Update on Q4 and Full Year Trading

Premier Foods plc today confirms it has concluded its strategic review announced on 27 February 2019 and announces a transformational agreement with its pensions schemes. The Group also provides an update on current Trading and on the impact on the Group of the COVID-19 outbreak.

Overview:

• Landmark pensions agreement between Company and pension Trustees
• NPV of pensions deficit contributions to reduce from £300-320m by up to approximately 45% to £175-185m
• Trading profit for FY19/20 at top end of market expectations
• Net debt/EBITDA at March 2020 comfortably lower than 3.0x, beating previous target

Pension Agreement Highlights

• Segregated merger of RHM, Premier Foods and Premier Grocery Products pension schemes
• RHM pension scheme moving progressively closer to a scheme buyout by a specialist insurance provider
• On buyout, a prospective RHM surplus would be expected to transfer to remaining deficit pension schemes
• Potential for significant reduction in future pension deficit contributions from current £38m p.a.
• From FY23/24, indicative annual cash deficit contribution reduction, subject to future valuation discussions and other assumptions projected as follows:
  • Low case: £8m lower p.a. at £30m
  • Medium case: £16m lower p.a. at £22m
  • High case: £21m lower p.a. at £17m
• NPV of pension deficit contributions could reduce from current £300-320m by up to approximately 45% to £175-185m
• Scheme expenses saving to the Company of £4m annually from FY20/21
• Substantial improvement to the position of the Premier Foods schemes

Colin Day, Chairman, said:
“The segregated merger of the Company’s pensions schemes we are announcing today represents a ground-breaking agreement which is set to unlock benefits and value for all stakeholders in the Company, leveraging the strength of the RHM scheme and substantially improving the position of the Premier Foods schemes. With a buyout of the RHM scheme getting progressively closer, any resulting surplus would be transferred to the remaining schemes and therefore result in significantly reduced pension deficit cash contributions by the Company in future years. The agreement we have reached follows extensive and highly collaborative discussions with all connected stakeholders, and marks a positive conclusion to the Company’s strategic review. The Group will continue to pursue its successful branded growth model strategy, opening up further opportunities to deliver value in due course.”

Further details on the pensions agreement is outlined in the RNS and brief presentation