Enriching life
through food
Premier Foods plc Annual Report for
the 52 weeks ended 30 March 2024
As one of the UK’s largest food
businesses, we’re passionate
about food and believe that
each and every day we have the
opportunity to help enrich peoples’
lives by creating great tasting products
that contribute to healthy and balanced
diets, while committing to nurturing our
people, local communities and our planet.
We are proud to be British, employing over
4,000 people operating from 14 sites across the UK,
supplying a range of customers with our iconic brands
which feature in millions of homes every day.
Contents
OVERVIEW
Highlights
02
Our branded growth model
04
Our ingredients
06
STRATEGIC REPORT
Our investment proposition
09
Our purpose, values and culture
10
About Premier Foods
12
Consumer and market trends
14
Our business model
16
Our strategy
18
Strategy in action
20
Group Chair’s statement
22
Chief Executive’s review
24
Key performance indicators (KPIs)
26
The Enriching Life Plan
30
Task Force on Climate-related Financial Disclosures
42
Operating and financial review
56
Risk management
63
Viability statement
71
Find us online at
www.premierfoods.co.uk
GOVERNANCE
Governance framework
74
Board of directors
76
Governance overview
78
Stakeholder engagement
and Section 172(1) statement
84
Nomination Committee report
88
Audit Committee report
91
Directors’ Remuneration report
96
Other statutory information
116
Statement of directors’ responsibilities
119
FINANCIAL STATEMENTS
Independent auditors’ report
to the members of Premier Foods plc
121
Consolidated financial statements
129
Notes to the consolidated financial statements
133
Company financial statements
176
Notes to the Company financial statements
178
Enriching Life Plan disclosure tables
182
Additional information
190
Read more
on pages 18 and 21.
Read more
on pages 04 and 05.
Insight driven
new products
Sustained marketing
investment
Retailer
partnerships
Leading
brand positions
Our branded
growth model
Continue to grow
the UK core
Supply chain investment
Expand UK into
new categories
Build international
businesses with
critical mass
Inorganic opportunities
Our
strategy
Read more
on pages 30 to 41.
Products
Helping consumers lead healthier
and more sustainable lifestyles,
by creating foods which have
a higher nutritional value, are
kinder to the environment
and are free of unnecessary or
problematic packaging.
Planet
Contributing to a healthier planet
through strong commitments
to tackle climate change and
deforestation, improving the
sustainability of farming practices
and reducing waste.
People
Forging inclusive and fulfilling
career pathways that contribute
to the UK economy and giving
back to the communities where
we operate.
Our Enriching
Life Plan
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
01
OVERVIEW
Overview
Further analysis and KPIs
found on pages 26 to 29.
Over the year, we have
continued to deliver
strong progress against
each of our five
strategic pillars.
This has resulted in another
strong set of financial results,
with revenue and Trading profit
both growing significantly
year-on-year. Our branded
growth model continues to
deliver sales growth through
new product development
(‘NPD’), sustained consumer
marketing investment and
excellent in-store execution.
Strong cash generation has also
helped us to reduce our Net
debt to its lowest ever level,
even after acquiring FUEL10K.
With this year of strategic
progress and strong financial
performance, we are increasing
our final dividend by 20%.
Statutory measures include 5 months’
ownership of FUEL10K for FY23/24. A
definition of Alternative Performance
Measures and a reconciliation between
headline and statutory measures
are provided in the appendices on
pages 60 to 62.
Read more
on pages 24 and 25.
Delivering against each of our five strategic pillars
Financial and operational highlights
+13.6%
Continue to grow the UK core
Our core UK business is key to the success
of the Group. This year we have delivered
UK branded revenue growth of +13.6%,
demonstrating the continuing success of
our branded growth model.
See page 18
for more information
£33m
Supply Chain Investment
This year we have spent £33m improving
efficiency and productivity. This ongoing
investment strategy releases cost that we
invest back into our brands in order to
drive further growth.
+72.3%
Expand UK into new categories
Sales from new categories have increased
by +72.3% over the year, driven by
products such as Ambrosia porridge pots.
See page 20
for more information
+12%
Build international businesses
with critical mass
We have continued to deliver progress,
with International sales up +12% in the
year (on a constant currency basis),
building distribution across our key
focus markets.
Inorganic opportunities
This year we purchased FUEL10K, a vibrant
breakfast brand, which we believe will
benefit from our branded growth model
and deliver accelerated growth.
See page 21
for more information
£1,122.6m
Headline revenue 1,2
+ 15.1%
£179.5m
Trading profit 1,3
+ 14.0%
£151.4m
Profit before tax
+ 34.7%
£1,122.6m
£975.6m
£900.5m
£934.2m
£847.1m
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
£179.5m
£157.5m
£141.2m
£141.6m
£124.0m
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
£151.4m
£112.4m
£102.6m
£122.8m
£53.6m
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
1.2x
Net debt to adjusted
EBITDA ratio1
56,580
Scope 1 & 2 emissions (tCO2e)4
(market-based) -13.8%
1.728p
Final dividend
+ 20%
1.2x
1.5x
1.7x
2.0x
2.8x
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
56,580
65,629
37,848
FY23/24
FY22/23
FY21/22
FY20/21
72,913
1.728p
1.44p
1.20p
1.00p
FY23/24
FY22/23
FY21/22
FY20/21
1 A definition of Alternative Performance Measures and a reconciliation
between headline and statutory measures are provided in the appendices on
pages 60 to 62.
2 Headline revenue in FY23/24 and FY22/23 exclude Knighton.
3 FY22/23 Trading profit was stated including software amortisation, the prior year
comparatives have been re-stated accordingly.
4 Total Scope 1 & 2 Greenhouse Gas Emissions – Market-based (tCO2e).
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
02
03
OVERVIEW
Highlights
Our branded growth model
fuels the core business, and
consists of four elements:
We launch new
products based on
consumer trends, with
a major focus on health
and nutrition.
1
Health and nutrition
2
Convenience
3
Snacking and on-the-go
4
Indulgence
5
Packaging sustainability
Significant investment in
TV advertising and digital
activation behind seven
of our brands, creating
emotional connections
with consumers.
Focused on driving
mutual category
growth and delivering
outstanding in-store
execution.
…that innovate
to meet
consumers’
needs…
We have
leading brands…
Many of our brands are leaders in their
categories with high household penetration.
…which are
supported
by engaging
marketing…
…and strong
customer
partnerships.
Flavourings & Seasonings
Quick Meals, Snacks & Soups
Ambient Cakes
Ambient Desserts
Cooking Sauces & Accompaniments
Ambrosia porridge pots
In FY22/23, we launched a new
range of Ambrosia porridge pots
in a ready-to-eat format. This
NPD took us into the breakfast
category for the first time, as part
of our strategy to expand into new
categories.
Over the year, Ambrosia porridge
pots delivered +108.7% revenue
growth and now has a 10.2%
share of the porridge pots market,
helping Ambrosia become our
fourth £100m brand.
Read more in our Strategy
in action on page 20.
Case Study
‘Devon knows’
Best Restaurant in Town
‘Adventures in flavour. Since 1889’
‘Dad’s night in’
‘Tasty’
‘Sticking together’
‘Piano’
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
04
05
OVERVIEW
Our branded growth model
Parsley
Camstar Herbs is one of the largest
producers of dried parsley in Europe,
with 3,000 acres in the UK dedicated
to the crop, and they’ve been suppliers
to Premier Foods for 13 years. Premier
Foods buys 72 tonnes of parsley each
year for use in a broad range of products
such as Paxo Stuffing, OXO Cubes,
Batchelors Cup A Soup, Batchelors Pasta
N Sauce and Bisto Parsley Sauce.
All Camstars growers are Red Tractor
approved which ensures high standards
and means their crops can be traced to
the British farms they came from. The
firm also prides itself on getting the
crop from the fields to the factory in
less than half an hour where the parsley
is carefully dried to capture its flavour
before it’s used in our recipes.
One of Camstar’s largest sites is
Chestnut Farm in East Anglia which
grows parsley between July and
November. The site is carefully
managed to protect the soil from the
damage which can be caused by heavy
agricultural practices. Instead, the
ground is only lightly ploughed and
the crop is planted using a corn drill to
ensure minimal soil disturbance. Oats
and radishes are grown on the land
through the winter to encourage aphid
eating invertebrates for spring, reducing
the need for pesticides.
Herbs like ours can transform a product,
elevating it above the every day. We’re proud
of our attention to detail and commitment to
sustainable production principles we share with
Premier Foods. It’s great to know our parsley is
playing a key role in so many famous products.”
Andrew West,
a key grower from Chestnut farm
72 tonnes of
UK parsley
for our Paxo Stuffing, OXO cubes
and Batchelors Cup A Soup
“
We offer consumers
great tasting products
made from quality
ingredients.
We source a wide range of healthy,
natural ingredients for our products,
purchasing raw ingredients from a
range of suppliers in the UK and from
markets around the world. Last year we
purchased over 265,000 tonnes of food
ingredients, working with around 245
suppliers, to develop long-term sustainable
partnerships which deliver mutual
benefits. We source our ingredients in a
responsible manner to give consumers
confidence that the food they purchase
is produced in an ethical and sustainable
way. Under our Enriching Life Plan, we
have set a target to more than double
the sales of products that meet high
nutritional standards.
How we make our products
We make a lot of our products in a similar
way as people do in their kitchens at
home. We combine simple ingredients and
then cook them – it’s just we do it on a
much larger scale.
Take Loyd Grossman Tomato and Basil
sauce as an example. We take ingredients
such as sun ripened tomatoes, garlic puree
and fragrant basil and combine them with
typical store cupboard ingredients such
as extra virgin olive oil, sea salt and black
pepper. We prepare and heat our sauces in
large pans to ensure they are thoroughly
cooked and can deliver the long shelf
life consumers expect whilst containing
no artificial preservatives. The cooking
is carefully controlled and the recipe is
kept consistent to ensure the outcome, in
terms of flavour and consistency, is always
the same.
14,000 tonnes of
tomatoes
from Spain and Portugal, for our
Sharwood’s, Loyd Grossman and
Homepride sauces.
55,000 tonnes of
wheat
from UK farmers, for our Andover
Mill, which is used to make bagged
flour and baking mixes, including
McDougalls.
2,900 tonnes of
Bramley
apples
from UK orchards, for products
such as our Mr Kipling fruit pies.
37 million litres of
milk
from West Country farmers, for
our Ambrosia rice pudding, custard
and porridge.
Case Study
Each year we purchase around:
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
06
OVERVIEW
Premier Foods plc
www.premierfoods.co.uk
07
Our ingredients
Outlined below are a range of attributes, which we believe make the Group an attractive investment
for equity and debt investors alike.
Category leading brands
We are market leader in the five main
categories in the UK in which we
operate (see page 12).
These market shares range from
15% to 44% and many of our brands
display a high degree of household
penetration.
90% of UK households purchase one
or more Premier Foods products
every year.
We are building ever stronger positions
in our categories overseas, particularly
our leading markets of Australia and
Ireland. An example being cake, where
Mr Kipling is the No. 1 brand in the UK,
Ireland and Australia.
01
Strong margin profile
Our adjusted EBITDA % margins
compare favourably with many of
our sector peers, including branded
multinational FMCG businesses.
These strong margins provide the
platform for us to continually invest
behind our brands, through marketing
investment and product innovation.
In FY23/24, our adjusted EBITDA
% margins were 18.2%, reflecting
the sustained focus on our branded
growth model, leveraging the strength
of our category-leading brands.
03
Proven branded
growth model
Brands are at the heart of our
business and will continue to drive our
future growth.
Through our market-leading brands,
we invest in emotionally engaging
advertising, launch insight-driven
new products and foster collaborative
partnerships with our retail customers.
Through this proven branded growth
model, we have continued to deliver
consistent branded revenue growth in
the UK, which has increased by 5.1%
per year, on average, over the last
three years.
We also apply our branded growth
model to deliver value to the
other areas of our strategy e.g.
new categories, international
and acquisitions.
02
Supply chain investment
We run an ongoing capital investment
programme throughout our supply
chain to capture opportunities for
growth, enhance site efficiency
through cost reduction initiatives and
upgrade our infrastructure.
We have a pipeline of projects from
which we expect to generate further
efficiency gains and we plan to steadily
build our capital investment over the
medium-term.
04
Highly cash generative
We operate a business which is highly
cash generative. With our strong
adjusted EBITDA margins, lower
financing costs and proportionate
levels of capital investment we
generate attractive levels of free
cash flow.
We maintain a Net debt/adjusted
EBITDA medium-term target of 1.5x
and have completed two acquisitions
in the last two financial years, our
first for 15 years, while still reducing
our leverage.
05
Pension obligations
solution
In June 2020, we completed a
segregated merger of our pension
schemes into one single Trust.
In March 2024, we announced
the suspension of pension deficit
contribution payments which in
FY23/24 were £33m. This significant
step presents us with enhanced capital
allocation options to deliver on our
growth ambitions. A full resolution of
the pension scheme, with the scheme
fully de-risked, is forecast by the end
of 2026.
06
Responsible in all that we do
Our ESG strategy – the Enriching Life Plan – is articulated through our three strategic pillars of Product, Planet and People. We
have set out our ambitions and targets under each pillar as we ensure the food we create helps enable people to lead sustainable,
healthier lifestyles.
The Enriching Life Plan covers all aspects of sustainable development and encompasses everything we touch, from the ingredients
we source to the communities we serve.
07
Premier Foods plc
www.premierfoods.co.uk
09
STRATEGIC
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
08
Strategic report
Our investment proposition
Our investment proposition
09
Our purpose, values and culture
10
About Premier Foods
12
Consumer and market trends
14
Our business model
16
Our strategy
18
Strategy in action
20
Group Chair’s statement
22
Chief Executive’s review
24
Key performance indicators (KPIs)
26
The Enriching Life Plan
30
Task Force on Climate-related
Financial Disclosures
42
Operating and financial review
56
Risk management
63
Viability statement
71
Our values and culture
As one of the UK’s leading food producers,
we’re committed to creating a truly great
place to work. Our shared values are the
DNA of our business, helping guide us
in the way we do things. They give us a
common framework for decision-making
and enable us to challenge ourselves, and
each other, to live them day-by-day.
Creating a more modern and
flexible working environment
During 2023 we invested in a new head
office, which provides a more modern
working environment and creates a
workspace that is fit for the future needs
of Premier Foods, whilst also supporting
the Planet pillar within our Enriching Life
Plan by reducing our head office CO2
emissions by around 30%.
Our new office, showcasing our new
corporate logo and colour scheme, is a
flexible space, with more collaborative
and informal spaces. Technology plays a
big part, with digital desk booking, signing
in, and wireless charging, as well as video
conferencing capability in all rooms. We
also have an extensive modernisation
programme being rolled out across our
sites as we continue to further invest
in the capabilities, infrastructure and
organisation that are needed to deliver our
exciting growth ambitions.
Building a high performing,
engaged workforce
In January 2024, we conducted our
companywide “OK to say” colleague
engagement survey and were pleased
to receive responses from 87% of our
colleagues, ensuring that we would
have a rich set of data on which to build
our action plans. We were delighted to
see that great progress has been made
from our last survey in 2022, with 10 of
the 12 categories (including Leadership,
Recognition and Personal growth) showing
improving scores, and the remaining 2
staying the same.
In addition, our overall engagement score
increased to 72%, up 3 points. We are
currently in the process of communicating
the results of this year’s survey to
management across the business, so
that they can share this with their teams
and agree development plans for the
coming year.
Employer Brand
To continue our work to make our
company an employer of choice, we
are developing an Employee Value
Proposition (EVP) which we will launch in
FY24/25. Over the year, 27 focus groups
were conducted across the business to
understand directly from colleagues
what working for Premier Foods is
really like, why they choose to work
for us, and what makes them
stay. This is helping us to gain a
more accurate understanding of
our culture so that we can be
transparent when attracting new
talent to the business, and it will
also help us retain colleagues
who already work for us.
Investing in our colleagues
Investing in colleague development
continued to be a key focus area for
us throughout the year. We believe
continuous learning and growth are
essential for the success of both our
colleagues and the business.
During FY23/24 we have implemented
various initiatives to support the
professional development of colleagues,
delivered through local academies which
have been built around core competencies
for each functional area and are designed
to enhance skills and knowledge in their
area of expertise.
We have provided opportunities for
training, workshops, and on the job
development. We continue to provide
access to extensive online learning
resources and are pleased to note that
colleagues’ usage has increased by 136%
year-on-year. Our company usage, based
on hours per user, is double the average of
other LinkedIn Learning customers.
We also have mentoring, reverse
mentoring, sponsorship and coaching
programmes in place and encourage
external networking to broaden individuals’
perspectives. We have high potential
programmes in place for our junior and
middle management colleagues and
bespoke offerings for more senior leaders.
Following feedback from our
manufacturing colleagues as part of the
2022 survey, we launched our Thrive
conversation, a standardised colleague
development review for non-management
colleagues across our factory locations.
Over 140 factory line managers have
attended training workshops to
ensure successful implementation and
development conversations are now
consistently taking place across the
business on a rolling basis. Our ambition is
that by 2030 at least 80% of our colleagues
will believe they have the opportunity to
develop and grow, as measured through
our engagement survey.
Evolving our inclusive culture
Inclusion and Diversity (‘I&D’) remains a
key strategic priority for Premier Foods
as we believe it is not only the right thing
to do but also makes good business
sense, by creating a culture where all our
colleagues can thrive. Our well established
#oktobeme programme aims to truly
embed inclusion and diversity across the
business and ensure that everyone feels
safe to bring their authentic self to work. It
was therefore good to note in our recent
survey that 73% of colleagues believe they
can be their authentic self at work which is
a 3% increase on our previous survey.
Last year we launched our first two
Employee Resource Groups (‘ERGs’),
focused on Multi-Culture and Gender
themes and sponsored by members of
the Executive Leadership Team. Following
the successful implementation of these,
we recently launched our next two ERGs
for Health and Disability and LGBTQ+.
The ERGs’ purpose is to educate, engage
and enable sustainable change to occur,
and each have identified key areas of
focus which include attraction of new
talent, education of colleagues within the
business, role modelling and investing in
early careers.
As proud sponsors of Diversity in Grocery
(DIG), we were invited to present a
Learning Lab at the annual DIG Live
Conference in October 2023. This is a
major annual event for the food and drinks
industry, with both manufacturers and
retailers in attendance. Our newly formed
Gender ERG invited five female colleagues
to share their personal stories about the
menopause and support provided within
the workplace with over 1,300 I&D leaders
and change makers from our Industry.
Our company purpose – Enriching Life Through Food – guides our actions
every day. It motivates us and is reflected in every element of how we run
our business for our consumers, our planet and our colleagues.
For consumers it means creating great tasting food that enables people to lead sustainable, healthier lifestyles. For the planet it
means making food in a way that respects the world’s natural resources and being a responsible and ethical business. For colleagues
we are contributing positively to their lives by creating an inclusive culture of entrepreneurship, where our people can reach their
full potential and be their authentic selves at work. Our purpose is also the driving force behind our sustainability strategy, known as
our Enriching Life Plan, which encompasses everything we touch, from the products we make to the ingredients we source and the
communities we operate in.
For more information see our Enriching Life Plan and pages 30 to 41.
We’re determined
to be the best,
consistently delivering
at the highest level.
We’re creative in what
we do and how we do it.
We’re energetic and
act with pace.
We achieve more when
we work together.
We bring out the best
in each other.
73%
OF COLLEAGUES BELIEVE THEY
CAN BE THEIR AUTHENTIC SELF
AT WORK
87%
RESPONSE RATE TO
ENGAGEMENT SURVEY
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
10
11
STRATEGIC
Our purpose, values and culture
Europe
Ireland
+12%
International
revenue
growth
Our international business
We are driving growth in our
international business through
the deployment of our branded
growth model, with the aim of
achieving critical mass in our
strategic focus markets.
Our largest international businesses are
in Australia and New Zealand and Ireland,
where we have established strategic
relationships in our focus categories with
the leading retailers in both markets. Our
brand focus is on Mr Kipling cake and
Sharwood’s and The Spice Tailor cooking
sauces, plus we are now exploring the
potential for FUEL10K to expand overseas.
Our objective is to build global brands
through leveraging our proven branded
growth model, to create a business of
scale, over time. Our other areas of
geographical focus are EMEA (Europe,
the middle East and Africa) and North
America. Our international business has
grown +62.6% since the launch of our new
strategy in 2020, and delivered another
strong performance in the year, with sales
+12% on a constant currency basis.
As one of the UK’s leading food businesses, we’re passionate about
food and believe, each and every day, we have the opportunity to
enrich life for everyone. During FY23/24, Premier Foods employed
over 4,000 colleagues operating from 14 sites across the country,
supplying a range of customers with our iconic brands which
feature in millions of homes every day.
We operate primarily in the ambient food
sector, which is one of the largest sectors
within the total UK grocery market. We
operate in four key Grocery categories
and the Ambient Cakes category. Our
brands are leaders in their categories
with high household penetration,
and 85% of our total revenue comes
from branded products. Following the
acquisition of FUEL10K in October 2023,
we are accelerating our presence in the
Breakfast category.
We are proud to be a British business, our
7 manufacturing sites across the UK make
92% of the food we produce1. Our brands
are leaders in their categories and bought
by 90% of UK households.
Strategic Partnerships
Nissin
We entered into a co-operation agreement
with Nissin Foods Holdings Co., Limited
(‘Nissin’) in 2016, and have launched
Batchelors Super Noodles in a new pot
format, using Nissin’s leading noodle
technology and manufacturing expertise. In
addition, we have taken on distribution of
Nissin’s Soba noodle pots, brought the Cup
Noodle brand to the pot market, and have
also grown Nissin’s Soba noodle bags in the
market. Nissin are now market leader, in the
UK, in the authentic quick meals and snacks
pot market, with a 64% share.
Mondelēz International
In 2017, we signed a strategic global
partnership with Mondelēz International
to renew the Company’s long-standing
licence to produce and market Cadbury
branded cake, as well as home baking and
ambient dessert products. The partnership
covers multiple countries and has the
potential to use the full range of Cadbury
brands in ambient cake.
Customers
We seek to execute our branded growth
model through strategic alignment with
our customers, developing best-in-class,
differentiated plans across all channels
and formats.
We operate a multi-format, multi-
channel approach to serving a broad
range of customers, including major UK
supermarkets, discounters, e-commerce
channels, convenience stores, wholesalers
and foodservice operators.
Ireland
Strong performances with our
three major retailers, resulting
in revenue growth +17% versus
prior year. Reflecting growth
across a number of key brands,
including Ambrosia, Bisto
and Oxo.
Australia and New Zealand
We have continued to build the
Mr Kipling and Cadbury cake
brands in Australia, reaching a
record market share of 16.1%
during the year, consolidating
our leadership position.
Now building distribution
of The Spice Tailor in New
Zealand.
Europe
Revenue growth +28% versus
prior year, helped by increased
distribution for Sharwood’s in
a range of markets including
Spain, Germany and the
Netherlands.
North America
Within North America, we our
building distribution of Mr
Kipling with customers and
now have listings in over 3,000
stores across the USA and over
900 in Canada.
We are also expanding
distribution of The Spice Tailor,
with 1,200 stores in Canada,
and recently agreed new
listings in over 1,000 stores in
the USA.
35%
REVENUE
GROWTH
IN US
+17%
REVENUE
GROWTH
+28%
REVENUE
GROWTH
No.1
IN CAKE IN
AUSTRALIA
Categories
Brands
Position
Share
Flavourings & Seasonings
#1
44%
Quick Meals Snacks & Soups
#1
38%
Ambient Desserts
#1
41%
Cooking sauces &
Accompaniments
#1
15%
Ambient Cakes
#1
18%
Source: Category position and market share: Circana, 52 weeks ending 30 March 2024
1 Based on retail sales value for FY23/24
North America
Australia and
New Zealand
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
12
13
STRATEGIC
About Premier Foods
Consumer trends
Health and
nutrition
Impact
Consumers continue to seek
better-for-you options in their
diet. This may encompass food
and meal choices that provide
additional health or nutrition
benefits, including being lower
in one or more of fat, salt, sugar
or calories.
Our response
Health and nutrition is a leading consumer trend for us and,
therefore, one which is pivotal in guiding the type of new
products we bring to market. This year, we expanded our
range of cooking sauces with the addition of Sharwood’s
Curry Pastes with 30% less fat. We also launched low fat
Batchelors Pasta ‘n’ Sauce pots. These follow the launch
last year of a range of Mr Kipling ‘Deliciously Good’ cakes
and pies, classified as non-HFSS (non-high in fat, salt and
sugar) and which provide consumers with a healthier
version of cakes, made with higher proportions of fruit
and fibre.
Convenience
Impact
Consumers live increasingly
busy lives, and don’t always
have the time to cook from
scratch, often using a multitude
of ingredients. Accordingly,
consumers look for help when
preparing and cooking delicious
meals at home, especially
during the middle of the week.
Our response
Convenience is therefore another key consumer trend we
incorporate in our innovation programme. To align to this
trend, we launched a larger, ‘Big Pot’ version of the already
popular Soba Noodle range. Soba Noodles have proved
immensely popular since we assumed distribution in 2017;
the brand is now worth £49m in retail sales value and has
grown revenue by an average of 54% per annum for the
last five years.
Snacking and
on the go
Impact
Many consumer meal and
eating occasions take place
in the home, however, many
also take place away from
home. These may be across all
meal time occasions, be they
breakfast, lunch or dinner.
Our response
In light of this trend, we offer many different products
across our portfolio to provide consumers with tasty
and convenient products they can eat when they are on
the go. For the breakfast meal occasion, we have our
successful Ambrosia porridge pots which require no added
ingredients and which can be eaten either hot or cold. We
also now have the FUEL10K brand, which we acquired this
year and which offers a wide range of protein enriched
products, such as Oat bars and breakfast drinks, which can
be consumed on the go. Additionally, the Mr Kipling range
features the ever popular snack pack cake slices which are
bought in packs of six or eight individual packaged cake
slices and are ideal for lunch boxes.
The ambient Grocery market is shaped by a number
of consumer, economic and social trends and also
the regulatory environment.
We have a deep understanding of the consumer trends most pertinent to the categories in which we
operate. We apply these trends as we develop innovative new products and evolve our existing ranges to
ensure we continually meet consumers’ needs. Some of the new product ranges we bring to market may
align to more than one of the consumer trends which are outlined below.
Consumer trends
Premium and
indulgence
Impact
There continues to be
demand for more premium
and indulgent products, as
when consumers are seeking
a treat, they’re looking for
exceptional taste to warrant
the indulgent nature of the
eating occasion. This remains
the case, despite the backdrop
of the well documented impact
of inflationary pressures and a
clear trend from consumers to
eat more healthily.
Our response
We continue to build premium and indulgent products
into our innovation plans. For example, this year, we
extended our range of premium Ambrosia Deluxe custard
and rice products, for those consumers in search of a more
premium dessert offering. Not only does this provide an
indulgent treat but the Ambrosia Deluxe range is also non-
HFSS. Additionally, we launched our best ever Mr Kipling
Signature mince pies which received strong consumer
reviews.
Packaging
sustainability
Impact
Consumers are also interested
in food that helps support
healthier and more sustainable
lifestyles, are kinder to the
environment and made of
recyclable or compostable
packaging.
Our response
Across our portfolio, 96% of our packaging is recyclable,
reusable or compostable. Therefore, a significant
proportion of our products are entirely recyclable. We
remain committed to making 100% of our products
recyclable, reusable or compostable. Since joining the UK
Plastics Pact in 2018, we have reduced our total packaging
usage by 23% and increased total recyclability from 91% to
96% and the recyclability of plastics from 48% to 86%.
Economic trends
Consumer budgets
in transition
Impact
Over the last two years,
consumers have experienced
inflationary pressures in
many areas of household
expenditure, such as heating
bills, fuel and food. This led to
declining disposable incomes,
resulting in many consumers
looking for nutritious and
affordable alternatives in
their weekly shops. In more
recent months, inflation has
moderated and wages have
grown faster than the CPI
index, so providing improved
purchasing power and bringing
some relief to consumers.
Our response
Our portfolio has a broad range of affordable and good
quality products, which families can purchase as part of
preparing and cooking healthy and inexpensive meals.
Not only does our portfolio offer many options to prepare
nutritious and good value meals, we have also lowered
the promotional prices of many of our products during
the second half of FY23/24. Products such as Batchelors
Super Noodles, Loyd Grossman cooking sauces and Mr
Kipling slices all lowered their promotional prices, providing
improved value for consumers.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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STRATEGIC
Consumer and market trends
Our
competitive advantage...
Our branded
growth model
Leading
brand positions
Our brands are leaders in their
categories with high household
penetration.
Insight driven
new products
We launch new products linked to
key consumer trends, with a major
focus on health and nutrition.
Sustained marketing
investment
We create emotional connections,
through media, to build brands,
maintain awareness and keep them
contemporary.
Retailer
partnerships
Our partnerships are focused on
driving mutual category growth
and delivering outstanding in-store
execution.
The
impact
we make
90%
of UK households
purchased one of our
products last year.
+29bps
market share growth (basis
points).
73%
colleague engagement
score, up 3% from our last
survey in 2022.
80%
of our third-party spend is
with UK-based suppliers.
+63%
shareholder return
delivered over the last
three years.
949,040
meals provided to help
those in food poverty (see
page 189 for definition).
Consumers
Helping consumers make tasty,
nutritional and low cost meals, and
launching new products that meet
their needs.
How we
deliver value
for our stakeholders
Our ESG
commitments
Product
Helping consumers lead
healthier and more
sustainable lifestyles, by
creating foods which have a
higher nutritional value, are
kinder to the environment
and are free of unnecessary
or problematic packaging.
People
Forging inclusive and
fulfilling career pathways
that contribute to the UK
economy and giving back to
the communities where we
operate.
Planet
Contributing to a healthier
planet through strong
commitments to tackle
climate change and
deforestation, improving
the sustainability of farming
practices and reducing waste.
Customers
Developing strong partnerships with
our customers to deliver category
growth and delivering excellent in-
store execution.
Colleagues
We’re committed to creating a
truly great place to work for our
4,000 colleagues, which provides
opportunities to develop and grow in
an inclusive and diverse environment.
Suppliers
We develop strong relationships
based on mutual respect and trust,
to source high-quality, natural
ingredients for the long-term benefit
of both parties.
