TIDMPFD TIDMIRSH
RNS Number : 8577L
Premier Foods plc
18 May 2022
18 May 2022
Premier Foods plc (the "Group" or the "Company")
Preliminary results for the 52 weeks ended 2 April 2022
Trading profit and adjusted PBT ahead of expectations; further
market share gains;
GBP60m reduction in pension contributions NPV to
GBP240-GBP260m
Headlines
-- Trading profit, Adjusted PBT and earnings per share ahead of
previously raised expectations(11) , dividend up +20%
-- Strong branded growth driving volume and value market share
gains in both Grocery and Sweet Treats
-- Successfully navigating macro and industry wide supply chain
challenges and continued inflationary environment
-- Trading profit margin increased 60 basis points to 16.5%,
leveraging operational efficiencies
-- International revenue up +25%(8) vs two years ago; strong
growth on Sharwood's and Mr Kipling
-- Interest costs(5) halved in last two years, reflecting
strength of strategic progress and debt refinancing
-- Pensions merger now delivering through c.GBP60m reduction in NPV of cash contributions
-- New ESG strategy, the 'Enriching Life Plan', announced with a
series of major sustainability commitments
-- Expectations for further good progress in FY22/23 unchanged
Headline results FY21/22 FY20/21* Change Change
vs 1yr vs 2yrs
ago ago
(52 weeks) (52 weeks)
Revenue (GBPm) 900.5 934.2 (3.6%) +6.3%
Trading profit(1) (GBPm) 148.3 148.3 +0.0% +11.9%
Adjusted profit before taxation(4)
(GBPm) 128.5 115.3 +11.4% +37.6%
Adjusted earnings per share(7)
(pence) 12.1 11.0 +10.5% +35.7%
Net debt(9) /adjusted EBITDA(3) 1.7 2.0
Statutory measures FY21/22 FY20/21* Change Change
vs 1yr vs 2yrs
ago ago
(52 weeks) (53 weeks)
Revenue (GBPm) 900.5 947.0 (4.9%) +6.3%
Operating profit (GBPm) 131.1 152.6 (14.1%) +37.6%
Profit before taxation (GBPm) 102.6 122.8 (16.4%) +91.4%
Basic earnings per share (pence) 9.0 12.5 (28.0%) +63.6%
Net debt(9) (GBPm) (285.0) (332.7) 14.3% lower 33.7% lower
Dividend per share (pence) 1.2 1.0 20.0% N/A
Non-GAAP measures above are defined and reconciled to statutory
measures throughout
* FY21/22 and FY19/20 were 52 week years, FY20/21 was a 53 week
year, a reconciliation between 53 week and 52 week measure for
FY20/21 and the financials for FY19/20 are provided in the
appendices
Financial headlines
Compared to 2 years ago
-- Group revenue up +6.3%, Branded revenue(12) up +9.7% reflecting
strength of branded growth model
-- Trading profit increased +11.9%
-- Adjusted profit before tax GBP128.5m, up +37.6% due to trading
performance and significant interest cost savings
-- Adjusted earnings per share increased by +35.7% to 12.1p
Compared to 1 year ago
-- Group revenue on 53 week basis (4.9%) decline due to lapping
effect of exceptional pandemic related volumes
-- Statutory profit before tax GBP20.2m lower reflecting GBP33.6m
Hovis disposal gain in prior year
-- Adjusted profit before tax on 52 week basis up +11.4% due to
reduced interest costs
-- Dividend proposed of 1.2p, 20% increase on prior year
-- Net debt reduced by GBP47.7m to GBP285.0m and Net debt/adjusted
EBITDA(3) leverage down to 1.7x
-- Premier Foods' pension scheme IAS19 deficit nearly halved to
GBP193.9m
Alex Whitehouse, Chief Executive Officer
"In January, we increased our full year profit guidance(11) ,
and so it's particularly pleasing that we have exceeded those
increased expectations with Trading profit up 11.9% and adjusted
PBT up 37.6% compared to two years ago. Yet again, our brands have
grown faster than their categories, with revenues increasing nearly
10% vs two years ago as they gained volume and value market share
in Grocery and Sweet Treats both instore and online. Mr Kipling
enjoyed its best year ever, benefitting from sustained levels of
marketing investment and a series of new product launches."
"As we look to expand beyond our core UK business, we have made
great initial progress leveraging the strength of our leading
brands by entering a number of adjacent new categories. Overseas,
our International business grew by 25%(8) compared to two years ago
with particularly strong growth in Ireland and Australia driven by
our priority international brands Sharwood's and Mr Kipling."
"Over the last two years, we have completely transformed our
financial position with our leverage now down to 1.7x, our interest
costs halved, and dividend payments recommenced after thirteen
years. Today, we have announced a GBP60m reduction in the NPV of
future pension payments, representing the first important
deliverable from the pensions merger we announced two years
ago."
" As we enter FY22/23, we have strong growth plans in place
including several new product launches such as the range of Mr
Kipling Deliciously Good cakes. We anticipate seeing further input
cost inflation which we will continue to address using a
combination of measures, as we have successfully done before, and
including cost efficiency programmes and increased pricing. Our
initial trading so far this year has been encouraging, in line with
our plans, and we are seeing strong market share gains as consumers
increasingly look for good value meal solutions. With this positive
momentum, and the resilience of our brands, categories and supply
chain, we are confident of delivering another year of good
progress. "
Environmental, Social and Governance (ESG)
On 29 October 2021, the Group announced its new 'Enriching Life
Plan' ESG strategy building on the strong progress the business has
made to date. The Group recognises its responsibility and the
opportunity, as a leading UK food manufacturer, to forge a
healthier future for people and the planet. This new strategy will
build a more resilient business for the long-term, ensuring it can
thrive in a changing world. During the process of developing this
strengthened ESG strategy, the Group also conducted a materiality
review, engaging with a range of stakeholders.
This new ESG strategy is articulated through the three key
strategic pillars of Product, Planet and People. The Group has set
out a series of major sustainability targets under each pillar
which can be found on the Company's website.
Dividend
Last year, the Group recommenced the payment of a dividend to
shareholders for the first time in thirteen years. Following
another good year of progress, the Board is proposing a dividend
for the full year of 1.2 per share, a 20.0% increase on the prior
year. This reflects strong earnings per share growth in FY21/22,
commitment to a progressive dividend and confidence in the Group's
future plans.
Outlook
The Group enters FY22/23 in a strong position, following another
year of successful strategic and financial progress. It continues
to execute against its five point strategy; growing the core UK
business; investing in its infrastructure; expanding into new
categories; building its overseas business and exploring M&A
opportunities.
Initial trading so far this financial year has been in line with
the Board's plans, and it is confident in the delivery of its full
year expectations. The Group expects to see further input cost
inflation, which it will continue to manage using a range of
measures including cost efficiency programmes and further pricing
action. The resilience of the Group's brands, categories and supply
chain means it is well positioned to deliver further progress this
year, while it's target of approximately 1.5x Net debt/adjusted
EBITDA(3) remains unchanged.
Strategy overview
The Group delivers growth and creates value through its five
point strategy, outlined below.
1. Continue to grow the UK core business
We have a vibrant and growing UK business which provides the
basis for further expansion. The branded growth model which we
employ in the UK is at the heart of what we do and is core to our
success. With our leading category positions, we launch new
products to market linked to key consumer trends, supported by
sustained levels of marketing investment and delivered through
strong customer and retailer partnerships.
2. Supply chain investment
We invest in operational infrastructure to increase efficiencies
across our manufacturing and logistics operations, providing a
virtuous cycle for brand investment. Capital investment in our
sites also facilitates growth through our innovation strategy and
enhances the safety and working conditions of our colleagues.
3. Expand UK business into new categories
We leverage the strength of our brands, using our proven branded
growth model to launch products in adjacent, new food
categories.
4. Build international businesses with critical mass
We are building sustainable business units with critical mass
overseas, applying our brand building capabilities to deliver
growth in our target markets of Republic of Ireland, Australia,
North America and Europe. Our primary brands to drive this
expansion are Mr Kipling and Sharwood's.
5. Inorganic opportunities
We will utilise our brand building and commercial expertise to
expand across a wider portfolio, accelerating value creation
through modest and targeted acquisition opportunities.
Further information
A presentation to investors and analysts will be webcast today
at 9:00am BST.
To register for the webcast follow the link:
www.premierfoods.co.uk/investors/investor-centre
A recording of the webcast will be available on the Company's
website later in the day.
A conference call for bond investors and analysts will take
place today, 18 May 2022, at 1:30pm BST. Dial in details are
outlined below:
Telephone: +44 20 8585 2961 (standard international access)
Conference ID: 3179028
A factsheet with highlights 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/
As one of the UK's largest food businesses, we're passionate
about food and believe each and every day we have the opportunity
to enrich life for everyone. Premier Foods employs over 4,000
people operating from 15 sites across the country, supplying a
range of retail, wholesale, foodservice and other customers with
our iconic brands which feature in millions of homes every day.
Through some of the nation's best-loved brands, including
Ambrosia, Batchelors, Bisto , Loyd Grossman, Mr. Kipling, Oxo and
Sharwood's, we're creating great tasting products that contribute
to healthy and balanced diets, while committing to nurturing our
people and our local communities, and going further in the pursuit
of a healthier planet , in line with our Purpose of 'Enriching Life
Through Food'.
Contacts:
Institutional investors and analysts:
Duncan Leggett, Chief Financial Officer
Richard Godden, Director of Investor Relations
Investor.relations@premier foods.co.uk
Media enquiries:
Lisa Kavanagh, Director of Communications
Headland
Ed Young +44 (0) 7884 666830
Jack Gault +44 (0) 7799 089357
- Ends -
This announcement may contain "forward-looking statements" that
are based on estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements are all statements other
than statements of historical fact or statements in the present
tense, and can be identified by words such as "targets", "aims",
"aspires", "assumes", "believes", "estimates", "anticipates",
"expects", "intends", "hopes", "may", "would", "should", "could",
"will", "plans", "predicts" and "potential", as well as the
negatives of these terms and other words of similar meaning. Any
forward-looking statements in this announcement are made based upon
Premier Foods' estimates, expectations and beliefs concerning
future events affecting the Group and subject to a number of known
and unknown risks and uncertainties. Such forward-looking
statements are based on numerous assumptions regarding the Premier
Foods Group's present and future business strategies and the
environment in which it will operate, which may prove not to be
accurate. Premier Foods cautions that these forward-looking
statements are not guarantees and that actual results could differ
materially from those expressed or implied in these forward-looking
statements. Undue reliance should, therefore, not be placed on such
forward-looking statements. Any forward-looking statements
contained in this announcement apply only as at the date of this
announcement and are not intended to give any assurance as to
future results. Premier Foods will update this announcement as
required by applicable law, including the Prospectus Rules, the
Listing Rules, the Disclosure and Transparency Rules, London Stock
Exchange and any other applicable law or regulations, but otherwise
expressly disclaims any obligation or undertaking to update or
revise any forward-looking statement, whether as a result of new
information, future developments or otherwise.
Financial results
Due to the unique nature of the prior year when the Group saw
exceptional patterns of demand for its products during the peak of
the Covid pandemic, it has managed and reviewed the performance of
its business this year with reference to the more normalised
trading conditions of two years ago as well as the prior year.
The statutory comparative period is for the 53 weeks ended 3
April 2021. To aid comparability of results against equal
timeframes, the following review for headline measures is provided
on a 52 week comparable basis and reconciliations provided to a 53
week basis for FY20/21 can be found in the appendix.
Revenue
Group revenue (GBPm) Grocery Sweet Treats Group
(52 week comparable basis)
Branded(12) 560.1 214.0 774.1
Non-branded(13) 87.6 38.8 126.4
Total 647.7 252.8 900.5
% change vs 1 year ago*
Branded (6.9%) +7.0% (3.4%)
Non-branded (4.5%) (5.0%) (4.7%)
Total (6.6%) +5.0% (3.6%)
% change vs 2 years ago*
Branded +8.8% +12.1% +9.7%
Non-branded (9.6%) (13.0%) (10.6%)
Total +5.9% +7.3% +6.3%
(53 week comparable basis)
% change vs 1 year ago*
Branded (8.1%) +5.3% (4.7%)
Non-branded (6.1%) (5.7%) (6.0%)
Total (7.8%) +3.4% (4.9%)
Commentary versus two years ago
Group revenue increased by 6.3% compared to two years ago.
Branded(12) revenue was particularly strong, up 9.7%, while lower
margin Non-branded(13) revenue declined (10.6%). In the fourth
quarter, Group revenues increased by 3.5% to GBP225.8m, with
branded revenue up 5.1% and Non-branded revenue (7.0%) lower. This
quarter compares against the same period two years ago when
consumers began to accelerate their purchase of household staple
grocery products at the onset of the pandemic. The Group's branded
mix accelerated to 86.0% of total sales, up 270 basis points
compared to two years ago.
The Group's branded growth model strategy leverages the strength
of its market leading brands, launching insightful new products,
supporting them with emotionally engaging advertising and building
strategic retail partnerships. Branded revenues on a two-year
compound annual growth rate basis, have grown by 4.7%, serving to
illustrate the success of this strategy and model. Additionally,
volume and value market share(14) increased by 41 and 68 basis
points respectively compared to the same period two years ago.
Outperformance was delivered in both the Grocery and Sweet Treats
markets, by 52 and 23 basis points respectively. In e-commerce,
many consumers who turned to shopping online for grocery products
during the pandemic have continued to use this channel. The Group's
sales through online have grown by a very significant 71% compared
to two years ago and additionally, market share has increased by
111 basis points.
Another key element of the Group's branded growth model is the
strength of its retailer/customer partnerships. Compared to the
prior year, the Group's weighted average distribution points have
grown by 121 basis points; and one of the key drivers of this has
been the strength and delivery of its innovation programme.
Grocery
Grocery revenue grew by 5.9% compared to two years ago. The
branded portfolio was the clear driver behind this growth as
revenue increased by 8.8%, with non-branded business (9.6%) lower.
Grocery revenues in the fourth quarter were marginally lower by
(0.2%), with higher margin brands delivering growth of 0.9%, as
volumes spiked two years ago at the onset of the pandemic. This was
offset by a (6.9%) decline in lower margin non-branded revenue due
to lower out of home volumes.
