrease in trade and
other receivables (14.8) 15.4
Increase/(decrease) in trade and
other payables and provisions 16.7 (11.8)
Movement in retirement benefit
obligations (18.8) (31.2)
-------------------------
Cash generated from continuing
operations 17.4 6.3
Discontinued operations - 0.7
---------------------------------- -----------------------
Cash generated from operations 17.4 7.0
---------------------------------- ------------------------- -----------------------
Analysis of movement
in borrowings
As at Other As at
1 Apr non-cash 30 Sept
2017 Cash flows movements 2017
GBPm GBPm GBPm GBPm
---------------------------- --------------------- -------------------- -------------------- ---------------------
Bank overdrafts (21.2) 9.8 - (11.4)
Cash and cash equivalents 3.1 6.4 - 9.5
---------------------------- --------------------- -------------------- -------------------- ---------------------
Net cash and cash
equivalents (18.1) 16.2 - (1.9)
Borrowings - revolving
credit facilities (22.0) 6.0 - (16.0)
Borrowings - senior secured
notes (500.0) (35.0) - (535.0)
Finance lease obligations (0.1) - - (0.1)
--------------------- -------------------- -------------------- ---------------------
Gross borrowings net
of cash(1) (540.2) (12.8) - (553.0)
Debt issuance costs 17.0 - 0.7 17.7
---------------------------- ---------------------
Total net borrowings(1) (523.2) (12.8) 0.7 (535.3)
---------------------------- --------------------- -------------------- -------------------- ---------------------
(1) Borrowings excludes derivative
financial instruments.
14. Contingencies
There were no material contingent liabilities as at 30 September
2017 and 1 April 2017.
15. Related party transactions
The Group's related party transactions and relationships for the
52 weeks ended 1 April 2017 were disclosed on page 106 of the
annual report and accounts.
Transactions with associates and major shareholders during the
period are set out below.
26 weeks 52 weeks
ended ended
30 Sept 1 Apr 2017
2017
GBPm GBPm
------------------- ---------------------- -----------------
Sale of goods:
- Hovis 0.2 0.4
Sale of services:
- Hovis 0.4 0.7
- Nissin - 0.2
Total sales 0.6 1.3
------------------- ---------------------- -----------------
Purchase of goods:
- Hovis 5.3 12.6
- Nissin 2.5 -
Total purchases 7.8 12.6
------------------- ---------------------- -----------------
16. Subsequent events
There have been no material subsequent events.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FFFESLFWSELF
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