Suspension of pension deficit payments

Premier Foods plc

06 March 2024

 

6 March 2024

Premier Foods plc ("Premier Foods", the "Group" or the "Company")

Suspension of pension deficit payments

Premier Foods is pleased to announce that it has reached agreement with the RHM Pension Scheme Trustee⁴ to suspend pension deficit contribution payments from 1 April 2024⁵. This suspension of future contributions is taking place earlier than originally expected, reflecting the strong performance of the pension scheme, following the segregated merger in June 2020.

As a result, the Group will benefit from £33m increased free cash flow for the financial year ending 29 March 2025, and subject to the results of the next triennial valuation, the Group anticipates no further contributions to be payable after this date.² Administration costs associated with running the pension scheme of c.£5m per annum and the dividend match⁶ mechanism are currently unchanged.

Duncan Leggett, Chief Financial Officer, said:

"The further significant progress in the funding position of the pension scheme has enabled us to take another important step to expected full resolution of the Scheme by the end of 2026. This suspension of pension payments substantially increases the free cash flow available to us and presents us with enhanced capital allocation options to deliver on our growth ambitions. The Scheme has reached this position following strong stewardship by the Trustee over many years and we will continue to work collaboratively with them to further de-risk the Scheme."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

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Contacts:

Institutional investors and analysts:

Duncan Leggett, Chief Financial Officer

Richard Godden, Director of Investor Relations

[e-mail]

Media enquiries:

Sarah Henderson, Director of Communications                                                            

Headland
Ed Young	[phone]
Jack Gault	[phone]

Notes to editors:

1.	The last actuarial triennial valuation of the Scheme, as at 31 March 2022, showed a surplus in the RHM section of £665m and a deficit of the Premier Foods section of £368m. The last buyout surplus for the RHM section as at 31 March 2022 was +£100m.
2.	The next triennial valuation of the Scheme is at 31 March 2025. In the event that the Scheme is under funded as at 31 March 2025, deficit contributions may recommence.
3.	The Group expects to pay pension deficit contributions of £33m to the Scheme for the financial year ending 30 March 2024.
4.	The RHM Pension Scheme Trustee manages the RHM and Premier Foods sections of the pension scheme.
5.	The Group has arranged Letters of Credit in favour of the Scheme, equal to the suspended deficit contributions.
6.	Dividend match mechanism: Of the first £5 million paid to shareholders as a dividend, a payment of 50 pence for every £1 paid to shareholders is payable to the Scheme. For any dividend paid between £5m and £10m, there is no matching payment made to the Scheme. For any dividend paid above £10m, a payment of 50 pence for every £1 paid to shareholders is payable.

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'. 

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.

 

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