The majority of the Group's Grocery brands grew revenues in
FY21/22 compared to the same period two years ago. Brands such as
Batchelors, Bisto, Sharwood's, Paxo and Angel Delight all grew well
above the category averages and many of these have benefitted from
sustained levels of consumer marketing investment and new product
development programmes.
A major success for the Group has been the Nissin noodle product
ranges. The Nissin brand has grown consistently strongly over the
last four years; revenues this year grew by nearly 130% compared to
the same period two years ago. During the year, Nissin noodles
became the market leader in the authentic snack pot market, having
grown market share from 16% in 2017 to 48% today.
The Group continues to bring more healthy product ranges to
market such as Loyd Grossman 30% less sugar Lasagne sauces, no
added sugar Homepride pasta bakes, Oxo meat-free Chicken flavour
stock cubes and Angel Delight ready to eat, on the go, low calorie
dessert pots. In FY22/23, the Group will be launching a series of
exciting new better for you products such as Bisto Best meat-free
gravy, Sharwood's lower fat Poppodoms and Popped Crackers and Paxo
low salt stuffing.
One of the Group's strategic pillars is expanding into adjacent
categories, leveraging the strength of the Group's branded
equities' and significant progress was delivered in the year. This
year, major launches included Oxo Rubs and Marinades, representing
Oxo's first major move beyond its heartland of stock; the extension
of the Mr Kipling, Ambrosia and Angel Delight brands into the
Ice-cream category with initial sales over GBP1m while Cape Herb
& Spice, the product range of rubs, chilli and seasonings has
achieved increased distribution.
Sweet Treats
Sweet Treats delivered strong revenue growth of 7.3% in the year
when compared to two years ago, driven by particularly high branded
growth, up 12.1% to GBP214.0m. This was partly offset by
non-branded revenue which declined by (13.0%) following exit of
lower margin contracts. During the fourth quarter, Sweet Treats
revenue increased by 15.4%, reflecting strong branded sales, which
grew 17.7%.
The branded performance was as a result of the particularly
strong innovation program. Consumer uptake from the new better for
you Mr Kipling 30% less sugar Viennese Whirls was strong, while the
premium Mr Kipling Signature products such as Deluxe Millionaire
Whirls also performed very well. Cadbury cake delivered strong
growth through the year, well supported by innovation, and
investment in Mr Kipling continued in FY21/22 with further
advertising to come next year
As outlined above, one of the Group's strategies is to expand
into new, adjacent, categories, leveraging its brands' equities. Mr
Kipling entered the biscuit category for the first time in the
second half of the year with a range of new biscuits targeting the
everyday treat occasion.
Looking ahead to the coming year, the Group has recently
announced the launch of Mr Kipling Deliciously Good cakes. This
ground breaking new range is a clear demonstration of delivering
against the Group's 'Enriching Life Plan' ESG strategy, offering
consumers further healthier options to support healthier
lifestyles. These new cakes, which come in seven different
variants, are made with higher levels of fibre and fruit compared
with the standard Mr Kipling range and are classified as non-HFSS
under UK government guidelines.
International
In the International business, revenue on a constant currency
basis was 25%(8) higher than the same period two years ago, with
growth in all target markets. In Ireland, application of the
branded growth model strategy saw further new product development
and television advertising. The business entered the Quick Meals
Snack & Soups and Homebaking categories and launched the Mr
Kipling premium signature range of cakes. Revenues in Australia
grew double digits, reflecting higher sales of Mr Kipling and
Cadbury cake, which between them, hold a 14% share of the cake
category and remain market leaders.
The Group continues to make strategic progress as it applies its
brand building capabilities and executional focus in its priority
markets of Ireland, North America, Australia and Europe. For
example, Mr Kipling snack pack cake slices in Canada are now in
wider distribution, following a successful trial and after
refinement of the product proposition. A similar approach is being
taken in the USA, with a test trial to validate the approach which
commenced at the start of FY22/23. Also in the USA, Sharwood's
continues to increase distribution in a key retailer reflecting
both increased store presence and new product listings.
Europe is increasingly becoming a clear opportunity for the
Group, with Sharwood's in particular demonstrating strong growth in
both Spain and Germany during the year. In Spain, revenue of
Sharwood's cooking sauces has increased by nearly 100% compared to
two years ago, reflecting strong growth in Indian sauces such as
Tikka Masala while sales in Germany have grown due to the
popularity of Sharwood's Rice pots.
Non-branded
Non-branded revenue was (10.6%) lower than the same period two
years ago. In Grocery, retailer non-branded revenue grew, while
some out of home volumes remain below pre-pandemic levels, some
parts of this business have now returned to growth on a one year
basis. Sweet Treats non-branded revenue was impacted by lower
margin contract exits in pies and slices.
Commentary versus prior year
The commentary in the following section is made by comparison to
the 52 weeks ended 3 April 2021, unless otherwise stated
Group revenue for the 52 weeks to 2 April 2022 was GBP900.5m, a
decrease of (3.6%) on the same period a year ago when volumes were
inflated by more meals being eaten at home due to restrictions on
out of home eating. Branded revenue was (3.4%) lower at GBP774.1m
while non-branded revenue declined (4.7%) to GBP126.4m. In the
fourth quarter, Group revenues were (0.5%) lower at GBP225.8m, with
branded revenue down (1.8%) and non-branded revenue up 10.5%. The
fourth quarter last year saw pandemic lockdown restrictions in
place, with less out of home hospitality open to consumers and
therefore a greater prevalence of eating in home.
When the year's results are compared to the statutory
comparative of 53 weeks ended 3 April 2021, revenue was (4.9%)
lower than the prior year. Grocery Revenue declined by (7.8%) while
Sweet Treats grew by 3.4%. Branded revenue declined by (4.7%) while
non-branded revenue was (6.0%) lower.
Grocery
As expected, Grocery revenue was lower in FY21/22 compared to
the prior year. Branded and non-branded revenue declined by (6.9%)
and (4.5%) respectively, reflecting the exceptional volumes
experienced in the prior year due to the elevated consumer demand
observed in the Group's grocery categories during the peaks of the
Covid pandemic. During the course of the year, the strongest
comparatives were seen in the first quarter when lockdown
restrictions were at their most stringent.
Sweet Treats
In Sweet Treats, revenue grew by 5.0% in the year to GBP252.8m.
The Branded part of the business grew strongly, as revenue grew by
7.0% to GBP214.0m, while Non-branded revenue was (5.0%) lower at
GBP38.8m. In FY20/21, the cake category did not experience the same
level of elevated volumes compared to that seen in the Group's
grocery categories, as consumers focused on purchasing key
household staple products as the UK entered lockdown
restrictions.
The delivery of the Sweet Treats branded revenue profile is
attributable to the Group's proven branded growth model, including
the strength of the new product development programme and sustained
marketing investment, as outlined above.
International
The International business saw revenue grow by 2%(8) on a
constant currency basis. In a similar vein to the Grocery business
in the UK, revenue in the first half of the year compared to the
prior period was impacted by the effects of the global pandemic. In
particular, grocery product ranges in the majority of overseas
markets saw lower sales due to more meals eaten at home during
lockdown restrictions in the prior year, as was the case in the
UK.
Non-branded
Grocery Non-branded sales were (4.5%) lower in the year due to
lower sales at Knighton Foods partly offset by higher sales at the
Group's frozen pizza base business, Charnwood Foods. In Sweet
Treats, revenue declined by (5.0%) which was due to the impact of
contract exits in fruit pies and slices ranges.
The Group's Non-branded business plays a secondary, supportive
role which includes assisting the recovery of manufacturing
overheads; applying strict financial hurdles on new contracts while
deploying low levels of capital investment and protecting branded
intellectual property.
Trading profit
GBPm FY21/22 FY20/21* Change Change FY20/21*
vs vs
(52 weeks) (52 weeks) 1 year 2 years (53 weeks)
ago* ago*
Divisional contribution(2)
Grocery 160.2 172.5 (7.1%) +8.1% 174.7
Sweet Treats 33.4 22.4 +49.6% +41.0% 23.2
Total 193.6 194.9 (0.6%) +12.7% 197.9
Group & corporate
costs (45.3) (46.6) +2.7% (15.4%) (46.6)
Trading profit 148.3 148.3 0.0% +11.9% 151.3
Commentary versus two years ago
The Group delivered a very strong performance at Divisional
contribution and Trading profit compared to two years ago. Trading
profit rose by 11.9% to GBP148.3m as Grocery and Sweet Treats
Divisional contribution grew by 8.1% and 41.0% respectively.
The Group's proven branded growth model has been a key driver
behind these performances reflecting the benefits of its innovation
strategy, consistent brand investment and collaborative customer
partnerships. Gross margins and Trading profit margins increased by
120 and 80 basis points respectively compared to two years ago,
reflecting benefits from branded mix and cost efficiency projects
while the Group also increased investment behind its brands through
higher advertising and marketing spend.
One of the Group's strategies is to increase its investment in
its supply chain infrastructure. The elements of this strategy
include capital investment to (i) increase efficiencies across the
manufacturing and logistics operations and (ii) to facilitate
growth through the Group's innovation strategy. Through these
strategies, the Group expects to deliver improvements in gross
margin, which then provides funds for additional brand investment,
in line with the branded growth model and so drive further branded
revenue growth as part of a virtuous cycle. An example of such
investment includes a new pots line at the Ashford site, which will
deliver innovation growth for the Batchelors and Sharwood's
brands.
Commentary versus prior year
The commentary in the following section is made by comparison to
the 52 weeks ended 3 April 2021, unless otherwise stated
As outlined above, the Group reported Trading profit of
GBP148.3m in FY21/22. This matches the exceptional performance
delivered in the prior year when Trading profit benefitted from the
operational leverage effects of elevated volumes during the various
lockdown phases of the pandemic. Divisional contribution was
slightly lower at GBP193.6m while Group & corporate costs
declined by 2.7% to GBP45.3m. The Grocery business reported
Divisional contribution of GBP160.2m which was (7.1%) lower than
the last year while Sweet Treats saw excellent Divisional
contribution growth of 49.6% to GBP33.4m.
Last year, the Grocery business saw some exceptionally strong
performances across its branded portfolio, as the substantial
increase in volumes seen during the peaks of the Covid pandemic saw
benefits to operational leverage, which in turn fed through to
Divisional contribution. With Grocery volumes lower than FY20/21,
this resulted in reduced levels of operational leverage and hence
lower Divisional contribution in the year.
In Sweet Treats, Divisional contribution increased by GBP11.0m
to GBP33.4m in the year. This strong progress reflects improved
supply chain efficiencies, lower Covid related costs in the year
and branded mix benefits as higher margin Mr Kipling and Cadbury
cake sales increased while non-branded sales declined. Unlike the
Group's grocery categories, the cake market was less impacted by
exceptional consumer buying trends during the pandemic in 2020.
The Group continued to invest in its market leading brands
during the year with Ambrosia, Batchelors, Bisto, Mr Kipling, Oxo
and Sharwood's all benefitting from TV advertising. Additionally,
some of these brands received investment in shorter, YouTube
activation media which focus on helping consumers with ideas on
recipes and cooking ideas. Looking ahead to FY22/23, the Group has
plans for increased levels of brand investment as the prior year,
as it continues to consistently apply its branded growth model
strategy.
Group & corporate costs of GBP45.3m benefitted from lower
management and colleague bonuses in the year and the release of a
provision no longer required.
During the course of the year, global supply chains across a
number of industries faced a range of challenges including a
shortage of heavy goods vehicle (HGV) drivers; general labour
shortages and an increasingly inflationary environment. The Group
successfully navigated through this environment during FY21/22,
demonstrating the strength of its supplier and customer
relationships and delivering in line with its plans.
Following the tragic events unfolding in Ukraine in early 2022,
a number of global commodity and energy markets are expected to
rise further. While the Group has no direct exposure through
revenue from, or purchases to, Russia or Ukraine, it expects to be
impacted by rising global commodity markets over the coming months.
Consequently, the Group will take mitigating actions to recover
increased costs, both through cost efficiency measures and pricing
actions.
Operating profit
GBPm FY21/22 FY20/21 Change Change
vs vs
(52 weeks) (53 weeks) 1 year 2 years
ago ago*
Adjusted EBITDA(3) 167.5 170.4 (2.9) 15.0
Depreciation (19.2) (19.1) (0.1) 0.7
Trading profit 148.3 151.3 (3.0) 15.7
Amortisation of intangible
assets (27.0) (30.4) 3.4 2.4
Fair value movements on
foreign exchange & derivatives 4.4 (2.3) 6.7 2.7
Net interest on pensions
and administrative expenses 4.2 9.7 (5.5) 8.8
Non-trading items:
Restructuring costs - (4.9) 4.9 4.1
GMP equalisation (0.3) (2.9) 2.6 (0.3)
Other non-trading 1.5 (0.5) 2.0 2.4
Operating profit before
gain on sale of Hovis 131.1 120.0 11.1 35.8
Reversal of impairment loss
of Loan receivable - 15.7 (15.7) -
Profit on disposal of investment
in associate - 16.9 (16.9) -
Operating profit 131.1 152.6 (21.5) 35.8
Operating profit in the year was GBP131.1m, a decrease of
GBP21.5m compared to the prior year. This was largely due to the
reversal of the impairment loss on the Hovis loan note principal
and profit on disposal of the Hovis investment in the comparative
period of GBP32.6m. Operating profit before gain on sale of the
Hovis investment associate grew by GBP11.1m in the year to
GBP131.1m.
Amortisation of intangible assets was GBP27.0m in the year, a
GBP3.4m reduction compared to FY20/21. Fair valuation of foreign
exchange and derivatives resulted in a positive movement of GBP4.4m
compared to the comparative period. An impairment reversal of
GBP15.7m was recognised in the prior year in respect of the Hovis
loan note previously written off; this reflected a reassessment of
the loan note's recoverability. Hovis Holdings Limited was disposed
by the Company and The Gores Group to Endless LLP on 5 November
2020. Additionally, a profit on disposal of GBP16.9m was recognised
in the prior year following completion of this transaction.
Net interest on pensions and administrative expenses was a
credit of GBP4.2m in the year. Expenses for operating the Group's
pension schemes were GBP6.8m in the FY21/22, offset by a net
interest credit of GBP11.0m due to an opening surplus of the
Group's combined pension schemes. There were no restructuring costs
incurred in the year; charges in the prior year of GBP8.3m were
largely due to costs associated with advisory work on the
segregated merger pensions agreement announced on 20 April 2020.
Other non-trading income of GBP1.5m primarily related to the
resolution of a legacy legal matter.