Shareholders
Delivering sustainable profitable
growth and long-term shareholder
value. Over the past three years, we
have delivered shareholder return of
63% and we are now positioned in
the top half of the FTSE 250.
Communities
We build strong bonds with the local
communities in which we operate,
providing long-term employment
opportunities and making meaningful
contributions through our charitable
giving and volunteering programmes.
We’re determined
to be the best,
consistently delivering
at the highest level.
We’re creative in what
we do and how we do it.
We’re energetic and
act with pace.
We achieve more when
we work together.
We bring out the best
in each other.
Our
values and
culture
Consumer insight
We have deep understanding of
our consumers, based around
insights on how they shop, how
they cook and how they eat. We
use this insight, together with our
knowledge of new and emerging
food trends, to develop and launch
products that meet their needs.
Colleagues
Our unique and inclusive culture
helps us to attract and retain
talented colleagues across our
business. Our experienced
leadership teams, have a broad
and deep understanding of the
food industry, and are focused on
delivering exceptional performance.
Sourcing
We are committed to producing
high-quality food that is sourced in
a fair, ethical and environmentally
responsible way.
Manufacturing
Our strong manufacturing
capabilities allow us to manufacture
a diverse range of high quality
products with enhanced efficiency,
whilst maintaining our leading
standards of safety, both for our
food and our colleagues.
Our
capabilities
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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STRATEGIC
Our business model
Continue to grow
the UK core
What this means
A vibrant and growing UK business
provides the foundation for broader
expansion.
Progress in FY23/24
Our branded growth model is at the
heart of what we do. Leveraging
our leading category positions, we
launch new products to market linked
to key consumer trends, supported
by sustained levels of marketing
investment and delivered through
strong customer/retailer partnerships.
One of our key focus areas is to launch
new product ranges aligned to key
consumer trends. Under the health
and nutrition trend, we launched
Sharwood’s curry pastes with 30%
less fat, and to tap into the indulgence
trend, we extended the Ambrosia
Deluxe range to include Rice Pudding.
We again increased our level of
marketing investment this year, with
seven of our major brands benefiting
from a blend of mainstream TV
advertising, digital and out door
media, and continued success
of our ‘Best Restaurant in Town’
campaign. Delivering sustained
levels of brand investment to focus
on building emotional connections
with consumers and delivering
outstanding in-store execution in
collaboration with our retail partners.
Outlook for FY24/25
We will continue to invest behind
our brands to drive emotional
connection with consumers.
Innovation plans for next year
include Loyd Grossman Tomato and
Mascarpone sauce and expansion of
The Spice Tailor range.
Link to KPIs
•
Revenue & Trading profit
Supply chain
investment
What this means
We have a strong pipeline of
opportunities to enhance efficiencies
across our manufacturing operations.
This facilitates the manufacture of
new products development and
enhances the safety and working
conditions of our colleagues.
Progress in FY23/24
In FY23/24, we increased capital
investment to £33m year on year.
We continued to install more auto-
casepackers and auto-palletisers in
our Sweet Treats manufacturing sites.
These projects are prime examples of
improving efficiencies, so enhancing
Gross Margins and delivering
attractive financial paybacks.
Additionally, we have invested
in replacing air compressors at a
number of our sites and installed
solar panels at our Stoke site. These
initiatives not only deliver increased
efficiencies but also reduce scope 1 &
2 carbon emissions.
Through improving our underlying
margins, these projects provide
funds for re-investment in our
brands, whether it be TV or digital
advertising. This serves to strengthen
our brand equity and provide the
platform for further growth over the
medium-term.
Outlook for FY24/25
In FY24/25, we plan to grow our
capital investment to levels at least
in line with FY23/24.
We have a number of projects in
our capital investment pipeline,
including an innovative, energy
efficient process to manufacture
iced-topped cake products. This
project will deliver increased line
efficiency and productivity and also
to reduce carbon emissions.
Link to KPIs
•
Free cash flow
Expand UK into
new categories
What this means
Leveraging the strength of our
brands and our proven branded
growth model by launching into new,
adjacent product categories.
Progress in FY23/24
Many of our brands are leaders in
their categories, with strong brand
equity which can be leveraged to
expand into adjacent categories.
We have made strong progress
expanding into new categories in the
year, growing new category revenues
by +72%.
Two years ago, we launched a range
of Ambrosia porridge pots in a ready-
to-eat format that can be enjoyed
hot or cold. This represented our
first entry into the breakfast eating
occasion. The launch has proved to
be very successful, reaching 10.2%
market share of the porridge pot
market.
Another recent new category
launch is ice-cream. The product
range is available in some of the
classic flavours of Angel Delight and
Mr Kipling, such as Butterscotch
Angel Delight and Mr Kipling Cherry
Bakewell. In addition, our Cape Herb
& Spice and OXO Marinades have also
performed well.
Outlook for FY24/25
We plan to expand the distribution
of ice-cream across the Mr Kipling,
Angel Delight and Ambrosia brands,
and extend Angel Delight ice-cream
into a hand-held format. We also
plan to expand distribution for our
Ambrosia porridge pots range and
augment the range with some further
exciting new flavour variants.
Link to KPIs
•
Revenue & Trading profit
Our growth strategy
is based on 5 strategic
pillars to deliver
sustainable long-term
growth, fund investment
behind our brands and
provide value for our
stakeholders.
While we will continue to grow our core
UK business, we also focus on a number of
areas which we believe have the ability to
deliver additional growth.
Build international
businesses
with critical mass
What this means
Building sustainable overseas
business units with critical mass,
by applying our brand building
capabilities and applying them to
focus overseas markets including
Ireland, Australia and New Zealand,
North America and EMEA.
Progress in FY23/24
The brands we are focusing on to
deliver this growth are Mr Kipling,
Sharwood’s and The Spice Tailor.
In North America, we have
successfully increased distribution of
Mr Kipling cake to over 3,000 stores
in the USA and over 900 stores in
Canada during the year.
We have continued to build the Mr
Kipling and Cadbury cake brands
in Australia, fostering collaborative
partnerships with retail customers
and launching new products,
including Mr Kipling Salted Caramel
Slices and Caramel Bakewell tarts.
Our market share of the cake
category in Australia reached 16.1%
during the year, consolidating our
position as market leader.
We increased the number of agreed
listings for The Spice Tailor to 10
countries globally.
Our international business delivered
revenue growth of +12% in the year
(on a constant currency basis).
Outlook for FY24/25
We will continue to apply our proven
branded growth model to our focus
brands and markets. We’re looking
forward to delivering further growth
of Mr Kipling, The Spice Tailor and
Sharwood’s in North America and
continued expansion of Sharwood’s
and The Spice Tailor in Europe.
Link to KPIs
•
International revenue
Inorganic
opportunities
What this means
We are looking to acquire brands
where we believe we can drive
significant value through the
application of our branded
growth model.
Progress in FY23/24
In October 2023, we announced
our second and latest acquisition:
FUEL10K, a vibrant, protein
enriched, high growth breakfast
brand.
FUEL10K provides us with an ideal
platform to accelerate our expansion
into the Breakfast category, building
on the increasingly established
success of Ambrosia porridge pots.
Attracting a predominantly young
consumer demographic, the brand
has an on-trend range of granola,
oats and drinks products. In a similar
way to our first acquisition for 15
years before it, The Spice Tailor,
FUEL10K has demonstrated a strong
growth profile in recent years,
and we expect to deliver further
growth through leveraging our well
established and proven branded
growth model.
Outlook for FY24/25
We will continue to explore
opportunities to acquire brands
where we believe we can add value
through our branded growth model.
While continuing to apply strong
financial discipline, in line with the
approach taken with our recent
acquisitions of The Spice Tailor
and FUEL10K.
Link to KPIs
•
Revenue & Trading profit
Premier Foods plc
www.premierfoods.co.uk
19
STRATEGIC
18
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Our strategy
LOW RES
Strategy in action
Inorganic opportunities
Another way we can accelerate growth
is through targeted acquisitions.
Acquisitions of The Spice
Tailor and FUEL10K
After a 15 year hiatus, we announced
the acquisition of The Spice Tailor in
July 2022 and followed this up with the
FUEL10K transaction in October 2023.
The Spice Tailor is a premium brand
in the authentic Indian and Southeast
Asian meal kit market. It is popular
with consumers who enjoy scratch
cooking and appreciate the strong
authentic taste profiles, allowing them
to make restaurant quality meals in
minutes.
Since acquisition, we have increased
distribution in major retailers and
delivered improved in-store execution
through more impactful product
displays. We have also expanded our
presence beyond the UK and Australia,
building distribution in the Irish and
Canadian markets and extended this
further to add another six countries,
taking the total country listings to ten.
As we look forward to next year, we
expect to deliver further revenue
growth and have exciting plans to
launch a range of new products both
in the UK and overseas, building on
The Spice Tailor’s heartland of cooking
sauces and kits.
FUEL10K is a vibrant breakfast brand,
boasting a portfolio of granola, oats
and drinks products, and representing
an ideal platform as we look to
significantly expand our presence in
the breakfast meal occasion, building
on the established success of Ambrosia
porridge pots.
Like The Spice Tailor, FUEL10K has been
incredibly successful in building brand
equity from scratch, bringing exciting
new products to market which are
well aligned to consumer trends, and
achieving listings in major retailers.
FUEL10K is also another example of
a brand which has delivered strong
double-digit revenue growth, building
a strong consumer following. Many of
these are younger consumers in search
of protein enriched products.
Since we acquired FUEL10K, we have
made strong progress integrating the
business into the wider Group and
the next stage for us is to leverage
our proven branded growth model to
deliver further progress.
For example, we have identified
opportunities to increase distribution
of the FUEL10K product range,
leveraging the strength of our
commercial relationships. Additionally,
we will expand the innovation pipeline
to bring more new products to market.
We will also support the brand with
increased marketing investment and
explore options to launch FUEL10K into
our existing overseas markets.
We’re excited about the opportunities
FUEL10K presents and look forward to
its continued progress.
THE SPICE TAILOR
NOW AVAILABLE IN
10
COUNTRIES
Strategy in action
Expand UK into new
categories
Our new categories strategy is to
leverage the strength of our brands
and our proven branded growth
model by launching into new, adjacent
product categories.
We target adjacent categories where
we believe the equities of our brands
are well placed to deliver new and
exciting alternatives for consumers
and shoppers. The first product
expansions under this strategic pillar
include Ambrosia porridge pots;
ice-cream in three different brand
choices (Angel Delight, Mr Kipling and
Ambrosia); Cape Herb & Spice and
OXO Marinades.
Ambrosia porridge pots
Ambrosia is one of our largest and
most loved brands; it is the leader in
the ambient desserts category and
synonymous with creaminess from
Devon. With household penetration of
35.2%, Ambrosia demonstrates strong
brand equity and with its brand and
product quality, a clear opportunity
existed to launch into the breakfast
category.
Therefore, in FY22/23, we launched a
new range of Ambrosia porridge pots
in a ready-to-eat format which can be
enjoyed hot or cold. This represented
our first entry into breakfast and
leverages the creaminess attributes
which Ambrosia is well known for. The
range was initially available in three
varieties – original, raspberry and
golden syrup flavour.
In its first year, the range was
successful in growing to a 5.2% share
of the porridge pots market. During
FY23/24, the range continued to
demonstrate strong progress, growing
to 10.2% share of the market, which
is growing at 19.1%. We also added
a fourth flavour variant to the range
this year, Apple & Blueberry, and have
plans to extend the product range
further in the future.
In line with our branded growth
model, to increase product awareness
to consumers, we also supported
porridge pots with national TV media,
leveraging the popular ‘Moley’
advertising used for the core Ambrosia
product range.
Additionally, we implemented
impactful promotional support during
the year, through employing both our
newly acquired brand, FUEL10K, and
Ambrosia porridge pots to deliver
increased sales through enhanced in-
store activation.
As we look forward to FY24/25, we
plan to increase retailer distribution,
expand the product range further,
deliver elevated levels of promotional
activity in-store and continue
advertising to drive consumer
awareness.
MARKET SHARE
10.2%
REVENUE GROWTH
+108.7%
STRATEGIC
Premier Foods plc
www.premierfoods.co.uk
21
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
20
Strategy
in action
This report covers our
2023/24 financial year
for the 52 weeks ending
30 March 20241.
Headline revenue2
reached £1,122.6m,
an increase of +15.1%,
and adjusted profit
before tax increased
to £151.4m. Net debt
for the Group reduced
by £38.7m to £235.6m
and, in April, we
suspended our pension
deficit contributions,
creating a free cash flow
saving of £33m for the
year ahead.
During the year, we completed our second
strategic acquisition, purchasing FUEL10K.
Together with The Spice Tailor, both
acquisitions are aligned to our strategy
of applying management’s successful
branded growth model to brands that
can deliver disproportionate growth and
accelerate value creation. It is in line with
this strategy that we took the difficult
decision last year to close our Knighton site
and, this year, we announced the closure
of our Charnwood manufacturing site,
both of which manufactured private label
products for third party customers.
External climate
Inflation levels seen across the food
industry in recent years continued to
be high in FY23/24. As a consequence,
we continued to mitigate rising costs
through a range of effective processes, in
conjunction with our retailer customers
and broad supplier base, thereby ensuring
we maintained value for consumers and
delivered for our shareholders.
During the second half of the year, as input
pressure started to ease together with
inflation beginning to soften, the business
responded with a range of measures
across a number of major brands,
supporting our strong performance in the
second half of this year.
Financial position
Our business strategy remains unchanged
and utilises our core skillset of building
and growing brands to deliver sustainable
long-term growth. Applying this across the
core portfolio and into new categories,
overseas markets and acquisitions as
part of our growth plan, has delivered a
consistently strong trading performance
and further strengthened our robust
financial position. This year we stepped
up our capital investment programme,
which will increase efficiency across our
operations and further supports our long-
term growth.
We have continued to make strong
progress, following the segregated merger
of the Group’s legacy pension schemes in
2020. The investment strategy remains the
same, to build the RHM scheme surplus
and reduce the Premier Foods deficit. In
April, following the strong performance of
the RHM pension scheme, we suspended
our pension deficit contributions, a saving
of £33m in free cash flow for the year
ahead, which presents us with enhanced
capital allocation options to deliver on our
growth ambitions.
Our Net debt has continued to fall,
reaching £235.6m at the end of the year,
and the Group continues to manage its
working capital tightly. At the year end,
FY23/24 Net debt/EBITDA sat at 1.2 times,
our lowest ever level, and this is after the
acquisition of FUEL10K.
The Board remains committed to providing
shareholders with a progressive dividend
each year. Therefore, I am pleased to
confirm that, subject to shareholder
approval, the directors have proposed a
final dividend of 1.728 pence per share for
the 52 weeks to 30 March 2024, a +20%
increase on prior year.
Board priorities and
shareholder feedback
As a Board, we support the management
team’s commitment to delivering our
growth strategy, the success of which is
evident by progress made against all its
strategic pillars during the year, generating
further value for our shareholders.
Delivering our ESG strategy, known as
our Enriching Life Plan, remains a key
focus for the Board and the management
team, and this year we made further
progress on our commitments, including
increasing the proportion of products
with a health or nutritional benefit from
43% to 44%, making further reductions
to our Scope 1 and 2 emissions and
increasing the number of women within
our senior management to 41%. Further
details can be found in our ESG section on
pages 30 to 41.
The Board is now fully compliant with the
recommendations of the FTSE Women
Leaders Review with 40% of our Board
comprised of female directors. In addition,
we are also aligned with the current
requirements of the Parker Review. In
light of the recommendations published
in March 2023, the Group has set an
ambition for 7% of senior management to
be colleagues from ethnic minorities by
December 2027. Further information can
be found in the Nomination Committee
report on pages 88 to 90.
As Group Chair, I have continued our
dialogue with shareholders during the year,
to understand your views and priorities
and ensure these were incorporated into
our future planning and Board discussions.
We look forward to continuing to hear your
insight, as we deliver further growth and
shareholder value in the coming years.
Governance and the Board
In July 2023, we announced that Simon
Bentley was resigning as a director to focus
on his commercial and other interests.
I’d like to thank Simon for his valuable
contribution to the Board over the past
four years, during which time the Group
has made substantial progress on its
strategic objectives and wish him well for
the future.
At the same time, following Simon’s
decision to step down from the Board, Tim
Elliott, was appointed Chair of the Audit
Committee.
Richard Hodgson will step down from
the Board at the AGM, having served
as a non-executive director for over
nine years and as Senior Independent
Director since 2019. I’d like to take this
opportunity to thank Richard for his
extensive commercial and retail insight
and the important contribution he has
made to the Company’s strategic thinking,
over what has been a period of significant
transformation for the business.
Replacing Richard, in May 2024 the Board
announced that Lorna Tilbian will take on
the role of Senior Independent Director.
I am also pleased to advise shareholders
that Malcolm Waugh will be joining the
Board after the AGM, bringing a wealth
of commercial, strategic and operational
experience from the food and drink
industry.
In summary, we have concluded the year
with both a strong financial and strategic
performance, which provides us with the
platform to continue delivering our growth
strategy, generating value for shareholders
and all our stakeholders.
I would like to once again thank all of our
investors, colleagues, suppliers, customers
and consumers for their continued
support.
Colin Day
Group Chair
16 May 2024
1 Statutory measures include 5 months’ ownership
of FUEL10K for FY23/24. A definition of Alternative
Performance Measures and a reconciliation
between headline and statutory measures is
provided in the appendices on pages 60 to 62.
2 Headline revenue excludes Knighton.
+34.7%
Increase in profit before tax
14.1%
Reduction in Net debt
+20%
Increase in final dividend
We have delivered another year of progress against our five strategic pillars, enabling us
to end the year with a financial performance ahead of market expectations.”
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
22
23
STRATEGIC
Group Chair’s statement
This has been another
very strong year for
the business, as we
continued to deliver
across all of our key
financial and strategic
metrics.
Our Trading profit increased by 14.0% to
£179.5m1 and headline revenue increased
by 15.1% to £1,122.6m2. Our Grocery
business performed particularly strongly,
with headline revenue up 16.7%, while our
overall market share increased by a further
29 basis points.
Strong trading and financial
performance
Once again, we have achieved this strong
performance because of our expertise in
building and growing brands. Our brands
are the heart of our business, and through
our Branded Growth model, we have been
able to continue to develop and expand
our brands in the UK and internationally.
Group branded revenue increased by
13.5% and we continued to outperform
the market. Through the consistent
application of our branded growth model,
our grocery brands have grown market
share year after year and by more than
200 basis points over the last three years.
A notable highlight this year has been
Ambrosia, which has become our fourth
£100m+ brand alongside Mr Kipling,
Batchelors and Bisto.
Once again, this year we continued to
operate in a challenging macroeconomic
climate. Nonetheless, we again were able
to mitigate significant increases in input
costs and hold our margins. As the year
progressed, we saw inflationary pressures
start to ease and we have been able to
invest in sharper promotional prices for
our consumers. As a result, we saw many
of our brands return to volume growth in
the fourth quarter.
As a result of our continued strong Trading
profit and cash generation, our financial
position has further strengthened. Net
debt has fallen further, and we are pleased
to report our lowest ever leverage, with
Net debt to EBITDA now at 1.2 times,
while at the same time acquiring the
FUEL10K brand and paying the previously
announced 20% increase in dividend.
I’m also particularly pleased with the
progress of our legacy pension schemes,
as we announced the suspension of
pension deficit contributions from April
2024. This reflects the great progress
made by the Trustee in delivering their
investment strategy since we completed
the landmark segregated merger in 2020.
The suspension of payments, represents
a saving of £33m in free cash flow for the
year ending 29 March 2025.
Continuing to deliver on our
five pillar Growth Strategy
Alongside our strong financial
performance, we have continued to make
good progress against our five pillar growth
strategy. This is an extension of our core
brand building capabilities, to areas where
we currently have limited presence such
as; categories where our brands currently
do not have a range of products, overseas
geographies where we currently generate
limited revenue, and brands we don’t
own yet but which would benefit from the
application of our branded growth model.
We have made further progress on each of
the five pillars this year.
We have continued to grow the UK core
business, with our UK branded revenue
growing by 13.6% which was once again
ahead of our categories. This follows
consistent UK branded revenue growth
of 5.1% per annum on average over the
last 3 years, whilst maintaining our strong
Trading profit margins.
We continue to have a significant
opportunity to invest in our second
strategic pillar: supply chain
infrastructure. This year we have increased
our capital investment to £33m, much of
it in improving productivity and facilitating
the manufacture of new product ranges.
This ongoing investment releases cost that
we invest back into our brands in order to
drive further growth, providing a virtuous
cycle.
We continue to focus our infrastructure
investment on our branded production
capabilities. Having announced the difficult
decision to close our factory in Knighton
in January 2023, the site closed in March
2024. The site manufactured non-branded
powdered beverages and was not aligned
to our branded growth strategy. In March
2024, we entered a consultation with
colleagues regarding the proposed closure
of our Charnwood site, for the same
rationale, a non-branded site which is not
our strategic focus.
2024 has been a significant year for
the third pillar of our growth strategy:
expanding our brands into new
categories. A strategic priority for the
business is to capitalise on the opportunity
we see to expand our much loved food
brands into new categories. During the
year, we made strong progress, growing
revenues from new categories by over
70%. A great example is Ambrosia’s
expansion into the fast-growing porridge
pot category. We now have 10.2% share
of the UK porridge pots market and have
extended the range into Ireland.
Meanwhile we continue to build our
international businesses, the fourth
pillar of our strategic plan. This year we
again delivered double digit growth in
international revenue, while making
further strategic progress, including
building distribution across several
key markets. This included expanding
distribution of The Spice Tailor into ten
markets, while Mr Kipling is now in
nearly 4,000 stores in North America and
Sharwood’s further expanded distribution
across both Europe and North America.
The final pillar of our strategy is to
buy brands that will benefit from the
application of our branded growth
model, and this year we made our
second acquisition in just over a year
with FUEL10K. This high-growth vibrant
breakfast brand will accelerate our
expansion into the breakfast category
and beyond. During the year, we also
continued to expand distribution of our
first acquisition, The Spice Tailor, both in
the UK and overseas. I’m pleased to report
that the brand has delivered returns ahead
of our acquisition plan.
Enriching Life Plan
In making this financial and strategic
progress, we continue to deliver against
our 2030 commitments, as laid out in our
Enriching Life Plan.
This year we made further progress in
increasing the proportion of our products
meeting higher nutritional standards,
which has now reached 44%. We also
reduced our market-based Scope 1 and 2
emissions by 13.8% which is ahead of our
plan and also delivered significant energy
cost savings.
Meanwhile, we continue to help our
colleagues to thrive at work and ensure
we have a positive impact on the local
communities where we operate. This year
we donated 949,040 meals to FareShare
and food insecurity charities. Further
details can be found on pages 30 to 41.
Recipe for success
Over the past four years, we have
successfully navigated a wide range of
challenges, including global supply chain
disruption and unprecedented inflation.
Our continued strong performance despite
these challenges, demonstrates the
robustness of the business, the strength of
our brands, our strategy and performance
led culture.
As we look forward, leveraging these
strengths and continuing to focus on
delivering our proven strategy, I am
confident that Premier Foods will continue
to deliver significant growth and become
a much bigger business than it already
is today, creating further value for
shareholders.
Alex Whitehouse
Chief Executive Officer
16 May 2024
1 Statutory measures include 5 months’ ownership
of FUEL10K for FY23/24. A definition of alternative
performance measures and a reconciliation between
headline and statutory measures is provided in the
appendices on pages 60 to 62.
2 Headline revenue excludes Knighton.
+15.1%
INCREASE IN HEADLINE REVENUE
+29bps
INCREASE IN UK MARKET SHARE
+14.0%
INCREASE IN TRADING PROFIT
£38.7m
REDUCTION IN NET DEBT
I’m delighted to be reporting another excellent performance, ahead of market expectations,
with further good progress across all strategic pillars.”
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
24
STRATEGIC
Premier Foods plc
www.premierfoods.co.uk
25
Chief Executive’s review
We use a number of performance indicators to monitor
financial, operational and ESG performance.
These are reviewed on a regular basis
by our senior management teams and
the Board. Performance indicators are
used to encourage focus on the delivery
of our key strategic priorities. They are
used to measure performance, highlight
areas for attention and corrective action,
as well as recognising good performance
and celebrating success. Trading profit
and certain ESG targets also form part of
management’s bonus objectives.
The KPIs set out below are aligned with
the Group’s five pillar growth strategy
and also the commitments set out in our
ESG strategy, the Enriching Life Plan.
£1,122.6m
Headline revenue1,2
£179.5m
Trading profit1
£1,122.6m
£975.6m
£900.5m
£934.2m
£847.1m
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
£179.5m
£157.5m
£141.2m
£141.6m
£124.0m
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
Why is this important?
Delivering sustainable revenue growth is one of our
strategic priorities.
Progress we have made
Headline revenue was up +15.1% versus prior year. This
growth has been driven by our branded growth model
of delivering new product innovation based on current
consumer trends, together with engaging advertising
and strategic relationships with our retail partners. The
performance also reflects the recovery of input cost inflation.
Link to strategy
Link to risk
1 2 3 8 10
Why is this important?
This measure reflects the profit associated with the
operational performance of the business and is also a good
proxy for the cash generative capacity of the business.
Progress we have made
Trading profit increased by +14.0% versus prior year.
This improvement was driven by our strong revenue growth
across both our Grocery and Sweet Treats segments.
Link to strategy
Link to risk
1 2 3 4 8 10
1 A definition and reconciliation of non-GAAP measures to reported measures are set out on pages 60 to 62 Trading profit for FY23/24 and FY22/23 are stated including
software amortisation, and the other prior year comparatives have been re-stated accordingly.
2 Headline revenue in FY23/24 and FY22/23 exclude Knighton.
1.2x
Net debt adjusted EBITDA ratio1
£109.7m
Free cash flow3
1.2x
1.5x
1.7x
2.0x
2.8x
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
£109.7m
£77.5m
£65.2m
£71.2m1,2
£70.5m2
FY23/24
FY22/23
FY21/22
FY20/21
FY19/20
Why is this important?
This ratio is the key metric used by the Group in measuring its
debt level relative to the overall performance of the business.
Progress we have made
Net debt reduced by £38.7m, from £274.3m to £235.6m,
our lowest ever level. Reflecting strong free cash flow in the
year, partly offset by the cost of the FUEL10K acquisition. As a
result, our ratio of Net debt to adjusted EBITDA, reduced from
1.5x to 1.2x.
Link to strategy
Link to risk
1 2 3
Why is this important?
Free cash flow is a measure of the overall health of the
business. It reflects the underlying cash generated by the
Group and helps inform capital allocation decisions.
Progress we have made
Free cash flow increased by +41.5% in the year, to £109.7m.
Cash flow benefitted from the strong trading performance in
the period.
Link to strategy
Link to risk
1 2 3 4 8 10
£70.8m
International revenue
(at constant currency)4
Why is this important?
Expanding our international business is one of our
strategic priorities.
Progress we have made
International revenue, was £70.8m, +12% higher than
prior year, on a constant currency basis4. This was the
result of growth in our five strategic markets, with strong
performances from Sharwood’s and Mr Kipling. The
international business has increased revenue by +62.6% since
we launched our new strategy in 2020.
Link to strategy
Link to risk
1 3 4 10
£70.8m
£58.7m
£54.8m
£53.9m
FY23/24
FY22/23
FY21/22
FY20/21
3 Prior year comparatives have been represented in accordance with the revised definition of free cash flow set out on page 62.
4 For a definition and reconciliation, please refer to note 8, on page 62.
Strategy pillars
Continue to grow the UK core
Supply chain investment
Expand UK into new categories
Build international businesses with critical mass
Inorganic opportunities
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
26
27
STRATEGIC
Key performance indicators (KPIs)
Financial
Non-financial KPIs align with our business model, ESG strategy and our
commitment to be a responsible food business.
Launching new products based on
consumer trends, with a major focus on
health and nutrition, is at the heart of our
branded business model.
In October 2021 we launched a new ESG
strategy the Enriching Life Plan. To align
with our new ESG priorities we have
included a KPI to represent each of the
pillars of the Enriching Life Plan:
Product – sales of products that meet high
nutritional standards;
Planet – CO2 emissions; and
People – Senior management roles held
by females.
Further details of progress against our
ESG targets are set out in the section on
our Enriching Life Plan on pages 30 to 41
and in the Enriching Life Plan disclosure
tables on pages 182 to 189.
Colleague safety is our first priority as
a business. The Reporting of Injuries,
Diseases and Dangerous Occurrences
Regulations (‘RIDDOR’), is a major indicator
of the success of our Health and Safety
protocols and allows us to benchmark
our performance against the UK food
manufacturing industry.
+29bps
Market share growth1
(FY22/23: -31 bps)
£397m
Revenue from products that meet higher
nutritional standards
£397m
£335m
£286m
£320m
FY23/24
FY22/23
FY21/22
FY20/21
Why is this important?
Increasing market share indicates consumer preference for
our products and drives category growth for the business.
Progress we have made
Our market share value grew by +29 basis points (‘bps’),
versus prior year. We experienced strong growth within
Grocery, demonstrating the strength of our branded growth
model and the resilience of the Group’s brands. Whilst in
Sweet Treats, we have seen a return to market share growth
in the second half of the year.
Link to strategy
Link to risk
2 3 4 8 10
Why is this important?
Under our Enriching Life Plan we have set a target to more
than double sales of products that meet high nutritional
standards (total company branded sales, in £m, of foods
scoring less than 4, and drinks scoring less than 1, on the UK
Department of Health’s Nutrient Profiling Model).
Progress we have made
Over the year, we launched or reformulated 209 products
which support high nutritional standards and 142 products
which offer an additional health and/or nutrition benefit. This
included reducing the level of salt in our Sharwood’s noodle
ranges and extending our Mr Kipling Deliciously Good range
to include Cherry Bakewell and Loaf Cakes.
Link to strategy
Link to risk
2 3 8
1 Circana value share data for the 52 weeks ended 30 March 2024 and 1 April 2023
41%
Senior management roles held by females
56,580
Scope 1 and 2 emissions (tCO2e) – market-
based
41%
40%
37%
28%
FY23/24
FY22/23
FY21/22
FY20/21
56,580
65,629
37,848
72,913
FY23/24
FY22/23
FY21/22
FY20/21
Why is this important?
