Premier Foods: announces agreement with pensions schemes

London / UK. (pf) British Premier Foods PLC 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 GBP 300-320 million by up to approximately 45 percent to GBP 175-185 million
• 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 GBP 38 million p.a.
• From FY23/24, indicative annual cash deficit contribution reduction, subject to future valuation discussions and other assumptions projected as follows:
  • Low case: GBP 8 million lower p.a. at GBP 30 million
  • Medium case: GBP 16 million lower p.a. at GBP 22 million
  • High case: GBP 21 million lower p.a. at GBP 17 million
• NPV of pension deficit contributions could reduce from current GBP 300-320 million by up to approximately 45 percent to GBP 175-185 million
• Scheme expenses saving to the Company of GBP 4 million 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.»