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19 March 2012

Premier Foods announces 2011 Full Year results, details of re-financing package and further information on growth strategies

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• 2011 Trading profit in line with previous guidance
• Consent obtained to landmark 4 ½ year re-financing package
• New management in place with clear strategies for growth
• 2012 focus on stabilising business and investing in future growth

Following announcement on 12 March of unanimous consent to the terms of a new re-financing package, Premier Foods today announces its Full Year results for 2011 and further details of its growth strategies.

Key elements of the 2011 results, re-financing package and growth strategies are headlined below:

2011 Full Year results
• Sales for Ongoing business1 declined by 3.4% reflecting challenging consumer environment and the effect of previous customer disputes
• Trading profit for Ongoing business1 of £173.7m
• Significant one-off items which offset each other are Trading profit neutral for the year
• Goodwill and intangible asset impairment in Bread2 division of £282.0m resulted in a loss after tax from Continuing operations of £230.0m for the year
• Sales of Meat-free, Canned grocery and Brookes Avana realised total net proceeds of £394m for a combined EBITDA multiple of 8.7x
• Net debt of £995.1m at 31 December 2011

Re-financing package
• Banking facilities of total of £1.4billion extended to June 2016
• Banking covenants re-set to support strategic plan
• Interest rate swaps converted to additional bank term loan
• Pension schemes to defer deficit contributions until January 2014
• Amortisation payment schedule amended and next payments deferred to mid 2014
• Sliding scale of new deferred bank fees at market rates from 2014

Growth strategies
• Growth strategies aligned around “Best in British Food” vision
• Marketing investment behind eight Power Brands will double in 2012 with sustainable increase planned in subsequent years
• Focus on building collaborative relationships with key customers to drive mutual growth
• Targeting gross 4% year on year supply chain savings and doubling of overhead savings to more than £40m by 2013
• Long-term approach to deliver sustainable shareholder value

Outlook

The recently announced re-financing package provides the foundation on which the Group’s growth strategies can be implemented. During the coming year, the Group’s priorities remain to stabilise its operational performance, while enabling the business to increase its focus through selected disposals.  The consumer environment is expected to remain challenging with continued high levels of promotional activity and ongoing cost inflation, albeit at lower levels than 2011. The Group, nevertheless, believes the planned increase in marketing investment, proposed cost reduction programmes, better customer collaboration and renewed focus across the Group will provide the platform to deliver future branded growth.

Consequently, over the medium-term, the Group expects a return to sales growth, and higher gross margins. This will be supported by further sustained increases in marketing investment and a continuation of cost reduction and efficiency programmes.  Additionally, the Group will reduce interest charges and net debt.

Commenting on the re-financing package, Michael Clarke, Chief Executive Officer, Premier Foods, said:

“I’m delighted that we have been able to reach a positive outcome with our banking and pension scheme partners. The consent for this re-financing package represents a strong sign of confidence and support for the business, its strategies and growth plans. This is great news for our employees and all of our stakeholders.”

He continued:

“We intend to draw a line under the performance of 2011.  Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilising the business, re-focus the portfolio and invest in our future growth. Whilst we recognise that the consumer environment remains challenging, our performance thus far in 2012 is in line with our expectations. I’m convinced we have the right team to turn this business around and I am very positive about our future.” 

A presentation to investors and analysts on 2011 results, re-financing package details and growth strategies will take place on 19 March 2012 at 9.30am at The Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED. The presentation will be webcast at http://www.premierfoods.co.uk/.

~ Ends ~

 

For further information, please contact:

Institutional investors and analysts:
Mark Moran, Chief Financial Officer                                                  +44 (0) 1727 815 850
Richard Godden, Head of Investor Relations                                    +44 (0) 1727 815 850

Media enquiries:
Lisa Attenborough, Director of Communications                              +44 (0) 1727 815 850

Maitland                                                                                            +44 (0) 20 7379 5151
Tom Buchanan
Brian Hudspith

The full release can be viewed below

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16 March 2012

Notification of 2011 Full Year results, details of re-financing package and growth strategies

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