Premier Foods plc · LSE:PFD
Premier Foods — Proxy Contest (July 2018)
25 slides from Premier Foods's proxy contest presentation, July 2018
Slide 1: Presentation in response to Oasis proposal
Presentation in response to Oasis proposal July 2018
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Certain statements in this presentation are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those sta
Slide 3: Premier Foods has faced a challenging industry backdrop
PREMIER FOODS HAS FACED A CHALLENGING INDUSTRY BACKDROP 2013-2018 industry headwinds Long term UK food inflation Significant input cost inflation during the period Channel shift to discounters Food price deflation 2015-2017 Key customers challenged during the period Intensification in supe
Slide 4: Yet many financial metrics have improved under Gavin Darby's leadership
YET MANY FINANCIAL METRICS HAVE IMPROVED UNDER GAVIN DARBY’S LEADERSHIP FY 2013 FY 17/18 Δ International revenues £33m £61m +£28m Trading profit £139m £123m (£16m) Net debt £831m £496m (£334m) Net debt / EBITDA 4.66x 3.56x (1.11x) Net RHM pension surplus / (£218m) £754m +£972m (deficit) Net PF pensi
Slide 5: Widespread pressure on profitability across the food supply chain
WIDESPREAD PRESSURE ON PROFITABILITY ACROSS THE FOOD SUPPLY CHAIN % CHANGE IN TRADING PROFIT 2013-20181 (11%) (17%) (44%) (44%) Premier Foods Sainsbury Morrison Tesco 1) Peers’ trading profit calculated as EBIT pre-exceptional items and amortisation, latest year end data compared to 5 years prior 5
Slide 6: Initiatives driving Premier Foods' transformation
INITIATIVES DRIVING PREMIER FOODS’ TRANSFORMATION 1 Cost reduction & efficiency 2 Leveraging strategic partnerships 3 Increasing rate of innovation 4 Growing international revenues 6
Slide 7: Ongoing cost reduction & efficiency programme
ONGOING COST REDUCTION & EFFICIENCY 1 PROGRAMME 1 SKU reduction programme 2 SG&A optimisation 3 Logistics transformation 1,700 CEO Sweet Treats International Legal & Corp Procurement CFO Grocery MD HR IT Corporate Affairs 975 MD MD Development & Central Ops Retained role Role removed 2012 2014 Red
Slide 8: Leveraging key strategic partnerships
2 LEVERAGING KEY STRATEGIC PARTNERSHIPS Global Strategic Partnership in Cake A Leading Global Player in Instant Noodles Expanded scope of Mondelez International agreement Nissin partnership provides access to noodle supply chain affords enhanced opportunity for international growth and R&D expertise
Slide 9: Increasing rate of innovation
3 INCREASING RATE OF INNOVATION Innovation as % UK branded sales Aligned with key consumer trends Targeting 10% of UK branded sales Health & 10.0% Nutrition 6.4% Convenience 5.1% 3.6% Snacking/On the go FY15/16 FY16/17 FY17/18 Target Indulgence 9
Slide 10: International revenues have nearly doubled over the last 3 years
INTERNATIONAL REVENUES HAVE NEARLY DOUBLED 4 OVER THE LAST 3 YEARS 61 Revenue grew 25% in FY17/181, 34% in +92% 48 Q41 38 Compound annual growth rate of 24% £m 32 over last 3 years International revenue now 7.5% of Group revenue Team expanded to 43 from just 9 three years ago FY14/15 FY15/16
Slide 11: FY17/18 results demonstrate the strategy is working
FY17/18 RESULTS DEMONSTRATE THE STRATEGY IS WORKING +5.3% £123m £496m +3.6% 3.56x +7.0% +5.1% ↓£27m Full Year H2 & Q4 Trading profit Net debt Net debt/EBITDA Revenue growth Revenue growth Strongest revenue growth for over 5 years 11
Slide 12: The Board's strategy: building business, deleveraging and accelerating value creation
THE BOARD’S STRATEGY: BUILDING BUSINESS, DELEVERAGING AND ACCELERATING VALUE CREATION Drive revenue growth Cost control & efficiency £ Cash generation Net debt/EBITDA Accelerating Keep building below 3.0x by March shareholder value business 2020 creation 12
Slide 13: Business leader testimonials
BUSINESS LEADER TESTIMONIALS "I have known Gavin Darby for 25 years, firstly as his customer when he was at Coca Cola Europe and I was Chairman of Tesco, and then as his Chairman when he was at Vodafone. I have always found him to be an excellent manager, good with people, and a very strong strategi