Finance costs
Net finance cost was GBP28.5m, a decrease of GBP1.3m compared to
the comparative period. Net regular interest was GBP19.8m, a
GBP13.2m reduction compared to the prior year and nearly half that
of two years ago. This reduction was due to lower Senior secured
notes interest charges following redemptions of the Group's now
retired 2022 Floating Rate Notes ("FRN"). Additionally, the Group
issued new GBP330m Fixed Rate Notes due October 2026 in FY21/22,
replacing the previous GBP300m Fixed Rate Notes due July 2023 which
were fully repaid in the year. The October 2026 Notes attract a
lower coupon (3.5%) compared to the retired October 2023 Notes
which attracted a coupon of 6.25%, therefore representing a
significant ongoing saving for the Group. Consequently, Senior
secured notes interest declined by GBP12.1m to GBP13.4m when
compared to the prior year on a 52 week basis.
GBPm FY21/22 FY20/21* Change Change FY20/21
vs vs
(52 weeks) (52 weeks) 1 year 2 years (53 weeks)
ago* ago*
Senior secured notes
interest 13.4 25.5 12.1 17.6 25.9
Bank debt interest
- net 4.3 4.6 0.3 0.7 4.6
17.7 30.1 12.4 18.3 30.5
Amortisation of
debt issuance costs 2.1 2.9 0.8 1.2 2.9
Net regular interest(5) 19.8 33.0 13.2 19.5 33.4
Write-off of financing
costs 4.3 N/A N/A (4.3) 1.3
Early redemption
fee 4.7 N/A N/A (4.7) -
Discount unwind (0.9) N/A N/A 2.2 (1.1)
Other finance cost 0.8 N/A N/A (0.3) 0.9
Other finance income (0.2) N/A N/A 0.2 (4.7)
Net finance cost 28.5 N/A N/A 13.2 29.8
Bank debt interest of GBP4.3m was GBP0.3m lower than the prior
year and the Group's revolving credit facility was undrawn as at 2
April 2022. Amortisation of debt issuance costs were GBP0.8m lower
at GBP2.1m, reflecting a lower quantum of borrowing facilities held
by the Group.
Following the completion of the Group's refinancing in the year,
the write-off of financing costs associated with borrowings now
retired and facilities which have since been replaced, were GBP4.3m
in the period. Additionally, and as expected, a fee of GBP4.7m was
incurred relating to the early redemption of the Group's now
retired GBP300m 2023 dated Fixed Rate Notes.
In the prior period, other finance income of GBP4.7m related to
the reversal of the impairment on interest on the Hovis loan note,
reflecting the reassessment of the loan note's recoverability.
Taxation
GBPm FY21/22 FY20/21 FY19/20
Profit before taxation 102.6 122.8 53.6
- Tax charge at rate of 19.0% (19.5) (23.3) (10.2)
Tax effect of:
- Changes in tax rate (7.2) - 4.9
- Capital gain on disposal of business - 6.6 -
- Other items 1.6 (0.1) (1.8)
Income tax (charge) (25.1) (16.8) (7.1)
Deferred tax asset 23.1 28.4 -
Deferred tax liability 212.9 85.8 184.9
The taxation charge for the year to 2 April 2022 was GBP25.1m
(2020/21: GBP16.8m). This charge comprised primarily a charge on
operating activities of GBP19.5m (2020/21: GBP23.3m) and GBP7.2m
due to tax rate changes. In the Government's 2021 spring budget,
the rate of corporation tax effective from April 2023 will increase
from the current level of 19% to 25%. Therefore, deferred tax
balances have been restated depending on the rate which they are
expected to unwind.
The Group retains brought forward losses which it can utilise to
offset against future tax liabilities. Due to changes in tax
legislation with respect to the offset of tax losses, the Group
expects to recommence paying cash tax in low single digit
GBPmillions in the medium term.
Earnings per share
Earnings per share (GBPm) FY21/22 FY20/21 Change Change
vs vs
(52 weeks) (53 weeks) 1 year 2 years
ago ago*
Operating profit 131.1 152.6 (21.5) 35.8
Net finance cost (28.5) (29.8) 1.3 13.1
Profit before taxation 102.6 122.8 (20.2) 49.0
Taxation (25.1) (16.8) (8.3) (18.0)
Profit after taxation 77.5 106.0 (28.5) 31.0
Average shares in issue
(million) 858.8 851.4 7.4 12.1
Basic Earnings per share
(pence) 9.0 12.5 (3.5) 3.5
Profit before tax was GBP102.6m in the year, a decrease of
GBP20.2m compared to FY20/21 and Profit after tax was GBP77.5m,
GBP28.5m lower than the comparative period. On a two year
comparator basis, profit before tax increased by GBP49.0m and
profit after tax was GBP31.0m higher. Basic earnings per share was
9.0 pence compared to 12.5 pence in the prior period.
Adjusted earnings per FY21/22 FY20/21* Change Change
share (GBPm) vs vs
(52 weeks) (52 weeks) 1 year 2 years
ago* ago*
Trading profit 148.3 148.3 0.0% 11.9%
Less: Net regular interest (19.8) (33.0) 40.0% 49.5%
Adjusted profit before
tax 128.5 115.3 11.4% 37.6%
Less: Notional tax (19%) (24.4) (21.9) (11.4%) (37.6%)
Adjusted profit after
tax(6) 104.1 93.4 11.4% 37.6%
Average shares in issue
(millions) 858.8 851.3 7.5 12.2
Adjusted earnings per
share (pence) 12.1 11.0 10.5% 35.7%
Adjusted profit before tax increased by 11.4% in the year to
GBP128.5m, as Trading profit was in line with the prior period and
net regular interest costs declined significantly, as described
above. Adjusted profit after tax also grew by 11.4%, to GBP104.1m
after deducting a notional 19.0% tax charge of GBP24.4m. Based on
average shares in issue of 858.8 million shares, adjusted earnings
per share were 10.5% higher at 12.1p.
When compared to two years ago, adjusted profit before tax
increased by 37.6% due to both higher Trading profit and a
significantly lower net regular interest charge. Over this time
frame, adjusted profit after tax and adjusted earnings per share
increased by 37.6% and 35.7% respectively.
Statutory cash flow statement
GBPm FY21/22 FY20/21
Cash generated from operating activities 90.1 85.6
Cash (used in)/generated from investing
activities (23.2) 13.8
Cash used in financing activities (13.7) (276.2)
Net increase/(decrease) in cash
and cash equivalents 53.2 (176.8)
Cash, and cash equivalents at beginning
of period 1.1 177.9
Cash and cash equivalents at end
of period 54.3 1.1
Free cash flow
GBPm FY21/22 FY20/21
Trading profit 148.3 151.3
Depreciation 19.2 19.1
Other non-cash items 4.1 3.4
Capital expenditure (23.2) (23.6)
Working capital (21.0) 0.6
Operating cash flow 127.4 150.8
Interest (20.8) (32.6)
Pension contributions (41.4) (47.0)
Free cash flow(10) 65.2 71.2
Non-trading items 0.9 (5.1)
Net proceeds from share issue 1.3 1.7
Re-financing fees (13.2) -
Sale of property, plant and equipment - 0.1
Dividend (including pensions match) (11.0) -
Disposal proceeds - 30.3
Movement in cash 43.2 98.2
Repayment of borrowings (320.0) (275.0)
Proceeds from borrowings 330.0 -
Net increase/(decrease) in cash
and cash equivalents 53.2 (176.8)
On a statutory basis, cash generated from operations was
GBP110.9m compared to GBP118.2m in the comparative period. Cash
generated from operating activities was GBP90.1m after deducting
net interest paid of GBP20.8m. Cash used in financing activities
was GBP13.7m in the year versus GBP276.2m in the prior year and
includes the proceeds from the issuance of the Group's GBP330m 2026
dated 3.5% Fixed Rate Notes in the period. These proceeds were
largely offset by the repayment in full of the Group's GBP300m 2023
dated 6.25% Fixed Rate Notes, the last remaining GBP20.0m tranche
of the Group's FRN, financing fees of GBP8.5m, an early redemption
fee of GBP4.7m relating to the retirement of the GBP300m Fixed Rate
Notes and dividends paid to shareholders of GBP8.5m. In FY20/21,
the Group repaid a drawdown of GBP85.0m on its committed revolving
credit facility in the first quarter of the year. This followed an
earlier prudent decision by the Group at the end of the previous
financial year to draw this GBP85.0m sum, reflecting early stage
wider uncertainties associated with the COVID-19 pandemic.
Secondly, the Group used cash generated during FY19/20 and FY20/21
to fund part redemptions of its FRN totalling GBP190.0m.
The Group reported an inflow in cash in the year of GBP43.2m.
Trading profit of GBP148.3m was GBP3.0m lower than the prior year
for the reasons outlined above, while depreciation of GBP19.2m was
similar to the prior year. Other non-cash items of GBP4.1m was
GBP0.7m higher and was predominantly due to share based
payments.
Net interest paid of GBP20.8m was GBP11.8m lower than the prior
year; this was due to reduced interest payments following the
redemption of the Group's FRN and the issue of GBP330m Fixed Rate
Notes due October 2026 which attract a coupon of 3.5%. These Fixed
Rate Notes replaced the previous GBP300m Fixed Rate Notes due
October 2023 which were repaid in the year and attracted a coupon
of 6.25%. There was no taxation paid in FY21/22 due to the
availability of brought forward losses and capital allowances.
Total pension contributions in the year were GBP41.4m, a GBP5.6m
reduction compared to prior year, reflecting lower administration
costs. Pension deficit contribution payments were GBP37.6m and
administration costs amounted to GBP3.8m.
Capital expenditure was GBP23.2m and was broadly in line with
the prior year. In the medium term, the Group expects capital
expenditure to be in the range of GBP30-35m, as it looks to
accelerate investment across the supply chain, covering both growth
projects supporting the Group's innovation strategy and cost
release projects to deliver efficiency savings. One of the key
objectives of this programme, is through improving operational
efficiency, the resultant accretion in gross margin will provide
additional funds for brand investment. This strategy of investing
in supply chain infrastructure represents a virtuous cycle to
provide the fuel for the Group's branded growth model.
The year saw a working capital outflow of (GBP21.0m) compared to
an inflow of GBP0.6m in the prior year. This outflow was largely
due to the higher value of input costs on inventory and also higher
level of trade receivables compared to the prior year.
The Group paid re-financing fees during the year which amounted
to GBP13.2m and were largely due to advisory, legal and arrangement
fees and included a redemption fee of GBP4.7m as referred to above.
Dividends paid in the year were GBP11.0m; of this, GBP8.5m were
payments made to shareholders and GBP2.5m was due to a dividend
match payment in favour of the Group's pension schemes.
Net debt and sources of finance
Net debt at 2 April 2022 was GBP285.0m, a reduction of GBP47.7m
compared to the prior year. The movement in cash in the year was
GBP43.2m and the movement in debt issuance costs was GBP2.0m. Lease
creditor movements were GBP2.5m and as at 2 April 2022, the Group
held cash and bank deposits of GBP54.3m. On a pre-IFRS 16 basis,
Net debt at 2 April 2022 was GBP268.9m.
Net debt/adjusted EBITDA(3) was 1.7x on a Post-IFRS 16
basis.
GBPm Post-IFRS Pre-IFRS
16 16
Net debt at 3 April 2021 332.7 314.1
Movement in cash (43.2) (43.2)
Movement in debt issuance
costs (2.0) (2.0)
Movement in lease creditor (2.5) -
Net debt at 2 April 2022 285.0 268.9
Adjusted EBITDA(3) 167.5 165.5
Net debt / Adjusted EBITDA(3) 1.7x 1.6x
During the year, the Group entered into a new revolving credit
facility (RCF) with an updated lending group for a period of three
years from May 2021 with extension options for up to two additional
years. This new senior secured RCF is a committed facility of
GBP175m and includes an interest margin grid broadly in line with
the previous RCF. The prevailing coupon on the RCF is currently
2.5% above GBP SONIA and undrawn elements of the RCF attract
interest equivalent to 35% of the applicable margin. Following the
year end, the Group completed the first extension of the RCF
facility to 2025.
Additionally, the Group issued new October 2026 dated GBP330m
Fixed Rate Notes during the year. These notes attract an interest
coupon of 3.5%; the first call date in 15 June 2023. As referred to
above, the Group redeemed in full its GBP300m 2023 dated Fixed Rate
Notes and the outstanding 2022 dated FRN during the year.
Pensions
IAS 19 results and commentary
IAS 19 Accounting 2 April 2022 3 April 2021
Valuation (GBPm)
RHM Premier Combined RHM Premier Combined
Foods Foods
Assets 4,273.7 826.3 5,100.0 4,459.4 792.5 5,251.9
Liabilities (3,134.9) (1,020.2) (4,155.1) (3,536.9) (1,175.1) (4,712.0)
Surplus/(Deficit) 1,138.8 (193.9) 944.9 922.5 (382.6) 539.9
Net of deferred
tax (25%/19.0%) 854.1 (145.4) 708.7 747.2 (309.9) 437.3
The IAS 19 pension schemes valuation reported a surplus for the
combined RHM and Premier Foods' pension schemes at 2 April 2022 of
GBP944.9m, an increase of GBP405.0m compared to the prior year.
This is equivalent to a surplus of GBP708.7m net of a deferred tax
charge of 25.0%. The reduction in value of liabilities of GBP556.9m
is the main driver behind the movement in the surplus and
substantially reflects an increase in the applicable discount rate
from 2.00% to 2.75% between the two respective periods. Asset
values across the two sets of schemes reduced by GBP151.9m, with
the RHM scheme asset values reducing by GBP185.7m and the Premier
Foods scheme assets increasing by GBP33.8m. When compared to the
position at 3 April 2021, the RHM scheme surplus increased by 23.4%
while the Premier Foods' scheme deficit reduced by 49.3%.
Deferred tax of 25.0% is deducted from the IAS19 retirement
benefit valuation of the Group's schemes to reflect the fact that
pension deficit contributions made to the Group's pension schemes
are allowable for tax. The deferred tax rate has been increased
from the 19.0% rate used for the prior period to 25.0% following
the change in the UK's corporation tax rate, effective from April
2023.