Under our Enriching Life Plan we are targeting gender
balance for our senior management population by 2030.
Senior management is defined as the Executive Leadership
Team and their direct reports
Progress we have made
Over the year, we have continued to progress our I&D
strategy to improve accessibility to leadership roles through
enhanced recruitment, development and mentoring
programmes. As a result, the number of women within senior
leadership rose to 41% as at year-end.
Link to strategy
Supports our Enriching Life Plan
Link to risk
9
Why is this important?
Reducing carbon emissions is a key priority under our
Enriching Life Plan, as we aim to reduce scope 1 and 2
emissions by 67% by 2030 and achieve net zero carbon
emissions by 2040.
Progress we have made
Our total scope 1 and 2 market-based emissions reduced
by 13.8% over the year, as a result of improved efficiency
from capital investment in projects such as air compressor
replacements and on-site solar generation, and the purchase
of Renewable Electricity Guarantees of Origin (REGOs).
Link to strategy
Supports our Enriching Life Plan
Link to risk
5 6
0.12
RIDDORs
(FY22/23: 0.09 RIDDOR reportable accidents per
100,000 hours worked)
Why is this important?
Colleague safety is our first priority as a business.
Progress we have made
There was a small increase in RIDDORs in the year, due
predominantly to minor injuries, such as slips and trips. We
are working with colleagues across the business to address
this as a matter of priority over the coming year and targeted
improvement plans have been put in place. In addition, a
refreshed Health & Safety strategy has been developed and
will be rolled out to sites over the course of FY24/25, including
enhanced training programmes and Safety Champions.
Link to strategy
Supports our Enriching Life Plan
Link to risk
2 4 9
0.12
0.21
0.50
Premier Foods
All UK manufacturing
UK Food manufacturing
Strategy pillars
Continue to grow the UK core
Supply chain investment
Expand UK into new categories
Build international businesses with critical mass
Inorganic opportunities
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
28
29
STRATEGIC
Key performance indicators (KPIs)
Non-financial
More than double sales of products
that meet high nutritional standards
More than 50% of our products
(by Stock Keeping Unit (‘SKU’)) will
provide additional health or nutrition
benefits
Grow sales of plant-based products
to £250m per annum
100% of our packaging will be
reusable, recyclable or compostable
by 2025
Reduce scope 1 and 2 emissions by
67% and reduce scope 3 emissions by
25% by 2030 in line with our Science-
Based Targets
Target net zero by 2040 across scope
1 and 2 emissions and target net zero
scope 3 emissions by 2050
Deforestation and conversion free
across entire supply chain
Halve our food waste and support our
suppliers and consumers to do the
same (against a 2017 baseline)
Achieve gender balance in our senior
leadership team
Provide skills programmes and
work opportunities for excluded
groups to enable fulfilling careers in
the food industry
Provide the equivalent of
1 million meals per annum to
those in food poverty
Be more of a force for good in our
communities by volunteering at least
1,000 colleague days a year
*All targets are 2030 from a 2020 baseline unless otherwise stated. For more information on all targets and how they are measured, see our Enriching Life Plan disclosure tables
from page 182.
Our
Products
Our
Planet
Our
People
01
02
03
Excelling in
food quality
Marketing
responsibly
Being
safe
Sourcing
with care
Doing the
right thing
Baked-in
behaviours
Headline Targets and our support for
the UN Sustainable Development Goals*
Our sustainability strategy, known as
our Enriching Life Plan, encompasses
everything we touch, from the products
we make to the ingredients we source and
the communities we operate in.
With our purpose, enriching life through
food, at its heart, the plan highlights our
commitment to a more sustainable food
system and, in turn, the UN Sustainable
Development Goals (SDG). Guiding our
work to 2030, it sets out our ambitions
to make more nutritious and sustainable
food, contribute to a healthier planet and
nourish the lives of our colleagues and
communities.
Working in Partnership
In order to help shape a more sustainable
UK food system, we are members of many
industry-leading groups which facilitate
collaboration and accelerate action. By
participating in these initiatives, we hold
ourselves accountable against industry-
wide targets and strive to contribute to
wider change. Where we feel we have a
unique contribution to make across the
broader industry we engage more, with
colleagues currently holding steering
group positions on the UK Plastics
Pact, The Courtauld Commitment
2030 programme, The Food
Data Transparency
Partnership and the
Food Industry
Intelligence
Network.
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As one of the UK’s
leading food producers
and home to some
of the nation’s most
loved and iconic
brands, we have both
an opportunity and a
responsibility to forge
a healthier future
for our planet and
everyone on it.
Partnership
for our targets
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
30
31
STRATEGIC
The Enriching Life Plan:
our purpose in action
Environmental, social and governance (‘ESG’) issues are constantly
evolving and our strategy is responsive to this, dealing with both changing
and emerging threats. As businesses, policy makers, non-governmental
organisations, scientists and citizens understand the issues better,
new international and national policies, and voluntary and industry
frameworks are being developed to help drive action.
Our Enriching Life Plan builds on the
findings of our materiality assessment,
which considered the views of a broad
range of stakeholders, including customers,
investors, specialists and colleagues. This
helped us to identify and prioritise the
issues most relevant to our business and
where they should be addressed in our
Enriching Life Plan (see graphic).
We will formally repeat our materiality
assessment in 2025/26 as we reach the
halfway point of our Enriching Life Plan,
but to ensure our work continues to
adapt to emerging and developing topics,
we continually review our priorities and
anticipate the emergence of nascent issues
which may impact the business.
2023 was declared as the warmest on
record and saw an increasing number of
examples of extreme weather, coupled
with ongoing geopolitical instability around
the world. The issues of human rights,
food security, water stewardship and the
ongoing response to climate change have
led to increased prominence of the roles
civil society and businesses need to play to
address these challenges in the future.
Water &
wastewater
management
Waste &
hazardous
materials
management
Well-being
Local food
systems
Climate change
Healthy
diets
Sugar,
salt & fats
Deforestation
Biodiversity
Sustainability
added value
Sustainable
agriculture
Stakeholder
responsiveness
Biodiverse
agriculture
Reducing
food waste
Business ethics
More significant
Less significant
Business impact
Stakeholder interest
Less significant
More significant
Ingredient / product
traceability
& integrity
Prospering
communities
Labour
practices
Product quality
and safety
Food poverty
Talent &
development
Employee
health & safety
Employee
engagement,
diversity &
inclusion
Supply chain,
human rights
& modern day
slavery
Sustainable
proteins &
plant-based
diets
Sharing &
applying
nutritional
knowledge
Marketing,
communication
& labelling
practices
Sustainable
packaging
& the circular
economy
Materiality assessment
Our approach: placing our purpose
at the heart of our business
Our governance
We believe everyone at Premier Foods
plays a part in delivering our Enriching Life
Plan. ESG sits at all levels of our business.
Our Board has oversight of our strategy,
and our Enterprise Risk Management
processes ensure oversight of climate-
related and other ESG risks (such as TCFD,
biodiversity, deforestation, water and
human rights).
Accountability for the delivery of our
plan rests with our Executive Leadership
Team (‘ELT’) and our Steering Groups
which report into our ESG Governance
Committee, chaired by our CEO. The
committee is made up of members of the
ELT, who have responsibility for ensuring
our Enriching Life Plan is embedded into
how we do business, sponsoring steering
groups which are led by members of our
Senior Leadership Team (‘SLT’). Our CEO
and CFO both have the delivery of specific
ESG targets in their annual bonus goals.
See the Directors’ Remuneration Report
for more information.
Our disclosure and
reporting approach
Holding ourselves accountable against our
targets is essential. We publish progress
against our Enriching Life Plan annually
and details can be found in our Enriching
Life Plan disclosure tables from page 182.
We remain committed to sharing our
data and progress with industry platforms
such as the UK Plastics Pact, Courtauld
Commitment 2030, Champions 12.3 and
the Carbon Disclosure Project (‘CDP’).
We continue to report against the SASB
(Sustainability Accounting Standards
Board) disclosure framework for the Food
and Beverage sector and for the first time
we have published Our journey to net
zero which explains how we aim to meet
our climate targets. We expect to iterate
and evolve our roadmap over time as
technologies develop and our pathway to
net zero becomes more defined.
We have sought independent limited
assurance procedures, for the second
year, over selected FY23/24 performance
indicators. For the details and results
of these assurance procedures, see our
Enriching Life Plan disclosure tables.
Our responsible approach
Underpinning the three pillars of our
Enriching Life Plan sits the broader ethical
foundation and framework that makes
up our responsible business approach
and our commitment to do the right
thing, in the right way. Our code of
conduct is designed to help us maintain
this framework and the trust in all the
things we do here at Premier Foods. It
encompasses many different aspects,
such as speaking up, acting honestly and
competing fairly. To be clear about what
we stand for in these areas and what we
expect from our colleagues, suppliers
and partners, the code of conduct directs
users to a range of policies which we
regularly review to ensure they reflect our
drive for continuous improvement. These
policies are linked to leading industry and
international standards and agreements
where possible and serve as a base for our
commitment to transparency, integrity
and accountability.
We look to maintain awareness and
compliance with our code of conduct
and wider responsible business practices
by conducting regular mandatory staff
training on areas such as data protection,
anti-bribery and corruption, and the
Corporate Criminal Offence legislation
amongst others. The anti-bribery and
corruption training includes guidance
on dealing with third parties, facilitation
payments, gifts and hospitality, and
charitable and political donations. Our
Company policy is to not make any
donations to political parties or causes.
Should there be any concern around
conduct, there is a formal procedure to
allow employees to raise any issues they
may have to a confidential whistleblowing
helpline, and the details of any such cases
are fed back to the Board via the Audit
Committee. The whistleblowing service
has been expanded to allow anyone who
comes into contact with our business,
such as customers and suppliers, to raise
concerns they may have that cannot be
dealt with through the normal channels.
For more detailed information on our
policies, please visit the policy section of
our website.
I&D culture
Well-being culture
Community volunteering
Community food poverty
Development
Scope 1 & 2
decarbonisation
Food waste
Scope 3 decarbonisation
Deforestation
Responsible and
Regenerative Agriculture
Product
Packaging
Board
Audit Committee
Enterprise Risk Management
TCFD Steering Group
ESG Governance Committee
Executive Leadership Team
ESG Reporting
& Compliance
Group
People Pillar
Steering Group
Planet Pillar
Steering Group
Product Pillar
Marketing SLT
Oversight of climate-related and
other ESG risks
Delivery of Enriching Life Plan
Delivery of
Enriching Life Plan
Embedding climate-related
and other ESG risks
Our Planet
Our Products
Our People
Our Baked-in behaviours
Expected materiality change
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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STRATEGIC
Our Products
Making nutritious
and sustainable food
The product pillar of our Enriching Life Plan is
dedicated to helping consumers lead healthier and
more sustainable lifestyles by creating foods which have a
higher nutritional value, are kinder to the environment and are
free of unnecessary or problematic packaging.
What’s at stake?
The UK Government Obesity Report 2023
shows that 64% of adults in England are
classified either as obese or overweight.
The last UK Government’s National
Diet & Nutrition Survey reveals that the
average person is far from meeting the
recommended intake of fibre, while
consuming too much saturated fat and,
furthermore 20% of adults are in severe
vitamin D deficiency. The EAT-Lancet
Commission advocates for a shift towards
healthier and more plant-based foods to
address the needs of a growing population
in a world of finite resources.
In 2021, 12.7 million tonnes of packaging
was placed on the market in the UK.
Packaging plays a key role in the food
industry by delivering products to
consumers safely. However, if poorly
designed, excessively used, or irresponsibly
disposed of, it can lead to a range of
environmental and social issues.
Our contribution
Keeping our consumers at the heart of
everything we do, we strive to democratise
nutritious, affordable food and nudge
consumers towards healthier and more
sustainable diets.
•
Over the last year we have launched or
changed the recipes of 209 products
which support high nutritional
standards and 142 products which
offer an additional health or nutrition
benefit.
•
In our top selling Sharwood’s noodle
range, we have reduced the average
salt by 16% from 0.31g to 0.26g per
100g since 2017, which meets the UK
Government’s target for this category.
•
While we have increased our range of
cooking sauces offering one of your
5-a-day, we have also increased fibre
levels and reduced salt. An example
is our best seller in Indian sauces,
Sharwood’s Tikka Masala now contains
17% less salt than in 2016.
•
We have launched alternatives to more
of our iconic Mr Kipling cakes which
are non-HFSS (not high in fat, salt and
sugar) for example Deliciously Good
Cherry Bakewell and Loaf Cakes.
•
We have changed the recipes of our
popular Angel Delight desserts (see
case study).
•
All our single servings of cake and
pudding products meet the UK
Government’s calorie cap, as set out
in their sugar reduction programme
(2016).
•
We have launched 54 products in
2023 in support of our Action on
Fibre Pledge with the Food & Drink
Federation. Since the programme
began in 2022, we have launched
116 products, sales of which have
contributed 220 tonnes of total fibre to
the UK market in 2023 alone.
To support consumers to make healthier
choices, the majority of our UK portfolio of
products are labelled using the voluntary
front-of-pack traffic light labelling scheme.
All products carry energy information and
the vast majority also show information on
fat, saturates, sugar and salt. We do not
market our products to children under 16.
Harnessing the power of our trusted
brands, we are supporting our consumers
who choose to transition towards more
plant-based diets. This year we have
gained further distribution for our range
of Plantastic Quick Meal Pots, including
launching a new flavour. We have also
launched Paxo Rosti cakes and McDougalls
Vegan Jelly. To raise the profile of these
great products we launched a major, cross-
brand, ‘Veganuary’ promotion of our plant-
based products in January 2024.
Food quality and safety are a continued
focus for our business. All our sites have
been awarded grade A or AA+ by the Brand
Reputation Compliance Global Standard
(‘BRCGS’) or meet specific customer
standards where they vary. We are
continually removing more artificial colours
and flavours from our brands and we do
not add non-naturally occurring trans fats
to our products. We also have a policy
that we won’t use genetically modified
organisms in our products. We are
founding members of the Food Industry
Intelligence Network (‘FIIN’) to help
ensure the integrity of food supply chains
and protect the interests of consumers.
More information can be found in our
Sustainable Accounting Standards Board
(‘SASB’) disclosure on our website.
Packaging plays a vital role in delivering
products safely to consumers, but we also
recognise the need to reduce its social
and environmental impact. We have
made significant progress in reducing the
amount of packaging we use, making more
of that packaging recyclable and helping
consumers with clear On Pack Recycling
Labels (‘OPRL’) (see case study). We are
a founding member of the UK Plastics
Pact and with a place on the steering
group we are active in discussions on the
direction of the pact once the current
commitments come to an end in 2025.
Understanding the importance of effective
household recycling systems, we are
also supporting industry action with the
Government on the future of the Extended
Producer Responsibility (‘EPR’) scheme
for packaging.
Case Study
Product innovation to support healthier diets
This year we changed the recipes of our Angel Delight whip desserts.
The new recipes of the most popular flavours; Strawberry, Butterscotch and Chocolate,
reduced sugar, saturated fat and salt whilst increasing fibre and protein to maintain the
great flavours and much-loved texture. These products continue to be free from artificial
colours, flavours and preservatives, and now score less than 4 on the Nutrient Profiling
Model, used by the UK government.
Case Study
Our ambitions, targets and progress
Our ambitions
Our 2030 targets
In-year progress
2030 target
progress
Make great-
tasting, healthier
and more
nutritious food
More than double sales of products that
meet high nutritional standards.
The Company’s branded sales of foods in £m
scoring less than 4, and drinks scoring less
than 1, on the UK Department of Health’s
Nutrient Profiling Model has grown by 19%
More than 50% of our products (by stock
keeping unit) provide additional health or
nutrition benefits.
The proportion of products with a health or
nutritional benefit has increased from 43%
to 44%.
Support the
nation’s shift
towards plant-
based diets
£250m sales in plant-based products made
to a vegan recipe.
The sales of plant-based products have
grown by 24%.
Each core range has a plant-based offering.
A new plant-based recipe has been launched
in our Pasta’n’Sauce range, along with new
products in cooking sauces and desserts.
Reduce the
environmental
impact of our
packaging
100% of packaging to be reusable, recyclable
or compostable by 2025.
96% of all our packaging and 86% of our
plastic packaging is now recyclable.
All targets are 2030 targets from 2020/21 baseline unless stated otherwise. See our Enriching Life Plan disclosure tables from page 182 for more information.
0. Not started
1. Plans in place
2. Early progress
3. On track
4. Advanced progress
5. Near completion
Supporting more sustainable packaging
Since joining the UK Plastics Pact, we have reduced our
total packaging usage by 23% and increased total packaging
recyclability from 91% to 96% and recyclability of plastic
packaging from 48% to 86%. We are working hard on the
rest of our packaging in collaboration with our suppliers
with major investments planned over the next two years.
This will leave us with a small number of specialist packaging
formats whose technical functionality can’t currently be
replicated with recyclable alternatives or for which there is no
widespread household collection or recycling infrastructure.
We will continue to engage with industry and Governments
on the future of household collection schemes and recycling
infrastructure to help us towards our target of 100%
recyclable, reusable or compostable packaging.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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35
STRATEGIC
Our Planet
Contributing to a
healthier planet
With strong commitments on tackling
climate change and deforestation, improving the
sustainability of farming practices and reducing waste,
the planet pillar of our Enriching Life Plan contributes to a healthier
planet by nurturing the natural resources that we rely on to make our food.
What’s at stake?
“Climate change is the defining issue of
our time, and we are at a crucial moment.
From shifting weather patterns that
threaten food production, to rising sea
levels and rainfall that increase the risk
of catastrophic flooding, the impacts of
climate change are global in scope and
unprecedented in scale” (United Nations).
Around 30% of greenhouse gas emissions
globally are attributable to the food system
– encompassing agriculture and land use,
processing and transport, through to
consumption and food waste. The food
industry has a major role to play in helping
the food system transition to a more
sustainable, resilient future.
Our contribution
Our plan recognises the environmental
impact of our operations and our wider
supply chain. We have stepped up our
actions to limit the effects of climate
change and are developing our resilience
to climate change (see our TCFD
statement). We want to do more to protect
natural resources through our supply
chain and are strengthening our efforts in
tackling food waste.
We understand the need to act quickly
and transform our ways of working and
have set near-term decarbonisation targets
which have been validated by the Science-
Based Targets initiative. Through the year
we have reduced energy usage and have
increased the proportion of renewable
electricity we use (see case study below)
contributing to a reduction in scope 1
and 2 market-based carbon emissions by
13.8%. See Enriching Life Plan disclosure
tables.
Building on previous work to understand
the carbon impact of our purchased goods
and services we launched a major new
supplier engagement programme laying
out our requirements of our key suppliers,
including setting and delivering against
their own science-based decarbonisation
targets. More information can be found in
Our Suppliers on page 38.
We recognise that we all need to
protect the natural resources on which
we depend. We are therefore tackling
deforestation in the products we source
which carry the greatest risks: palm, soy,
beef, pulp and cocoa. We continue our
work with the Roundtable on Sustainable
Palm Oil (‘RSPO’) and the Round Table
on Responsible Soy (‘RTRS’) to drive
supply of sustainable commodities and
now have 97% of our directly sourced
cocoa certified. Closer to home, we’re
committed to responsible and regenerative
agriculture where it can help us reduce
carbon emissions, improve resilience
to climate change, help protect natural
resources which are at risk and help
improve animal welfare. We have laid out
minimum standards for key ingredients
and packaging suppliers.
Protecting local environments at our
operational sites has long been a key
commitment and all our sites are certified
to ISO 14001. This year we have installed a
new DAF (Dissolved Air Flotation) effluent
treatment plant to improve the quality of
water discharges from our Worksop site.
We have also developed an environmental
apprentice programme, with the first
role in place at our Carlton site. Our sites
have sent zero waste to landfill since 2016
and, as signatories to the Food Waste
Reduction Roadmap and Champions 12.3,
we have long worked on reducing food
waste in our operations. This year has seen
the development of a new approach to
managing key waste streams at our Lifton
creamery which has helped reduce our
total food waste by around 10.5%.
Innovating our production processes to
reduce our energy requirements.
Innovation in the way we make our products will play a key role in helping us
achieve our decarbonisation targets, especially where we can reduce the amount
of heat, steam and cooling needed to make or cook our products. This year we
have successfully trialled a new approach to making icing toppings for our pies,
tarts and slices which significantly reduces the amount of heating and cooling
required in the process. We are investing in the equipment to use this new
process at our Stoke bakery over the coming year, which will significantly reduce
the site’s use of steam. We are also working with Sheffield Hallam University on
the development and testing of new approaches to making cooking sauces which
require less energy than current processes and could also lead to better tasting
and even more nutritious products.
Case Study
Our ambitions, targets and progress
Transitioning to renewable electricity
This year we have increased our use of renewable electricity to 36% through increasing
procurement via our sourcing contracts and purchasing Renewable Electricity
Guarantees of Origin (‘REGOs’). We have made our first major installation of on-site
solar generation capacity at our Stoke Bakery. The initial system is forecast to produce
around 25% of base requirement at the site with a second, larger phase at the site
now being planned. We have also received planning permission for a much bigger
installation at our Carlton bakery in Yorkshire, which has now been submitted to the
Distribution Network Operator for approval.
Case Study
Our ambitions
Our 2030 targets
In-year progress
2030 target
progress
Taking action on
climate change
Reduce scope 1 and 2 market-based
emissions by 67% and target net zero
by 2040.
Scope 1 and 2 market-based emissions have
reduced by around 13.8% against prior
year and 22.4% since our baseline year of
2020/21.
Reduce scope 3 emissions by 25% and target
net zero by 2050.
Launched new requirements on key
suppliers to set and deliver against their own
science-based targets and share carbon data
on the products and services supplied to
Premier Foods.
Protecting our
natural resources
Deforestation and conversion free palm
and beef supply chains by 2025, and across
entire supply chain by 2030.
100% certified direct palm and soy.
97% certified direct cocoa.
Champion regenerative agricultural practices
for key ingredients.
Over 99% of directly sourced wheat & flour,
100% of directly sourced UK grown sugar
beet and 100% of directly sourced UK dairy
products meet at least silver standard on the
Sustainable Agriculture Farm Sustainability
Assessment (‘SAI FSA’) or equivalent.
Launched new requirements on suppliers of
key agricultural ingredients.
Reducing waste
across our value
chain
Halve our food waste and support our suppliers
to do the same.
Food waste in our own operations reduced
by 10.5%.
Launched new requirements on key
suppliers to set and deliver targets aligned
to UN SDG 12.3 to halve global food waste.
Use the strength of our brands to engage
consumers to reduce food waste in
the home.
We have again expanded our on-pack
programme to raise awareness of the issues
of food waste and raise funds for our charity
partner FareShare.
All targets are 2030 targets from 2020/21 baseline unless stated otherwise. See our Enriching Life Plan disclosure tables from page 182 for more information.
0. Not started
1. Plans in place
2. Early progress
3. On track
4. Advanced progress
5. Near completion
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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STRATEGIC
Our journey to net zero
Our Suppliers
At the event, supported by several
leading environmental organisations,
we laid out our objectives and our own
actions to reduce our environmental and
social impact and improve our resilience.
Many of our suppliers already have well
established sustainability programmes;
however others appreciated further
direction and support and so we laid out
a set of key objectives for all key suppliers
and then specific requirements covering
areas of deforestation, sustainable and
regenerative agriculture, food waste and
human rights.
These requirements will form the basis of
a new relationship with our key suppliers
and will be a key component of our joint
business plans in the future. We all face
the same challenges, and we can only
develop a more resilient supply chain by
working together.
In order to better capture and collate
information on the progress of our
suppliers in the areas which are of most
importance to us, and broader ESG
performance and risks, we have joined
the EcoVadis platform with a significant
number of our key suppliers already
providing their information.
We are delighted that this work has been
recognised with an improvement of our
Supplier Engagement Rating from D to B
with the Carbon Disclosure Project.
Specific requirements dependent on areas of impact
Requirements of all key suppliers
Provide supply
chain transparency
Food Waste
Forests
Regenerative
Agriculture
Decarbonisation focus areas
Baseline
FY20/21
FY23/24
emissions
2030
Near-term targets
2040 & 2050
Long-term targets
We aim to give our consumers great tasting
products made from quality ingredients.
We source a wide range of healthy, natural
raw ingredients, packaging, and other
services from a range of suppliers in the
UK and from markets around the world.
Last year we purchased over 265,000
tonnes of food ingredients working with
around 245 suppliers. We’re developing
long-term, sustainable partnerships which
deliver mutual benefits, helping to reduce
the environmental and social impact of our
products and improving the resilience of
our supply chain.
We have used the Sedex (Supplier Ethical
Data Exchange) programme to support
ethical sourcing for many years. 99% of
our direct spend on ingredients, packaging
and bought in finished goods is with Sedex
registered suppliers who have shared
their ethical data with Premier Foods. We
expect suppliers outside Europe to have
completed Sedex Members Ethical Trade
Audits (‘SMETA’).
To go further, we have also launched a
major new supplier engagement plan
to support suppliers in their activities
and help us deliver the objectives of our
Enriching Life Plan. This culminated in an
event at our Carlton bakery in October
attended by our key ESG impact suppliers
who make up over 70% of our scope 3
carbon emissions and who also have a
major role to play in helping deliver our
goals of protecting natural resources,
reducing waste and ensuring everyone in
our supply chain is treated fairly.
Achieve minimum
sustainability standard for
agricultural commodities
equal to Bronze SAI
Platform Farm Sustainability
Assessment by spring 2025
A water policy which
supports increased water
stewardship at farmer level
within their supply chains
by spring 2025
Reported measure of the
water intensity to produce
agricultural crops in your
supply chains by spring 2025
A Forest Sustainability
Policy by end of 2024
Timebound milestones &
targets for Deforestation
& Conversion Free (DCF)
Supply Chain by end
of 2024
Demonstrate DCF through
responsible sourcing toolkit
by end of 2024
Sign up to an industry Food
Waste Initiative by end of
2024 – setting target to
halve Foodwaste by 2030
Zero food waste sent to
landfill by mid 2025
Move waste up the food
& drink waste material
hierarchy
Provide supply chain
mapping data
Register & share info on
EcoVadis by mid 2024
Establish a Human Rights
Due Diligence framework
by end of 2024
Share climate & nature
related risk assessments by
end of 2024
Supporting the transition to more sustainable lifestyles
•
Ensure all key categories have a plant-based product
•
Grow plant-based product sales
•
Use the power of our brands to promote more
sustainable diets
•
Support initiatives to reduce food waste in the home
and improve recycling of packaging
Operational efficiency and investment in low energy
and low carbon operations
•
Removing coal from our fuel mix
•
New steam generation
•
Innovative manufacturing processes
•
Upgrading boilers
•
Upgrading ovens
•
Reducing food waste
•
Increase use of recycled packaging materials
100% renewable electricity
•
Green electricity tariffs
•
On-site generation
•
Long-term Private Wire and Corporate Power Purchase
Agreements (PPAs)
Supplier engagement
•
Key suppliers to have SBTi aligned decarbonisation plans
•
Support responsible and regenerative agricultural
practices
•
Eliminate deforestation and land conversion
•
Support suppliers to reduce food waste
Carbon capture and sequestration
•
Collaborate with suppliers on in-supply chain
carbon capture and sequestration opportunities
Scope 1 & 2
(Market-based)
Scope 3
05
04
03
02
01
Provide
product level
carbon footprint
by end 2025
Set carbon
reductions
targets that are
validated by SBTi
by 2025
Complete and
share climate
and nature
related risk
assessments by
end of 2024
Register and
share your data
on EcoVadis by
mid 2024
Collaborate
with relevant
industry groups
Now &
ongoing
2024
2025
2040
Net zero
57k tCO2e
22% reduction
756k tCO2e
18% reduction
919k tCO2e
2030
67% reduction
2030
25% reduction
2050
Net zero
73k tCO2e
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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STRATEGIC
Our People
Nourishing the lives of our
colleagues and communities
Within our People pillar we are building the culture,
skills and capabilities needed to help our business, the UK
food sector and wider economy thrive and, wherever possible, identifying
opportunities to give back to the communities where we operate.
What’s at stake?
With a footprint in every region in the
UK, food and drink is the UK’s largest
manufacturing sector, contributing £38bn
in Gross Value Added to the economy
annually and employing over 472,000
people. As a result, it offers a wide range of
opportunities, but this is often overlooked
by young talented individuals. Developing
home-grown talent, increasing the
attractiveness of the industry to prospective
employees and improving workforce skills
are therefore key priorities for us. Being
open to diversity in all its forms allows us
to access the widest talent pool, whilst
creating an inclusive environment will
enable them to excel.
Our contribution
Our aim is that Premier Foods is a place
where everyone is welcome, and our
colleagues can bring the best version of
themselves to work every day.
One of our key objectives is to bring
gender balance to senior leadership roles
through a range of measures, including
the introduction of our new Women in
Leadership Programme, our successful
sponsorship programme for diverse talent,
as well as through our mentoring, reverse
mentoring, and coaching programmes.
These programmes aim to better
understand the challenges faced by diverse
talent, providing tools and techniques to
break through barriers to progression and
promoting equity of opportunity. In light
of the Parker Review recommendations
published in March 2023, the Group
has set an ambition for 7% of senior
management (defined as the ELT and
their direct reports) to be colleagues from
ethnic minorities by December 2027.
To support colleagues with their mental and
physical wellbeing we are partnering with
Vitality, who run one of the largest health
and wellbeing surveys, ‘Britain’s Healthiest
Workplace’. To date we have carried out
health assessments at five of our sites,
developed strategic plans to support our
colleagues and achieved one Silver and four
Bronze accreditations. We plan to extend
the programme to all of our locations over
the next 12 months.
We have a robust Health and Safety
management system in place, with all
of our manufacturing sites accredited
to ISO 45001, and the Board reviews
performance at every scheduled meeting.
Our ‘Talk Safe Be Safe’ and ‘Total
Observation Process’ remain internal
priorities building on our excellent safety
culture across sites. There is an ongoing
programme of H&S training for all
colleagues through our Safety Leadership
Plus and CAREs courses (Championing
and Recognising Excellence in Safety) and
in 2023, we held our first H&S week. Our
RIDDOR (Reporting of Injuries, Diseases
and Dangerous Occurrences Regulations)
rate of 0.12 per 100,000 hours worked
is significantly better than the industry
average of 0.50.
