Premier Foods plc · LSE:PFD
Premier Foods — Corporate Update (April 2020)
20 slides from Premier Foods's corporate update, Apr 20, 2020
Slide 1: Pensions agreement & Trading update
Pensions agreement & Trading update 20 April 2020
Slide 2: Contents
CONTENTS 1 Overview 2 Pension agreement highlights and benefits 3 Indicative deficit contribution schedule and scenario sensitivities 4 Additional benefits & details 5 Trading update & COVID-19 6 Cash & liquidity 7 Appendix 2
Slide 3: Overview: Strategic review concluded with landmark pensions agreement
1 OVERVIEW Strategic review concluded with landmark pensions agreement ✓ ✓ ✓ ✓ Top of 11 <3.0 £m range Consecutive Transformational Market Net debt/EBITDA quarters of UK pensions expectations end March 2020 sales growth agreement • Group’s branded growth model strategy has delivered 11 consecutive q
Slide 4: Benefits of this groundbreaking pensions agreement
2 BENEFITS OF THIS GROUNDBREAKING PENSIONS AGREEMENT Set to deliver value for many stakeholders 1,200 Accounting valuation from 2013 1,070 800 300-320 400 £4m per annum £m 175-1851 administration 0 costs saving2 (400) Current Projected (481) (800) RHM Premier Foods Dec 2013 Sept 2019 1 2 3 Merged Tr
Slide 5: Landmark agreement to deliver value for many stakeholders
2 LANDMARK AGREEMENT TO DELIVER VALUE FOR MANY STAKEHOLDERS Pension scheme members expected to benefit from better funding How do the benefits work through? 1 2 3 4 On buyout, Creates greater Utilises strength RHM scheme in prospective funding of RHM scheme healthy surplus1 RHM surplus2 certainty fo
Slide 6: Future deficit contribution plan scenarios
3 FUTURE DEFICIT CONTRIBUTION PLAN SCENARIOS Subject to scheme investment performance over time Low case – Gilts +2.0% Medium case – Gilts +2.8% High case – Gilts +3.25% £m Current FY22/23 FY23/24 FY24/25 FY22/23 FY23/24 FY24/25 FY22/23 FY23/24 FY24/25 Deficit 38 36 30 31 32 22 23 28 17 17 contribut
Slide 7: Benefits summary: pension scheme benefits
4 BENEFITS SUMMARY Landmark agreement expected to deliver value for many stakeholders 1 More secure future for Premier Foods schemes members 2 Potential sharing of surplus on buyout across the whole trust Pension Scheme 3 The existing £450m security which the RHM Scheme benefits from remains unchang
Slide 8: Benefits summary: company benefits
4 BENEFITS SUMMARY Landmark agreement expected to deliver value for many stakeholders 1• Potential for significant reduction in pension deficit contribution payments 2• Resultant significant reduction in NPV of deficit contributions by up to c.45%1 3 £4m p.a. reduction in administration expenses pai
Slide 9: Trading update
5 TRADING UPDATE Now expect Trading profit for FY19/20 to be at top end of market expectations • Branded growth model strategy is continuing to drive strong performance: Branded - Leveraging our market leading brands growth - Exciting new product innovation based on consumer trends model - Emotional
Slide 10: COVID-19 update
5 COVID-19 UPDATE Additional supply chain measures implemented and demand trends 1. Colleagues health, safety & wellbeing • Group’s priority is health and wellbeing of our colleagues and other stakeholders • A wide range of additional health, safety and hygiene protocols adopted across supply chain:
Slide 11: Cash & liquidity
6 CASH & LIQUIDITY Expect to comfortably beat previous 3.0x Net debt/EBITDA target at 28 March 2020 £91m £90m Cash £510m £266m £210m Fixed notes due Oct 2023 Senior available Drawn RCF Secured Floating rate notes due June 2022 liquidity Notes £300m Undrawn RCF £85m Cash and Committed RCF at 28 March
Slide 12: Appendix
Appendix
Slide 13: Branded growth model strategy is delivering
7 BRANDED GROWTH MODEL STRATEGY IS DELIVERING We have increased vigour, impetus and energy £ Sustainable Cost control Cash & profitable & efficiency generation revenue growth • Leading brand positions • Lean SG&A cost base • Tight focus on Capex • Sustained marketing investment • Operational Excelle
Slide 14: UK revenue performance
7 UK REVENUE PERFORMANCE Track record of delivering sustainable profitable revenue growth Quarterly UK revenue growth % movement year on year Sustainable & profitable 7.3% revenue growth 4.8% 4.4% 4.4% 4.0% 3.6% 3.4% +3.4% 2.6% 1.6% 1.2% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY17/18 FY18/19 FY19/20 14
Slide 15: Indicative deficit contribution schedule changes (low case)
7 INDICATIVE DEFICIT CONTRIBUTION SCHEDULE CHANGES Investment return assumption: LOW – GILTS +2.0% £m 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Indicative revised plan Deficit contributions 38 37 36 30 31 32 Administration costs 4 4 4 4 4 4 Total 42 41 40 34 35 36 Current plan Deficit contribu
Slide 16: Indicative deficit contribution schedule changes (medium case)
7 INDICATIVE DEFICIT CONTRIBUTION SCHEDULE CHANGES Investment return assumption: MEDIUM – Gilts + 2.8% £m 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Indicative revised plan Deficit contributions 38 35 32 22 23 23 Administration costs 4 4 4 4 4 4 Total 42 39 36 26 27 27 Current plan Deficit cont
Slide 17: Indicative deficit contribution schedule changes (high case)
7 INDICATIVE DEFICIT CONTRIBUTION SCHEDULE CHANGES Investment return assumption: HIGH – GILTS +3.25% £m 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Indicative revised plan Deficit contributions 38 34 28 17 18 18 Administration costs 4 4 4 4 4 4 Total 42 38 32 21 22 22 Current plan Deficit contri
Slide 18: Improved dividend matching arrangement
7 IMPROVED DIVIDEND MATCHING ARRANGEMENT Reduced payments to pension schemes compared to previous 1:1 plan Matching payment to pension scheme (£m) 25 20 Previous Revised 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Dividend paid (£m) ▪ Up to £5m of cash dividend - for every £1 paid a
Slide 19: Pensions – combined schemes
7 PENSIONS – COMBINED SCHEMES Most recent accounting position as at 28 September 2019 £m 28 Sept 2019 30 March 2019 Scheme Assets (£m) 28 September 2019 30 March 2019 Assets 5,657 5,041 Equities 180 180 Liabilities (5,068) (4,668) Government bonds 1,632 1,490 Surplus 589 373 Corporate bonds 21 27 Su
Slide 20: Evolution of accounting valuation
7 EVOLUTION OF ACCOUNTING VALUATION £m 1,200 1,070 1,000 RHM Premier Foods 800 600 400 200 0 (200) (400) (481) (600) (800) Dec Sept 2013 2019 ▪ RHM scheme demonstrated consistently strong performance over last 6 years ▪ Accounting valuation uses UK AA corporate bonds for valuing liabilities ▪ Hence