Combined pensions schemes 2 April 2022 3 April 2021
(GBPm)
Assets
Equities 10.4 14.9
Government bonds 1,213.7 1,625.4
Corporate bonds 6.3 1.0
Property 576.9 467.9
Absolute return products 934.7 1,112.1
Cash 113.8 79.8
Infrastructure funds 364.7 321.5
Swaps 490.9 485.4
Private equity 320.0 240.6
LDI 7.7 191.2
Illiquid credits 273.2 174.9
Global credits 628.6 318.6
Other 159.1 218.6
Total Assets 5,100.0 5,251.9
Liabilities
Discount rate 2.75% 2.00%
Inflation rate (RPI/CPI) 3.6%/3.2% 3.25%/2.80%
Actuarial valuation update and NPV of deficit contributions
Following the segregated merger of the Group's pension schemes,
effective June 2020, an interim actuarial funding valuation of the
Premier Foods and Premier Grocery Products sections as at 31 March
2021 has been completed. The outcome of this valuation has resulted
in a GBP125m reduction in the deficit of these schemes from GBP552m
as at 31 March 2019 to GBP427m as at 31 March 2021. Following the
reduction in this deficit, the Company and Trustees of the schemes
have agreed to reduce the length of the current pension deficit
contribution schedule by two years. Consequently, the net present
value of future pension contributions to the end of the respective
recovery periods has reduced by approximately GBP60m, from
GBP300-320m(15) to GBP240-260m.
Capital allocation
The Group is a highly cash generative business and has
substantially reduced its interest costs. Today, the allocation of
capital is split across pension contributions, capital investment
and dividends, with a strategy to explore bolt-on M&A. In the
medium term, we expect pensions contributions to reduce, freeing up
increased cash to spend on capital investment, dividends and
M&A.
Principal risks and uncertainties
Strong risk management is key to delivery of the business'
strategic objectives. The Group has an established risk
management process, the Executive Leadership Team performing a
formal robust assessment of the principal
risks bi-annually which is reviewed by the Board and Audit
Committee. Risks are monitored at a segment and
functional level throughout the year considering both internal
and external factors. The principal risks that the Group is exposed
to will be disclosed in the Group's 2022 Annual Report. These are:
macroeconomic & geopolitical instability, impact of government
legislation, market and retailer actions, operational integrity,
legal compliance, climate risk, technology, product portfolio, HR
and employee risk and strategy delivery.
Alex Whitehouse Duncan Leggett
Chief Executive Officer Chief Financial Officer
Appendices
The Company's Preliminary results are presented for the 52 weeks
ended 2 April 2022 and the comparative period, 53 weeks ended 3
April 2021 and 52 weeks ended 28 March 2020. References to the
'quarter', unless otherwise stated, are for the 13 weeks ended 2
April 2022 and the comparative periods, 13 weeks ended 3 April 2021
and 13 weeks ended 28 March 2020. To aid comparability of results,
headline results are provided on a 52 week basis and
reconciliations provided to a 53 week basis.
Headline group results for 52 weeks ended 2 April 2022 and comparative
53 weeks ended 3 April 2021 and 52 weeks ended 28 March 2020
GBPm FY21/22 FY20/21 Exclude: FY20/21 FY19/20
53 week 52 week
basis
52 week 53 week 52 week
Revenue basis basis basis
Grocery 647.7 702.6 (9.2) 693.4 611.6
- Branded 560.1 609.3 (7.6) 601.7 514.7
- Non-branded 87.6 93.3 (1.6) 91.7 96.9
Sweet Treats 252.8 244.4 (3.6) 240.8 235.5
- Branded 214.0 203.2 (3.3) 199.9 190.9
- Non-branded 38.8 41.2 (0.3) 40.9 44.6
Group 900.5 947.0 (12.8) 934.2 847.1
- Branded 774.1 812.5 (10.9) 801.6 705.6
- Non-branded 126.4 134.5 (1.9) 132.6 141.5
Divisional contribution
Grocery 160.2 174.7 (2.2) 172.5 148.2
Sweet Treats 33.4 23.2 (0.8) 22.4 23.7
Total 193.6 197.9 (3.0) 194.9 171.9
Trading profit 148.3 151.3 (3.0) 148.3 132.6
Adjusted EBITDA(3) 167.5 170.4 (3.3) 167.1 152.5
Adjusted EBITDA(3)
(excl IFRS 16) 165.5 168.2 (3.3) 164.9 149.9
Net regular interest (19.8) (33.4) 0.4 (33.0) (39.3)
Adjusted profit
before tax 128.5 117.9 (2.6) 115.3 93.3
Adjusted eps 12.1 11.2 (0.2) 11.0 8.9
Net debt 285.0 332.7 N/A N/A 429.6
Net debt (excl IFRS
16) 268.9 314.1 N/A N/A 408.1
Net debt/adjusted
EBITDA(3) 1.7x 2.0x N/A N/A 2.8x
Net debt/adjusted
EBITDA(3) (excl
IFRS 16) 1.6x 1.9x N/A N/A 2.7x
Quarter 4 Revenue
GBPm - 52 week basis Grocery Sweet Treats Group
FY21/22 Q4 Revenue
Branded 143.8 55.4 199.2
Non-branded 22.3 4.3 26.6
Total 166.1 59.7 225.8
FY20/21 Q4 Revenue
Branded 152.1 50.7 202.8
Non-branded 20.3 3.8 24.1
Total 172.4 54.5 226.9
% change vs 1 year ago
Branded (5.5%) 9.2% (1.8%)
Non-branded 10.0% 13.1% 10.5%
Total (3.6%) 9.5% (0.5%)
FY19/20 Q4 Revenue
Branded 142.5 47.1 189.6
Non-branded 24.0 4.6 28.6
Total 166.5 51.7 218.2
% change vs 2 years ago
Branded 0.9% 17.7% 5.1%
Non-branded (6.9%) (7.6%) (7.0%)
Total (0.2%) 15.4% 3.5%
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. The Group uses Trading profit to review overall Group profitability.
Trading profit is defined as profit/(loss) before tax, before
net finance costs, amortisation of intangible assets, fair
value movements on foreign exchange and other derivative contracts,
net interest on pensions and administration expenses and any
material items that require separate disclosure by virtue of
their nature in order that users of the financial statements
obtain a clear and consistent view of the Group's underlying
trading performance.
2. Divisional contribution refers to Gross Profit less selling,
distribution and marketing expenses directly attributable to
the relevant business segment.
3. Adjusted EBITDA is Trading profit as defined in (1) above excluding
depreciation.
4. Adjusted profit before tax is Trading profit as defined in
(1) above less net regular interest.
5. Net regular interest is defined as net finance cost after excluding
write-off of financing costs, early redemption fees, other
interest payable and other finance income.
6. Adjusted profit after tax is Adjusted profit before tax as
defined in (4) above less a notional tax charge of 19.0% (2020/21:
19.0%).
7. Adjusted earnings per share is Adjusted profit after tax as
defined in (6) above divided by the weighted average of the
number of shares of 858.8 million (53 weeks ended 3 April 2021:
851.4 million).
8. International sales remove the impact of foreign currency fluctuations
and adjusts current year sales to ensure comparability in geographic
market destinations. The constant currency calculation is made
by adjusting the current year's sales to the same exchange
rate as the prior year and two years ago, as applicable. The
constant currency adjustment is calculated by applying a blended
rate.
The following are stated on a 52 week basis for each respective
year:
GBPm Reported Adjustment Constant
currency
FY21/22 53.4 1.4 54.8
FY20/21 53.9 N/A 53.9
Growth/(decline)
% (1.0%) 1.6%
GBPm Reported Adjustment Constant
currency
FY21/22 53.4 0.6 54.0
FY19/20 43.3 N/A 43.3
Growth/(decline)
% 23.3% 24.6%
9. Net debt is defined as total borrowings, less cash and cash
equivalents and less capitalised debt issuance costs.
10. Free cash flow is Net increase or decrease in cash and cash
equivalents excluding proceeds and repayment of borrowings,
less dividend payments, disposal proceeds, re-financing fees,
proceeds from share issues and non-trading items.
11. FY21/22 guidance provided at Q3 trading update, 19 January
2022: at least GBP145m Trading profit; at least GBP125m Adjusted
profit before tax.
12. Branded revenue is revenue generated from products sold by
the Group under owned brands, or licenced brands, such as
Ambrosia, Batchelors, Bisto, Loyd Grossman, Mr Kipling, Sharwood's,
Oxo and others.
13. Non-branded revenue is revenue generated by products sold
by the Group which are not labelled as brands owned, or sold
under licence, by the Group.
14. IRI, 52 weeks ended 26 March 2022.
15. The schedule of future contributions are as agreed per the
2021 interim actuarial funding valuation for the Premier Foods
Schemes, discounted using the Company post tax WACC of 7.4%.
Additional notes:
-- The Directors believe that users of the financial statements
are most interested in underlying trading performance and
cash generation of the Group. As such intangible asset amortisation
and impairment are excluded from Trading profit because they
are non-cash items.
-- Restructuring costs have been excluded from Trading profit
because they are incremental costs incurred as part of specific
initiatives that may distort a user's view of underlying trading
performance.
-- Net regular interest is used to present the interest charge
related to the Group's ongoing financial indebtedness, and
therefore excludes non-cash items and other credits/charges
which are included in the Group's net finance cost.
-- Group & corporate costs refer to group and corporate expenses
which are not directly attributable to a business unit and
are reported at total Group level.
-- In line with accounting standards, the International and Knighton
business units, the results of which are aggregated within
the Grocery business unit, are not required to be separately
disclosed for reporting purposes.
Consolidated statement of profit or loss
52 weeks 53 weeks ended
ended
2 April 2022 3 April 2021
Note GBPm GBPm
Revenue 3 900.5 947.0
Cost of sales (573.4) (611.7)
Gross profit 327.1 335.3
Selling, marketing and distribution costs (133.4) (137.4)
Administrative costs (62.6) (77.9)
Reversal of impairment losses on financial
assets - 15.7
Profit on disposal of investment in associate - 16.9
Operating profit 3 131.1 152.6
Finance cost 4 (29.0) (36.2)
Finance income 4 0.5 6.4
Profit before taxation 102.6 122.8
Taxation charge 5 (25.1) (16.8)
Profit for the period attributable to
owners of the parent 77.5 106.0
Basic earnings per share
From profit for the period (pence) 6 9.0 12.5
Diluted earnings per share
From profit for the period (pence) 6 8.8 12.2
Consolidated statement of comprehensive
income
52 weeks 53 weeks ended
ended
2 April 2022 3 April 2021
Note GBPm GBPm
Profit for the period 77.5 106.0
Other comprehensive income, net of
tax
Items that will never be reclassified
to profit or loss
Remeasurements of defined benefit schemes 7 357.3 (750.3)
Deferred tax (charge) / credit 5 (114.2) 132.9
Current tax credit 5 6.4 9.2
Items that are or may be reclassified
subsequently to profit or loss
Exchange differences on translation (0.4) (1.0)
Other comprehensive income, net of
tax 249.1 (609.2)
Total comprehensive income attributable
to owners of the parent 326.6 (503.2)
Consolidated balance sheet
As at As at
2 Apr 2022 3 Apr 2021
Note GBPm GBPm
ASSETS:
Non-current assets
Property, plant and equipment 190.9 192.1
Goodwill 646.0 646.0
Other intangible assets 293.5 317.2
Deferred tax assets 5 23.1 28.4
Net retirement benefit assets 7 1,148.7 934.7
2,302.2 2,118.4
Current assets
Stocks 78.1 68.8
Trade and other receivables 96.5 83.4
Cash and cash equivalents 8 54.3 4.2
Derivative financial instruments 10 2.4 0.1
231.3 156.5
Total assets 2,533.5 2,274.9
LIABILITIES:
Current liabilities
(254. 0
Trade and other payables ) (249.8)
Financial liabilities
- short-term borrowings - (3.1)
- derivative financial instruments 10 (0.3) (2.3)
Lease liabilities 9 (2.1) (2.3)
Provisions for liabilities and charges (2.3) (6.2)
(258. 7
) (263.7)
Non-current liabilities
Long-term borrowings 9 (323.2) (315.2)
Lease liabilities 9 (14.0) (16.3)
Net retirement benefit obligations 7 (203.8) (394.8)
Provisions for liabilities and charges (8.3) (8.4)
(212. 9
Deferred tax liabilities 5 ) (85.8)
Other liabilities (5.7) (7.1)
(767. 9
) (827.6)
Total liabilities (1,026.6) (1,091.3)
Net assets 1,506.9 1,183.6
EQUITY:
Capital and reserves
Share capital 86.3 85.5
Share premium 1.5 0.6
Merger reserve 351.7 351.7
Other reserves (9.3) (9.3)
Profit and loss reserve 1,076.7 755.1
Total equity 1,506.9 1,183.6
Consolidated statement of cash flows
52 weeks 53 weeks
ended ended
2 April 3 Apr 2021
2022
Note GBPm GBPm
Cash generated from operations 8 110.9 118.2
Interest paid (21.2) (34.1)
Interest received 0.4 1.5
Cash generated from operating activities 90.1 85.6
Proceeds from repayment of loan notes to
associate - 15.7
Net proceeds from sale of investment in
associate - 16.9
Interest received on loan notes to associate - 4.7
Purchases of property, plant and equipment (19.5) (18.0)
Purchases of intangible assets (3.7) (5.6)
Sale of property, plant and equipment - 0.1
Cash (used in) / generated from investing
activities (23.2) 13.8
Repayment of borrowings (320.0) (275.0)
Proceeds from borrowings 330.0 -
Repayment of lease liabilities (3.3) (2.7)
Financing fees(1) (8.5) -
Early redemption fee(1) (4.7) -
Dividends paid (8.5) -
Purchase of shares to satisfy share awards (0.4) (0.2)
Proceeds from share issue 1.7 1.7
Cash used in financing activities (13.7) (276.2)
Net increase / (decrease) in cash and
cash equivalents 53.2 (176.8)
Cash, cash equivalents and bank overdrafts
at beginning of period 1.1 177.9
Cash and cash equivalents at end of period(2) 8 54.3 1.1
(1) Relates to payments made as part of the refinancing of the
Group's debt in June 2021. See note 11 for further details.
(2) Cash and cash equivalents of GBP54.3m (2020/21: GBP1.1m) includes
bank overdraft of GBPnil (2020/21: GBP3.1m) and cash and bank deposits
of GBP54.3m (2020/21: GBP4.2m). See note 10 for more details.