Our well-established apprenticeship
programmes provide fantastic
opportunities for our existing colleagues
to develop their skills as well as helping
us attract new talent into the business.
These programmes play an important role
in addressing the skills gap faced by our
industry, particularly in roles requiring
STEM (Science, Technology, Engineering
and Maths) skills.
We are delighted to be the first food and
drink manufacturer to host engineering
T-Level placements. These two-year
technical qualifications are an alternative
to A-levels and include an industry
placement to prepare students for work or
further training. Taking on T-Level students
is a great way to teach practical skills whilst
allowing students to gain qualifications,
and they potentially provide a stepping
stone into an apprenticeship.
We endeavour to be a caring partner for
our colleagues and our local communities.
We aim to be a force for good and
volunteer our time and expertise to
local causes linked to the issues of
food insecurity, employability and local
environmental quality.
As a food manufacturer, we have an
opportunity to help tackle the increasing
issue of food insecurity and we are
currently in the second year of a five-
year partnership with FareShare UK. This
encompasses the reduction of food waste
at our sites, increased redistribution of
surplus stock, commercial partnership
campaigns with our retailers, and
colleague engagement and fundraising.
This year, we provided the equivalent
of 949,040 meals to support FareShare
and other food insecurity charities. Our
colleagues gave 502 days of volunteering
at multiple charities and community
organisations. In response to global
disasters we have contributed £50,000 to
the British Red Cross Disaster Relief Fund,
enabling them to provide vital support to
people impacted by major crises.
As a business, we understand the role
we play in protecting and promoting
the human rights of all those working in
our value chain. We have established a
Human Rights Working Group which will
be developing a formal Human Rights Due
Diligence framework. We have joined the
Food Network for Ethical Trade (‘FNET’),
an organisation formed to collaborate
on best practice to identify and act on
human rights issues in the food industry.
We publish a Modern Slavery Statement,
which we update every year.
Championing thriving careers in the food industry
Niall joined Premier Foods in 2019 as
the Company’s first ever packaging
development apprentice, reporting
into the Grocery R&D team. In 2023
he was named Food and Drink
Federation Apprentice of the Year for
his contribution to the Company and
the way he helped promote careers
in the industry. Since finishing his
apprenticeship Niall has taken on a
permanent technologist role.
Niall’s work during his apprenticeship
helped deliver a 40-tonne saving in
packaging across Premier Foods through
optimisation of the Bisto drum. He also
worked on more sustainable packaging
for both the Paxo and Batchelor’s
brands, improving recyclability and
lowering the carbon footprint.
Throughout his studies Niall was an
ambassador for Sheffield Hallam
University, supporting other
apprentices, and he took part in the
‘Technicians: We Make the Difference’
programme with Gatsby, promoting
apprenticeships and technical careers to
other students.
Case Study
Tackling food insecurity
Working in partnership with our charity
partner, FareShare, we are committed to
tackling food insecurity. Premier Foods
has a target to donate the equivalent
of 1 million meals annually by 2030.
This year we donated the equivalent of
949,040 meals through 3,905 charities
and community groups. This reached
people on low or no income, children
and families,
homeless people, older people, and
asylum seekers and refugees. Hexthorpe
Primary School, situated in one of
Doncaster’s most deprived areas,
receives Premier Foods donations
through FareShare. Twice a week, an
average of 12 struggling families collect
a food parcel from the school, enabling
them access to meals they may not have
been able to afford.
Case Study
Our ambitions, targets and progress
Our ambitions
Our 2030 targets
In-year progress
2030 target
progress
A diverse,
healthy and
inclusive
culture
Gender balance for senior
management.
41% of senior management roles are held by females.
Diversity KPIs to reflect regional
demographics.
Published our annual D&I report internally equipping
leaders with data for their areas.
All sites achieve platinum level Health
and Wellbeing accreditation.
Four sites have now achieved bronze accreditation
and one silver.
A leading
developer
of people
Provide skills and work opportunities
for young and excluded groups.
Levy gifting – We have supported 79 apprenticeships
across 41 SMEs since 2020.
75% of STEM vacancies filled by
internal candidates.
Expanded T-Level programme to Engineering. 70 of
our apprentices are in a STEM role. 47% of our STEM
vacancies were filled internally.
80% of colleagues feel they have
opportunity to develop and grow.
60% of colleagues reported via our colleague survey
that they have the opportunity to develop and grow.
A caring
community
partner
Provide the equivalent of 1 million
meals per year to those in food
insecurity.
Second year of partnership with FareShare. The
equivalent of 949,040 meals donated to FareShare
and other food insecurity charities.
Be a force for good in our
communities by volunteering at least
1,000 days each year.
502 days volunteered by our colleagues to charities
and good causes.
* See our Enriching Life Plan disclosure tables from page 182 for more information.
0. Not started
1. Plans in place
2. Early progress
3. On track
4. Advanced progress
5. Near completion
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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STRATEGIC
Our TCFD Climate Risk Journey
We conducted training and workshops with key business
functions to raise awareness of climate-related risks and
opportunities. Initial identification of six key risks and
opportunities disclosed in first TCFD disclosure. Climate-
change risks included in Company’s principal risk log.
Year 01
Year 02
Year 03
Identified three climate change scenarios and quantified risks
associated with changes in consumer demand and disruption
in supply due to availability of key ingredient and disruption at
manufacturer sites. Strengthened TCFD disclosure.
Expanded assessment on the acute and chronic risks
associated with supply of key ingredients. Pilots on nature risk
assessments. Increased disclosure on the metrics and targets
used to measure risk and opportunity to be consistent with all
recommendations of TCFD.
Taskforce on Climate-related Financial Disclosures
Introduction and Compliance Statement
We recognise that climate change is one of the most pressing
issues facing society, and our collective response over the next
decade will determine how broad and deep the impacts of
climate change will be. That’s why we must continue to work
collaboratively to make a greater positive impact. We see it
as both a responsibility and an opportunity, to which we are
committed to playing our part.
Our Enriching Life Plan lays out a bold set of ambitions and
targets, including our response to climate change; ensuring
we play our role in the transition to a net zero future and how
we can better prepare our business to adapt to the impacts of
climate change.
In 2022 we made our first TCFD disclosure that explained our
approach to the management of climate-related risks. Over the
intervening two years we have strengthened our disclosures and
consider it consistent with the listing requirements of LR9.8.6(8)
and the recommendations and recommended disclosures
from the Taskforce on Climate-related Financial Disclosures
(‘TCFD’), including the Annex and Guidance published in 2021.
The requirements, status and next steps are summarised in
each section.
The Board has overall
accountability for our ESG
strategy, the Enriching Life
Plan, and climate-related risks.
The Board receives presentations twice
a year on the business’ progress on our
Enriching Life Plan and receives updates
in the form of dashboard reports on key
performance and projects every time they
meet. These updates include progress
on adopting the recommendations
of the Taskforce for Climate-related
Financial Disclosures.
Members of the Board have experience
from consumer goods, retail companies
and government departments with
strong track records on climate change
and sustainability. Colin Day, the Chair
of our Board is a board member at the
Department for the Environment and Rural
Affairs (‘DEFRA’), chairing the DEFRA Audit
and Risk Assurance Committee. Helen
Jones was the chair of the Sustainability
Committee at Halfords plc, and Roisin
Donnelly is a member of the Sustainable
Business Committee at NatWest Group plc.
The governance structure (see below)
ensures that climate-related and other ESG
risks are embedded into the Company’s
Enterprise Risk Management processes
which the Board’s Audit Committee
reviews. A TCFD steering group has been
established under the leadership of the
CFO, to support the adoption of the
framework. The steering group ensures
climate-related risks are properly included
in our Enterprise Risk Management
process and directly updates the Board’s
Audit Committee. The adoption of the
requirements of TCFD forms part of
the non-financial annual bonus goals of
the CFO who is an Executive Director of
the Company.
Climate risks are reviewed by the Audit
Committee, as reflected in its Terms of
Reference, as part of the risk management
process conducted twice a year, and
subsequently presented to the Board.
Climate risks and ESG matters have
also been embedded into the annual
review and approval of the Group’s five
year Strategic Plan and budget approval
process, and are taken into account by the
Board when making key decisions as part
of its responsibility to consider matters
under Section 172 of the Companies Act.
Examples of this include signing off capital
investment plans, including efficiency
and resilience projects at our sites, and
reviewing progress of the transition of
production from Knighton to other plants
with a significant impact on our energy
usage and fuel mix.
Day-to-day responsibility for managing
climate related, and other ESG, risks
is delegated to our ESG Governance
Committee. Our ESG Governance
Committee, is chaired by our CEO and
comprises relevant members of the
Executive Leadership Team (‘ELT’),
including the CFO and Corporate Affairs
and ESG Director. The ESG Governance
Committee meets six times a year
and manages all ESG risks. The ESG
Governance Committee also includes our
ESG Director and subject matter experts
across the business. Actions taken by the
group during the year include the review
of climate related risks and this TCFD
statement, approval of our submission for
validation of our net zero carbon targets by
the Science Based Targets initiative (‘SBTi’),
review of progress on our decarbonisation
plans, review of our deforestation and
regenerative agriculture roadmaps,
setting new targets for our plant-based
products and approval of our new
Supplier Engagement programme. Various
members of this group have objectives
and remuneration which are aligned to
our management of climate-related risks
and opportunities. For members of the
ELT these are covered in the Metrics and
Targets section below.
Governance
Describe the Board’s oversight of
climate-related risks and opportunities.
Describe management’s role in
assessing and managing climate-
related risks and opportunities.
Aligned
•
We have disclosed our approach to
Board oversight and management’s
role in assessing climate
related risks.
•
We lay out the skills and
experience of our Board and
management and how the groups
work together.
•
We give examples of the issues
which have been reviewed and the
decisions made by these groups in
the year.
Next steps
•
We will continue to provide
information to the Board and
management on the evolution
of climate-related risks and
opportunities, and their potential
impacts on the business.
I&D culture
Well-being culture
Community volunteering
Community food poverty
Development
Scope 1 & 2
decarbonisation
Food waste
Scope 3 decarbonisation
Deforestation
Responsible and
Regenerative Agriculture
Product
Packaging
Board
Audit Committee
Enterprise Risk Management
TCFD Steering Group
ESG Governance Committee
Executive Leadership Team
ESG Reporting
& Compliance
Group
People Pillar
Steering Group
Planet Pillar
Steering Group
Product Pillar
Marketing SLT
Oversight of climate-related and
other ESG risks
Delivery of Enriching Life Plan
Delivery of
Enriching Life Plan
Embedding climate-related
and other ESG risks
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
42
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STRATEGIC
Taskforce on Climate-related Financial Disclosures
continued
Strategy
Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium, and
long-term.
Describe the impact of climate
related risks and opportunities on the
organisation’s businesses, strategy, and
financial planning.
Describe the resilience of the
organisation’s strategy, taking into
consideration different climate related
scenarios, including a 2°C or lower
scenario.
Aligned
•
We have assessed the most
important risks of climate change,
and disclosed the findings and
where they have an impact on our
business strategy.
•
We have refreshed modelling of
the impact of changes in demand
for our products and expanded the
modelling of risks associated with
the sourcing of key ingredients.
•
We have assessed a range of
climate scenarios and, where
relevant, we have included the
impacts in our financial reporting.
Next steps
•
We will continue to monitor and
develop our understanding of these,
and other emerging risks, including
updates in future disclosures.
We are proud to manufacture the majority of our
products in our dedicated factories across the UK,
serving several commercial channels through a
range of different routes to market.
These local operations mean we can
expect our own business to be affected
by the physical and transitional impacts
of climate change in the UK. As a food
manufacturer, our business relies on a
wide range of raw materials, ingredients
and packaging items and, whilst much of
this is locally sourced, there are a number
of complex international supply chains.
These international supply chains, along
with our commercial expansion into
new markets, mean the global effects of
climate change will also impact us. We
are therefore preparing our business
for a range of physical and transitional
impacts of climate change, both locally and
internationally, which will represent both
risks and opportunities for the organisation
over the short, medium and long term.
We have carried out several risk
identification workshops with colleagues
from across our business, which have
identified a number of different risks and
opportunities due to climate change. In
response to the requirements of TCFD, we
have prioritised these risks by likelihood
and impact, dividing climate risk into two
broad categories – physical risk relating to
extreme weather events and long-term
chronic shifts in global temperatures
and precipitation levels, and transition
risk pertaining to changes in regulation,
pricing, consumer and customer demand
changes and reputation. Over the last
three years, we have worked with external
organisations and our insurance partners
to accelerate our understanding of these
risks to our business. As part of this
process, we have conducted climate risk
training and workshops with key business
functions, including our sales, marketing,
procurement, finance and operational
teams. Engaging key stakeholders,
these workshops involved building our
understanding of climate-related impacts
and resilience and understanding the
current impacts of climate change to
project future risks and opportunities. The
output culminated in the identification
of six key physical and transition risks
and opportunities which had the most
significant potential impact on our
business strategy. This year, these risks
were reviewed with key leaders in the
business to confirm they are still the most
relevant risks and opportunities for our
business. Further assessment was carried
out to develop our understanding of the
risks. Three scenarios were considered to
support this analysis and are summarised
in the table below.
There is early decisive action within
society to reduce global emissions, as well
as coordinated policy action towards a
low carbon economy. The outcome of this
scenario, is action sufficient to limit global
warming to well below 2°C, aligned to the
Paris Agreement.
There is a delay in implementing the
policy response required to reduce
global emissions.
This scenario highlights the global
impact of a failure by governments to
introduce policy interventions to limit
global emissions. Under this scenario
we see global temperatures increase to
above a 3-4°C level of warming.
Physical Climate Change Pathway*
RCP2.6
Physical Climate Change Pathway*
RCP2.6
Physical Climate Change Pathway*
RCP8.5
Policy landscape**
Delivery of stated UK government policy
objectives in the next 5 years.
Strengthened, but well-planned,
policies for industrial and agricultural
decarbonisation from 2029 onwards,
informed by the UN PRI Inevitable Policy
Response.
Policy landscape**
Delivery of stated government policy
landscape in UK in the next 5-10 years.
More severe policy response from
around 2034, to compensate for the late
transition. Includes several of the policy
suggestions from the UN PRI Inevitable
Policy Response but at a lower scale and
implemented more slowly.
Policy landscape**
Delivery of stated government policy
landscape in UK in the next 5 -10 years.
Disjointed and ineffective policy
response from around 2034.
Commercial and
consumer landscape
The Science Based Targets initiative
is widely adopted by our customers,
and they encourage suppliers to make
progress using commercial arrangements.
Consumers increasingly seek out products
with sound environmental credentials.
Credible product information is available
to support consumer choices.
Commercial and
consumer landscape
The Science Based Targets initiative
is widely adopted by our customers,
and they encourage suppliers to
make progress using commercial
arrangements.
Consumers increasingly seek out
products with sound environmental
credentials. Some product information
is available to support consumer choices.
Commercial and
consumer landscape
The Science Based Targets initiative is
adopted by many of customers, and they
encourage suppliers to make progress
using commercial arrangements but
divergence in approach.
Consumers increasingly seek out
products with sound environmental
credentials. Some product information
is available to support consumer choices.
* Representative concentration pathway, as laid out by the International Panel on Climate Change (‘IPCC’).
** Whilst the business is impacted by EU and local legislation, the UK policy framework is most important given the significance of the UK market to our revenues and as the
location of our manufacturing base. The business does not meet the criteria for reporting obligations under the EU Corporate Sustainability Reporting Directive (‘CSRD’) or
the proposed Directive on Corporate Sustainability Due Diligence (‘CSDDD’)
Early Policy Action:
Smooth Transition
Late Policy Action:
Disruptive Transition
No Policy Action:
Business as Usual
In all scenarios and for all risks, specific consideration was given to the next five years as this reflects the period covered in
our business strategy cycle and therefore key financial planning, statements and disclosures. To align with our enterprise risk
management and materiality processes, risks were assessed to determine whether they reached the criteria of a potential impact
of greater than £5m in any year in the period of the business strategy cycle.
Climate Change Scenarios
Strengthened risk assessments over the last year
•
Modelling of the chronic physical risks associated with the availability of key
ingredients was expanded to cover 15 key ingredients, accounting for 59% of
purchased ingredients by spend, and including those with the most reliance on
specific sourcing regions. This analysis considered the impact of climate change over
the next 20 years.
•
Assessments of the acute physical risks associated with the availability of key
ingredients was carried out for the first time, assessing regions responsible for 59% of
purchased ingredients by spend. This analysis considered the likelihood and severity of
extreme weather events over the next 20 years.
•
Modelling was refreshed on the commercial risks associated with changing consumer
behaviours and covered all our current product sales in the UK over the next 20 years.
•
Assessment on the impact of policy interventions laid out in the UN PRI Inevitable
Policy response, including carbon pricing, zero emission vehicles, clean industry and
forestry.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
44
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STRATEGIC
Taskforce on Climate-related Financial Disclosures
continued
Unmitigated risk
Time horizon
Addressed in our
business strategy
Mitigating actions as part
of our strategic planning
Outcome
Key physical risks
Disruption to our
operations as a result of
acute extreme weather
events.
The most significant risk to our sites comes from
flooding as a result of intense localised rainfall.
Our Lifton site was previously identified as being at
risk of flooding from a river bordering the site but
investments have already been made to mitigate this
risk. The extreme weather experienced during the
summer in 2022 helped us identify processes and
infrastructure which will be increasingly vulnerable to
higher localised rainfall and higher temperatures. In
some circumstances, these necessitated temporary
changes to working practices in order to maintain
production.
Next 5
years
6-10
years
More than
10 years
Supply chain
Investment
Protecting key infrastructure
Investments in flood protection were made at Lifton in 2021 and
a review of drainage has been carried out at our Worksop site,
resulting in improvements being made.
All sites have strengthened their extreme weather protocols,
including local site investments to improve local resilience.
A resilience workshop was carried out with operational and
engineering leaders to better understand risk and resilience insights
and best practice, facilitated by our facilities management and
insurance partners.
In all scenarios we do not deem
this mitigated risk reaches the
threshold for materiality in the
period covered in our business
strategy cycle.
Changes in the
availability, price or
quality of key ingredients,
as a result of more
extreme weather events
or chronic changes in
climate in sourcing
regions.
Our previous analysis identified 1 commodity with a
local yield risk in the short-term and 3 commodities
with local yield risks in the medium to long-term
as a result of the chronic impact of climate change.
This analysis was expanded this year to consider the
chronic risks for an additional 5 commodities and
the acute risk in 9 key sourcing regions. These have
identified no new risks in the next 5 years.
Next 5
years
6-10
years
More than
10 years
Supply chain
Investment
Supplier collaboration and R&D
We have developed a quantitative yield chronic impact tool, and a
new framework for assessing acute risks with a third party which we
will monitor regularly to understand evolving risk. We are working
closely with suppliers of those commodities identified as at a yield
risk, to understand their resilience and mitigation plans. We have
laid out a requirement of our key suppliers to provide climate and
ESG risk assessments following the TCFD and TNFD frameworks
which we will start to use in our work with suppliers and future
sourcing decisions.
Our actions include sourcing key commodities from other suppliers
and regions, and in some cases may lead to product reformulation
to broaden the range of ingredients we can use in our products.
We seek to minimise the cost of these actions, although in some
cases, it may be necessary to include price increases in our
commercial strategy.
Our programmes to improve ingredients yields and reduce food
waste in our own operations will also contribute to our resilience.
In all scenarios we do not deem
this mitigated risk reaches the
threshold for materiality in the
period covered in our business
strategy cycle.
Time Horizon Key
as described on
Page 45
Smooth transition
Disruptive transition
Business as usual
Unmitigated risk
Time horizon
Addressed in our
business strategy
Mitigating actions as part
of our strategic planning
Outcome
Key transition risks
Financial impact of
increasing energy costs
and carbon pricing.
In all climate scenarios, we assume increases in the
pricing of electricity and gas. This is driven by many
factors, including, but not limited to, the policies
adopted by governments to address climate change.
This will impact our own energy prices and also those
of suppliers, who will likely seek to recover some of
those costs.
We have two sites which are currently covered by the
UK Emissions Trading Scheme. (‘ETS’)
Next 5
years
6-10
years
More than
10 years
Supply chain
Investment
Progressing on our journey to net zero
Our Journey to net zero is laid out on page 38 and includes
improvement and investment in low energy and low carbon
operations and a transition to 100% renewable electricity which
will help mitigate the impact of any changes in electricity and
carbon pricing.
Our work has a particular focus on sites currently covered by
the UK ETS. Developments at these sites may bring emissions
below the criteria for involvement in the scheme and therefore
represent a financial opportunity.
In all scenarios we do not deem
this mitigated risk reaches the
threshold for materiality in the
period covered in our business
strategy cycle.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
46
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STRATEGIC
Taskforce on Climate-related Financial Disclosures
continued
Unmitigated risk
Time horizon
Addressed in our
business strategy
Mitigating actions as part
of our strategic planning
Outcome
Key transition risks
Evolving legislation and
regulation could lead
to increased business
complexity and force
changes in key business
processes.
Premier Foods operates in a complex regulatory
environment, set by local governments and their
adoption of global frameworks. Current UK legislation
is focused on disclosure and understanding risks
which, whilst increasing reporting obligations,
will not have material impact on our operations.
Governments have objectives to support the
transition to a low carbon economy, which will
encourage the adoption of new technology and
energy sources for manufacturing and transport
and will represent opportunities to support our
own transition.
Next 5
years
6-10
years
More than
10 years
Supply chain
Investment
Horizon scanning on upcoming
legislation and emerging technology
We have strengthened our ESG risk assessment and disclosure
standards to prepare for upcoming reporting requirements.
Our reporting working group reviews upcoming legislation twice a
year to include in our functional plans.
Our engineering team reviews emerging low carbon technology,
and programmes to support their adoption, for suitability in
our applications.
In all scenarios we do not deem
this mitigated risk reaches the
threshold for materiality in the
period covered in our business
strategy cycle.
Unmitigated risk
Time horizon
Addressed in our
business strategy
Mitigating actions as part
of our strategic planning
Outcome
Key commercial
opportunities & risks
Changes in consumers’
demand for our products,
in the event of changing
weather patterns.
Premier Foods produce, market and distribute a
range of products which are consumed in a range
of situations. Consumption of food and drink is
impacted by weather and many of our products
have a seasonal demand pattern. Changes in the
climate will alter seasonal patterns and, therefore,
may change the demand for different types of
products. This represents both a risk and an
opportunity for Premier Foods, with demand for
products traditionally consumed in autumn and
winter, potentially under threat from shorter and
less severe cold weather, and products consumed in
hotter weather, potentially able to exploit increased
opportunities from longer and hotter summers.
Next 5
years
6-10
years
More than
10 years
Expand UK into
new categories
Build international
businesses with
critical mass
Inorganic
opportunities
Continue to grow
in the UK core
Commercial planning and category expansion
By understanding the factors which impact consumers’ purchasing
decisions, we are well placed to manage the risk of reduced
demand for products at specific times.
Our commercial strategy includes expansion into new categories,
many of which have different use occasions and are more suitable
for warmer weather. Recent examples include breakfast cereals
with the acquisition of FUEL10K and new products such as
barbeque marinades and ice cream.
When considering this risk
(excluding the associated
opportunities), we do deem
that this mitigated risk
could reach the threshold
for materiality in the period
covered in our business strategy
cycle and it has therefore been
considered in our viability
statement.
Commercial opportunities
from supporting
customers’ and
consumers’ demands
for more sustainable
products.
Many of our major customers have their own science-
based targets to tackle climate change and have
developed strategies to encourage decarbonisation
and resilience in their supply chains. These strategies
could include the rewarding of positive progress
through supplier financing terms, product listings,
or collaborative projects. There is also a risk that
retailers could penalise suppliers who are not making
sufficient progress on addressing issues in their own
products and services.
Next 5
years
6-10
years
More than
10 years
Expand UK into
new categories
Build international
businesses with
critical mass
Inorganic
opportunities
Continue to grow
in the UK core
Strengthening the sustainability credentials of our
products and collaboration
Our Enriching Life Plan lays out a wide range of ways in which
we are improving the sustainability credentials of our products.
Many of these are well aligned to the objectives of our customers.
We monitor consumer sentiment to understand the factors that
are most important in purchase decisions and are well placed to
respond to those opportunities.
One particular opportunity is consumers’ increasing demand for
plant-based products, which is a key part of our commercial plans.
In all scenarios we do not deem
this mitigated risk reaches the
threshold for materiality in the
period covered in our business
strategy cycle.
Time Horizon Key
as described on
Page 45
Smooth transition
Disruptive transition
Business as usual
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
48
49
STRATEGIC
Taskforce on Climate-related Financial Disclosures
continued
Climate-related risks are identified and managed
through our established Enterprise Risk Management
framework to identify, assess, mitigate and monitor
the key risks we face as a business.
The risk management framework is used
to inform our principal, watchlist and
emerging risks. Our Internal Audit and ESG
teams work closely to update our principal
risks as they relate to climate change and
climate change is considered as a principal
risk. We have taken steps to more formally
integrate the identification of climate-
related risks into our existing bottom up
risk management framework, including
training and new templates to ensure their
inclusion.
Response strategies are developed
for the key risks identified across the
business. We use this to define controls
and monitor metrics. This will ensure that
the appropriate decisions on mitigating,
transferring, accepting or controlling
the climate-related risks are made. Risk
owners from the ELT are assigned and are
responsible for embedding our response to
risk-related issues in our business strategy.
All key risks are reviewed with risk owners,
on a bi-annual basis, to assess and
understand the evolution of the risk, and
whether our current risk management
controls are sufficient. Outputs of this work
are then included in the Risk Management
sections of each Annual Report.
This year we have made a requirement
of our 70 key impact suppliers to provide
climate and risk assessments using the
TCFD and TNFD frameworks by the end
of 2024. This will be used to help inform
future risk assessments, mitigation
actions and sourcing decisions. We
have also carried out a trial of nature
risk assessments on three specific UK
farms where we source dairy products,
apples and parsley. To further understand
the specific risks associated with local
water availability we have appointed a
third party to support assessments at
our operational sites with a view to also
helping inform future climate and nature
risk assessments.
Our performance in reducing greenhouse gas
emissions and progress against our science-based
targets are key metrics to help us understand
our management of climate related risks
and opportunities.
A full view of our global energy
consumption and greenhouse gas
emissions data in line with the UK
Government’s Streamlined Energy and
Carbon reporting (‘SECR’) Regulations can
be found below. In addition, there are
a range of other key environmental and
commercial performance measures linked
to our management of climate related
risks and opportunities which are shown in
the table below. Many of these, and other
important performance indicators, can
be found in our Enriching Life disclosure
tables and our Sustainable Accounting
Standards Board (‘SASB’) disclosure on our
website. We also disclose annually to CDP
(formerly the Carbon Disclosure Project).
The table shows where members of our
Executive Leadership Team have been
financially incentivised on the delivery
of this target in the 52 weeks ending
30 March 2024. For Executive Directors
more information can be found in the
Directors’ Remuneration Report.
Metrics
Target and objective (2030 unless otherwise stated)
Mitigation Adaptation
Executive remuneration
Data, disclosure and
reporting
• Strengthen quality
of key ESG data and
ensure compliance
with all ESG and non-
financial disclosure
requirements.
• Deliver limited
assurance on key ESG
non-financial metrics
(2023/24).
• Disclosure
consistent with the
recommendations of
TCFD (2023/24).
• Disclosure consistent with
the recommendations
of TCFD and limited
assurance on key ESG
non-financial metrics
formed part of the
objectives of the Chief
Finance Officer in the
reporting period.
Mitigating or adaptation action
We understand that to best manage the
climate related risks and opportunities in
the supply of the ingredients we use we
will need to work in new ways with our
suppliers. The launch of our new supplier
engagement programme this year is a
key step on developing a more resilient
supply chain.”
Gareth Pullan
Procurement Director
It’s clear that a changing climate will
be one of the trends which will impact
the food shoppers want to buy and eat,
either through changing eating occasions
or through a growing demand for more
sustainable products. Our strength in
understanding shopper insights and our
bold Enriching Life Plan put us in a good
position to capitalise on these trends.”
Alex Whitehouse
Chief Executive Officer
Risk management
Describe the organisation’s processes
for identifying and assessing climate-
related risks.
Describe the organisation’s processes
for managing climate related risks.
Describe how processes for
identifying, assessing and managing
climate related risks are integrated
into the organisation’s overall risk
management.
Aligned
•
We have disclosed how climate
related risks and opportunities are
identified, assessed and managed
through our Enterprise Risk
Management process.
Next steps
•
We will continue to improve the
management of climate, and other
ESG risks, through our Enterprise
Risk Management process.
Disclosure
and Reporting
Metrics and Targets
Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with strategy and
risk management process.
Disclose scope 1, scope 2, and, if
appropriate scope 3, greenhouse gas
(‘GHG’) emissions, and the related risks.
Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
Aligned
•
We disclose the metrics and targets
we use to guide our actions, and also
where they form part of executive
remuneration.
•
We disclose our full scope 1, 2 and
appropriate scope 3 greenhouse gas
emissions.
•
We disclose a wide range of other
non-financial performance metrics.
Next steps
•
We will continue to monitor
performance against our targets and
develop new targets as new mitigation
and adaptation actions are adopted.
•
We will continue to strengthen
provision of non-financial data to
improve its use in decision making
and disclosures.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
50
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STRATEGIC
Taskforce on Climate-related Financial Disclosures
continued
Mitigating or adaptation action
Key physical risks
Metrics
Target (2030 unless otherwise stated)
Mitigation Adaptation
Executive remuneration
Changes in the
availability, price
or quality of key
ingredients, as a result
of more extreme
weather events or,
chronic changes in
climate in sourcing
regions.
• Quantitative yield
forecast tool
developed with third
party to understand
local and global
impact of physical
climate change
(internal measure).
• We are now collecting
information from key
agricultural suppliers
on their compliance
against environmental
certification
schemes. *
• We have made a
requirement on our
key impact suppliers
to share their own
climate and nature
risk assessments using
the TCFD and TNFD
frameworks. We will
track compliance
rates and use the
findings to strengthen
our own disclosures
(internal measure).
• Ensuring continuity
of supply on key
ingredients.
• Managing portfolio
exposure to yield loss
and availability issues
through chronic
and acute climate-
related risks.
• Halve our food
waste and support
our suppliers to do
the same.
