Premier Foods: First Half 2018-2019 Trading update

London / UK. (pf) British Premier Foods PLC released its half year results for the 26 weeks ended 29 September 2018. Chief Executive Officer Gavin Darby: «We are pleased to report revenue growth of +1.3 percent in the first half, a +6.2 percent increase in Trading profit and Net Debt GBP 26m lower compared to last year. Mr Kipling, the Group’s largest brand was key to this growth following an excellent consumer response to its brand relaunch in the UK with revenues up +13 percent. Batchelors, the Group’s third largest brand, delivered revenue growth of +6.8 percent as consumers continue to enjoy its new convenient pots range».

Financial Headlines

• Half year revenue up +1.3 percent; Q2 revenue up +1.0 percent
• Trading profit growth of +6.2 percent to GBP 51.0m
• Adjusted profit before tax up +14.3 percent to GBP 30.2m
• Statutory loss before tax (GBP 2.2m); loss after tax (GBP 0.7m)
• Net debt GBP 509.5m; a GBP 25.8m reduction on H1 FY17/18
• Combined pensions surplus GBP 282.7m compared to GBP 317.0m at 31 March 2018

Strategic and operational Headlines

• Mr Kipling brand relaunch in the UK delivered revenue growth of +13 percent
• Batchelors strong performance as innovation programme continues to deliver results
• Quarter 2 revenue growth demonstrates portfolio resilience despite hot summer in the UK and operational challenges associated with final phase of logistics transformation programme
• Group in discussions with third parties regarding the potential disposal of Ambrosia

Headline results	H1-2018/2019	H1-2017/2018	Change
Revenue (million GBP)	358.0	353.3	+1.3 percent
Trading profit (million GBP)	51.0	48.0	+6.2 percent
Adjusted profit before tax (million GBP)	30.2	26.4	+14.3 percent
Adjusted earnings per share (GBPence)	2.91	2.56	+13.8 percent
Net debt (million GBP)	(509.5)	(535.3)
Other measures	H1-2018/2019	H1-2017/2018	Change
Operating profit (million GBP)	28.3	22.5	+25.7 percent
Loss before taxation (million GBP)	(2.2)	(1.2)	(83.3 percent)
(Loss)/Profit after taxation (million GBP)	(0.7)	0.3	–

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CEO Gavin Darby: «We saw improved resilience displayed by the business during the hot summer experienced in the first half of the financial year; however we are presently experiencing some operational challenges with the implementation of the final Sweet Treats phase of our logistics transformation programme».

«While we are committed to our strategy of improving operating performance and targeting a Net debt to Ebitda ratio below 3.0x by March 2020, we are also working in parallel to identify other strategic opportunities to accelerate the Company’s turnaround. The Board has determined that it should focus resources on areas of the business which have the best potential for growth through accelerated investment in consumer marketing and high return capital projects. Accordingly, we are pursuing options to fund these plans as well as delivering a meaningful reduction in Net debt, through discussions with third parties regarding the potential disposal of our Ambrosia brand. Although there is no certainty that any transaction will complete, we will update shareholders in due course».

«We have a strong innovation plan in place for the second half of the year, and profit expectations for the full year remain unchanged».

«Having today (2018-11-12) announced a new strategic initiative for the business, I have decided to step down as CEO on 31st January 2019, which will mark the sixth anniversary of my joining Premier Foods. The Board will now begin a recruitment process for my successor».