Consolidated statement of changes in equity
Share Share Merger Other Profit Total
Note capital premium reserve reserves and loss equity
reserve(1)
GBPm GBPm GBPm GBPm GBPm GBPm
At 29 March 2020 84.8 1,409.4 351.7 (9.3) (156.6) 1,680.0
Profit for the period - - - - 106.0 106.0
Remeasurements of defined
benefit schemes 7 - - - - (750.3) (750.3)
Deferred tax credit 5 - - - - 132.9 132.9
Current tax credit 5 9.2 9.2
Exchange differences on translation - - - - (1.0) (1.0)
Other comprehensive income - - - - (609.2) (609.2)
Total comprehensive income - - - - (503.2) (503.2)
Shares issued 0.7 1.0 - - - 1.7
Capital reduction(2) (1,409.8) 1,409.8 -
Share-based payments - - - - 3.1 3.1
Purchase of shares to satisfy
share awards - - - - (0.2) (0.2)
Deferred tax movements
on share-based payments 5 - - - - 2.2 2.2
At 3 April 2021 85.5 0.6 351.7 (9.3) 755.1 1,183.6
At 4 April 2021 85.5 0.6 351.7 (9.3) 755.1 1,183.6
Profit for the period - - - - 77.5 77.5
Remeasurements of defined
benefit schemes 7 - - - - 357.3 357.3
Deferred tax charge 5 - - - - (114.2) (114.2)
Current tax credit 5 6.4 6.4
Exchange differences on translation - - - - (0.4) (0.4)
Other comprehensive income - - - - 249.1 249.1
Total comprehensive income - - - - 326.6 326.6
Shares issued 0.8 0.9 - - - 1.7
Share-based payments - - - - 3.4 3.4
Purchase of shares to satisfy
share awards - - - - (0.4) (0.4)
Deferred tax movements
on share-based payments 5 - - - - 0.5 0.5
Dividends 11 - - - - (8.5) (8.5)
At 2 April 2022 86.3 1.5 351.7 (9.3) 1,076.7 1,506.9
(1) Included in Profit and loss reserve at 2 April 2022 is GBP3.7m
in relation to cumulative translation losses (2019/20: GBP2.3m loss,
2020/21: GBP3.3m loss)
(2) Following shareholder approval at a General Meeting held on
11 January 2021 and a hearing in the High Court of Justice, Business
and Property Courts of England and Wales on 9 February 2021, an
order was given confirming the cancellation of the entire amount
standing to the credit of the Company's share premium account, which
amounted to GBP1,409.8m ('Capital Reduction'). The order was produced
to the Registrar of Companies and was registered on 10 February
2021, making the Reduction of Capital effective.
1. General information
The financial information included in this preliminary
announcement does not constitute the Company's statutory accounts
for the 52 weeks ended 02 April 2022 and for the 53 weeks ended 03
April 2021, but is derived from those accounts. Statutory accounts
for the 53 weeks ended 03 April 2021 have been delivered to the
registrar of companies, and those for 52 weeks ended 02 April 2022
will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention to
by way of emphasis without qualifying their report, and (iii) did
not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The consolidated financial statements of the Company have been
prepared in accordance with UK-adopted international accounting
standards.
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 as detailed in note 11. 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 compliant with its covenant tests as at 2 October
2021 and 2 April 2022.
Having undertaken a robust assessment of the Group's forecasts
with specific consideration to the trading performance of the
Group, cashflows and covenant compliance, the Directors have a
reasonable expectation that the Group is able to operate within the
level of its current facilities, meet the required covenant tests
and has adequate resources to continue in operational existence for
at least 12 months from the date of approval of these financial
statements. The Group therefore continues to adopt the going
concern basis in preparing its financial information for the
reasons set out below.
At 2 April 2022 the Group had total assets less current
liabilities of GBP2,274.8m and net assets of GBP1,506.9m. Liquidity
as at that date was GBP229.3m made up of cash and cash equivalents,
and undrawn committed credit facilities of GBP175m expiring in May
2025. The covenants linked to the facilities are shown in note 11.
At the time of the approval of these financial statements, the cash
and liquidity position of the group has not changed
significantly.
The Group operates in the Food Manufacturing industry,
considered as essential during the pandemic, and whilst HM
Government restrictions have now been lifted, there still exists
uncertainty in respect of the potential future impact of Covid-19.
HM Government restrictions when necessary to be put in place and
the increase in hybrid working, means more meals are expected to be
eaten at home and hence increased demand for the Group's product
ranges. The Group's first priority remains the health and wellbeing
of its colleagues, customers and other stakeholders and to date the
Group has experienced no net financial adverse impact of the
Covid-19 pandemic with elevated levels of demand seen.
The Directors have rigorously reviewed the situation relating to
inflationary pressures across the industry driven by global supply
chain disruption as a result of Covid-19 and the current global
political uncertainty driven by the conflict in Ukraine and have
modelled a series of 'downside case' scenarios impacting future
financial performance, cash flows and covenant compliance, that
cover a period of at least 12 months from the date of approval of
the financial statements. These downside cases represent severe but
plausible scenarios and include assumptions relating to an estimate
of the impact of inflation during the period, net of estimated
recovery and the closure of a proportion of manufacturing sites due
to colleague absence as opposed to Government imposed guidelines.
The Directors continue to believe that the risk of enforced site
closures is low supported by there having been no manufacturing
site closures and a large proportion of colleagues have received a
vaccination. The Directors have also considered driver shortages
and climate change that may have an adverse impact on supply of, or
the demand for certain product groups and actions that retailers
could take impacting financial performance.
Whilst the downside scenarios are severe but plausible, it is
considered by the Directors to be prudent, having an adverse impact
on revenue, margin and cash flow. The Directors, in response,
identified mitigating actions within their control, that would
reduce costs, optimising cashflow and liquidity. Amongst these are
the following actions reducing capital expenditure, reducing
marketing spend and delaying or cancelling discretionary spend. The
Directors have assumed no significant structural changes to the
business will be needed in any of the scenarios modelled.
The Directors, after reviewing financial forecasts and financing
arrangements, consider that the Group has adequate resources to
continue to meet its liabilities as they fall due for at least 12
months from the date of approval of this report. Accordingly, the
Directors are satisfied that it is appropriate to adopt the going
concern basis in preparing its consolidated financial
information.
Impact of the war in Ukraine
The Group primarily supplies the UK market but also supplies to
other countries in Europe and rest of the world. The Group does not
trade in Ukraine or Russia and is therefore not directly affected
by trading restrictions or sanctions. However, the Group could be
affected in future due to inflationary pressures such as increase
in commodity prices (e.g. wheat, dairy), energy prices, changes in
long term UK GDP growth rate, and discount rates. The Group has
reviewed the impact of these changes and have modelled
sensitivities as part of the viability and going concern analysis
and sensitivities of changes in key inputs to impairment testing of
goodwill. The Group will continue to monitor the situation as it
develops.
Climate change
The Group has considered the impact of both physical and
transitional climate change risks on the financial statements of
the Group. The Group does not consider there to be a material
impact on the valuation of the Group's assets or liabilities,
including useful economic life of property, plant and equipment, or
on any significant accounting estimates or judgements. The Group
will continue to monitor the impact on valuations of assets and
liabilities as government policy evolves.
The impact of climate change has been considered in the
projected cash flows used for impairment testing.
2. Significant estimates and judgements
The following are areas of particular significance to the
Group's financial statements and may include the use of estimates,
which is fundamental to the compilation of a set of financial
statements. Results may differ from actual amounts.
Significant accounting estimates
The following are considered to be the key estimates within the
financial statements:
2.1 Deferred tax
All balances giving rise to deferred tax liabilities are
recognised in full, whereas deferred tax assets are only recognised
to the extent at which they are recoverable. Management performs an
assessment on an annual basis to assess the extent of future
taxable profits that will be available against which the tax losses
can be utilised. The key assumptions underlying the assessment is
availability of future taxable profits and the underlying revenue
growth and divisional contribution margin growth. Revenue growth is
forecast based on known or forecast customer sales initiatives,
including, to the extent agreed, customer business plans or
agreements for the next period, current and forecast new product
development, promotional and marketing strategy, and specific
category or geographical growth. External factors, including the
consumer environment, are also taken into account in the more
short-term forecasts.
The taxable profits for Year 1 to 3 are based on the latest
Board approved Budget and strategic plans. For recoverability
purposes taxable profits are assumed to remain flat from year 3
onward based on which, the tax losses will be fully utilised within
20 years. A reasonable change in the key assumptions will not lead
to a material change in the deferred tax balance recognised and a
material adjustment in the carrying value of the deferred tax asset
is not expected in the next 12 months.
Further disclosures are contained within note 5.
2.2 Employee benefits
The present value of the Group's defined benefit pension
obligations depends on a number of actuarial assumptions. The
primary assumptions used include the discount rate applicable to
scheme liabilities, the long-term rate of inflation and estimates
of the mortality applicable to scheme members. Each of the
underlying assumptions is set out in more detail in note 9.
At each reporting date, and on a continuous basis, the Group
reviews the macro-economic, Company and scheme specific factors
influencing each of these assumptions, using professional advice,
in order to record the Group's ongoing commitment and obligation to
defined benefit schemes in accordance with IAS 19 (Revised).
Plan assets of the defined benefit schemes include a number of
assets for which quoted prices are not available. At each reporting
date, the Group determines the fair value of these assets with
reference to most recently available asset statements from fund
managers.
Where pensions asset valuations were not available at the
reporting date, as is usual practice, valuations at 31 December
2021 are rolled forward for cash movements to end of March 2022 to
estimate the valuations for these assets. This approach is
principally relevant for Infrastructure Funds, Private Equity,
Absolute Return Products, Property Assets, Illiquid Credits and
Global Credits. Management have reviewed the individual investments
to establish where valuations are not expected to be available for
inclusion in these financial statements, movements in the most
comparable indexes have then been applied to these investments at a
category level to establish any potential estimation uncertainty
within the results
2.3 Goodwill
Impairment reviews in respect of goodwill are performed at least
annually and more regularly if there is an indicator of impairment.
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 has considered the impact of the assumptions used on
the calculations and has conducted sensitivity analysis on the
value in use calculations of the CGUs carrying values for the
purposes of testing goodwill.
2.4 Commercial arrangements
Sales rebates and discounts are accrued on each relevant
promotion or customer agreement and are charged to the statement of
profit or loss at the time of the relevant promotional buy-in as a
deduction from revenue. Accruals for each individual promotion or
rebate arrangement are based on the type and length of promotion
and nature of customer agreement. At the time an accrual is made
the nature, funding level and timing of the promotion is typically
known. Areas of estimation are sales volume/activity, phasing and
the amount of product sold on promotion.
For short-term promotions, the Group performs a true up of
estimates where necessary on a monthly basis, using real time
customer 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. A reasonable change in the key assumption will not
lead to a material change in the balance recognised and a material
adjustment is not expected in the 12 months of the estimate.
Judgements
The following are considered to be the key judgements within the
financial statements:
2.5 Non-trading items
Non-trading items have been presented separately throughout the
financial statements. These are items that management believes
require separate disclosure by virtue of their nature in order that
the users of the financial statements obtain a clear and consistent
view of the Group's underlying trading performance. In identifying
non-trading items, management have applied judgement including
whether i) the item is related to underlying trading of the Group;
and/or ii) how often the item is expected to occur.
3. Segmental analysis
IFRS 8 requires operating segments to be determined based on the
Group's internal reporting to the Chief Operating Decision Maker
('CODM'). The CODM has been determined to be the Executive
Leadership Team as it is primarily responsible for the allocation
of resources to segments and the assessment of performance of the
segments.
The Group's operating segments are defined as 'Grocery', 'Sweet
Treats', and 'International'. The CODM reviews the performance by
operating segments. The Grocery segment primarily sells savoury
ambient food products and the Sweet Treats segment sells primarily
sweet ambient food products. The International segment has been
aggregated within the Grocery segment for reporting purposes as
revenue is below 10% of the Group's total revenue and the segment
is considered to have similar characteristics to that of Grocery as
identified in IFRS 8. There has been no change to the segments
during the period.
The CODM uses Divisional contribution as the key measure of the
segments' results. Divisional contribution is defined as gross
profit after selling, marketing and distribution costs. Divisional
contribution is a consistent measure within the Group and reflects
the segments' underlying trading performance for the period under
evaluation.
The Group uses trading profit to review overall Group
profitability. Trading profit is defined as profit/loss before tax
before net finance costs, amortisation of intangible assets, fair
value movements on foreign exchange and other derivative contracts,
net interest on pensions and administrative expenses, and any
material items that require separate disclosure by virtue of their
nature in order that users of the financial statements obtain a
clear and consistent view of the Group's underlying trading
performance.
The segment results for the period ended 2 April 2022 and for
the period ended 3 April 2021 and the reconciliation of the segment
measures to the respective statutory items included in the
consolidated financial statements are as follows :
52 weeks ended 2 April 53 weeks ended 3 April
2022 2021
Grocery Sweet Total Grocery Sweet Total
Treats Treats
GBPm GBPm GBPm GBPm GBPm GBPm
External revenues 647.7 252.8 900.5 702.6 244.4 947.0
Divisional contribution 160.2 33.4 193.6 174.7 23.2 197.9
Group and corporate
costs (45.3) (46.6)
Trading profit 148.3 151.3
Amortisation of
intangible
assets (27.0) (30.4)
Fair value movements on
foreign
exchange and other
derivative
contracts(1) 4.4 (2.3)
Reversal of impairment
losses on financial
assets(2) - 15.7
Profit on disposal of
investment
in associate(2) - 16.9
Net interest on pensions
and administrative
expenses 4.2 9.7
Non-trading items:(3)
- GMP equalisation
charge (0.3) (2.9)
- Restructuring costs - (4.9)
- Other non-trading
items(4) 1.5 (0.5)
Operating profit 131.1 152.6
Finance cost (29.0) (36.2)
Finance income(2) 0.5 6.4
Profit before taxation 102.6 122.8
Depreciation(5) (11.2) (8.0) (19.2) (11.5) (7.6) (19.1)
(1) The gain of GBP4.4m (2020/21: loss of GBP2.3m) reflects changes
in fair value rate during the 52-week period and movement in nominal
value of the instruments held at 2 April 2022 from the 3 April 2021
position.