• Ensuring continuity
of supply for key
ingredients formed part
of the objectives of the
Procurement and Central
Operations Director in
the reporting period.
Key
physical risks
Key physical risks
Metrics
Target and objective (2030 unless otherwise stated)
Mitigation Adaptation
Executive remuneration
Disruption to our
operations as a result of
acute extreme weather
events.
• Operational
performance and
service levels (internal
measure).
• Climate risk score
assessing exposure to
climate-related risks
at our sites provided
by our insurance
partner (internal
measure).
•
Customer service
levels.
•
Delivery of our site
infrastructure plans.
• Investing in our sites
formed part of the
objectives of the
Operations Director in
the reporting period.
Key
physical risks
Key physical risks
Metrics
Target and objective (2030 unless otherwise stated)
Mitigation Adaptation
Executive remuneration
Financial impact of
increasing energy costs
and carbon pricing.
• Scope 1, 2 and 3
emissions (disclosed
below).
• Energy usage
(disclosed below).
• Reduce scope 1 and
2 emissions by 66.8%
and reduce our scope
3 emissions by 25%,
all by 2030 (against a
2020 baseline).
These targets have been
validated by the Science
Based Targets initiative.
• Net zero in our own
operations by 2040
and in our total supply
chain by 2050.
• Reductions in scopes 1
and 2 emissions formed
part of the objectives of
the Operations Director
in the reporting period.
Evolving legislation and
regulation could lead
to increased business
complexity and forced
changes in key business
processes.
• Packaging usage and
recyclability. *
• Food Waste. *
• Certification status
of key commodities
addressing
environmental and
social risks. *
• Ensure 100% of our
packaging is reusable,
recyclable or
compostable by 2025.
• Halve our food
waste and support
our suppliers to do
the same.
• Deforestation and
conversion free palm
and meat by 2025,
and across the whole
supply chain by 2030.
• Reducing food waste
formed part of the
objectives of the Chief
Executive Officer and
Operations Director in
the reporting period.
Key
transition risks
* Disclosed in our Enriching Life Plan Disclosure tables
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
52
53
STRATEGIC
Premier Foods’ GHG emissions are
calculated and reported based on the ‘The
Greenhouse Gas Protocol: GHG Protocol:
A Corporate Accounting and Reporting
Standard – Revised Edition’ (‘GHG Protocol’)
and the complementary ‘Corporate Value
Chain (Scope 3) Accounting and Reporting
Standard’, setting our boundaries to include
all key requirements and following an
operational control approach.
https://www.premierfoods.co.uk/
sustainability/our-progress/Premier-
Foods-reporting-criteria-for-specified-ESG-
performance-metrics-2023-24.pdf
The Greenhouse Gas Protocol (2015)
defines location-based Scope 2 emissions
as reflecting “the average emissions
intensity of grids on which energy
consumption occurs” and market-based
Scope 2 emissions as reflecting “emissions
from electricity that companies have
purposefully chosen”.
Scope 3 emissions include all relevant
categories, using primary data wherever
possible. Where primary data isn’t
available, estimates were made with
a choice of assumptions following a
conservative approach. Emissions factors
were selected from a range of reputable
sources, including Ecoinvent 3.8, BEIS 2020
and 2021, Agri-footprint and WFLDB (World
Food LCA Database). All emissions values
in this report are given in metric tonnes of
carbon dioxide equivalent (‘tCO2e’).
All of our energy use is based in the UK, we
have no manufacturing or office facilities
under our control outside of the UK and as
such, our Streamlined Energy and Carbon
data below is all UK based.
2023/24 Streamlined Energy and Carbon Reporting
2023/24
2022/23
Production output and energy usage
Production Output (tonnes)
290,675
305,449
Total Energy Usage (MWh)
A
247,118
259,555
Total Revenue (£m)
1,122.6
1,006.4
Energy usage intensity (MWh/£m)
220.1
257.9
Scope 1 and 2 greenhouse gas emissions
Scope 1 Greenhouse Gas Emissions (tCO2e)
A
34,614
36,668
Scope 2 Greenhouse Gas Emissions – location-based (tCO2e)
A
15,405
15,081
Scope 2 Greenhouse Gas Emissions – market-based (tCO2e)
A
21,966
28,961
Total Scope 1 & Scope 2 Greenhouse Gas Emissions – location-based (tCO2e)
A
50,019
51,749
Total Scope 1 & Scope 2 Greenhouse Gas Emissions Intensity – location-based (tCO2e/£m)
44.6
51.4
Total Scope 1 & Scope 2 Greenhouse Gas Emissions – market-based (tCO2e)
A
56,580
65,629
Total Scope 1 & Scope 2 Greenhouse Gas Emissions Intensity – market-based (tCO2e/£m)
50.4
65.2
Scope 3 greenhouse gas emissions *
Purchased goods and services (tCO2e)
622,319
807,319
Upstream transport and distribution (tCO2e)
34,737
34,960
Downstream transport and distribution (tCO2e)
38,379
6,930
Other relevant scope 3 emissions (tCO2e) **
60,509
56,286
Total scope 3 emissions
755,944
905,495
* Scope 3 emissions are based on 2023 calendar year. Improvements have been made to emissions factors used to calculate most categories.
** Includes; capital goods, fuel and energy related activities, waste generated in operations, business travel, employee commuting, and the end of life treatment of sold products
(packaging).
Independent assurance
Consistent with the prior period of
independent limited assurance activity,
PricewaterhouseCoopers LLP (‘PwC’)
has performed an Independent Limited
Assurance engagement on selected
balances within the 2023/24 data,
shown with the symbol A , in accordance
with the International Standard on
Assurance Engagements 3000 (Revised)
‘Assurance Engagements other than
Audits or Reviews of Historical Financial
Information’ and International Standard
on Assurance Engagements 3410
‘Assurance engagements on greenhouse
gas statements’, issued by the International
Auditing and Assurance Standards Board.
The Independent Limited Assurance Report
can be found on our website https://
www.premierfoods.co.uk/sustainability/
our-progress/ESG-Disclosure-Assurance-
Report-2023-24/ accept along with our
Methodology Statement – the basis on
which the KPIs are calculated and on
which the limited assurance is given at the
following link https://www.premierfoods.
co.uk/sustainability/our-progress/Premier-
Foods-reporting-criteria-for-specified-ESG-
performance-metrics-2023-24.pdf.
Principal energy efficiency
measures taken in 2023/24
As part of our Enriching Life Plan, we have
set bold new targets to decarbonise our
own operations and support our suppliers
to do the same. Energy efficiency is a
crucial element of this plan and we have
in place a “Smart Energy” programme
under the leadership of our Operations
Director. The programme coordinates the
organisation’s work on energy efficiency
through site energy councils who are
driving short-term behavioural and
operational improvement programmes.
Our engineering team is driving long-
term investment in new processes and
equipment. Projects this year include
an update of start-up and shut-down
routines for energy intensive equipment,
and investments in new LED lighting and
air compressors. We have adopted new
distribution equipment too with new
electric forklift trucks at several sites.
To support our transition to renewable
electricity we have installed solar panels at
our Stoke plant with plans being finalised
for a larger installation at our Carlton site.
Both energy use and associated CO2e
emissions are monitored monthly through
our internal environmental performance
reporting and we are improving the quality
of available information by investing
in metering equipment. This allows us
to more clearly identify improvement
opportunities and prioritise them based on
their potential benefits.
Key physical risks
Metrics
Target and objective (2030 unless otherwise stated)
Mitigation Adaptation
Executive remuneration
Changes in consumers’
demand for our
products in the event
of changing weather
patterns.
• Internal tool to
assess the impact
of climate change
on the consumption
of products in key
categories (internal
measure).
• Expand UK into new
categories and grow
international business
– ongoing
• The commercial
performance of
new categories and
international expansion
formed part of the
objectives of the Chief
Marketing Officer and the
Chief Customer Officer in
the reporting period.
Commercial
opportunities from
supporting customers’
and consumers’
demands for more
sustainable products.
• Sales of plant-based
products. *
• Core product category
with a plant-based
offerings. *
• Packaging usage and
recyclability. *
• Certification status
of key commodities
addressing
environmental and
social risks. *
• Customer feedback
and consumer insight
(internal measure).
• Expand UK into new
categories and grow
international business
(ongoing).
• Grow the sales of
plant-based products
to £250m per annum
by 2030.
• Ensure each core
product category has
a plant-based offering
by 2030.
• Ensure 100% of our
packaging is reusable,
recyclable or
compostable by 2025.
• Zero deforestation
and conversion free
palm and meat by
2025, and across the
whole supply chain
by 2030.
• The commercial
performance of
new categories and
international expansion
form part of the
objectives of the Chief
Marketing Officer and the
Chief Customer Officer in
the reporting period.
* Disclosed in our Enriching Life Plan disclosure tables.
Key commercial
opportunities
and risks
Taskforce on Climate-related Financial Disclosures
continued
Mitigating or adaptation action
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
54
55
STRATEGIC
This has been another really strong year for the business with considerable
progress across all our key financial metrics and five pillar growth strategy. In
the UK, branded revenue increased by 13.6%, accompanied by 29 basis points
of market share, as we continued to outperform the market.
The Group gained market share
13 in its Grocery categories across
the year, as its leading brands continue to demonstrate their
strength and resilience in what has been a challenging consumer
environment. Divisional contribution increased by 16.2% to
£219.8m, with margins broadly flat to last year.
In the fourth quarter, Grocery headline revenue increased by
10.3%, with branded growth of 12.4% partly offset by non-
branded revenue which was 5.4% lower.
Grocery volumes returned to growth in the fourth quarter, as
elasticity effects of price increases dissipated. In the second half of
the year, the Group also implemented sharper promotional pricing
across a number of its products, such as Loyd Grossman cooking
sauces and Batchelors Super Noodles, which served to strengthen
these volume trends.
As the Group has consistently highlighted, its branded growth
model generates value by leveraging the strength of its market
leading brands, launching insightful new products, supporting
its brands with emotionally engaging advertising and building
strategic retail partnerships. Effective application of this strategy
has resulted in consistent UK branded revenue growth of 5.1%
over the last three years.
Growth in the Grocery portfolio was broad based across all brands
in the year. The Grocery business’s major brands, Ambrosia,
Batchelors, Bisto, Sharwood’s, Oxo and Loyd Grossman all
benefitted from consumer marketing investment in FY23/24,
including through the ‘Best Restaurant in Town’ campaign, which
highlighted great value meal ideas across the Grocery portfolio.
Oxo was a particularly strong performer in the period, benefitting
not only from increased brand advertising but also further
expansion of new Oxo Stock pots. Nissin noodles ranges again
enjoyed another great year, delivering revenue growth of over
30%, recording retail sales of nearly £50m
13 and also benefitting
from the launch of the Big Soba pots range. Ambrosia became a
£100m revenue brand for the first time in FY23/24, gaining over
100 basis points of market share, with growth due to both its core
range and the launch of Ambrosia Deluxe creamed rice in can and
pot formats.
Another element of the branded growth model is to build and
maintain strong, collaborative partnerships with customers. For
example, Batchelors extended its successful partnership with
DC Warner Brothers in the year, this time through its tie-up with
Batman and Aquaman, producing some highly impactful instore
execution displays. The Group also extended its partnership with
its charity partner, Fareshare, with the ‘Win a Dinner, Give a
Dinner’ campaign, to help fight hunger and address food waste.
During the year, the Group’s Grocery categories increased total
distribution by 1.8%, with Quick Meals, Snack & Soups and
Desserts being strong contributors to this growth.
The Group continues to make strong progress expanding into
adjacent categories, leveraging the equity of its leading brands,
with revenue increasing 72% compared to last year. Ambrosia
porridge pots again led the way; sales more than doubled year on
year and market share increased to 10.2%
14 in a category growing
at 19%. During the year, the range was extended with the launch
of an Apple & Blueberry variant; it also featured in the main
Ambrosia ‘Moley’ television advert and benefitted from outdoor
media activity.
Ice-cream also performed well, with revenue growth of over 50%,
as it increased distribution in major multiple retailers through
ranges under the Angel Delight and Mr Kipling brands. This will be
extended in FY24/25 with the launch of handheld Angel Delight ice
cream in Butterscotch and Banana flavours.
The Spice Tailor continues to benefit from the Group’s commercial
capabilities, its category expertise and has a strong set of product
innovation plans in the next 12 months, such as stir fry sauces and
East Asian meal kits. Instore execution was enhanced in the year
with end of aisle displays delivering greater visibility, while the
brand also benefitted from digital advertising in both the UK and
Australia. Additionally, the brand’s returns performance is now
running ahead of the Group’s original expectations.
The Group acquired FUEL10K, the vibrant, protein enriched
breakfast brand in October 2023 for an initial consideration of
£29.6m. This acquisition expands the Group’s nascent presence in
the breakfast category, providing the ideal platform to build on the
initial success of Ambrosia porridge pots. FUEL10K has continued
to perform well in its first five months with the Group, growing
sales and market share and developing further exciting product
innovation which will be instore from FY24/25 onwards.
In the fourth quarter of the year, and following a review of
operations, the Group announced to colleagues the proposed
closure of its Charnwood frozen pizza base business. This closure
has since been confirmed, will affect c.60 colleagues and is
expected to complete in the first half of FY24/25. Charnwood is an
entirely non-branded business and this move reflects the Group’s
strategic priorities as a brand-focused business.
Sweet Treats
£m
FY23/24
FY22/23
% change
Branded revenue
217.7
208.9
4.2%
Non-branded revenue
69.4
50.7
36.9%
Headline revenue
287.1
259.6
10.6%
Divisional contribution2
33.7
27.0
24.8%
Divisional contribution
margin
11.7%
10.4%
1.3ppts
Total revenue increased by 10.6% in Sweet Treats, with Branded
revenue up 4.2% and non-branded revenue ahead 36.9%. The
growth in non-branded was consistently strong throughout the
year and was due to a combination of contract wins in pies and
tarts and price increases on existing ranges. Divisional contribution
increased to £33.7m in Sweet Treats, and margins improved to
11.7%, a 130 basis point improvement on the prior year, reflecting
volume recovery assisted by sharper promotional pricing.
In the fourth quarter of the year, Sweet Treats revenue increased
by 6.3%, with branded revenue up 5.0% and non-branded revenue
ahead 16.7%.
FY23/24 revenue growth for Mr Kipling reflected activity
commemorating the King’s Coronation, impactful instore
brand activation to assist shoppers navigate the cake category
with greater ease and a strong promotional campaign in
partnership with the Minions franchise. Brand investment in Mr
Kipling television advertising featured the new ‘Piano’ advert,
demonstrating the Group’s media approach of building emotional
connections with consumers.
Operating and financial review
Financial results
Overview
£m
FY23/24
FY22/23
% change
Branded revenue
958.1
844.2
13.5%
Non-branded revenue
164.5
131.4
25.2%
Headline revenue
1,122.6
975.6
15.1%
Divisional contribution2
253.5
216.2
17.3%
Trading profit1
179.5
157.5
14.0%
Trading profit margin
16.0%
16.1%
(0.1ppt)
Adjusted EBITDA3
203.9
182.3
11.8%
Adjusted profit before tax4
157.9
137.2
15.1%
Adjusted earnings per share7
(pence)
13.7
12.9
6.4%
Basic earnings per share
(pence)
13.0
10.6
22.6%
Headline revenue excludes Knighton Foods, reconciliations are
provided in the appendices on pages 60 to 62.
Headline revenue increased by 15.1% to £1,122.6m in FY23/24.
Divisional contribution grew by 17.3% to £253.5m and Trading
profit increased by 14.0% to £179.5m. Group and corporate costs
were higher in the period due to investment to improve planning
systems and support strategic priorities, wage and salary inflation
and wider management incentive scheme costs. In addition, the
prior year included non-repeating income of £3.8m which related
to a temporary interruption at a manufacturing site.
Trading profit margins of 16.0% were broadly in line with the prior
year. Adjusted profit before tax increased by 15.1%, while adjusted
earnings per share grew by 6.4%, reflecting an increase in the UK
corporation tax rate from 19% to 25%. Basic earnings per share for
FY23/24 increased by 22.6% to 13.0p.
Statutory overview
£m
FY23/24
FY22/23
% change
Grocery
Branded revenue
740.4
635.3
16.5%
Non-branded revenue
110.0
111.5
(1.4%)
Total revenue
850.4
746.8
13.9%
Sweet Treats
Branded revenue
217.7
208.9
4.2%
Non-branded revenue
69.4
50.7
36.9%
Total revenue
287.1
259.6
10.6%
Group
Branded revenue
958.1
844.2
13.5%
Non-branded revenue
179.4
162.2
10.6%
Statutory revenue
1,137.5
1,006.4
13.0%
Profit before tax
151.4
112.4
34.7%
Basic earnings per share
(pence)
13.0
10.6
22.6%
The table above is presented including revenue from
Knighton Foods.
Group revenue on a statutory basis increased by 13.0% in FY23/24,
with branded revenue growing by 13.5% and non-branded
revenue up 10.6%. Grocery revenue was £850.4m, 13.9% higher
than the prior year. Non-branded Grocery revenue declined by
(1.4%) to £110.0m as price increases on existing contracts were
offset by managed contract exits associated with the closure of
Knighton Foods and Charnwood. Commentary on Sweet Treats is
provided below.
Trading performance
Grocery
£m
FY23/24
FY22/23
% change
Branded revenue
740.4
635.3
16.5%
Non-branded revenue
95.1
80.7
17.8%
Headline revenue
835.5
716.0
16.7%
Divisional contribution2
219.8
189.2
16.2%
Divisional contribution
margin
26.3%
26.4%
(0.1ppt)
On a headline basis Grocery revenue increased by 16.7% in the
year to £835.5m, with Branded revenue up 16.5% to £740.4m.
Non-branded revenue increased by 17.8% to £95.1m largely
due to pricing to recover input cost inflation in retailer branded
product ranges.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
56
57
STRATEGIC
Operating and financial review
continued
New products launched in the year included Mr Kipling ‘Best Ever’
Signature mince pies, which received strong consumer reviews
while the Signature Brownie Bites range also performed well. As
a result of lower levels of input cost inflation in the second half
of the year, the Group increased its investment in promotional
pricing, which assisted volume recovery.
Cadbury cake revenue grew strongly in the second half, partly due
to lapping a softer comparative period and also due to impactful
instore brand activation and the relaunch of Crème Egg cake bars.
International
Revenue overseas increased by 12%
8 compared to last year.
In-market cake sales in Australia continue to grow, however, as
previously disclosed, revenue was impacted by reduced shipping
times which in turn led to lower stock holdings in the supply chain.
Ireland delivered a consistently strong year, with broad based
growth across many brands; Ambrosia, Bisto and Oxo were
particularly strong performers due to continued successful
application of the branded growth model and pricing benefits. In
Europe, sales of Sharwood’s increased reflecting significant new
listings in major retailers in Germany and Netherlands.
Building sustainable businesses in the Group’s target markets
continues to progress well. The Mr Kipling and Cadbury cake
brands reached a combined record market share in Australia
during the year of 16.1%
14 and delivered further retail sales
growth. Execution of the Company’s branded growth model
included Mr Kipling benefitting from TV advertising in the form
of the engaging ‘Little Thief’ advert and also the sponsorship of
the Great Australian Bake Off, while new products launched in the
period included Caramel Bakewell Tarts and Salted Caramel Slices.
In the USA, the distribution of Mr Kipling to a range of retailers
is building well, with more than 3,000 stores now stocking the
Group’s largest brand across North America, up from c.200 at the
start of the year.
Distribution of The Spice Tailor is accelerating strongly; listings
have now been agreed with major retailers in ten countries
globally, including for over 1,000 stores in the USA and three
countries in continental Europe.
Operating profit
Operating profit increased by £45.5m to £177.7m in the year.
Trading profit increased by 14.0% to £179.5m, as described above,
and brand amortisation of £20.9m was £0.2m higher than the
prior year. Net interest on pensions and administrative expenses
was a credit of £31.6m (FY22/23: £17.7m credit), due to an
interest credit on the opening combined surplus of the pension
scheme of £37.2m, partly offset by £5.6m of administrative
expenses. Non-trading items
9 of £11.4m were £9.1m lower than
the prior year principally due to Knighton closure costs in FY22/23.
Impairment of fixed assets and restructuring costs were £4.2m
(FY22/23: £3.6m) and £5.3m (FY22/23: £11.1m) respectively
and both relate to closures of the Knighton and Charnwood
manufacturing sites. Other non-trading items of £1.9m relate
primarily to M&A transaction costs.
Finance costs
Net finance cost was £26.3m in FY23/24, compared to £19.8m
in the prior year. Net regular interest
5 increased by £1.3m to
£21.6m, predominantly due to a higher SONIA rate applicable to
the Group’s revolving credit and debtors securitisation facilities.
Interest on the Group’s Senior secured notes of £11.5m were,
as expected, in line with the prior year. Other interest payable
was £5.2m (FY22/23: £0.6m) the majority of which related to the
unwind of both long-term provisions and contingent consideration
related to acquisitions. Interest income increased by £2.8m to
£3.6m in the year due to higher interest rates on cash reserves.
Taxation
The tax charge for the year was £38.9m (FY22/23: £20.8m) and
was largely due to a £37.9m (FY22/23: £21.4m) charge at the
domestic income tax rate of 25% (FY22/23: 19%). The increase
compared to the prior year is due to an increase in the UK
corporation tax rate from 19% to 25% and higher profit before
tax. The Group is able to offset a proportion of cash tax payable
through available brought forward losses and capital allowances.
Following the suspension of pension deficit contributions, which
are allowable for tax, ongoing annual cash tax payable is expected
to be in the single digit £’millions in the medium term.
Earnings per share
£m
FY23/24
FY22/23
% change
Operating profit
177.7
132.2
34.4%
Net finance cost
(26.3)
(19.8)
(32.8%)
Profit before taxation
151.4
112.4
34.7%
Taxation
(38.9)
(20.8)
87.0%
Profit after taxation
112.5
91.6
22.8%
Average shares in issue
(million)
862.4
861.2
0.1%
Basic Earnings per share
(pence)
13.0
10.6
22.6%
The Group reported profit before tax of £151.4m in FY23/24, a
34.7% increase on the prior year. Profit after tax was £112.5m, an
increase of £20.9m and basic earnings per share was 13.0 pence,
an increase of 22.6%.
Cash flow
Net debt as at 30 March 2024 was £235.6m, a reduction of
£38.7m compared to the prior year. Net debt / EBITDA reduced
from 1.5x to 1.2x during the year, as Adjusted EBITDA
3 increased
by 11.8% to £203.9m.
Trading profit was £179.5m, as described above. Depreciation
plus software amortisation was £24.4m in the year, resulting
in Adjusted EBITDA
3 of £203.9m, 11.8% higher than FY23/24.
A £9.0m outflow of working capital, an improved trend on the
prior year, was due to higher stock reflecting inflation of both
raw materials and finished goods. Pension deficit contribution
payments were £33.1m and Pension Trustee and administration
costs were £5.6m, totalling a £38.7m cash outflow to the schemes.
Non-trading items were £14.4m and related to payments
associated with closure of the Knighton manufacturing site and a
lease exit of a non-operational site.
On a statutory basis, cash generated from operating activities was
£121.7m (FY22/23: £87.2m) after deducting net interest paid of
£20.3m (FY22/23: £19.6m). The Group paid Tax of £4.4m in the
period (FY22/23: £1.5m).
Cash used in investing activities was £62.1m (FY22/23: £63.8m), of
which the acquisition of FUEL10K represented £29.3m and capital
investment was £32.8m. The Group has a number of opportunities
to invest in the business at attractive returns to increase efficiency
and innovation. During the year it replaced air compressors
across a number of sites which have improved efficiency and also
installed solar panels at the Group’s Stoke manufacturing site.
In FY24/25, the Group expects to increase its capital investment
which will include the development of a new, innovative energy
efficient process to manufacture iced-topped cake products and
a project to deliver additional capacity for Ambrosia porridge pot
production reflecting success since launch.
Cash used in financing activities was £20.7m in the year
(FY22/23: £14.3m) which included a £12.4m dividend payment to
shareholders (FY22/23: £10.3m) and £6.3m purchase of shares to
satisfy share awards (FY22/23: £2.5m). A dividend match payment
to the Group’s pension schemes of £3.8m was also made in the
period. As at 30 March 2024, the Group held cash and bank
deposits of £102.3m and its £175m revolving credit facility was
undrawn.
Pensions
The pension scheme has continued to make strong progress, benefiting from a successful investment strategy for both the RHM and
Premier Foods sections since the segregated merger of the scheme in June 2020. On 6 March 2024, the Group announced another major
strategic step with the suspension of deficit contribution payments to the pension scheme Trustee with effect from 1 April 2024.
Consequently, 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, at 31 March 2025, the Group anticipates no further contributions to be payable after this
date. Administrative expenses, which are expected to be £5-6m in FY24/25, and the dividend match mechanism remain in place. A full
resolution of the pension scheme, where the scheme has fully de-risked, is forecast to take place by the end of 2026.
30 March 2024
1 April 2023
IAS 19 Accounting Valuation (£m)
RHM
Premier Foods
Combined
RHM Premier Foods
Combined
Assets
3,032.0
533.0
3,565.0
3,240.2
552.6
3,792.8
Liabilities
(2,232.8)
(730.7)
(2,963.5)
(2,291.9)
(735.4)
(3,027.3)
Surplus/(Deficit)
799.2
(197.7)
601.5
948.3
(182.8)
765.5
Net of deferred tax (25%)
599.4
(148.3)
451.1
711.2
(137.1)
574.1
The Group’s pension scheme reported a combined surplus of £601.5m as at 30 March 2024, a reduction of £164.0m compared to the
prior year. This is equivalent to a surplus of £451.1m net of a deferred tax charge of 25.0%. Asset values fell in both sections of the
schemes and reduced by £227.8m overall. Of note, the illiquid Credit and Global Credit asset classes were lower in the year. The value of
liabilities fell by £63.8m, or 2.1% to £2,963.5m. The applicable discount rate used to value liabilities was unchanged at 4.80% and the RPI
inflation rate assumption used was 3.15% (FY22/23: 3.30%). The reduction in assets is greater than the reduction in liabilities due to the
scheme being over hedged on an accounting basis and hence as underlying gilt yields increase the assets reduce more than liabilities.
A deferred tax rate of 25.0% is deducted from the IAS19 retirement benefit valuation of the Group’s schemes to reflect the fact that
pension deficit contributions made to the Group’s pension schemes are allowable for tax.
Dividend
Subject to shareholder approval, the directors have proposed a
final dividend of 1.728 pence in respect of the 52 weeks ended
30 March 2024 (FY22/23: 1.44p), payable on 26 July 2024 to
shareholders on the register at the close of business on 28 June
2024. This represents a 20% increase in the dividend paid per
share compared to FY22/23, is ahead of adjusted earnings per
share growth, reflecting the confidence we have in the future and
is consistent with the Board’s progressive dividend approach. The
ex-dividend date is 27 June 2024.
Outlook
The Group expects a return to volume driven revenue growth
this year, as demonstrated in quarter four, partially offset by a
lower price per unit. Further progress in FY24/25 is expected to
be delivered across all the Group’s strategic pillars, through the
application of the Group’s proven branded growth model, with
expectations for the full year on track. Following the successful
de-risking of pension obligations and the suspension of deficit
contribution payments, the Group has a number of opportunities
to invest in the business at attractive returns to increase efficiency
and innovation, while continuing to explore M&A opportunities
and apply its progressive approach to dividends.
Duncan Leggett
Chief Financial Officer
16 May 2024
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
58
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STRATEGIC
Operating and financial review
continued
Appendices
The Company’s preliminary results are presented for the 52 weeks ended 30 March 2024 and the comparative period, 52 weeks ended 1 April 2023. All
references to the ‘period’, unless otherwise stated, are for the 52 weeks ended 30 March 2024 and the comparative period, 52 weeks ended 1 April 2023.
All references to the ‘quarter’, unless otherwise stated, are for the 13 weeks ended 30 March 2024 and the comparative period, 13 weeks ended 1
April 2023.
Full year and Quarter 4 Revenue
FY23/24
Full year revenue (£m)
Statutory revenue
Knighton
Foods
Headline
revenue
Headline revenue
% change
vs prior year
Grocery
Branded
740.4
740.4
16.5%
Non-branded
110.0
(14.9)
95.1
17.8%
Total
850.4
(14.9)
835.5
16.7%
Sweet Treats
Branded
217.7
217.7
4.2%
Non-branded
69.4
69.4
36.9%
Total
287.1
287.1
10.6%
Group
Branded
958.1
958.1
13.5%
Non-branded
179.4
(14.9)
164.5
25.2%
Total
1,137.5
(14.9)
1,122.6
15.1%
FY23/24
Quarter 4 Revenue (£m)
Statutory revenue
Knighton
Foods
Headline
revenue
Headline revenue
% change
vs prior year
Grocery
Branded
198.4
198.4
12.4%
Non-branded
23.4
(1.6)
21.8
(5.4%)
Total
221.8
(1.6)
220.2
10.3%
Sweet Treats
Branded
57.1
57.1
5.0%
Non-branded
8.2
8.2
16.7%
Total
65.3
65.3
6.3%
Group
Branded
255.5
255.5
10.6%
Non-branded
31.6
(1.6)
30.0
(0.1%)
Total
287.1
(1.6)
285.5
9.4%
EBITDA to Operating profit reconciliation (£m)
FY23/24
FY22/23
Adjusted EBITDA3
203.9
182.3
Depreciation
(19.5)
(19.9)
Software amortisation10
(4.9)
(4.9)
Trading profit
179.5
157.5
Amortisation of brand assets
(20.9)
(20.7)
Fair value movements on foreign exchange & derivative contracts
(1.1)
(1.8)
Net interest on pensions and administrative expenses
31.6
17.7
Non-trading items:
Impairment of fixed assets
(4.2)
(3.6)
Restructuring costs
(5.3)
(11.1)
Other non-trading items
(1.9)
(5.8)
Operating profit
177.7
132.2
Finance costs (£m)
FY23/24
FY22/23
Change
Senior secured notes interest
11.5
11.5
–
Bank debt interest – net
8.3
6.9
(1.4)
19.8
18.4
(1.4)
Amortisation of debt issuance costs
1.8
1.9
0.1
Net regular interest5
21.6
20.3
(1.3)
Re-measurement due to discount rate change & contingent consideration
3.9
(1.1)
(5.0)
Other finance cost
0.8
0.6
(0.2)
Net finance cost
26.3
19.8
(6.5)
Adjusted earnings per share (£m)
FY23/24
FY22/23
Change
Trading profit
179.5
157.5
14.0%
Less: Net regular interest5
(21.6)
(20.3)
(6.3%)
Adjusted profit before tax
157.9
137.2
15.1%
Less: Notional tax (25%/19%)
(39.5)
(26.1)
(51.4%)
Adjusted profit after tax6
118.4
111.1
6.6%
Average shares in issue (millions)
862.4
861.2
0.1%
Adjusted earnings per share (pence)
13.7
12.9
6.4%
Net debt (£m)
Net debt11 at 1 April 2023
274.3
Movement in cash
(38.9)
Movement in debt issuance costs
1.3
Movement in lease creditor
(1.1)
Net debt at 30 March 2024
235.6
Adjusted EBITDA
203.9
Net debt / Adjusted EBITDA
1.2x
Free cash flow (£m)
FY23/24
FY22/23
Trading profit
179.5
157.5
Depreciation & software amortisation
24.4
24.8
Other non-cash items
6.6
4.7
Capital expenditure
(32.8)
(20.0)
Working capital
(9.0)
(24.8)
Operating cash flow16
168.7
142.2
Interest
(20.3)
(19.6)
Pension contributions
(38.7)
(45.1)
Free cash flow12
109.7
77.5
Non-trading items
(14.4)
(8.3)
Net purchase of shares
(6.0)
(1.1)
Financing fees
(0.5)
(0.7)
Taxation
(4.4)
(1.5)
Dividend (including pensions match)
(16.2)
(13.0)
Acquisition
(29.3)
(43.8)
Movement in cash
38.9
9.1
Proceeds from borrowings
–
–
Net increase in cash and cash equivalents
38.9
9.1
The following table outlines the basis on which the Group will report Headline revenue, Trading profit and adjusted earnings per share for FY24/25.