Slide 14: The Board has full confidence in Gavin Darby
THE BOARD HAS FULL CONFIDENCE IN GAVIN DARBY Gavin rescued Premier from its dire situation in 2013 and gave the Company a future Gavin is successfully addressing Premier’s biggest remaining challenges ‐ Driving organic growth in a difficult market back-drop ‐ Undertaking significant cost and eff
Slide 15: Highly experienced independent directors
HIGHLY EXPERIENCED INDEPENDENT DIRECTORS Keith Hamill, Chairman Previously Chairman of Travelodge, Tullett Prebon, Moss Bros, Collins Stewart and Heath Lambert Currently NED of Samsonite and Chairman of Horsforth Holdings Ian Krieger, Senior Independent Director Pam Powell, Non-Executive Directo
Slide 16: Premier Foods' corporate governance is robust
PREMIER FOODS’ CORPORATE GOVERNANCE IS ROBUST Refreshed Board of directors ‐ Average tenure of non-executive directors 3.4 years ‐ 4 out of 6 non-executive directors have joined since 2013 Broad and complementary mix of skills and backgrounds Five independent non-executive directors on the Boa
Slide 17: McCormick approach: Board acted in the interests of all shareholders
McCORMICK APPROACH: BOARD ACTED IN THE INTERESTS OF ALL SHAREHOLDERS McCormick initial indicative offer of 52p, which the Board rejected as it 12 February 2016 significantly undervalued the Company and its prospects1 McCormick made an improved indicative offer of 60p, which was also rejected 14
Slide 18: 2017/2018 strategic review: substantive and professionally managed exercise
2017/2018 STRATEGIC REVIEW: SUBSTANTIVE AND PROFESSIONALLY MANAGED EXERCISE Daniel Wosner, an Oasis nominee, served as a Director of Premier from March 2017 to March 2018 May 2017: Financial adviser appointed to explore a wide range of strategic options May 2017 - March 2018: c.30 meetings hel
Slide 19: Gavin Darby's remuneration
GAVIN DARBY’S REMUNERATION Gavin Darby has invested £2 million of his own funds in the shares of Premier Foods At the time of Gavin Darby’s recruitment, the Company was in a difficult financial situation and it was necessary to appoint a highly experienced CEO to lead the turnaround With an en
Slide 20: Conclusion
CONCLUSION The Premier Board is committed to its strategy of improving performance and reducing net debt to create value for shareholders, while working in parallel to identify other strategic opportunities to accelerate the Company’s turnaround The Company’s results clearly demonstrate that the
Slide 21: Appendix
APPENDIX 21
Slide 22: Letter from the pension trustees
LETTER FROM THE PENSION TRUSTEES Dear Alastair, Oasis Management Company Ltd The Trustees note with concern the various announcements which have been made by the Company and by Oasis. As you are well aware stable, consistent leadership and strategic execution are considered vital ingredients in the
Slide 23: Analyst commentary
ANALYST COMMENTARY “Oasis’s departure as an activist with Board representation creates a possible stock overhang, but looking at it another way, this could be interpreted as there being nothing they could bring to the party. Premier’s management is doing everything possible to drive the business in
Slide 24: Financial Times: February 2013
FINANCIAL TIMES: 1 FEBRUARY 2013 Hard task awaits new Premier Foods chief Investors have a right to expect more. Michael Clarke, after barely 17 months at the helm, resigned abruptly from Premier Foods this week. The company put a brave face on it. Mr Clarke, its spin-doctors opined, had done an exc
Slide 25: McCormick approach: Premier Foods and McCormick RNS extracts
McCORMICK APPROACH: PREMIER FOODS AND McCORMICK RNS EXTRACTS 1. The Board of Premier Foods plc ("Premier" or the "Company") confirms that it received an unsolicited, non-binding and highly conditional approach from McCormick & Company, Inc. ("McCormick") on 12 February 2016 regarding a possible offe