(2) In April 2014, the Group entered into a partnership with The
Gores Group LLC in respect of Hovis Holdings Limited ('Hovis'). This
partnership, of which the Group held a 49% equity interest, was subsequently
written off in FY 2015/16. On 5 November 2020, the Group completed
the sale of its interest in Hovis to Endless LLP. As part of the
sale, the Group has received a total consideration of GBP37.3m, of
which GBP16.9m was in respect of equity and GBP20.4m reflected the
settlement of the outstanding loan to associate including interest
of GBP4.7m.
(3) Non-trading items in the prior period include restructuring
costs of GBP4.9m relating primarily to costs associated with the
Strategic review and integration of the Knighton business.
(4) Other in the current period relates primarily
to the resolution of a legacy legal matter.
(5) Depreciation in the period ended 2 April 2022 includes GBP2.0m
(2020/21: GBP2.2m) of depreciation of IFRS 16 right of use assets.
Revenues in the period ended 2 April 2022, from the Group's four
principal customers, which individually represent over 10% of total
Group revenue, are GBP224.8m, GBP129.0m, GBP97.6m and GBP91.7m
(2020/21: GBP240.2m, GBP138.8m, GBP112.0m and GBP98.5m). These
revenues relate to both the Grocery and Sweet Treats reportable
segments.
The Group primarily supplies the UK market, although it also
supplies certain products to other countries in Europe and the rest
of the world. The following table provides an analysis of the
Group's revenue, which is allocated on the basis of geographical
market destination, and an analysis of the Group's non-current
assets by geographical location.
Revenue
52 weeks 53 weeks
ended ended
2 Apr 3 Apr 2021
2022
GBPm GBPm
United Kingdom 847.1 892.9
Other Europe 26.2 28.5
Rest of world 27.2 25.6
Total 900.5 947.0
Non-current assets
As at As at
2 Apr 3 Apr 2021
2022
GBPm GBPm
United Kingdom 1,130.4 1,155.3
Non-current assets exclude deferred tax assets and net
retirement benefit assets.
4. Finance income and costs
52 weeks ended 53 weeks ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Interest payable on bank loans and overdrafts (4.3) (5.7)
Interest payable on senior secured notes (13.4) (25.9)
Interest payable on revolving facility (0.3) (0.6)
Other interest receivable(1) 0.1 0.2
Amortisation of debt issuance costs (2.1) (2.9)
(20.0) (34.9)
Write off of financing costs(2) (4.3) (1.3)
Early redemption fee(3) (4.7) -
Total finance cost (29.0) (36.2)
Interest receivable on bank deposits 0.3 1.7
Other finance income 0.2 4.7
Total finance income 0.5 6.4
Net finance cost (28.5) (29.8)
(1) Included in other interest receivable is GBP0.8m charge (2020/21:
GBP0.9m charge) relating to non-cash interest costs arising following
the adoption of IFRS 16 and GBP0.9m credit (2020/21: GBP1.1m credit)
relating to the unwind of the discount on certain of the Group's long-term
provisions
(2) Relates to the refinancing of the senior secured fixed rate notes
due 2023 and revolving credit facility in the current period and redemption
of senior secured floating rate notes due 2022 in the previous period.
See note 11 for further details.
(3) Relates to a non-recurring payment arising on the early redemption
of the GBP300m senior secured fixed rate notes due to mature in October
2023 as part of the refinancing of the Group's debt in June 2021.
5. Taxation
52 weeks ended 53 weeks ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Current tax
- Current period (6.4) (9.2)
Deferred tax
- Current period (16.5) (9.2)
- Prior periods 1.9 1.6
- Changes in tax rate (4.1) -
Income tax charge (25.1) (16.8)
The applicable rate of corporation tax for the period is
19%.
Tax relating to items recorded in other comprehensive income
included:
52 weeks ended 53 weeks ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Corporation tax credit on pension
movements 6.4 9.2
Deferred tax charge on increase (17.9) -
of corporate tax rate
Deferred tax credit on 1.6 -
prior year
Deferred tax (charge)/credit on
pension movements (97.9) 132.9
(107.8) 142.1
The applicable rate of corporation tax for the period is 19%. As
set out in the Finance Act of 2021, the corporation tax rate will
increase from the current 19% to 25% starting April 2023.
Therefore, the deferred tax balances have been restated between 22%
to 25% depending on the rate at which they are expected to unwind.
As a result of the higher tax rate a tax charge of GBP4.1m has been
recorded in the consolidated statement of profit or loss and a tax
charge of GBP17.9m has been recorded in other comprehensive
income.
The tax charge for the period differs from the standard rate of
corporation tax in the United Kingdom of 19.0% (2020/21: 19.0%).
The reasons for this are explained below:
52 weeks 53 weeks
ended ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Profit before taxation 102.6 122.8
Tax charge at the domestic income tax
rate of 19.0% (2020/21: 19.0%) (19.5) (23.3)
Tax effect of:
Non-deductible items (0. 8 ) (1.4)
Other disallowable items - (0.3)
Capital gain on disposal of business - 6.6
Adjustment to restate opening deferred
tax balances (4.1) -
Difference between current and deferred
tax rate (3.1) -
Tax incentives 0.5 -
Adjustments to prior periods 1. 9 1.6
Income tax charge (25.1) (16.8)
Corporation tax losses are not recognised where future
recoverability is uncertain.
The difference between current and deferred tax rate of GBP3.1m
relates to the impact of the current tax rate being 19% and the
current year deferred tax movements being measured at between 22%
and 25%.
The adjustments to prior periods of GBP1.9m (2020/21: GBP1.6m)
relates primarily to the changes in prior period intangibles and
capital allowances following verifications in submitted
returns.
Deferred tax
Deferred tax is calculated in full on temporary differences
using the tax rate appropriate to the jurisdiction in which the
asset/(liability) arises and the tax rates that are expected to
apply in the periods in which the asset or liability is
settled.
2021/22 2020/21
GBPm GBPm
At 4 April 2021 / 29 March 2020 (57.4) (184.9)
Charged to the statement of profit or loss (18.7) (7.6)
(Charged)/credited to other comprehensive income (114.2) 132.9
Credited to equity 0.5 2.2
At 2 April 2022 / 3 April 2021 (189.8) (57.4)
The Group has not recognised GBP2.2m of deferred tax assets
(2020/21: GBP1.7m not recognised) relating to UK corporation tax
losses. In addition, the Group has not recognised a tax asset of
GBP83.9m (2020/21: GBP83.9m) relating to Advanced Corporation Tax
(ACT) and GBP76.6m (2020/21: GBP58.1m) relating to capital losses.
Under current legislation these can generally be carried forward
indefinitely.
Deferred tax liabilities Intangibles Retirement Leases Other Total
benefit
obligation
GBPm GBPm GBPm GBPm GBPm
At 29 March 2020 (52.0) (232.7) (2.9) - (287.6)
Current period credit/(charge) 1.9 (2.1) - - (0.2)
Reclassified from deferred tax
assets - - - (1.0) (1.0)
Credited to other comprehensive
income - 132.9 - - 132.9
At 3 April 2021 (50.1) (101.9) (2.9) (1.0) (155.9)
At 4 April 2021 (50.1) (101.9) (2.9) (1.0) (155.9)
Charge due to change in corporate
tax rate
- To statement of profit or loss (15.4) (9.5) (0.9) (0.3) (26.1)
- To other comprehensive income (22.7) (22.7)
Current period credit/(charge) 1.3 (3.5) - - (2.2)
Charged to other comprehensive
income - (97.9) - - (97.9)
Prior period (charge)/credit
- To statement of profit or loss (0.3) - - - (0.3)
- To other comprehensive income 1.6 1.6
At 2 April 2022 (64.5) (233.9) (3.8) (1.3) (303.5)
Deferred tax assets Accelerated Share-based Losses Other Total
tax depreciation payments
GBPm GBPm GBPm GBPm GBPm
At 29 March 2020 56.7 0.1 45.9 - 102.7
Current period (charge)/credit (8.6) 0.4 (0.9) 0.1 (9.0)
Reclassified to deferred tax
liabilities - - - 1.0 1.0
Credited to equity - 2.2 - - 2.2
Prior period credit
- To statement of profit or
loss 1.4 - - 0.2 1.6
At 3 April 2021 49.5 2.7 45.0 1.3 98.5
At 4 April 2021 49.5 2.7 45.0 1.3 98.5
Credit due to change in corporate
tax rate
- To statement of profit or
loss 12.7 - 9.1 0.2 22.0
- To other comprehensive income - - 4.8 - 4.8
- To equity - 0.1 - - 0.1
Current period (charge)/credit (13.1) 0.7 (1.2) (0.7) (14.3)
Credited to equity - 0.4 - - 0.4
Prior period credit
- To statement of profit or
loss 2. 2 - - - 2. 2
113.
At 2 April 2022 51. 3 3.9 57.7 0.8 7
Deferred tax asset on losses and accelerated
tax depreciation GBPm
As at 2 April 2022 23.1
As at 3 April 2021 28.4
Net deferred tax liability GBPm
As at 2 April 2022 (212.9)
As at 3 April 2021 (85.8)
Where there is a legal right of offset and an intention to
settle as such, deferred tax assets and liabilities may be
presented on a net basis. This is the case for most of the Group's
deferred tax balances except non-trading losses of GBP23.1m
(2020/21: GBP18.7m) and GBPnil (2020/21: GBP9.7m) towards
accelerated tax depreciation. The remainder of deferred tax assets
have therefore been offset in the tables above. Substantial
elements of the Group's deferred tax assets and liabilities,
primarily relating to the defined benefit pension obligation, are
greater than one year in nature.
6. Earnings per share
Basic earnings per share has been calculated by dividing the
profit attributable to owners of the parent of GBP77.5m (2020/21:
GBP106.0m profit) by the weighted average number of ordinary shares
of the Company.
2021/22 2020/21
Number Number
(m) (m)
Weighted average number of ordinary shares for
the purpose of basic earnings per share 858.8 851.4
Effect of dilutive potential ordinary shares:
- Share options 17.0 17.1
Weighted average number of ordinary shares
for the purpose of diluted earnings per share 875.8 868.5
52 weeks ended 2 53 weeks ended 3
April 2022 April 2021
Basic Dilutive Diluted Basic Dilutive Diluted
effect effect
of share of share
options options
Profit after tax (GBPm) 77.5 77.5 106.0 106.0
Weighted average number
of shares (m) 858.8 17.0 875.8 851.4 17.1 868.5
Earnings per share (pence) 9.0 (0.2) 8.8 12.5 (0.3) 12.2
Dilutive effect of share options
The dilutive effect of share options is calculated by adjusting
the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares. The
only dilutive potential ordinary shares of the Company are share
options and share awards. A calculation is performed to determine
the number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the share awards
and the subscription rights attached to the outstanding share
options.
No adjustment is made to the profit or loss in calculating basic
and diluted earnings per share.
Adjusted earnings per share ('Adjusted EPS')
Adjusted earnings per share is defined as trading profit less
net regular interest, less a notional tax charge at 19.0% (2020/21:
19.0%) divided by the weighted average number of ordinary shares of
the Company.
Net regular interest is defined as net finance cost after
excluding write-off of financing costs, early redemption fees,
other interest payable and other interest receivable.
Trading profit and Adjusted EPS have been reported as the
directors believe these assists in providing additional useful
information on the underlying trends, performance and position of
the Group.
52 weeks 53 weeks
ended ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Trading profit 148.3 151.3
Less net regular interest (19.8) (33.4)
Adjusted profit before tax 128.5 117.9
Notional tax at 19.0% (2020/21: 19%) (24.4) (22.4)
Adjusted profit after tax 104.1 95.5
Average shares in issue (m) 858.8 851.4
Adjusted EPS (pence) 12.1 11.2
Dilutive effect of share options (0.2) (0.2)
Diluted adjusted EPS (pence) 11.9 11.0
Net regular interest
Net finance cost (28.5) (29.8)
Exclude other interest receivable (0.2) (4.7)
Exclude write-off of financing costs 4.3 1.3
Exclude early redemption fee 4.7 -
Exclude other interest receivable (0.1) (0.2)
Net regular interest (19.8) (33.4)
7. Retirement benefit schemes
Defined benefit schemes
The Group operates a number of defined benefit schemes under
which current and former employees have built up an entitlement to
pension benefits on their retirement. Although the Premier Foods
Section, Premier Grocery Products Section and RHM Section
identified below are no longer separate schemes following the
merger in 2020, historically, Premier Foods companies' pension
liabilities and ex-RHM companies' liabilities have been shown
separately. These are as follows:
(a) The "Premier" Schemes, which comprise:
Premier Foods Pension Section of RHM Pension Scheme
Premier Grocery Products Pension Section of RHM Pension
Scheme
Premier Grocery Products Ireland Pension Scheme ('PGPIPS')
Chivers 1987 Pension Scheme
Hillsdown Holdings Limited Pension Scheme
(b) The "RHM" Pension Schemes, which comprise:
RHM Section of the RHM Pension Scheme
Premier Foods Ireland Pension Scheme
The Premier Foods Pension Scheme (PFPS) and Premier Grocery
Products Pension Scheme (PGPPS) were wound up following the merger
of assets and liabilities on a segregated basis with the RHM
Pension Scheme in June 2020. The RHM Pension Scheme operates as
three sections, the RHM Section, Premier Foods Section and Premier
Grocery Products Section.
The interim actuarial valuations for the new Premier Foods and
Premier Grocery Products Sections as at 31 March 2021 have been
agreed and show a combined reduction in their deficits of GBP125m
since April 2019. This has allowed the recovery plans for both
Sections to be shortened by two years. There is no change to the
rate of deficit contributions paid in the short term.
The triennial valuation cycle continues with effect from 31
March 2022 for all three Sections of the RHM Pension Scheme.
The exchange rates used to translate the overseas euro based
schemes are GBP1.00 = EUR1.1774 (2020/21: GBP1.00 = EUR1.1215) for
the average rate during the period, and GBP1.00 = EUR1.1881
(2020/21: GBP1.00 = EUR1.1740) for the closing position at period
end.
All defined benefit schemes are held separately from the Company
under Trusts. Trustees are appointed to operate the schemes in
accordance with their respective governing documents and pensions
law. The schemes meet the legal requirement for member nominated
trustees' representation on the trustee boards. Trustee directors
undertake regular training and development to ensure that they are
equipped appropriately to carry out the role. In addition, each
trustee board has appointed professional advisers to give them the
specialist expertise they need to support them in the areas of
investment, funding, legal, covenant and administration.