This includes acquisitions but excludes Revenue and Trading profit from the Charnwood site which will be closed in FY24/25. In FY23/24, all Charnwood
revenue was reported in Grocery – Non-branded.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
60
61
STRATEGIC
Group results ex Charnwood (£m)
FY23/24
Revenue
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Full Year
Statutory revenue
235.9
258.2
356.3
287.1
1,137.5
Less: Knighton
(4.8)
(4.9)
(3.6)
(1.6)
(14.9)
Headline revenue (FY23/24 basis)
231.1
253.3
352.7
285.5
1,122.6
Less: Charnwood
(3.9)
(3.8)
(3.1)
(3.1)
(13.9)
Headline revenue (FY24/25 basis)
227.2
249.5
349.6
282.4
1,108.7
Trading profit (£m) to adjusted eps (p)
Half 1
Half 2
Full Year
Trading profit as reported
67.5
112.0
179.5
Less: Charnwood
(0.9)
(1.4)
(2.3)
Headline Trading profit (FY24/25 basis)
66.6
110.6
177.2
Net regular interest
(10.6)
(11.0)
(21.6)
Adjusted profit before tax
56.0
99.6
155.6
Adjusted profit after tax at 25%
42.0
74.7
116.7
Adjusted earnings per share
4.9p
8.6p
13.5p
Notes and definitions of alternative performance measures
The Company uses a number of alternative performance measures to
measure and assess the financial performance of the business. The
directors believe that these alternative performance measures assist
in providing additional useful information on the underlying trends,
performance and position of the Group. These alternative performance
measures are used by the Group for reporting and planning purposes and
it considers them to be helpful indicators for investors to assist them in
assessing the strategic progress of the Group.
1. The Group uses Trading profit to review overall Group profitability.
Trading profit is defined as profit/(loss) before tax, before net finance
costs, amortisation of intangible assets, non-trading items (items
requiring separate disclosure by virtue of their nature in order that
users of the financial statements obtain a clear and consistent view of
the Group’s underlying trading performance), fair value movements
on foreign exchange and other derivative contracts, net interest on
pensions and administration expenses.
2. Divisional contribution refers to Gross Profit less selling, distribution
and marketing expenses directly attributable to the relevant business
segment.
3. Adjusted EBITDA is Trading profit as defined in (1) above excluding
depreciation and software amortisation.
4. Adjusted profit before tax is Trading profit as defined in (1) above less
net regular interest.
5. Net regular interest is defined as net finance cost after excluding
write-off of financing costs, early redemption fees, other finance cost
and other finance income.
6. Adjusted profit after tax is Adjusted profit before tax as defined in (4)
above less a notional tax charge of 25.0%.
7. References to Adjusted earnings per share are on a non-diluted basis
and is calculated using Adjusted profit after tax as defined in (6) above
divided by the weighted average of the number of shares of 862.4
million (52 weeks ended 1 April 2023: 861.2 million).
8. International sales remove the impact of foreign currency fluctuations
and adjusts prior year sales to ensure comparability in geographic
market destinations. The constant currency calculation is made by
adjusting the current year’s sales to the same exchange rate as the
prior year. The constant currency adjustment is calculated by applying
a blended rate.
£m
Reported
Adjustment
Constant
currency
FY23/24
70.4
0.4
70.8
FY22/23
63.3
N/A
63.3
Growth %
11.2%
N/A
11.8%
9. Non-trading items have been presented separately throughout the
financial statements. These are items that management believes
require separate disclosure by virtue of their nature in order that the
users of the financial statements obtain a clear and consistent view of
the Group’s underlying trading performance. In identifying non-trading
items, management have applied judgement including whether i) the
item is related to underlying trading of the Group; and/or ii) how often
the item is expected to occur.
10. Software amortisation is the annual charge related to the amortisation
of the Group’s software assets during the period.
11. Net debt is defined as total borrowings, less cash and cash equivalents
and less capitalised debt issuance costs.
12. Free cash flow is net increase or decrease in cash and cash equivalents
excluding proceeds and repayment of borrowings, less dividend
payments, disposal proceeds, re-financing fees, net proceeds from
share issues, tax, acquisitions and non-trading items.
13. Circana, 52 weeks ended 30 March 2024.
14. Circana, 4 week rolling, 9 March 2024.
15. Acquisition accounting pertaining to FUEL10K acquisition can be found
in Note 28.
16. Operating cash flow excludes interest and pension contributions.
17. Pension deficit contributions are suspended from 1 April 2024; subject
to the results of the next triennial valuation, the Group anticipates no
further contributions to be payable after this date.
18. Further details of progress on the Group’s Enriching Life Plan can be
found on pages 30 to 41.
19. Defined as scoring less than 4 on the UK Government’s Nutrient
Profiling Model.
Additional notes:
•
The directors believe that users of the financial statements are most
interested in underlying trading performance and cash generation
of the Group. As such intangible brand asset amortisation and
impairment are excluded from Trading profit because they are non-
cash items.
•
Non-trading items have been excluded from Trading profit because
they are incremental costs incurred as part of specific initiatives that
may distort a user’s view of underlying trading performance.
•
Net regular interest is used to present the interest charge related to
the Group’s ongoing financial indebtedness, and therefore excludes
non-cash items and other credits/charges which are included in the
Group’s net finance cost.
•
Group & corporate costs refer to group and corporate expenses which
are not directly attributable to a reported segment and are disclosed
at total Group level.
•
In line with accounting standards, the International operating
segment, the results of which are aggregated within the Grocery
reported segment, are not required to be separately disclosed for
reporting purposes.
Our approach
We have an established risk management
framework to identify, evaluate, mitigate
and monitor the risks we face as a
business. Our risk management framework
incorporates both a top-down and a
bottom-up approach, to ensure that we
have maximum input from the Board
through to operational management, to
identify both current and emerging risks
that our business faces as we execute our
strategy and grow the business. Our Board
owns and oversees our risk management
programme, with overall responsibility for
ensuring that our risks are aligned with our
goals and strategic objectives.
The Audit Committee assists the Board in
monitoring the effectiveness of our risk
management and internal control policies,
procedures and systems. The Executive
Leadership Team (‘ELT’) performs a robust
risk assessment on a periodic basis and the
output from this is routinely reviewed by
the Board and the Audit Committee.
Responsibility for risk management is
embedded throughout our organisation
and our first line of defence remains our
colleagues, who have a responsibility
to manage day-to-day risk in their areas
guided by Group policies, procedures,
and controls frameworks. The ELT and
ultimately the Executive, ensure that
these risks are managed, maintained,
reviewed and mitigated according to these
frameworks. The Group’s Internal Audit
function continues to provide assurance
over the effectiveness of mitigating
controls. While copies of these reports
are provided to the ELT to action any
necessary control improvements, the
Internal Audit function reports directly to
the Audit Committee who monitor and
challenge management to ensure control
improvements are actioned
Risk management framework
Board of Directors
Assess principal risks and set risk appetite.
Overall responsibility for maintaining
sound risk management and internal
controls.
Audit Committee
Set risk management framework.
Assess effectiveness of the Group’s risk
framework and internal controls.
Executive Leadership Team
Implement risk management framework.
Assess effectiveness of the Group’s risk
framework and internal controls.
Risk and Internal Audit
Test internal controls and co-ordinate risk
management activity. Provide support
to business risk owners and report risk
information across the Group.
Operational Management
Own and review operational risks. Operate
controls and implement mitigation actions.
Principal risks and uncertainties
The Board has carried out a robust
assessment of the principal and emerging
risks facing the Group. They include those
that we consider most impact our business
model (see pages 16 and 17), the delivery
of our long-term strategic objectives
(see pages 18 and 19), and that would
threaten our future performance, solvency
or liquidity. These risks and uncertainties
(pre-mitigation) are identified in the
heatmap on the following page, followed
by a more detailed description including
key mitigating activities in place to address
them on pages 65 to 70.
We have also considered the broadening
potential impacts across a number
of principal risks including changes in
macro-economic pressures and resilience
measures along our supply chain. The
‘Changes since FY22/23’, highlight changes
in the profile of our principal risks and/or
describe our experience and activity over
the last year.
Risk appetite
Our approach is to minimise exposure to
reputational, financial and operational risk
while accepting and recognising a risk/
reward trade-off in pursuit of our strategic
and commercial objectives. Risk appetite
statements are reviewed routinely by
the ELT and approved by the Board to
guide the actions that management
takes in executing our strategy. As a food
manufacturing company, with many
well-known brands, the integrity of our
business is crucial and cannot be put at
risk. Consequently, we have zero tolerance
for risks relating to food safety and the
health and safety of our employees. In
addition, we have set low-risk appetites
for a number of other risks such as cyber-
security, legal, compliance, environmental
and regulatory risks.
I
D
E
N
T
IF
Y
R
E
S
P
O
N
D
M
E
A
S
U
R
E
M
O
N
IT
O
R
A
N
D
R
E
P
O
R
T
RISK
MANAGEMENT
PROCESS
• Periodic reports provided to the ELT
and Board on how efficiently risks
are being managed
• Controls defined to address risks
within tolerance and ownership
defined
• Risk action plans created to manage
risks within appetite
• Strategic reviews with ELT
• Group principal risks reviewed and
agreed with ELT and the Board
• Risk appetite set by the Board for
all principal risks
• Measurement of risks against
appetite and escalation process
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
62
63
STRATEGIC
Operating and financial review
continued
Risk management
1 Macroeconomic and geopolitical instability
Link to strategy
Risk and potential impact
Our business has been subject to
a period of prolonged uncertainty
owing to political and ongoing
economic developments. While
those risks related to Covid-19 have
dissipated and the initial impact
of the Russian/Ukrainian war on
energy and commodity costs and
subsequent spread into broader
inflationary pressures have begun
to stabilise, we remain cognisant
of more recent geopolitical events
that could potentially heighten the
Group’s risk profile.
How we manage it
• We seek to hedge certain key commodities
and energy supplies, where appropriate, to
manage our exposure to price increases.
• In addition, we actively manage foreign
exchange currency volatility through hedging
activity and through an ongoing supplier risk
management process.
• Our cost-saving and efficiency programmes
seek to minimise the impact of inflationary
pressures.
• The ELT closely monitors developments related
to commodity costs and carefully consider the
prices of our products.
• We continually monitor our customer and
supplier base for potential exposure to
applicable trade sanctions.
Changes since FY22/23
• The overarching risk trend was assessed
as moderately declining during the
year, in part due to a broader reduction
in inflationary pressures for both our
suppliers and our customers. We
continue to support our consumers
through the continued success of our
‘Best Restaurant in Town’ campaign.
In addition, during the second half of
FY23/24, we have also lowered the
promotional prices of many of our
products, as detailed under ‘Consumer
and market trends’ (see pages 14 and
15).
Risk trend
2 Impact of government legislation
Link to strategy
Risk and potential impact
The continued focus on health and
obesity may result in a decline in
demand for cakes and desserts and/
or our share of them, along with the
risk of additional complexity and
cost as a result of any reformulation
efforts. There is an elevated level of
media and Government scrutiny on
health and obesity. The first phase
of the Government legislation
restricting promotions of High Fat,
Salt or Sugar (‘HFSS’) products by
‘location’ became effective from 1
October 2022. It is expected that a
second phase of restriction of HFSS
products by ‘volume’ will come into
force on 1 October 2025 alongside
an ‘advertising’ restriction.
The UK Government has also
introduced a new tax on non-
recyclable plastic packaging as part
of the reformed Packaging Producer
Responsibility Regulations. The
introduction of this escalating
tax on plastic packaging and any
further legislation may adversely
impact the products that the Group
manufactures. It was announced in
July 2023 that the first EPR payment
will be deferred to 1 October 2025.
How we manage it
• We have a wide range of product offerings,
which includes non-HFSS products, that extend
our range of healthier choices, enhance the
nutrition profile of our existing core ranges
and help consumers to make healthier eating
choices. Details can be found in our Enriching
Life Plan section on pages 30 to 41.
• We have an ongoing evaluation and
development of the brand portfolio and
innovation pipeline with a focus on healthier
options that help us align with changing
consumer preferences (also see Risk 8).
• Our Environmental, Social and Governance
(‘ESG’) Committee, chaired by our CEO, has
a range of cross-functional steering groups
that are responsible for the delivery of
our ESG strategy, including our Packaging
Steering Group. This ensures focused efforts,
through KPI-driven targets, to optimise our
packaging and reduce its environmental
impact and mitigate the impact of the tax on
non-recyclable packaging. This is achieved
by using materials from certified sustainable
sources wherever possible, increasing our
use of recycled materials, and increasing the
recyclability of our packaging. 96% of our
packaging, by weight, is recyclable at year-end.
Changes since FY22/23
The risk profile remained stable year-on-
year.
The Group continues to actively adapt its
strategy in order to support the phases
of the UK Government’s programme to
tackle obesity. This includes continuing to
extend the range of non-HFSS products
available to consumers.
The UK Government’s primary legislation
(November 2020) to introduce an
escalating tax on plastic material came
into effect on 1 April 2022 and the
Group has continued its packaging
optimisation programme to ensure both
the minimisation of packaging and that
packaging use is fully recyclable.
Risk trend
Nonetheless, we operate in a challenging
and highly competitive marketplace and
as a result we recognise that strategic,
commercial and investment risks will be
required to seize opportunities and deliver
results at pace. We are therefore prepared
to make certain managed financial and
operational investments in pursuit of
growth objectives. Our acceptance of
risk is subject to ensuring that potential
benefits and risks are fully understood and
appropriate measures to mitigate those
risks are firstly established.
Emerging risks
The ELT and the Board formally review
emerging risks when considering
the outputs of the risk management
processes. Through both the top-down
and bottom-up risk discussions held across
the business, we seek to identify changes
in existing risks and identify new risks
which may have a significant impact. This
includes horizon scanning and utilising
in-house knowledge and expertise
supported by input from external sources,
to identify emerging risks for consideration
and review. These uncertainties may
relate to future economic, regulatory, or
environmental changes. Examples include,
the further rollout of legislation related
to the UK Government’s programme to
tackle obesity and Extended Producer
Responsibility requirements for packaging.
While significant consideration has been
given to assessing emerging risks, we
have also concluded that these emerging
risks are adequately captured across our
existing broad set of principal risks and,
as a result, no new principal risks are
proposed this year.
Future initiatives
We continuously evolve and improve
our approach to risk management, in
light of the ever-increasing volatility and
uncertainty in the external environment.
We have engaged the Internal Audit co-
source partner to review the Company’s
risk management processes in FY25 with
the intent of further strengthening their
operation. In addition, risk plays a key role
in the cross-functional team responsible
for our approach to the requirements
for Task Force on Climate-related
Financial Disclosures (‘TCFD’), under a
dedicated steering group. We continue
to embed the selection of the key
risks used in our scenario analysis and
support the integration of this activity
into our ongoing risk processes, so that
climate-related considerations become
part of our longer-term strategic thinking
and decision-making in the business. See
pages 42 to 55 for further details on our
approach to TCFD.
Probability
Impact
1
1
2
10
9
4
4
5
6
7
8
3
Risks
1
Macroeconomic and geopolitical instability
2
Impact of government legislation
3
Market and retailer actions
4
Operational integrity
5
Legal compliance
6
Climate risk
7
Technology
8
Product portfolio
9
HR and employee risk
10
Strategy delivery
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
64
65
STRATEGIC
Risk management continued
4 Operational integrity
Link to strategy
Risk and potential impact
Delivery of our strategy depends on
our ability to minimise operational
disruption from issues with
facilities and factory infrastructure.
Supplier failure, market shortage
or an adverse event in our supply
chain impacts the sourcing of
our products, and the cost of our
products is significantly affected by
commodity price movements.
How we manage it
• We have business continuity and disaster
recovery management processes in place.
These are reviewed and refreshed on an
ongoing basis.
• Appropriate insurance coverage is in place to
mitigate the financial impact of material site
issues.
• We have an appropriately resourced and
skilled procurement function that possesses
the requisite market and industry knowledge
to pinpoint raw material market developments.
• Procurement category plans are in place to
mitigate against single supplier risk.
• Cross-functional teams help to manage any
sourcing challenges because of broader
macroeconomic factors.
• We have robust quality management standards
applied and rigorously monitored across our
supply chain.
• We have an ongoing programme (in
conjunction with our insurers) to move our
sites into a ‘Highly Protected Risk’ status.
• ELT review resourcing plans to ensure
appropriate labour availability across factories,
warehouse and transport.
Changes since FY22/23
• The risk profile has moderately declined
during the year. This was because we
continued to improve our operational
resilience through various initiatives,
including Capex projects that replace
existing plant and machinery and
provide increased reliability and
efficiency. This year we also made
several specific investments to enhance
our flood and fire defence systems at
several of our ‘higher-risk’ sites.
• Our suppliers have continued to supply
us with raw materials, packaging and
bought-in finished goods, aided by
accurate demand forecasting providing
forward views of demand planning
requirements.
• Our Procurement, Operational and
Technical teams have also managed
to source alternative suppliers for key
ingredients where there were potential
interruptions to supply.
• Our factories continued to maintain
production levels through careful
management of production capacity
and through sourcing and retaining
a reliable pool of labour. This was
particularly called upon whilst we
completed the previously announced
closure of our Knighton site and moved
key production facilities to our other
sites.
• We continue to maintain high levels
of customer service through our KPI
monitoring of key suppliers, despite the
disruptions caused in some of our key
raw materials markets.
Risk trend
Strategy pillars
Risk trend
Continue to grow the UK core
Supply chain investment
Expand UK into new categories
Build international businesses with
critical mass
Inorganic opportunities
Increase
No change
Decrease
3 Market and retailer actions
Link to strategy
Risk and potential impact
As a primarily UK-based company,
our sales are concentrated,
predominately with a number of
major customers who operate
in a highly competitive market.
Maintaining strong relationships
with our existing customers and
building relationships with new
customers, and further supported
by technology-enabled channels,
are critical for our brands to be
readily available to our consumers.
A failure to do this may impact
our ability to obtain competitive
pricing and trade terms and/or
the availability and presentation of
our brands. Actions taken by these
retailers (for example, changes in
pricing and promotion strategies),
may negatively impact our financial
performance and can also have an
impact on the overall market for
our products.
How we manage it
• We have strong relationships with major
retailers built on the strength of our brands,
our expertise in our categories and shopper
insight.
• We have a programme of continuous
innovation rooted in consumer insights and
designed to build category growth.
• We develop commercial plans with customers
that include investment and activation plans.
• We are growing our international business by
applying our proven UK branded growth model
strategy in target markets, which in time will
reduce dependence on the UK market.
• We are investing to build our online channel
presence and capabilities.
Changes since FY22/23
• The risk profile remained stable
year-on-year.
• We continued to work with all
our customers, including category
partnerships and range reviews,
to match our product offering to
consumer needs.
• We recorded growth in branded sales
as a result of our strong innovation
pipeline, sustained brand investment
and close customer partnerships.
• Our international business continued
to grow as we focus on the Group’s
strategic markets.
Risk trend
Strategy pillars
Risk trend
Continue to grow the UK core
Supply chain investment
Expand UK into new categories
Build international businesses with
critical mass
Inorganic opportunities
Increase
No change
Decrease
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STRATEGIC
Risk management continued
7 Technology
Link to strategy
Risk and potential impact
A successful cyber-attack, or other
systems failure, could result in us
not being able to manufacture or
deliver products, plan our supply
chain, pay and receive money, or
maintain proper financial control.
This could have a major customer,
financial, reputational and
regulatory impact on our business.
How we manage it
• Our centrally governed IT function continually
monitors known and emerging threats with
incident response plans in place to manage/
eliminate these risks.
• This includes maintaining firewalls and threat
detection and response systems with regular
penetration testing performed.
• Business continuity plans are in place across
the business and both these and disaster
recovery procedures are tested regularly.
• Information and IT policies are in place and
are regularly reviewed. Compulsory IT training
is regularly run, including internal phishing
awareness campaigns, to validate that learning
is embedded throughout the organisation.
• Our cyber-security strategy and actions are
regularly monitored by the Audit Committee
and the Board.
• We review our cyber-insurance coverage on a
regular basis.
Changes since FY22/23
• The risk profile has remained stable
during the year as we continue to invest
in our IT systems to remain protected
and match the ever-increasing number
and diversity of external security
threats.
Risk trend
8 Product portfolio
Link to strategy
Risk and potential impact
Consumer preferences, tastes
and behaviours change over
time. As part of this, consumers’
desire for healthier choices and
premiumisation are significant
trends. Our ability to anticipate
these trends, innovate and ensure
the relevance of our brands are
critical to our competitiveness
in the marketplace and our
performance. Furthermore,
sales of many of the Company’s
products can be adversely affected
by seasonal weather conditions.
We may fail to successfully evolve
our portfolio to take advantage of
growth categories and/or re-invent
our core brands to meet consumer
needs.
How we manage it
• The Group offers a broad range of branded
products across a range of categories and
markets which offer a wide choice to the end
consumer.
• We perform continual assessments of
consumers and customer trends and have
an insights programme in order to anticipate
changes in consumer preferences. This helps
us evolve our existing product offerings, as
well as identify adjacent product categories to
launch into.
• We continue to invest heavily in new product
development with well-established stage gate
controls to ensure we continue to adjust to
consumers’ requirements.
• We continue to review the impact of
weather on sales during our monthly product
performance reviews.
• Our M&A focus is on expanding into higher
growth categories.
Changes since FY22/23
• The risk remained stable year-on-year.
• We continue to expand our product
offerings within adjacent categories
such as ice cream.
• We acquired FUEL10K, a differentiated
and vibrant breakfast brand.
Risk trend
Strategy pillars
Risk trend
Continue to grow the UK core
Supply chain investment
Expand UK into new categories
Build international businesses with
critical mass
Inorganic opportunities
Increase
No change
Decrease
5 Legal compliance
Link to strategy
Risk and potential impact
Our business is subject to many
legal and regulatory requirements
and we must continuously monitor
new and emerging legislation
(domestic and international),
in areas such as Health and
Safety, listing rules, competition
law, intellectual property, food
safety, labelling regulations and
environmental standards. We have
also adopted the recommendations
of the Financial Stability Board’s
Task Force on Climate-related
Financial Disclosures (‘TCFD’).
A more detailed overview of the
impact of climate change on our
business can be found in the TCFD
section on pages 42 to 55.
How we manage it
• We have dedicated Legal and Regulatory
teams in place to monitor laws and regulations
to ensure compliance, protect intellectual
property and defend against litigation, where
necessary.
• We work closely with our external advisors
and the regulators, government bodies and
trade associations regarding current and future
legislation which would impact the Group.
• Whistleblowing processes are in place that are
routinely tested to ensure that they are fit for
purpose.
• We have leading food industry processes in
place to manage health and safety and food
safety issues (including an ongoing programme
of internal and external audits).
• Regular mandatory compliance-related training
is in place covering key risk areas.
• As previously described, our ESG Committee
oversees various initiatives, including
compliance with TCFD recommendations.
Changes since FY22/23
• The risk remained stable year-on-year.
• We have included disclosures on pages
42 to 55 of this report to comply with
TCFD recommendations.
• Our risk management framework
continues to be enhanced to
accommodate and report on climate
risks and appropriate disclosures in line
with TCFD recommendations.
Risk trend
6 Climate risk
Link to strategy
Risk and potential impact
Climate change has the potential
to dramatically change the world in
which we live and operate. Tackling
climate change, by taking measures
to limit its impact to manageable
levels, has become a key priority
for governments and businesses.
As the impacts of climate change
become clearer, businesses are
looking to understand how this will
impact their operations. Through
our work to disclose against the
requirements of the Task Force
for Climate-related Financial
Disclosures (TCFD), we have
identified risks and opportunities
associated with operational
disruption, ingredients sourcing,
energy pricing, policy changes and
changing consumer behaviour.
How we manage it
• Our decarbonisation targets have been
submitted to, and approved by, the Science-
Based Targets initiative (‘SBTi’) and are
embedded within our Enriching Life Plan.
We track progress against our targets in line
with our commitments.
• An assessment of the physical risks associated
with more extreme weather across the
Company’s manufacturing sites has been
carried out in partnership with our insurance
partners, with investments made at our sites
to reduce the risk and impact of river and
pluvial flooding.
• An assessment of the risk of changes in the
availability, price or quality of key ingredients,
as a result of acute and chronic changes in
the climate in key sourcing regions has been
carried out and mitigating actions to reduce
the risk of supply issues on key commodities
have been identified.
• An assessment of the risk associated with
changes in the demand for our products in
the event of changing weather patterns has
been carried out and considered as part of our
commercial planning.
Changes since FY22/23
• Although the impacts of climate change
are becoming more visible, they are in
line with the scenarios and risk profiles
we have assessed over the last two
years. The risk has remained stable
year-on-year as we continue to make
progress against the targets we have set
for ourselves under our Enriching Life
Plan, and required of us under TCFD.
• Please refer to pages 30 and 41 for an
update on our Enriching Life Plan, pages
42 to 55 for our TCFD statement and
pages 182 to 189 for our Enriching Life
Plan disclosure tables.
Risk trend
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STRATEGIC
Risk management continued
The directors, in accordance with provision
31 of the UK Corporate Governance Code
2018, have assessed the viability of the
Group, taking into account the current
financial position, the Group’s strategic and
financial plan, and the potential impact
on profitability, liquidity and key financial
ratios of the principal risks documented
on pages 63 to 70. These factors have
also been carefully assessed in light of
the global political uncertainty driven by
current conflict and a prolonged period of
inflation.
The directors have determined that five
years is the most appropriate period to
assess viability over, this timeframe is
consistent with the way the Board views
the development of the business over
the medium term, and is appropriate for
both business planning and measuring
performance. The directors also
considered the consistent business
performance, nature of the Group’s
activities and the degree to which the
business changes and evolves given the
dynamic nature of the FMCG sector when
determining the assessment period.
In order to report on the viability of the
Group, the directors reviewed the overall
funding capacity and headroom available
to withstand severe but plausible events
and carried out a robust assessment of the
principal risks facing the Group, including
those that would threaten its business
model, future performance, solvency or
liquidity. This assessment also included
reviewing mitigating actions in respect of
each principal risk.
The starting point for the viability
assessment is the Group’s strategic plan,
which was updated and signed off by
the Board in February 2024. Sensitivity
analysis was applied to this base financial
information and the projected cash flows
were stress tested against a number
of severe but plausible scenarios, the
viability assessment being an extension
of the going concern assessment (see
note 2.1 of the financial statements). As
of 30 March 2024, £175m of committed
borrowing facilities available to the Group
were undrawn. The Board reviewed the
level of performance that would cause
the Group to breach its debt covenants
and considered all of the principal risks,
focusing on those which have the potential
to materially reduce Trading profit or
adversely impact the Group’s liquidity.
The risks considered to have the greatest
potential impact have been modelled in
the downside scenarios, further detail of
which are shown in the table on page 72.
Consideration has been given to the
impact of climate change which identified
an increase in costs of external specialists,
capital investment and regulatory
requirement within the assessment period,
best estimates for which are included in
the Group’s strategic plan and a sensitivity
was modelled as discussed above. An in-
depth assessment of climate risk continues
and whilst this work remains ongoing it
is not believed that the climate related
risks would have a significant impact on
the business within the five year viability
review period. See pages 42 to 55 for an
overview of the work related to TCFD.
9 HR and employee risk
Link to strategy
Risk and potential impact
The ongoing successful delivery of
the Group’s strategy depends on
having the appropriate number
of colleagues (capacity) with the
right skills (capability). As economic
stability returns, there is risk of
losing colleagues to competitors,
especially in areas where there is a
skills shortage.
How we manage it
• We continue to invest in colleague
development and engagement initiatives,
including an all-colleague engagement survey.
See ‘Our purpose, values and culture’ on pages
10 and 11.
• We have processes in place to attract diverse
talent into the business with the right
capabilities and behaviours through our ‘in-
house’ team.
• We have increased our Organisational Design
capability to make sure we have the structure
to deliver our plans.
• We are developing strategies to focus on
developing our own in-demand skills, e.g.
engineering.
• We have succession plans in place to retain
and progress our internal talent pipeline.
• We have a well-established and successful
graduate recruitment and development
programme and invest in apprenticeship
training.
• We benchmark pay to make sure we remain
competitive in the market and, where
appropriate, make changes to our offering.
Changes since FY22/23
• The risk profile remained stable
year-on-year, albeit individual HR
and employee risk elements that
amalgamate to the principal risk have
varied.