The trustee boards generally meet at least four times a year to
conduct their business. To support these meetings certain aspects
of the schemes' operation are delegated to give specialist focus
(e.g. investment, administration and compliance) to committees for
which further meetings are held as appropriate throughout the year.
These committees regularly report to the full trustee boards.
The schemes invest through investment managers appointed by the
trustees in a broad range of assets to support the security and
funding of their pension obligations. Asset classes used include
government bonds, private equity, absolute return products, swaps,
infrastructure, illiquid credits and global credits.
The scheme assets do not include any of the Group's own
financial instruments, nor any property occupied by, or other
assets used by, the Group. The RHM Pension Scheme holds a security
over the assets of the Group which ranks pari passu with the banks
and bondholders in the event of insolvency, up to a cap.
The schemes incorporate a Liability Driven Investment (LDI)
strategy to more closely match the assets with changes in value of
liabilities. The RHM Pension Scheme uses assets including interest
rate and inflation swaps, index linked bonds and infrastructure in
its LDI strategy.
In setting the investment strategy, the primary concern for the
trustee of the RHM Pension Scheme is to act in the best financial
interests of all beneficiaries, seeking the best return that is
consistent with a prudent and appropriate level of risk. This
includes the risk that environmental, social and governance
factors, including climate change, negatively impact the value of
investments held if not understood and evaluated properly. The
trustee considers this risk by taking advice from its investment
advisors when choosing asset classes, selecting managers, and
monitoring performance.
From 1 October 2022, the trustee is required by regulation
to:
-- implement climate change governance measures and produce a
Taskforce on Climate-related Financial Disclosures (TCFD)
report containing associated disclosures; and
-- publish its TCFD report on a publicly available website, accessible
free of charge.
The trustee is on track to draft and disclose the scheme's first
TCFD report as part of the 2023 year-end reporting cycle.
The main risks to which the Group is exposed in relation to the
funded pension schemes are as follows:
-- Liquidity risk - the PF and PGP Sections of the RHM Pension
Scheme have significant technical funding deficits which could
increase. The RHM Section of the RHM Pension Scheme is currently
in surplus, but subsequent valuations could reveal a deficit.
As such this could have an adverse impact on the financial
condition of the Group. The Group continues to monitor the
pension risks closely working with the trustees to ensure a
collaborative approach.
-- Mortality risk - the assumptions adopted make allowance for
future improvements in life expectancy. However, if life expectancy
improves at a faster rate than assumed, this would result in
greater payments from the schemes and consequently increases
in the schemes liabilities. The trustees review the mortality
assumption on a regular basis to minimise the risk of using
an inappropriate assumption.
-- Yield risk - a fall in government bond yields will increase
the schemes liabilities and certain of the assets. However,
the liabilities may grow by more in monetary terms, thus increasing
the deficit in the scheme.
-- Inflation risk - the majority of the schemes liabilities increase
in line with inflation and so if inflation is greater than
expected, the liabilities will increase.
-- Investment risk - the risk that investments do not perform
in line with expectations
The exposure to the yield and inflation risks described above
can be hedged by investing in assets that move in the same
direction as the liabilities in the event of a fall in yields, or a
rise in inflation. The RHM Pension Scheme has largely hedged its
inflation and interest rate exposure to the extent of its funding
level. Both the Premier Foods and Premier Grocery Products Sections
are currently hedged to 80% for interest rates and 80% to
inflation.
The liabilities of the schemes are approximately 45% in respect
of former active members who have yet to retire and approximately
55% in respect of pensioner members already in receipt of
benefits.
The average duration of the pension liabilities for the three
Sections of the RHM Pension Scheme is 16.0 years (16.0 years for
the RHM Section; 15.5 years for the PF Section and 15.5 years for
the PGP Section).
All pension schemes are closed to future accrual.
At the balance sheet date, the combined principal accounting
valuation assumptions were as follows :
At 2 Apr 2022 At 3 Apr 2021
Premier RHM Premier RHM Schemes
Schemes Schemes Schemes
Discount rate 2.75% 2.75% 2.00% 2.00%
Inflation - RPI 3.60% 3.60% 3.25% 3.25%
Inflation - CPI 3.20% 3.20% 2.80% 2.80%
Future pension increases
- RPI (min 0% and max
5%) 3.35% 3.35% 3.10% 3.10%
- CPI (min 3% and max
5%) 3.65% 3.65% 3.40% 3.40%
For the smaller overseas schemes, the discount rate used was
1.75% (2020/21: 1.1%) and future pension increases were 2.6%
(2020/21: 1.6%).
At 2 April 2022 and 3 April 2021, the discount rate was derived
based on a bond yield curve expanded to also include bonds rated AA
by one credit agency (and which might for example be rated A or AAA
by other agencies).
The Group continued to set RPI inflation in line with the market
break-even expectations less an inflation risk premium. The
inflation risk premium of 0.3% (2020/21: 0.3%), reflects an
allowance for additional market distortions caused by the RPI
reform proposals.
The Group has set the CPI assumption by assuming it is 1.0% p.a.
lower than RPI pre 2030 (reflecting UKSA's stated intention to make
no changes before 2030) and 0.1% lower than RPI post 2030 (2020/21:
0.0% post 2030), this being our expectation of the long-term
average difference between CPI and CPI-H.
Using this approach, the assumed difference between the RPI and
CPI is an average of 0.40% (2020/21: 0.45%) per annum. The
estimated impact of the reduction in the difference between RPI and
CPI is approximately GBP9.2m increase in defined benefit obligation
in respect of the schemes.
The assumptions take into account the timing of the expected
future cashflows from the pension schemes.
The RHM scheme invests directly in interest rate and inflation
swaps to protect from fluctuations in interest rates and
inflation.
The mortality assumptions are based on standard mortality
tables. The directors have considered the impact of the current
Covid-19 pandemic on the mortality assumptions and consider that
use of the updated Continuous Mortality Improvement (CMI) 2021
projections released in March 2022 for the future improvement
assumption a reasonable approach. Management considers the 2020 and
2021 mortality experience to be outliers and therefore have applied
a 0% weight to the 2020 and 2021 mortality experience data.
However, an addition to the mortality scaling factors of 2% has
been applied, which reflects the expected long term negative
outlook from the impact of Covid-19 on future life expectancy. The
estimated impact of the addition to the mortality scaling factors
is approximately 0.5% decrease in defined benefit obligation in
respect of the schemes.
An adjustment to the base mortality tables has been made for the
Premier Foods schemes to reflect the latest scheme mortality
studies which were commissioned by the trustee in 2021. The life
expectancy assumptions are as follows:
At 2 Apr 2022 At 3 Apr 2021
Premier RHM Schemes Premier RHM Schemes
Schemes Schemes
Male pensioner, currently aged
65 86.6 85.2 87.2 85.4
Female pensioner, currently aged
65 88.3 87.7 89.4 87.8
Male non-pensioner, currently
aged 45 87.5 86.5 87.8 86.6
Female non-pensioner, currently
aged 45 89.8 89.3 90.4 89.4
A sensitivity analysis on the principal assumptions used to
measure the scheme liabilities at the period end is as follows:
Change in assumption Impact on scheme liabilities
Discount rate Increase/decrease Decrease/increase by GBP65.9m/GBP66.9m
by 0.1%
Inflation Increase/decrease Increase/decrease by GBP29.2m/GBP19.0m
by 0.1%
Assumed life expectancy Increase/decrease Increase/decrease by GBP225.3m/GBP215.9m
at age 60 (rate of mortality) by 1 year
The sensitivity information has been derived using projected
cash flows for the Schemes valued using the relevant assumptions
and membership profile as at 2 April 2022. Extrapolation of these
results beyond the sensitivity figures shown may not be
appropriate.
Premier % of total RHM % of total Total % of total
Schemes Schemes
GBPm % GBPm % GBPm
Assets with a quoted price in an active market at 2 April 2022:
Government bonds 337.1 40.8 842.3 19.7 1,179.4 23.1
Cash 27.9 3.4 76.0 1.8 103.9 2.0
Assets without a quoted price in an active market at 2 April 2022:
UK equities 0.1 0.0 0.3 0.0 0.4 0.0
Global equities 4.3 0.5 5.7 0.1 10.0 0.2
Government bonds 31.8 3.9 2.5 0.1 34.3 0.7
Corporate bonds 0.3 0.0 6.0 0.1 6.3 0.1
UK property 84.9 10.3 285.4 6. 7 370.3 7. 3
European property 38.3 4.6 168.3 3.9 206.6 4. 0
Absolute return products 62.5 7.6 872.2 20. 4 934.7 18. 3
Infrastructure funds 26.7 3.2 338.0 7.9 364. 7 7. 2
Interest rate swaps 0.1 0.0 397.4 9.3 397.5 7.8
Inflation swaps - - 93.4 2.2 93.4 1.8
Private equity 39.9 4.8 280.1 6.5 320.0 6.3
LDI - - 7.7 0.2 7.7 0.2
Global credit 74.3 9.0 554.3 13.0 628.6 12. 3
Illiquid credit 81.6 9.9 191.6 4.5 273.2 5. 4
Cash 9.8 1.2 0.1 0.0 9.9 0.2
Other(1) 6.7 0.8 152.4 3.6 159.1 3.1
Fair value of scheme assets
as at 2 April 2022 826.3 100% 4,273.7 100% 5,100.0 100%
Assets with a quoted price in an active market at 3 April 2021:
Government bonds 45.1 5.7 1,527.7 34.3 1,572.8 29.9
Cash 14.8 1.9 64.9 1.5 79.7 1.5
Assets without a quoted price in an active market at 3 April 2021(2) :
UK equities 0.6 0.1 0.3 0.0 0.9 0.1
Global equities 8.1 1.0 5.9 0.1 14.0 0.3
Government bonds 34.3 4.3 18.3 0.4 52.6 1.0
Corporate bonds 1.0 0.1 - - 1.0 0.0
UK Property 84.6 10.7 278.8 6.2 363.4 6.9
European property 20.6 2.6 83.9 1.9 104.5 2.0
Absolute return products 228.2 28.8 883.9 19.8 1,112.1 21.1
Infrastructure funds 19.3 2.5 302.2 6.8 321.5 6.1
Interest rate swaps - - 464.2 10.4 464.2 8.8
Inflation swaps - - 21.2 0.5 21.2 0.4
Private equity 22.3 2.8 218.3 4.9 240.6 4.6
LDI 191.2 24.1 - - 191.2 3.6
Global credit 16.9 2.1 301.7 6.8 318.6 6.1
Illiquid credit 47.1 5.9 127.8 2.9 174.9 3.4
Cash 0.1 0.0 - - 0.1 0.0
Other(1) 58.3 7.4 160.3 3.5 218.6 4.2
Fair value of scheme assets
as at 3 April 2021 792.5 100 4,459.4 100 5,251.9 100
(1) Included in Other in the RHM Schemes is GBP111.2m (2020/21: GBP106.3m) of assets which
were sold in the prior period and await settlement at the year-end date.
(2) Updated to provide enhanced disclosure on the assets within the Other category.
For assets without a quoted price in an active market fair value is determined with reference
to net asset value statements provided by third parties.
Where pensions asset valuations were not available at 31 March
2022, as is usual practice, valuations at 31 December 2021 have
been rolled forward for cash movements to end of March 2022 to
estimate the valuations for these assets. This approach is
principally relevant for Infrastructure Funds, Private Equity,
Absolute Return Products, Property Assets, Illiquid Credits and
Global Credits. Management have applied movements in the market
indexes most comparable between 31 December 2021 and 1 April 2022
to project a valuation for assets where the lagged value approach
is to be taken . Pension asset valuations are therefore subject to
estimation uncertainty due to market volatility, which could result
in a material movement in asset values over the next 12 months.
The amounts recognised in the balance sheet arising from the
Group's obligations in respect of its defined benefit schemes are
as follows:
At 2 April 2022 At 3 April 2021
Premier RHM Schemes Total Premier RHM Schemes Total
Schemes Schemes
GBPm GBPm GBPm GBPm GBPm GBPm
Present value of
funded obligations (1,020.2) (3,134.9) (4,155.1) (1,175.1) (3,536.9) (4,712.0)
Fair value of scheme
assets 826.3 4,273.7 5,100.0 792.5 4,459.4 5,251.9
(Deficit)/surplus
in schemes (193.9) 1,138.8 944.9 (382.6) 922.5 539.9
The aggregate surplus of GBP539.9m has increased to a surplus of
GBP944.9m in the current period. This increase of GBP405.0m
(2020/21: GBP690.5m decrease) is primarily due to changes in
financial assumptions, being higher discount rate offset to a
lesser extent by higher inflation assumptions. Further details are
provided later in this note .
The disclosures in note 9 represent those schemes that are
associated with Premier ('Premier schemes') and those that are
associated with ex-RHM companies ('RHM Schemes'). These differ to
that disclosed on the balance sheet, in which the schemes have been
split between those in an asset position and those in a liability
position. The disclosures in note 9 reconcile to those disclosed on
the balance sheet as shown below:
At 2 April 2022 At 3 April 2021
Premier RHM Schemes Total Premier RHM Schemes Total
Schemes Schemes
GBPm GBPm GBPm GBPm GBPm GBPm
Schemes in net
asset position 9.9 1,138.8 1,148.7 12.2 922.5 934.7
Schemes in net
liability position (203.8) - (203.8) (394.8) - (394.8)
Net (Deficit)/surplus
in schemes (193.9) 1,138.8 944.9 (382.6) 922.5 539.9
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 28 March
2020 (1,049.6) (3,240.0) (4,289.6)
Interest cost (22.8) (60.4) (83.2)
Past service cost (0.4) (2.5) (2.9)
Settlement 27.4 57.8 85.2
Remeasurement loss (171.6) (442.8) (614.4)
Exchange differences 2.6 1.5 4.1
Benefits paid 39.3 149.5 188.8
Defined benefit obligation at 3 April
2021 (1,175.1) (3,536.9) (4,712.0)
Interest cost (22.7) (68.9) (91.6)
Past service cost (0.1) (0.2) (0.3)
Settlement 0.2 - 0.2
Remeasurement gain 139.7 333.5 473.2
Exchange differences 0.5 0.2 0.7
Benefits paid 37.3 137.4 174.7
Defined benefit obligation at 2 April
2022 (1,020.2) (3,134.9) (4,155.1)
Changes in the fair value of scheme assets were as follows:
Premier RHM Schemes Total
Schemes
GBPm GBPm GBPm
Fair value of scheme assets at
28 March 2020 774.7 4,745.3 5,520.0
Interest income on scheme assets 16.2 81.4 97.6
Remeasurement gains/(losses) 16.7 (152.6) (135.9)
Administrative costs (6.8) (3.9) (10.7)
Settlement (18.1) (61.1) (79.2)
Contributions by employer 45.5 1.5 47.0
One-off contribution by employer(1) 7.0 - 7.0
Exchange differences (3.4) (1.7) (5.1)
Benefits paid (39.3) (149.5) (188.8)
Fair value of scheme assets at
3 April 2021 792.5 4,459.4 5,251.9
Interest income on scheme assets 15.3 87.3 102.6
Remeasurement gains/(losses) 17.5 (133.4) (115.9)
Administrative costs (4.2) (2.5) (6.7)
Settlement (0.3) - (0.3)
Contributions by employer 40.9 0.5 41.4
Additional employer contribution(2) 2.5 - 2.5
Exchange differences (0.6) (0.2) (0.8)
Benefits paid (37.3) (137.4) (174.7)
Fair value of scheme assets at
2 April 2022 826.3 4,273.7 5,100.0
(1) One-off contribution by employer is related to Hovis
disposal proceeds due to the Premier Schemes
(2) Contribution by the Group to the Premier Schemes due to the
payment of dividends during the year.