• We continue to maintain a strong
commercial focus on process and cost
improvement to manage and mitigate
the increased cost of labour.
• In addition, we maintain Group-wide
communication tools as well as holding
quarterly Town-Hall meetings to ensure
colleagues are briefed on new strategic
initiatives that will grow the Company.
Risk trend
10 Strategy delivery
Link to strategy
Risk and potential impact
Our five-pillar strategy, as set out
on pages 18 and 19, is at the core
of how we run our business. The
strategy focuses on continuing to
grow the UK core, investing in our
supply chain, expanding into new
categories as well as building our
international business. In addition,
we seek acquisitions where we can
leverage strong synergies with our
existing categories to enable us
to further accelerate our growth.
Failure to timely deliver our strategy
may result in taking longer than
expected to deliver results, which
may impact the speed at which we
can deliver shareholder value.
How we manage it
• We continue to seek inorganic opportunities
expanding our product portfolio through
acquisitions and applying our brand building
and commercial expertise to create further
value.
• Reflecting the seasonal nature of many of
our brands, media investment is targeted
in periods of peak consumer demand and
through the most cost-effective channels.
• Our new and existing product development
programmes are based on deep consumer
insight and continue to make our product
ranges more relevant to the ever-changing
lives of our consumers, particularly focusing on
health and nutrition.
Changes since FY22/23
• The risk profile remained stable during
the year.
• Following The Spice Tailor acquisition,
we acquired FUEL10K during the year.
We have followed a rigorous integration
programme to ensure the benefits of
the acquisition are fully realised.
• Our branded growth strategy for
delivering new product innovation
based on consumer trends together
with high-quality advertising behind our
major brands continues to deliver.
• We continued to leverage our branded
growth model in the Group’s strategic
markets.
Risk trend
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STRATEGIC
Viability statement
Risk management continued
Governance
Governance framework
74
Board of directors
76
Governance overview
78
Stakeholder engagement and
Section 172(1) statement
84
Nomination Committee report
88
Audit Committee report
91
Directors’
Remuneration report
96
Other statutory information
116
Statement of directors’
responsibilities
119
In assessing the Group’s viability, the Board also considered all the severe but plausible scenarios simultaneously materialising and for a
sustained period, in conjunction with mitigating actions such as reducing discretionary costs and capital investment. The likelihood of the
Group having insufficient resources to meet its financial obligations and breach its covenants is unlikely under this scenario.
In addition, a reverse stress test was conducted to identify the magnitude of Trading profit decline required before the Group breaches
its debt covenant, which indicates that a Trading profit decline of broadly half in each year of the five year review period is required to
breach covenants, which is considered extreme and not plausible.
Based on this assessment, the Board confirms that it has a reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the five-year period to 31 March 2029.
Risk assumptions modelled
Action taken
Link to principal risks1
Materials, packaging, utilities
and supply chain inflation in the
market place2.
We have modelled further inflation in the market
place, increasing input costs, we have assumed
that this is not all recovered with an adverse
impact on volume and margin.
1
3
4
A cyber-attack shuts down the
operating systems temporarily
stopping production2.
We have modelled production stopping at all
manufacturing sites for two weeks in the viability
review period, with the associated loss of sales
due to the halt in production, and taking into
account the levels of stock held.
7
Climate change: impact on
revenue2.
We have modelled the expected reduction
in revenue anticipated if Representative
Concentration Pathway (‘RCP’) 8.5 were followed.
6
8
Managing human resources in
response to unplanned events2.
We have modelled disruption to our supply chain
due to the outbreak of an infectious disease
which drives labour shortages or outbreaks
leading to half of our manufacturing sites being
closed for a one-week period on two occasions
during the review window, including the
associated loss of sales, and taking into account
the levels of stock held.
4
7
9
Retailer strategy results in
margin dilution2.
We have modelled a reduction in gross margin for
our UK business over the viability review period.
1
3 10
1 For risks see pages 63 to 70.
2 Risk impact included in the Going Concern 12-month review period.
Non-financial and sustainability information statement
This statement, along with the information incorporated by cross-reference, complies with the non-financial reporting requirements set
out in Sections 414CA and 414CB of the Companies Act 2006.
This section on our Enriching Life Plan fulfils the requirements under Section 414CB of the Companies Act for content on environmental
matters, our employees, social matters and non-financial key performance indicators. Further information on climate related targets can
be found on pages 30 to 41.
Information on human rights can be found on page 118.
Content on anti-bribery and corruption can be found on page 118.
Our business model can be found on pages 16 and 17.
Principal risks and how they are managed can be found on pages 63 to 70.
The section 172(1) statement is set out on pages 84 to 87.
The strategic report, set out on pages 09 to 72, has been approved by the Board.
By order of the Board
Simon Rose
General Counsel & Company Secretary
16 May 2024
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73
Viability statement continued
Shareholders and other stakeholders
Shareholders
Board
Committees
Company Secretary
and Internal Audit
Management
Nomination Committee
Responsible for Board appointments, succession planning and reviewing the structure, size and
composition of the Board, ensuring that there is a healthy balance of skills, knowledge, experience
and diversity on the Board. Provides oversight of inclusion and diversity, talent management and
succession planning for the wider Group.
Further information can be found on pages 88 to 90.
Audit Committee
Monitors the integrity of the Group’s external reporting and
provides oversight and governance of the Group’s Internal Audit
team, internal controls, risk management and the relationship
with the external auditors. The committee also monitors
compliance with the Task Force on Climate-related Financial
Disclosures (‘TCFD’) reporting regulations and provides
oversight of the Group’s whistleblowing procedures.
Further information can be found on pages 91 to 95.
Remuneration Committee
Responsible for setting the Directors’ Remuneration Policy
and the remuneration for the Group Chair, executive directors
and senior management, to ensure that it is aligned with the
Group’s strategic objectives and culture, and oversight of the
remuneration of the wider workforce.
Further information can be found on pages 96 to 115.
Group Chair
The Group Chair is responsible for the
leadership of the Board, ensuring its
effectiveness and promoting the highest
standards of corporate governance. He chairs
Board meetings, ensuring timely and accurate
distribution of information and full review and
discussion of agenda items.
Senior Independent Director (‘SID’)
The SID supports the Group Chair and leads
the non-executive directors in the oversight
of the Group Chair. He is also available to
shareholders if they have concerns that
cannot be raised through normal channels.
Non-executive
directors (‘NEDs’)
The NEDs bring a range of
knowledge and experience to
the Board. Their role is to use
their experience, objectivity
and sound judgement to
scrutinise and challenge
executive management’s plans
and performance and the
development of the Group’s
vision, values and strategy.
Workforce Engagement
NED
The Workforce Engagement
NED’s role is to engage
with colleagues across the
business to ensure their views
and concerns are brought
to the Board and taken into
account by the directors,
particularly when they are
making decisions that could
affect the workforce.
Chief Executive
Officer (‘CEO’)
The CEO is responsible
for the day-to-day
management of the
Group, working with the
Executive Leadership
Team to ensure the
implementation of the
agreed strategy.
Chief Financial Officer
(‘CFO’)
The CFO has
responsibility for
developing and
implementing the
Group’s financial
strategies, financial risk
management, treasury,
investor relations and
pensions strategy.
Internal Audit
Internal Audit is responsible for providing the Audit Committee and Board with independent assurance that the Group’s internal control
and risk management processes are operating effectively.
Company Secretary
The role of the Company Secretary is to ensure that there is an effective flow of information
between executive management and the Group Chair and NEDs. The Company Secretary also
advises the Board on legal and governance matters and supports the Board evaluation process and
induction programme.
Executive Leadership Team (‘ELT’)
The Board delegates day-to-day responsibility for managing the business to the ELT and its sub-
committees. The ELT comprises of the heads of the commercial business units and corporate
functions. The ELT meets on a monthly basis, with weekly follow ups. Members of the ELT also
regularly present to the Board.
ESG Governance Committee
Chaired by the CEO and including
members of the ELT, the committee is
responsible for setting the Group’s ESG
strategy, monitoring performance and
ensuring ESG is embedded into the way
the business operates.
Further information can be
found on page 33.
TCFD Steering Group
Responsible for assessing and managing
climate-related risks and opportunities and
embedding the TCFD framework across
the business.
Further information can be
found on page 42.
Inclusion and Diversity
Steering Group
Responsible for implementing and
reviewing the Group’s approach to
inclusion and diversity.
Further information can be
found on pages 10 and 11.
How our governance framework supports the delivery of the Group’s strategic objectives
Our governance framework facilitates effective, entrepreneurial and prudent management that promotes the long-term success of
the Group. It also generates value for shareholders and contributes to all our stakeholders whether customers, consumers, suppliers,
employees, the government or wider society. The Board of directors is responsible for the governance of the Group, including providing
oversight of the Group’s purpose, strategy, values, and the approach to ESG matters. It provides the leadership to put them into effect,
supervising the management of the business, monitoring performance, and reporting to shareholders on their stewardship.
Premier Foods plc
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GOVERNANCE
Governance framework
Colin Day
Non-executive Group Chair
Alex Whitehouse
Chief Executive Officer
Duncan Leggett
Chief Financial Officer
Tania Howarth
Non-executive director
Helen Jones
Non-executive director
Yuichiro Kogo
Non-executive director
Appointed to the Board
August 2019 (appointed Nomination
Committee Chair in August 2019)
Skills and experience
Colin was previously Chief Financial
Officer at Aegis Group plc and then
Reckitt Benckiser plc before spending
six years as Chief Executive of Essentra
plc. He has served as a non-executive
director on the boards of major
listed UK businesses, including Amec
Foster Wheeler, WPP, Cadbury,
Imperial Brands, easyJet, Meggitt and
Euromoney Institutional Investor.
Colin is currently a board member of
the Department for Environment, Food
and Rural Affairs (‘Defra’) and chairs
the Defra Audit and Risk Assurance
Committee. He is a non-executive
director and Audit Committee Chair
at S4 Capital plc and a non-executive
director of FM Global. He is also a
member of the Board and Finance
Committee of Cranfield University.
Colin is a Fellow of the Association of
Chartered Certified Accountants and
has an MBA from Cranfield School of
Management.
N
Appointed to the Board
August 2019
Skills and experience
Alex joined the Company in July 2014,
holding the positions of Managing
Director of the Grocery Strategic
Business Unit and then UK Managing
Director before his appointment
as Chief Executive Officer. Alex has
significant senior international,
marketing, sales, strategy, innovation
and general management experience
gained across multiple geographies. He
spent 18 years with Reckitt Benckiser
plc, where he held senior leadership
roles, including Managing Director,
New Zealand and Worldwide Head
of Shopper and Customer Marketing.
Earlier in his career, he held a number
of retail management positions with
Whitbread plc.
Appointed to the Board
December 2019
Skills and experience
Duncan joined the Company in
September 2011 and has held a
number of senior roles within finance,
including Group Financial Controller
and Director of Financial Control and
Corporate Development. Prior to joining
the Company, Duncan spent nine
years at KPMG, working with clients
across a variety of industries. Duncan’s
responsibilities include operational
and corporate finance, corporate
development, investor relations,
treasury and pensions. He is a qualified
Chartered Accountant.
Appointed to the Board
March 2022
Skills and experience
Tania has extensive senior executive
experience from her roles across
global FMCG businesses. She was Chief
Operating Officer of Nomad Foods,
a European frozen foods business
listed on the NYSE, with household
brands such as Birds Eye, Findus and
Iglo. During her 10-year tenure, she
had responsibility for Supply Chain,
Quality, HR, IT and M&A integration.
Prior to this, Tania was CIO for Coca-
Cola’s European and African businesses
and spent nine years at Walkers
Snack Foods, latterly as CIO. Tania
is an advisor to the Private Equity
business within Goldman Sachs Asset
Management and a member of the
Technology Advisory Board at NatWest
Group plc.
A N I
Appointed to the Board
May 2020 (appointed Workforce
Engagement NED in September 2020
and Remuneration Committee Chair in
July 2022)
Skills and experience
Helen has over 35 years of commercial
and general management experience
within FMCG and multi-site consumer
businesses. During her executive career,
Helen was Group Executive Director of
Caffe Nero Group Ltd and Managing
Director of Zizzi restaurants. Prior to
this, Helen spent nine years at Unilever,
having previously been the successful
architect for the launch of the Ben &
Jerry’s brand in the UK and Europe.
Helen is currently non-executive
director and Remuneration Committee
Chair of THG PLC, Fuller, Smith & Turner
plc and Virgin Wines UK PLC.
R I
Appointed to the Board
March 2021
Skills and experience
Yuichiro is General Manager, Corporate
Planning Division, of Nissin Foods
Holdings Co., Ltd (‘Nissin’) and is
responsible for devising Nissin’s
M&A strategy, as well as originating
and executing business alliance and
investment transactions. Prior to
joining Nissin, he was Vice President
at the Investment Banking Division
of Goldman Sachs Japan Co., Ltd.
During his nine years at the firm, his
key responsibilities included execution
of global equity/debt financing
transactions, as well as coverage of
corporate clients across multiple
industry sectors, including technology,
steel and natural resources. Yuichiro
received a BA in Economics from
Keio University and an MBA from the
University of Chicago.
Richard Hodgson
Senior Independent Director
Roisin Donnelly
Non-executive director
Tim Elliott
Non-executive director
Lorna Tilbian
Non-executive director
Appointed to the Board
January 2015 (appointed SID in
May 2019)
Skills and experience
Richard is Chief Executive Officer of The
SnowFox Group and has over 20 years’
experience in the food industry. He was
Chief Executive Officer at Pizza Express,
and held roles as Commercial Director
at Waitrose and Morrisons, the latter
being a newly created role combining
Trading and Marketing. Prior to that,
Richard spent 10 years at Asda in senior
positions before being appointed as
Marketing & Own Brand Director.
R N I
Appointed to the Board
May 2022
Skills and experience
Roisin has over 30 years’ marketing
and brand building experience, gained
at Procter and Gamble, where she
was responsible for a large portfolio of
leading consumer brands within the
UK, Europe, EMEA and the Americas.
Most recently, she spent 12 years as
Chief Marketing Officer, UK and Ireland,
and then two years in the same role for
Northern Europe. Roisin has served as
a non-executive director of Just Eat plc,
Holland & Barrett Ltd, Homeserve plc
and Bourne Leisure Ltd. She is currently
a non-executive director of NatWest
Group plc and Sage Group Plc, and also
a member of the Digital Advisory Board
of Coca-Cola Europacific Partners.
A R I
Appointed to the Board
May 2020 (appointed Audit Committee
Chair in July 2023)
Skills and experience
Tim has nearly 40 years’ experience
in investment banking and corporate
finance, advising a wide range of
companies and industries, particularly
those in the consumer and retail
sectors. During his career, Tim held
Managing Director roles at both
Barclays Capital and JP Morgan and,
more latterly, was a Partner and
Consultant at KPMG. Tim has deep
knowledge and experience of capital
markets and is currently Senior Advisor
at Alvarez & Marsal LLP.
A R I
Appointed to the Board
April 2022
Skills and experience
Lorna has extensive experience as
an equity analyst covering the media
sector and an investment banker
with strong financial analysis and
leadership skills. During her career,
Lorna was executive director and
Head of the Media Sector at Numis
Corporation PLC. She was a founder
of Numis, having previously worked at
Sheppards as a director at SG Warburg
and an executive director of WestLB
Panmure. Lorna is executive Chair of
Dowgate Capital Ltd, sits on the Board
of Dowgate Wealth Ltd and is a non-
executive director of Rightmove plc,
Finsbury Growth & Income Trust plc
and ProVen VCT plc.
N I
Committee membership
A Audit Committee
R Remuneration Committee
N Nomination Committee
Committee Chair
I Independent
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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GOVERNANCE
Board of directors
Compliance with the UK Governance Code 2018
The Board supports the principles laid down by the UK Corporate
Governance Code 2018 (the ‘Governance Code’) as issued by the
Financial Reporting Council, which applies to accounting periods
beginning on, or after, 1 January 2019 (available at www.frc.org.
uk). The Board reviewed the recent publication of the 2024 UK
Corporate Governance Code and steps are being taken towards
compliance for when the new measures come into force.
Following the approval of the new Directors’ Remuneration Policy
at the 2023 AGM, the Board is pleased to announce compliance
with Provision 36 of the Governance Code, via the introduction
of a formal post-employment shareholding requirement for
executive directors (further details are set out in the Directors’
Remuneration Report on page 106).
As a result of the above, the Board considers that it has complied
with the requirements of the Governance Code during the
financial year. The table opposite, along with the reports of each
Board committee, demonstrate how the Group has applied the
principles of the Governance Code.
Workforce engagement
The Board and its committees receive regular updates on
workforce matters, and this is a standing item reported to the
Board via HR reports. This includes updates on key issues, such as
site-based pay negotiations, vacancies and recruitment, the review
of talent management and succession plans, the results of periodic
employee engagement exercises and action plans to address the
issues raised.
These activities are enhanced by the work of the Remuneration
and Audit Committees, which review remuneration arrangements
for the workforce across the business and the issues raised via the
Group’s confidential whistleblowing helpline and management’s
response to them.
Helen Jones, as the Group’s Workforce Engagement NED, has
an important role in fostering effective engagement with the
workforce to enable the Board to be kept informed of the
views of the workforce, and ensure these views are taken into
consideration as part of the Board’s decision-making process.
‘Voice Forums’ have been established at all our sites, facilitating
two-way engagement with colleagues across the business. During
the year, Helen attended these meetings at various sites and the
results were fed back to the Board. Updates were provided on
investment at a number of Premier Foods sites which had been
well received by colleagues, the continuing focus on investing in
additional resources, and the need to prioritise to ensure delivery
of projects with efficiency.
Appreciation was noted again for the continued work carried out
on inclusion and diversity and mental health support, volunteering
days and the work with our charity partner FareShare, and the
successful transformation of the business. It was highlighted that,
across all sites visited, there was a noted sense of pride in working
for Premier Foods, energised by recent results and the clarity of
the Group’s strategy.
Principle
Page
Board leadership and Company purpose
Promoting long-term sustainable success
9
Culture
10-11
Risk management framework
63-64
Stakeholder engagement
84-87
Workforce voice
79 / 118
Division of responsibilities
Governance framework
74-75
Independence
88
Board Responsibilities
81-82
Composition, succession and evaluation
Succession planning
89
Skills, experience and knowledge
89
Performance review
82-83
Diversity
89-90
Audit, risk and internal control
Internal audit / internal controls
93
External audit
91-92
Fair, balanced and understandable
94
Principal risks
63
Remuneration
Approach to remuneration
98
Directors’ Remuneration Policy
99
Annual General Meeting (‘AGM’)
We understand the importance of the AGM to shareholders and
value the opportunity to meet in person. We look forward to
welcoming shareholders in person once again to the AGM, which
will be held at our head office, Premier House, Centrium Business
Park, Griffith’s Way, St Albans, AL1 2RE, on Thursday, 18 July 2024
at 11.00am. I look forward to meeting with shareholders then.
Colin Day
Non-executive Group Chair
16 May 2024
Group Chair’s introduction
Dear shareholder,
On behalf of the Board, I would like
to introduce the Group’s corporate
governance statement for FY23/24.
Board leadership
The Board leads the Group’s governance
structure. It provides stewardship of the
Company with the purpose of safeguarding
its long-term sustainable success, creating
value for the Group’s shareholders and
other stakeholders, and enabling the
Group to make a positive contribution to
the communities and wider societies in
which it operates.
Group strategy
The Board has an important role to play
in reviewing and approving the Group’s
strategy, and in providing effective
oversight of the implementation of the key
elements of the strategy in order to deliver
long-term sustainable growth. The Board
also received regular strategy updates
from key members of management
throughout the year, and is pleased to
note that significant progress has been
made against all five strategic pillars. In
February 2024, the Board reviewed the
Group’s five-year strategic plan, the key
steps to deliver the stretching growth plans
and the organisational design needed to
implement it. As set out on pages 18 to
21, significant focus is placed on strategic
development and implementation.
Purpose, values and culture
One of the Board’s responsibilities is to
assess and monitor culture and behaviours
throughout the organisation to ensure
these are aligned with the Group’s strategy.
We continue to make progress with
embedding the Group’s purpose
and values across the business; with
investment in communication and
engagement with colleagues; and training
in areas such as leadership and Inclusion
and Diversity. We monitor progress
through regular HR updates, Group-
wide colleague surveys, site visits by the
Board, issues raised in whistleblowing
helpline calls, colleague retention levels
and through the work of the Workforce
Engagement NED.
In January 2024 we issued our biennial
colleague survey, which allows colleagues
to voice their views and allows us to gain
an insight on how we are progressing as
an organisation. We were delighted to
achieve an 87% response rate, with 10 of
the 12 categories, including leadership,
recognition and personal growth, showing
improving scores from FY21/22. We will
be reviewing the responses to identify
an action plan for the coming year.
Further information can be found on
pages 10 to 11.
The Board reviewed the Group’s purpose,
values, strategy and culture as part of the
assessment and approval of the Group’s
five-year strategic plan in February 2024.
The Board’s effectiveness in monitoring
the culture and behaviours throughout the
organisation was also considered as part
of this year’s internal Board evaluation and
rated positively.
Governance, risk and internal
control
The Board is responsible for the oversight
of risk and the effectiveness of the Group’s
system of internal controls, including the
financial reporting process. The Board
has an effective governance and risk
framework, which has been devised to
ensure that the Group is being operated
and managed appropriately, and that
prudent and effective controls are in place
to identify and manage or mitigate those
risks.
During the year, the Board has undertaken
a robust assessment of the Group’s
emerging and principal risks. Further
details of the Group’s risk landscape can be
found on pages 63 to 70.
The Board noted that the macro-economic
environment remained challenging and
has monitored the impact of elevated
levels of inflation on the business and
key stakeholders, such as consumers,
customers, colleagues and suppliers.
The overall cyber security landscape also
remained an area of elevated risk and
the Board continued to receive regular
updates on the Group’s IT strategy and
management actions to strengthen
resilience. This included third-party
penetration testing of the Group’s
systems, ISO27001 security standard
training for all security colleagues, a
Group-wide cyber awareness programme,
investment in technology infrastructure at
manufacturing sites and the strengthening
of systems to support the Group’s internal
controls systems.
The Board has delegated authority
for monitoring risk management and
internal controls to the Audit Committee
and further information is set out on
pages 63 to 64.
ESG strategy and climate risks
The Board has overall responsibility for the
Group’s ESG strategy and oversight of the
climate-related risks the business faces as
a leading UK food producer.
In 2021, the Board approved a new ESG
strategy, the Enriching Life Plan, which is
focused on three areas: Product, Planet
and People. While the Board has overall
accountability for our ESG Strategy and
climate-related risks, it delegates day-to-
day management to the ESG Governance
Committee, which is chaired by the CEO
and is supported by the ESG Director,
members of the ELT and subject matter
experts from across the Group. Regular
updates are provided by the CEO and
Steering Groups. The Board reviews ESG
strategy on a biannual basis and progress
against ESG targets is reported at each
scheduled Board meeting. During the
year the Board reviewed and approved
the priorities planned for the following
18 months. Since the introduction of the
Enriching Life Plan, significant progress
has been made against the three pillars
of Product, Planet and People and the
Board is delighted that this progress has
been recognised by external stakeholders.
Further details can be found on pages 30
to 41.
Climate-related risks are incorporated into
the Group’s Enterprise Risk Management
framework. This ensures a bottom-up
approach to identifying and quantifying
risks for prioritisation, as well as oversight
through appointed members of the ELT,
the Audit Committee and, ultimately, the
Board. In addition, the ESG Governance
Committee oversees the TCFD Steering
Group, which is responsible for embedding
the TCFD framework across the business.
ESG matters and climate risks are
considered by the Board when making key
decisions as part of its responsibility to
consider matters under Section 172 of the
Companies Act 2006.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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79
GOVERNANCE
Governance overview
Board attendance
During the year, there were six scheduled meetings of the Board, four meetings of the
Audit Committee, four meetings of the Remuneration Committee and two meetings of
the Nomination Committee. In addition, a further four Board meetings and calls were
convened for specific business.
All directors are expected to attend the AGM, scheduled Board meetings and relevant
committee meetings, unless they are prevented from doing so by prior commitments.
Where a director is unable to attend a meeting, they have the opportunity to read the
papers and ask the Chair to raise any comments. They are also updated on key discussions
and decisions that were taken at the meeting. Non-executive directors also have the
opportunity to meet without management present.
Details of Board and committee membership, and attendance at scheduled Board
meetings and committee meetings, are set out in the table below. Tania Howarth was
unable to attend one Board meeting and one Audit Committee meeting due to a personal
commitment. Richard Hodgson was unable to attend one Board meeting, and Helen Jones
was unable to attend the 2023 AGM, due to other business commitments, which could
not be rescheduled.
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Executive directors
Alex Whitehouse
6/6
–
–
–
Duncan Leggett
6/6
–
–
–
Non-executive directors
Colin Day
6/6
–
–
2/2
Richard Hodgson
5/6
–
4/4
2/2
Simon Bentley1
1/1
1/1
–
–
Roisin Donnelly
6/6
4/4
4/4
–
Tim Elliott
6/6
4/4
4/4
–
Tania Howarth
5/6
3/4
–
2/2
Helen Jones
6/6
–
4/4
–
Yuichiro Kogo
6/6
–
–
–
Lorna Tilbian
6/6
–
–
2/2
1 Simon Bentley resigned from the Board with effect from 12 July 2023.
Conflicts of interest
The Group has procedures in place for managing conflicts of interest and directors have
continuing obligations to update the Board on any changes to these conflicts. This process
includes relevant disclosure at the beginning of each Board meeting as well as the Group’s
annual formal review of potential conflict situations, which includes the use of a questionnaire.
Under our Relationship Agreement with Nissin (who held 24.84% of issued share capital
as at 30 March 2024), Nissin is entitled to nominate an individual for appointment to
the Board. This is conditional upon Nissin retaining an interest in shares in the Company
(representing 15% of issued share capital). A summary of the principal terms of the
Relationship Agreement can be found on the Group’s website. During the period to
30 March 2024, no other director had a material interest at any time, in any contract
of significance with the Company or Group other than their service contract or letter
of appointment.
Induction
All directors receive a tailored induction on joining the Board covering their duties and
responsibilities as directors. Non-executive directors also receive a full briefing on all key
areas of the Group’s business and they may request further information as they consider
necessary. A typical induction would include meetings with Board colleagues, the ELT
and other key senior management, site visits and an induction on directors’ duties, key
elements of the Listing Rules, Disclosure and Transparency Regulations and Market Abuse
Regulation and the operation of the Board and its committees.
Board information
The main source of information provided
to directors is via the Board papers, which
are designed to keep directors up to date
with all material business developments
in advance of Board meetings. In addition,
training on specific issues is provided as and
when required. Non-executive directors
also meet with senior management outside
of Board meetings to discuss specific
areas of interest in more detail, e.g. brand
and marketing plans, customer strategy
and pension investment strategy. Board
papers, generally, contain the following
standing items: CEO business review; CFO
review (incorporating investor relations
and treasury), financial dashboard and
KPIs, commercial and performance review,
health and safety and ESG performance. In
addition, there are quarterly, biannual and
periodic updates on a range of matters,
such as human resources, diversity, talent
management, corporate affairs, commercial
performance, new product development,
IT, customer service levels, operations and
logistics, ESG strategy, strategic projects,
and capital expenditure.
Terms of reference
During the year, the Board reviewed
the matters reserved for the Board, and
the terms of reference for each of its
committees, against recent developments
in corporate governance and best practice.
The committees’ terms of reference can be
found on the Group’s website.
Board allocation of time
over the year
38%
17%
27%
18%
Strategic development and
implementation
Operational performance
Financial performance and risk
Environmental, Social and Governance
(including colleagues and Health
& Safety)
Key Board activities in the year
Set out below are details of the key areas of focus over the course of the financial period.
The Board maintains responsibility for the overall leadership of the Group and providing oversight of the Group’s purpose,
values and strategy for the long-term sustainable success of the Group. Changes made to the structure of meetings and agenda
items over last couple of years has aided focus on the delivery of the Group’s strategic priorities. These changes have resulted
in enhancing the balance of time spent reviewing operational performance and allowed more time for forward-looking matters,
such as innovation, investment and growth initiatives.
•
Approved a new five-year Group strategic plan, the
strategy to implement the plan, and the Group’s business
plans for the medium-term.
•
Monitored, and received updates on, the Group’s
international strategic plan.
•
Monitored the performance and integration of The Spice
Tailor, in line with the Group’s acquisition model.
•
Approved the acquisition of FUEL10K (for further
information, see page 21).
•
Approved a number of infrastructure investments at
the Groups site to increase efficiency, support the
innovation pipeline and reduce the Group’s energy
emissions.
•
Received updates on customers and commercial
execution.
•
Reviewed NPD strategy and initiatives.
Strategic development and implementation
The Board has oversight of the Group’s operations, ensuring
effective planning and execution of the day-to-day running of
the business led by the CEO and his executive team. This is
enhanced by the review of a range of KPIs and more detailed
quarterly reports on health & safety, IT, corporate affairs and
human resources.
•
Monthly trading updates from the UK and international
businesses.
•
Operational performance including supply chain efficiencies,
warehousing, logistics and customer service levels.
•
Following a detailed tender process, approved the
appointment of a new logistics provider.
•
Monitored the closure of the Group’s Knighton factory
following an assessment of its viability.
•
Considered and approved an assessment of the viability of
the Group’s Charnwood factory.
•
Received regular updates on external matters impacting
the Group including the elevated levels of inflation and the
ongoing impact of the cost-of-living crisis on the business
and key stakeholders.
Operational performance
The Board monitors financial performance against agreed
budgets and plans, ensuring that the business has the
resources in place to deliver its strategic objects and any
necessary corrective actions are taken. As part of its oversight
of Group operations, the Board ensures that there is an
effective system of risk management and internal control
through regular risk reviews and reporting from the Audit
Committee to the Board. Overall approval off the Group’s
risk management framework and risk appetite is provided
by the Board.
•
Approved the annual budget, re-forecasts and monthly
management accounts.
•
Continued to review the medium-term financing
requirements of the Group.
•
Monitored the funding levels and investment strategy of
the Group’s defined benefit pension schemes.
•
Reviewed key risks facing the business, including
environmental risks, emerging risks and the risk appetite
of the business.