The reconciliation of the net defined benefit (deficit)/surplus
over the period is as follows:
Premier RHM Schemes Total
Schemes
GBPm GBPm GBPm
(Deficit)/surplus in schemes at 28 March
2020 (274.9) 1,505.3 1,230.4
Amount recognised in profit or loss (4.5) 11.3 6.8
Remeasurements recognised in other comprehensive
income (154.9) (595.4) (750.3)
Contributions by employer 45.5 1.5 47.0
One-off contribution by employer 7.0 - 7.0
Exchange differences recognised in other
comprehensive income (0.8) (0.2) (1.0)
(Deficit)/surplus in schemes at 3 April
2021 (382.6) 922.5 539.9
Amount recognised in profit or loss (11.8) 15.7 3.9
Remeasurements recognised in other comprehensive
income 157.2 200.1 357.3
Contributions by employer 40.9 0.5 41.4
Additional employer contribution(1) 2.5 - 2.5
Exchange differences recognised in other
comprehensive income (0.1) - (0.1)
(Deficit)/surplus in schemes at 2 April
2022 (193.9) 1,138.8 944.9
(1) Contribution by the Group to the Premier Schemes due to the
payment of dividends during the year.
Remeasurements recognised in the consolidated statement of
comprehensive income are as follows:
2021/22 2020/21
Premier RHM Total Premier RHM Total
Schemes Schemes Schemes Schemes
GBPm GBPm GBPm GBPm GBPm GBPm
Remeasurement gain/(loss)
on scheme liabilities 139.7 333.5 473.2 (171.6) (442.8) (614.4)
Remeasurement gain/(loss)
on scheme assets 17.5 (133.4) (115.9) 16.7 (152.6) (135.9)
Net remeasurement
gain/(loss) for the
period 157.2 200.1 357.3 (154.9) (595.4) (750.3)
The actual return on scheme assets was a GBP 13.3m loss
(2020/21: GBP 38.3m loss), which is GBP115.9m less (2020/21:
GBP135.9m less) than the interest income on scheme assets of
GBP102.6m (2020/21: GBP97.6m).
The remeasurement gain on liabilities of GBP473.2m (2020/21:
GBP614.4m loss) comprises a gain due to changes in financial
assumptions of GBP413.3m (2020/21: GBP575.1m loss), a loss due to
member experience of GBP3.2m (2020/21: GBP6.7m gain) and a gain due
to demographic assumptions of GBP63.1m (2020/21: GBP46.0m
loss).
The Group expects to contribute between GBP4m and GBP6m annually
to its defined benefit schemes in relation to expenses and
government levies and GBP37-39m of additional annual contributions
to fund the scheme deficits up to 2 April 2023.
The Group has concluded that it has an unconditional right to a
refund of any surplus in the RHM Pension Scheme once the
liabilities have been discharged and, that the trustees of the RHM
Pension Scheme do not have the unilateral right to wind up the
scheme, so the asset has not been restricted and no additional
liability has been recognised.
The total amounts recognised in the consolidated statement of
profit or loss are as follows:
2021/22 2020/21
Premier RHM Schemes Total Premier RHM Schemes Total
Schemes Schemes
GBPm GBPm GBPm GBPm GBPm GBPm
Operating profit
Past service cost (0.1) (0.2) (0.3) (0.4) (2.5) (2.9)
Settlement (costs)/credits (0.1) - (0.1) 9.3 (3.3) 6.0
Administrative costs (4.2) (2.5) (6.7) (6.8) (3.9) (10.7)
Net interest (cost)/credit (7.4) 18.4 11.0 (6.6) 21.0 14.4
Total (cost)/credit (11.8) 15.7 3.9 (4.5) 11.3 6.8
Defined contribution schemes
A number of companies in the Group operate defined contribution
schemes, including provisions to comply with auto enrolment
requirements laid down by law. In addition, a number of schemes
providing life assurance benefits only are operated. The total
expense recognised in the statement of profit or loss of GBP8.0m
(2020/21: GBP7.8m) represents contributions payable to the schemes
by the Group at rates specified in the rules of the schemes.
8. Notes to the cash flow statement
Reconciliation of profit before tax to cash flows from
operations
52 weeks 53 weeks
ended ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Profit before taxation 102.6 122.8
Net finance cost 28.5 29.8
Operating profit 131.1 152.6
Depreciation of property, plant and equipment 19.2 19.1
Amortisation of intangible assets 27.0 30.4
Loss on disposal of non-current assets 0.7 0.4
Impairment of tangible assets - 0.3
Impairment of intangible assets - 0.1
Fair value movements on foreign exchange and
other derivative contracts (4.4) 2.3
Reversal of impairment losses on financial
assets(1) - (15.7)
Profit on disposal of investment in associate(1) - (16.9)
Equity settled employee incentive schemes 3.4 3.1
GMP equalisation and past service cost related
to defined benefit pension schemes 0.3 2.9
Increase in inventories (9.3) (0.8)
(Increase) / Decrease in trade and other
receivables (13.1) 5.7
Increase / (Decrease) in trade and other
payables and provisions 4.1 (1.6)
Additional employer contribution(2) (2.5) -
Movement in retirement benefit obligations (45.6) (63.7)
Cash generated from operations 110.9 118.2
(1) On 5 November 2020, the Group completed the sale of its interest
in Hovis to Endless LLP. As part of the sale, the group received
a total consideration of GBP37.3m, of which GBP16.9m was in respect
of equity and GBP20.4m reflected the settlement of the outstanding
loan to associate including interest of GBP4.7m
(2) Contribution by the Group to the Premier schemes due to the
payment of dividends during the year.
52 weeks 53 weeks
ended ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Net inflow / (outflow) of cash and cash equivalents 53.2 (176.8)
Movement in lease liabilities 2.5 2.9
(Increase) / decrease in borrowings (10.0) 275.0
Debt issuance costs in the period 8.5
Other non-cash movements (6.5) (4.2)
Decrease in borrowings net of cash 47.7 96.9
Total net borrowings at beginning of period (332.7) (429.6)
Total net borrowings at end of period (285.0) (332.7)
Analysis of movement in borrowings
As at Cash flows Non-cash Other As at
3 Apr interest non-cash 2 Apr
2021 expense movements 2022
GBPm GBPm GBPm GBPm GBPm
Bank overdrafts (3.1) 3.1 - - -
Cash and bank
deposits 4.2 50.1 - - 54.3
Net cash and cash
equivalents 1.1 53.2 - - 54.3
Borrowings -
revolving credit
facilities - - - - -
Borrowings - Senior
Secured
Fixed Rate Notes
maturing
October 2023 (300.0) 300.0 - - -
Borrowings - Senior
Secured
Fixed Rate Notes
maturing
October 2026 - (330.0) - - (330.0)
Borrowings - Senior
Secured
Floating Rate
Notes maturing
July 2022 (20.0) 20.0 - - -
Lease liabilities (18.6) 3.3 (0.7) (0.1) (16.1)
Gross borrowings
net
of cash(1) (337.5) 46.5 (0.7) (0.1) (291.8)
Debt issuance
costs(2) 4.8 8.5 - (6.5) 6.8
Total net
borrowings(1) (332.7) 55.0 (0.7) (6.6) (285.0)
Total net
borrowings
excluding lease
liabilities(1) (314.1) 51.7 - (6.5) (268.9)
(1) Borrowings exclude derivative financial instruments.
(2) The non-cash movement in debt issuance costs relates to the
amortisation of capitalised borrowing costs only.
The Group has the following cash pooling arrangements in
sterling, euros and US dollars, where both the Group and the bank
have a legal right of offset.
As at 2 Apr 2022 As at 3 Apr 2021
Offset Offset Net Offset Offset Net
asset liability offset asset liability offset
asset asset
Cash, cash equivalents
and bank overdrafts 8.1 0.0 8.1 138.2 (141.3) (3.1)
9. Bank and other borrowing
As at As at
2 Apr 2022 3 Apr
2021
GBPm GBPm
Current:
Bank overdrafts - (3.1)
Lease liabilities (2.1) (2.3)
Total borrowings due within one year (2.1) (5.4)
Non-current:
Lease liabilities (14.0) (16.3)
(14.0) (16.3)
Transaction costs(1) 6.8 4.8
6.8 4.8
Senior secured notes (330.0) (320.0)
(330.0) (320.0)
Total borrowings due after more than one
year (337.2) (331.5)
Total bank and other borrowings (339.3) (336.9)
(1) Included in transaction costs is GBP1.9m (2020/21: GBP2.6m)
relating to the revolving credit facility.
Secured senior credit facility - revolving
During the period, the Group entered into a new revolving credit
facility (RCF) with an updated lending group for a period of three
years from May 2021 with the option of extending for up to two
additional years, which led to a write off of previously
capitalised transaction fees of GBP2.3m. The RCF of GBP175m
attracts a leverage-based margin of between 2.0% and 4.0% above
SONIA. Banking covenants of net debt / EBITDA and EBITDA / interest
are in place and are tested biannually.
The covenant package attached to the revolving credit facility
is:
Net debt Net
/ EBITDA(1) debt
/ Interest(1)
2021/22 FY 3.50x 3.00x
2022/23 FY 3.50x 3.00x
(1) Net debt, EBITDA and Interest are
as defined under the revolving credit facility.
On 18 May 2022, the Group announced that it had extended the
period of its revolving credit facility (RCF) by one year to May
2025 with the same lending group. See note 15 for further
details.
Senior secured notes
During the period, the Group issued new Senior Secured Fixed
Rate Notes maturing October 2026. The senior secured notes are
listed on the Irish GEM Stock Exchange. The notes totalling GBP330m
mature in October 2026 and attract an interest rate of 3.5%. The
gross proceeds were used to redeem GBP300m Senior Secured Fixed
Rate Notes maturing October 2023, which led to the write off of
previously capitalised transaction fees of GBP1.9m and an early
redemption fee of GBP4.7m.
During the period, the Group also redeemed the remaining GBP20m
Senior Secured Floating Rate Notes maturing July 2022. This
redemption led to the write off of previously capitalised
transaction fees of GBP0.1m.
Lease liabilities
The following table analyses the Group's lease liabilities into
relevant maturity groupings based on the contractual undiscounted
cash flows.
Within 1 and 2 and 3 and 4 and Over Total
1 year 2 years 3 years 4 years 5 years 5 years
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 2 April 2022
Lease liabilities (2.9) (2.6) (2.5) (2.2) (1.5) (19.1) (30.8)
At 3 April 2021
Lease liabilities (3.2) (2.8) (2.5) (2.4) (2.2) (20.6) (33.7)
Cash outflows of GBP3.3m (2020/21: GBP2.7m) in relation to
repayments of lease liabilities have been included in the
consolidated statement of cash flows.
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 2 April As at 3 April
2022 2021
Carrying Fair Carrying Fair
amount value amount value
GBPm GBPm GBPm GBPm
Financial assets not measured at
fair value:
Cash and cash equivalents 54.3 54.3 4.2 4.2
Financial assets at amortised
cost:
Trade and other receivables 65.7 65.7 49.4 49.4
Financial assets at fair value
through profit or loss:
Trade and other receivables 3.3 3.3 2.5 2.5
Derivative financial instruments
- Forward foreign currency exchange 0.
contracts 0. 1 1 - -
- Commodity and energy derivatives 2 .3 2.3 0. 1 0. 1
Financial liabilities at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange
contracts (0.3) (0.3) (2.3) (2.3)
Financial liabilities at
amortised cost:
(243
Trade and other payables (247.4) (247.4) .8) (243 .8)
Senior secured notes (330.0) (305.8) (320.0) (326.6)
( 3.
Bank overdraft - - 1) (3.1)
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 2 April As at 3 April
2022 2021
Level Level Level
1 2 1 Level 2
GBPm GBPm GBPm GBPm
Financial assets at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange
contracts - 0.1 - -
- Commodity and energy derivatives - 2.3 - 0.1
Financial liabilities at fair value
through profit or loss:
Derivative financial instruments
- Forward foreign currency exchange (0
contracts - .3) - (2.3)
Financial liabilities at
amortised cost:
(326
Senior secured notes (305.8) - .6) -
11. Dividends
The following dividends were declared and paid during the
period:
52 weeks ended 53 weeks
ended
2 Apr 2022 3 Apr 2021
GBPm GBPm
Ordinary final of 1.0 pence per
ordinary share (2020/21: nil)
paid 30 July 2021 8. 5 -
After the balance sheet date, a final dividend for 2021/22 of
1.2 pence per qualifying ordinary share
(2020/21: 1.0 pence) was proposed for approval at the Annual
General Meeting on 20 July 2022 and will be payable on 29 July
2022. Dividend distributions are recognised as a liability in the
period in which the dividends are approved by Group's
shareholders.
12. Related party transactions
There has been no material change to transactions with related
parties during the period.
13. Subsequent events
On 18 May 2022 the Group announced that it had extended the
period of its revolving credit facility (RCF) by one year to May
2025 with the same lending group. The covenant package attached to
the RCF and tested bi-annually is unchanged (see note 11 for
details).
On 18 May 2022, the directors have proposed a final dividend for
the period ended 2 April 2022 for approval at the Annual General
Meeting.
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END
FR DBGDUGGBDGDR
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