•
Received updates on levels of insurance across the Group,
including the level in cyber security cover.
•
Reviewed viability statement over the next five years.
•
Approved the Half Year and Full Year results, and the Q1
and Q3 trading statements.
•
Reviewed Annual Report to confirm it is fair, balanced and
understandable.
Financial performance and risk
Strategy pillars
Continue to grow the UK core
Supply chain investment
Expand UK into new categories
Build international businesses with
critical mass
Inorganic opportunities
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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GOVERNANCE
Governance overview continued
Board and committee
evaluation
The Board conducts a three-year rolling
evaluation process. During the process,
the input of each Board member is kept
confidential to foster open, honest and
in-depth feedback. A report is then
presented to the Board and an action plan
is drawn up.
The three-year rolling evaluation process
normally follows the following format:
Year 1
An externally facilitated evaluation is
carried out to assess the effectiveness
of the Board, each committee and the
Group Chair.
Years 2 and 3
An internally facilitated evaluation is
managed by the Company Secretary.
A questionnaire is prepared by the
Company Secretary, in conjunction
with the Group Chair, focusing on core
responsibilities of the Board.
Progress since FY22/23
Following the evaluation carried out last
year, strong progress has been made
over the year against the areas of focus
highlighted. As noted earlier, the Board
has continued to focus on the execution
of the Group’s strategy, and significant
progress has been made against all five of
the strategic pillars. The completion of the
acquisition of FUEL10K, will expand the
Group’s presence in the Breakfast meal
occasion and further support the Group’s
strategic growth plans. During the year the
Board continued to monitor progress against
the Group’s innovation strategy, with strong
performances from Ambrosia porridge pots
and Mr Kipling and Angel Delight ice-cream.
The Board undertook a detailed review of
organisational design and, in November
2023, Jo Cullen was appointed as Chief
Information Officer. This new appointment
to the Executive Leadership Team
significantly enhances the experience and
expertise within the IT function to support
the Group’s transformation programmes,
systems, controls and security. The Board
also continued to monitor the overall risk
landscape facing the business and further
details are set out in the risk management
section of this report.
FY23/24 evaluation
Following the externally facilitated
evaluation carried out by Lintstock
last year, we returned to an internally
facilitated evaluation for FY23/24, in line
with our three-year rolling evaluation
process. When drafting the evaluation
questionnaire, the Company Secretary,
in conjunction with the Group Chair,
considered and reviewed the outcomes
of the prior year evaluation to ensure that
any areas of focus were provided with
the requisite attention to drive continued
improvement. The questionnaire also
focuses on the core duties of the Board,
as outlined in the Matters Reserved for
the Board, as well as the wider macro-
economic environment facing the business.
In February 2024, a report was presented
to the Board summarising the outcome of
the process. As a result of this report, the
Board agreed an action plan which will be
monitored throughout FY24/25.
Outcomes from the
FY23/24 evaluation
The overall response to the questionnaire
was very positive and the feedback
confirmed the continued effectiveness of
the Board in its oversight of the delivery of
the strategic plan and that the Board was
well placed to deal with future challenges.
Areas of strength that were highlighted
included the composition and diversity of
the Board, understanding of the Group’s
strategy and subsequent oversight of
execution, understanding and oversight of
ESG matters, relationships between Board
members and senior management, and
company secretarial support. It was noted
that the atmosphere within the boardroom
was positive and constructive with strong
engagement with management. Culture
within the Group was highlighted, with
one NED noting, that the ‘proud culture of
Premier Foods permeates the organisation
and was palpable on factory visits’.
Following the review, the Board agreed
that its focus over the next 12 months
should include:
•
Strategy – A continued focus on the
execution of the Group’s strategic
priorities to accelerate growth with
particular focus on its targeted M&A
strategy, scaling up the international
business and the organisational design
to support this.
•
Stakeholders – Strengthen
understanding of the views and
areas of priority of key stakeholders,
including consumer insights and
supplier relationships.
•
Board balance – Keep under review
the balance of skills on the Board and
the need for additional expertise to
support the business, whilst balancing
the need for diversity.
•
Risk management – Continued focus
on the Group’s risk management
process to understand the risk
landscape for the business and the
mitigations in place.
•
Colleagues and culture – Further focus
on the continued development of
Group culture and inclusivity through
the Voice Forum, the results of the
employee engagement survey, site
visits, I&D updates and reviewing best
practice.
Assessment of the Group
Chair’s performance
As part of the annual Board evaluation
process, Richard Hodgson, the Senior
Independent Director, (‘SID’), led a review
of the Group Chair’s performance. A
meeting was held with the other non-
executive directors, without the Group
Chair being present. The review focused
on the relationship between the Group
Chair and the CEO, the overall leadership
of the Board, the governance process, the
conduct of Board meetings and the quality
of debate. In addition, the Group Chair’s
relationship with major shareholders and
his understanding of their priorities were
discussed.
A summary of the key findings was shared
at a subsequent meeting between the
SID and the Group Chair. It was confirmed
that the Group Chair continues to lead the
Board in both a decisive and collaborative
way, fostering a culture of challenge with
integrity. It was also noted that the Group
Chair continued to dedicate sufficient time
to the role.
Board focus
highlights
• Full Year results and
dividend
• Health & Safety
• Diversity
• Modern Slavery
Statement
• The Spice Tailor
integration
• Q1 Trading Statement
• Annual General Meeting
• Enriching Life Plan
• Site Investment
• Pensions Teach-in
• Approved the acquisition
of FUEL10K
• Talent & Succession
• Site Investment
• Enriching Life Plan
• Health & Product Safety
• Half Year Results
• Risk Review
• International Strategy
• Innovation
• Q3 Trading Statement
• Customer & Commercial
Execution
• Gender Pay Gap
• Workforce Engagement
• Annual Budget
• 5-year Strategic Plan
• Board Evaluation
• Pension scheme
arrangements
The Board has responsibility for ensuring that the Group’s
culture aligns with the Group’s purpose, values and strategy.
The Board also takes into account the views and opinions
of all stakeholders, as well as other section 172 factors,
during discussions and decision making. In addition, the
Board reviews the Group’s overall corporate governance
arrangements and compliance with relevant legislation and
best practice guidelines.
•
Reviewed diversity within the Board and for the
wider Group.
•
Reviewed the Group’s medium-term plans for
organisational structure, to ensure it was aligned with, and
supported, the Group’s strategic plan and growth strategy.
•
Engaged in and reviewed the feedback from the internally
facilitated Board and committee evaluations.
•
Received updates from the Workforce Engagement NED.
•
Reviewed governance best practice and the
Governance Code.
The Board has oversight of the Group’s strategy to address
environment and social matters. Non-financial performance is
monitored and assessed, ensuring that there is alignment with
financial decisions, other strategic, forward-looking matters
and the goals, values and culture of the business.
•
Reviewed updates on the Group’s ESG Strategy, the
Enriching Life Plan and the targets set under each of the
three pillars.
•
The Board reviewed updates regarding the Group’s
approach to Health and Safety, product safety and trends
and issues relating to nutrition, modern day slavery,
gender pay, Inclusion and Diversity and plastic packaging.
Governance and culture
Responsibility and sustainability
May
July
Sept
Oct
Nov
Jan
2023
Feb
Mar
2024
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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GOVERNANCE
Governance overview continued
FUEL10K acquisition
How did this allow us to promote the success of the company?
In October 2023, we announced the
acquisition of FUEL10K, which will help
to accelerate our expansion within
the breakfast category. Corporate
actions require substantial review and
consideration by the Board as they
impact a wide range of stakeholders.
The Board considered a range of
acquisition opportunities on a number
of occasions over the year and assessed
the business case for acquiring FUEL10K
in detail.
The likely consequences of any decision in the long-term
One of the Group’s five strategic pillars is to acquire brands where there is an opportunity
to drive significant value through the application of our branded growth model. The Board
considered that FUEL10K would enable the Group to strengthen its position within the
breakfast category whilst offering a differentiated position, with its protein rich products.
FUEL10K products attract a predominantly younger consumer demographic which aligns
with the longer-term goals of the Group. At the same time, it represented a good strategic
fit with the Group’s existing portfolio of brands and increases the Group’s position in the
breakfast category, building on the success of Ambrosia porridge pots.
Interests of the company’s employees
Since completing the acquisition, FUEL10K employees have been fully integrated into
the business. The culture at FUEL10K reflects many of the values that we hold at Premier
Foods and there are exciting opportunities for the business to take learnings from an agile,
high growth brand, whilst FUEL10K colleagues benefit from the additional scale, financial
resources and established customer relationships of the Group. In addition, the acquisition
also offers FUEL10K colleagues increased opportunities for career advancement in a
larger organisation.
Fostering the company’s business relationships with suppliers, customers and others
The Board was cognisant of the relationships that FUEL10K holds with their existing
suppliers and appropriate due diligence was undertaken prior to acquisition, which
included site visits to key suppliers.
Impact on the community and the environment
The Board considered that Fuel10K’s commitment to sustainability aligned well with the
Group’s Enriching Life Plan. Through their commitment to reducing sugar levels from
product lines and introducing packing which is either renewable or recyclable.
Maintaining a reputation for high standards of business conduct
The integration of the FUEL10K business allows the brand and its employees to benefit
from the Group’s established operating processes and procedures in key areas such as
manufacturing, health and safety, marketing and sales.
Acting fairly as between shareholders of the company.
As part of the due diligence process, the Board assessed the valuation of the FUEL10K
and its growth forecast. The Board considered that the acquisition of the brand was
well aligned with the Group’s growth strategy and would provide future value through
leveraging its proven branded growth model which would benefit the shareholders of the
Company and help to drive sustainable long-term value.
Capital allocation
How did this allow us to promote the success of the company?
Over the year the Board has considered
capital allocation over the short,
medium and long-term in line with the
Group’s five-year strategic plan and
budget. The Board is conscious of the
importance of balancing investment
choices with the priorities of different
stakeholder groups
The likely consequences of any decision in the long-term
When making decisions on how to allocate capital, the Board considers options which
support the Group’s strategic pillars, this includes choices for investment in the business
to launch NPD, expanding the Group’s international business and make further targeted
acquisitions. These are focused on delivering long-term sustainable growth for the
company and its stakeholders.
The Board regularly approves new capital investment projects to drive cost savings and
efficiencies, which will generate further cash flow over the medium-term which can be
reinvested back into the business to fund further branded growth.
Interests of the company’s employees
The Group continues to invest in colleagues through a range of leadership and
development initiatives, as well as graduate and apprenticeship schemes, developed
to equip colleagues with the right skills and behaviours to support the Group’s
growth strategy. During the year the Board has approved a number of site investment
opportunities which also enhance the work environment for colleagues. This also included
investment in a new head office, to provide a future focussed, tech-enabled workspace,
that is focussed on colleague collaboration.
Fostering the company’s business relationships with suppliers, customers and others
Cost savings and efficiencies from capital investment can be reinvested back into our
brands in order to drive further growth. The Board also approved investment in Ambrosia
porridge pots to increase capacity to meet increased consumer and customer demands for
the product.
Impact on the community and the environment
During the year the Board approved the capital expenditure required to support a range
of ESG commitments. This included investment to automate the retort process of the
Mr Kipling sponge pudding production. The new retorts will be considerably more energy
efficient, driving financial savings and emissions reductions. Additionally, as part of our
Enriching Life Plan, we aim to help reduce food insecurity and during the year we are
proud to have donated 949,040 meals, an increase of 31% on last year. Pursuing our
goal of reducing Scope 1 and 2 emissions, our first solar photovoltaics project is now in
implementation at our Stoke bakery. For further details on how we’re allocating capital to
improve our impact on the community and environment, see pages 30 to 41.
Maintaining a reputation for high standards of business conduct
Over the year the Board approved increased investment in internal controls with the
appointment of external resource to support the strengthening of the internal control
framework in advance of the new requirements set out in the UK Corporate Governance
Code 2024. This is designed to enhance the effectiveness of the Group’s financial,
operational, compliance and non-financial controls and provide assurance to shareholders
and other stakeholders.
Acting fairly as between shareholders of the company.
The Board remains conscious of the importance of dividend payments for shareholders. As
part of its progressive dividend policy, the Board has proposed a final dividend for FY23/24
of 1.728p per share to shareholders, representing a 20% increase on the prior year.
Stakeholder engagement and Section 172(1) statement
Our approach
The Board is responsible for leading shareholder engagement. Like many major UK businesses, the Group operates in a complex and
interconnected commercial and regulatory environment, which impacts and touches many different stakeholders. By understanding
and engaging with stakeholders, the Board can consider their interests and priorities when making key decisions.
This also aligns with our purpose of Enriching Life Through Food for our consumers, our planet and our colleagues, and ensures that
we work constructively with stakeholders to deliver value creation and promote the long-term sustainable success of the Group.
The information on pages 86 and 87 sets out our key stakeholders and our engagement with them. Set out below are two case studies,
which illustrate where the Board has taken into consideration the interests of various stakeholder groups.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
84
85
GOVERNANCE
Governance overview continued
Customers and consumers
Why are these stakeholders
important to our business?
Customers and consumers buy and eat
our products – they are at the heart of the
Group’s business model.
What issues and factors are most
important to these stakeholders?
•
Category leadership
•
Excellent customer service levels
•
Innovative, relevant products that
meet consumers’ needs
•
Great-tasting, affordable products
•
Convenient and responsible packaging
formats
•
Customers and consumers buy and eat
our products – they are at the heart of
the Group’s business model
•
Environmental, nutritional and
sustainability issues
Engagement and outcomes
We seek to develop sustainable
partnerships with our customers focused
on driving mutual category growth.
Regular meetings take place at many
levels, through the sales team, senior
management and CEO. These cover range
reviews, new products, promotions,
displays and service levels. Feedback from
customers is also provided via an annual
customer survey.
Customer insights, from various channels,
are shared and discussed at Board
meetings, including details on consumer
behaviours, market trends and competitor
activities. Product tastings and NPD are
showcased at Board meetings. Customer
and consumer feedback is reported to the
Board via KPIs.
It is essential that we engage with our
consumers so that we can understand
consumption and lifestyle trends in order
to help us to create products that meet
their needs.
We have a dedicated Consumer Careline,
through which we monitor and deal with
issues our consumers raise.
We also regularly benchmark our products
with consumers in blind panel tests.
Colleagues
Why are these stakeholders
important to our business?
We have an experienced and dedicated
workforce of over 4,000 colleagues
at 14 sites across the UK. We have a
responsibility to ensure all colleagues
work in a safe environment and have
opportunities to learn and develop in their
careers.
What issues and factors are most
important to these stakeholders?
•
Understanding our purpose, strategy
and values
•
Reward and recognition
•
Safe and pleasant working conditions
•
Job security
•
Learning and development
opportunities
•
Health and well-being
•
Inclusion and diversity
Engagement and outcomes
We communicate and engage with
colleagues in many ways throughout
the year, to ensure they understand our
business priorities and performance.
This ensures that, in turn, we can listen
to their issues and concerns. Feedback is
received via Group employee surveys, line
management and HR teams, resulting in
targeted action plans to address key areas
for improvement. Biennially, we issue our
all employee survey to allow employees
to provide us with feedback. For further
information see pages 10 to 11.
We have regular Company briefings led by
the CEO and shared by video feed to all
sites across the Group. There are regular
site briefings from management to give
presentations and listen to feedback,
supplemented by ELT and Board visits.
The Board receives regular updates
on key employee issues and internal
communications.
To increase the focus on two-way
communication, the Workforce
Engagement NED regularly attends
employee forums to discuss key issues
directly with colleagues. For further
information see page 79.
A formal whistleblowing procedure is in
place to allow employees to raise any
concerns or issues they have confidentially,
and details of all cases raised are fed back
to the Board via the Audit Committee. For
further information see page 118.
Suppliers
Why are these stakeholders
important to our business?
We are one of the UK’s largest food
producers and we are proud to work with
many British suppliers. Over the year,
80% of our total third-party spend was
with UK-based suppliers.
What issues and factors are most
important to these stakeholders?
Understanding the Group’s strategy and
growth plans
•
Forming long-term collaborative
partnerships
•
Transparent terms of business
•
Payment terms
Engagement and outcomes
It is crucial that we develop strong
relationships with our suppliers, based
upon mutual trust and respect, to ensure
that we can source high-quality products
and services at the right price.
We have open, constructive and effective
relationships with our key suppliers
through regular meetings, which
provide both parties the ability to feed
back on successes, challenges and our
ongoing strategy.
Periodic audits of our raw material,
packaging and co-manufacture suppliers
(our ‘Direct Suppliers’) are undertaken
to ensure compliance with ethical
sourcing standards, and that suppliers
are operating under a recognised Global
Food Safety Initiative certification
programme (e.g. BRCGS, FSSC22000). All
Direct Suppliers, along with key high risk
indirect partners, are requested to register
with Supplier Ethical Data Exchange
(‘SEDEX’) and share relevant ethical data.
Feedback from suppliers is also provided
via feedback surveys. The Group’s
whistleblowing hotline has been extended
to include suppliers to allow them to raise
any concerns anonymously.
Key supplier contracts are discussed by the
Board as appropriate.
Payment policies, practice and performance
are reported through the Government’s
Payment Practices Reporting portal.
During the year we held an ESG supplier
conference which was attended by our
major high-impact suppliers. These
suppliers represent around 70% of our
Scope Three Green House Gas Emissions
and are critical to the success of our
delivery across our sustainability Planet
Pillar. This was an important milestone
within our Supplier Engagement
Programme, enabling us to share our own
vision, but also to clearly articulate our
ESG expectations and requirements to our
most impactful suppliers. These suppliers
will help us to reduce carbon emissions,
food waste, deforestation, and will assist
us in supporting sustainable regenerative
agriculture whilst ensuring everyone in
our supply chain is treated fairly. We have
requested that our high impact suppliers
join us on the EcoVadis ESG ratings
platform, to help collate and report our
overall supplier performance. For further
information see pages 38 to 39.
Communities and environment
Why are these stakeholders
important to our business?
As a responsible food manufacturer, we
consider the impact we have in the areas
we operate, including local businesses,
residents and charities. We also have an
important role to play in ensuring we
reduce our impact on the environment.
What issues and factors are most
important to these stakeholders?
•
How our factories impact on local
communities
•
Volunteering and supporting charities
•
Reducing carbon emissions
•
Environmental commitments
•
Reducing plastic packaging and
improving recyclability
Engagement and outcomes
Updates are provided to the Board on ESG
(Environmental Social and Governance)
matters affecting the business, so that the
long-term sustainability of the Group can
be considered in its decision making.
The Board receives updates on KPIs
relating to our economic contribution
and environmental impact, as well as our
contributions to the community, both at a
local site level and via the work we do with
our corporate charity partners.
In 2021, the Board reviewed and approved
a new ESG strategy, the Enriching Life Plan,
based around three pillars: Product, People
and Planet.
Government and society
Why are these stakeholders
important to our business?
The Board believes in the importance of
acting responsibly and operating with
high standards of business conduct. The
Group also takes an active role in seeking
to shape and influence debates around
key issues in society relating to food safety,
nutrition and health and well-being issues.
What issues and factors that most
important to these stakeholders?
•
Food safety
•
Nutrition
•
Tax
•
Conducting business in a fair way
•
Regulatory and legal compliance
Engagement and outcomes
The Board receives regular updates from
the Corporate Affairs & ESG Director on
key regulatory issues affecting the Group
and the food industry, such as nutritional
guidelines, advertising and promotions.
The General Counsel & Company Secretary
provides updates on governance, legal,
regulatory and compliance matters.
We seek to take an active role in
responding to the key issues affecting
our industry, through membership of
organisations such as the Institute for
Grocery Distribution and the Food and
Drink Federation.
Bond holders, banks
and pension schemes
Why are these stakeholders
important to our business?
The Group’s bank lending groups and
bond holders provide essential financing
that supports the long-term viability of
the Group. The Group also has a large
defined benefit pension scheme, with
approximately 41,000 pensioners and
deferred pensioners, who depend on
the Group’s long-term ability to fund the
schemes.
What issues and factors are most
important to these stakeholders?
•
Regular communications with regards
to the Group’s strategy and trading
performance
•
Cash flow and Net debt levels
•
The strength of our employer covenant
•
Ongoing schedule of contributions
Engagement and outcomes
Management engages regularly with the
Group’s bank lending groups and bond
holders via conference calls, conferences
and face-to-face meetings.
During the first half of FY22/23, the
Group completed the first extension of
its new Revolving Credit Facility to 2025.
Subsequently, the Group has successfully
completed a further extension of its
Revolving Credit Facility to 2026.
The CFO maintains a regular dialogue via
attendance at Trustee and Investment
Committee meetings and regularly reports
on the Group’s trading performance.
Periodic updates are provided to the Board
on funding levels and investment strategy.
During the year the Group engaged with
the Trustee of the RHM Pension Scheme
to review deficit repair contributions,
following the strong performance of
the scheme’s investment strategy. As a
consequence, the Board and the Trustee
approved a suspension to contribution
payments from 1 April 2024 which will
increase free cash flow by £33m in
FY24/25. For further information see
page 59.
Shareholders, investors
and analysts
Why are these stakeholders
important to our business?
An important role of the Board is to
represent and promote the interests of its
shareholders, as well as being accountable
to them for the performance and activities
of the Group.
What issues and factors are most
important to these stakeholders?
•
Shareholder return over the
medium-term
•
Good governance and stewardship of
the Group and its brands
•
Delivery of financial performance
•
Maintaining the appropriate level of
leverage
•
Dividends
Engagement and outcomes
The Board believes it is very important to
engage with its shareholders and does this
in a number of ways.
This includes the financial results
presentations and conference calls for
shareholders and analysts, face-to-face
meetings, investor road shows and
anonymous shareholder feedback via
brokers. The Group Chair and CEO meet
regularly with shareholders to discuss
strategic and governance matters. The
SID and committee Chairs also engage
with shareholders on specific matters,
when appropriate.
Board members also have the opportunity
to meet with private shareholders at the
Company’s AGM.
The Group reinstated dividend payments
in 2021 and the Board has recommended
a final dividend for FY23/24 of 1.728p, an
increase of 20% from the prior year.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
86
87
GOVERNANCE
Governance overview continued
Dear shareholder,
On behalf of your Board, I would like to
present the Nomination Committee report
for the period ended 30 March 2024.
The responsibilities of the Committee are
set out in its terms of reference (available
on the Group’s website), and include:
•
Considering the size, structure and
composition of the Board;
•
Leading the formal, rigorous
and transparent process for the
appointment of directors;
•
Making appointment
recommendations so as to maintain
an appropriate balance of skills,
knowledge, experience and diversity
on the Board;
•
Ensuring a formal and rigorous
Board and committee evaluation is
undertaken on an annual basis (an
overview of which is provided on pages
82 to 83); and
•
Overseeing the Company’s policy,
objectives and strategy on inclusion
and diversity.
The Committee also reviews the succession
requirements of the Board and senior
management and makes recommendations
to the Board as appropriate. With the
exception of myself, as Group Chair, only
independent non-executives are members
of the Committee. I was appointed Group
Chair in 2019 and was considered fully
independent on appointment. Details of the
Committee’s meeting attendance are set
out on page 80.
Board membership and recruitment
The procedures for appointing new
directors are set out in the Committee’s
terms of reference. The process is led
by the Group Chair, except where the
appointment is for their successor,
when it is led by the SID. This includes
an assessment of the time commitment
expected for the role, other significant
business commitments and any potential
conflicts of interest.
Before an appointment is made, the
Committee evaluates the balance of skills,
knowledge, experience and diversity on
the Board, as well as the skills required to
help deliver the Group’s strategy and meet
any future challenges of the business.
The Committee prepares a candidate
specification setting out the role and
capabilities required. Non-executive
directors and the Group Chair are generally
appointed for an initial period of three
years, which may be renewed for a further
two terms. Reappointment is not automatic
at the end of each three-year term.
During the financial year, a review of the
Committee’s effectiveness was undertaken.
In addition, the Committee considered
the composition, balance and diversity of
the Board. The Board was made aware of
the availability of Malcolm Waugh, who
was previously shortlisted as a candidate
from an independent search process
undertaken by Lygon (who have no other
connection to the Group). Members of the
Board met with Malcolm, following which
it was recommended he be appointed as
a non-executive director, following the
AGM in July 2024. Malcolm has a wealth of
senior executive experience in commercial,
operational and leadership roles working in
a range of international markets.
Board tenure
The average length of appointment of our
NEDs was four years, as at year end. The
breakdown for the full Board can be seen
in the following chart.
3
6
1
0–1 years
1–3 years
3–6 years
6–9 years
9+ years
(As at 30 March 2024)
Board independence
The Governance Code recommends that at
least half the Board, excluding the Group
Chair, should comprise non-executive
directors determined by the Board to be
independent.
3
6
1
As at 30 March 2024
Non-independent directors
Independent directors
Group Chair
Only independent NEDs are members
of the Board’s committees, with the
exception of the Nomination Committee
which is chaired by the Group Chair,
who was considered independent
on appointment. Yuichiro Kogo, who
represents our largest shareholder, is fully
independent of management, but is not
considered independent. Further details of
the relationship agreement under which
Yuichiro is appointed, can be found on
page 80.
Colin Day
Appointed August 2019 (appointed
Committee Chair August 2019)
Richard Hodgson
Appointed January 2015
Tania Howarth
Appointed March 2022
Lorna Tilbian
Appointed April 2022
Gender diversity
The data below displays the percentage
of women across various levels of the
business, as at 30 March 2024.
FY23/24
FY22/23
FY23/24
FY22/23
FY23/24
FY22/23
FY23/24
FY22/23
40%
36%
20%
11%
41%
40%
36%
37%
FY23/24
Board – (4 of 10)
ELT – (2 of 10)
ELT and direct reports (23 of 56)
All colleagues (1,457 of 4,048)
FY22/23
Board – (4 of 11)
ELT – (1 of 9)
ELT and direct reports (23 of 57)
All colleagues (1,505 of 4,098)
Talent and succession management
The Board reviews the Group’s Talent and
Succession process on an annual basis. This
includes a robust assessment of the risk
of individuals leaving the business and the
likely impact, developing plans to mitigate
identified risks. The review also highlighted
the key talent and development plans
specifically focused on strengthening
gender and ethnic diversity within
management. Senior Leadership was
reviewed in detail, including all members
of the ELT and their direct reports.
There is a strong culture of succession
planning and talent management within
the organisation. This has resulted in
a significant proportion of senior roles
being filled internally, including the
current CEO and CFO, and the majority
of ELT, Factory General Manager and
commercial positions. Colleagues see this
as positive, helping not only in attracting
talent externally, but also with internal
retention. The Board assessed the strength
of the talent pipeline and, where there
were potential risks, the plans to address
these. Following the latest review, it was
identified that the leadership bench
strength had increased significantly, and
a robust succession plan is in place for
senior leadership team roles. In addition,
the Committee met separately during the
year to review succession plans for the
executive directors.
Review of NED performance
Over the course of the year, a review of
the contribution and performance of the
independent non-executive directors
was undertaken. This included a review
of the contribution of each NED, their
other appointments and whether these
impacted on their availability to commit
appropriate time to their roles, their
continuing independence, and training and
development needs. This was considered
by the Committee as part of its assessment
of the current composition of the Board
and the need for any future appointments,
as part of the succession planning process.
Following this review, it was agreed that
the Board had an appropriate balance of
skills, experience and knowledge of the
Group to enable it to discharge its duties
and responsibilities effectively. In addition,
the current Board was felt to have a broad
range of retail, marketing, commercial
and financial experience, which is
appropriate for the size and complexity of
the Group. Consequently, the Committee
recommended the re-election (or election)
of all directors at the 2024 AGM, with the
exception of Richard Hodgson. As noted in
last year’s Annual Report, and in the Group
Chair’s Statement, Richard’s tenure will
cease at the 2024 AGM having served as a
NED for 9.5 years.
Inclusion and diversity
The Board adopted a Diversity Policy in
2022, which is available on the Group’s
website. The purpose of the policy
is to ensure an inclusive and diverse
membership of the Board and its
committees, to enhance decision making
and assist in the development and delivery
of the Group’s strategy. The Board believes
it is important that its membership
includes a broad mix of skills, professional
and industry backgrounds, geographical
experience and expertise, gender, tenure,
ethnicity and diversity of thought.
The Board, or where appropriate the
Nomination Committee, will:
•
Consider all aspects of diversity when
reviewing the composition of the
Board and its committees, and when
reviewing the Board’s effectiveness;
•
Only engage executive search firms
who have signed up to the voluntary
Code of Conduct on gender diversity
and best practice and request them
to identify suitable candidates for
appointment to the Board on merit
against objective criteria, having
regard to the benefits of diversity in
promoting the success of the Group;
•
Encourage the development of a
diverse internal talent pipeline to
meet future succession planning
needs of the Group, by supporting
and monitoring the Group’s actions
to increase the proportion of senior
leadership roles held by women,
people from ethnic minority
backgrounds and other under-
represented groups across the
business; and
•
Assist the development of a diverse
pipeline of high-calibre candidates by
encouraging senior individuals within
the business to take on additional roles
to gain valuable board experience.
Developments over the year
The Board and Committee regularly
review the Group’s approach to diversity
(including both gender and ethnicity),
within senior management and across the
whole business and this remains an area of
significant focus.
The Board supports the recommendations
set out in the FTSE Women Leaders Review
and the Parker Review. The Nomination
Committee has reviewed the requirements
of, and compliance with, LR 9.8.6(9) and
notes that the Company is compliant
with the recommendations of the Parker
Review, and the FTSE Women Leaders
Review recommendation that at least 40%
of the Board are women.
At least 40% of Board directors to be
women
As at 30 March 2024, 40% of Board
directors were women. In July 2023, Simon
Bentley retired from the Board and this
resulted in overall female representation
increasing from 36% to 40%. The
Committee will continue to monitor the
skills and experience required by the
Board, and the need to replace departing
Board members.
At least one of Chair, SID, CEO, CFO
to be a woman
As at 30 March 2024, none of the four
senior posts were held by a woman.
However, the Board announced in May
2024 that following Richard’s retirement,
Lorna Tilbian will take on the role of Senior
Independent Director with effect from 18
July 2024.
Committee membership
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
88
89
GOVERNANCE
Nomination Committee report
Dear shareholder,
As Chair of the Audit Committee, I am
pleased to present the Committee’s report
for the period ended 30 March 2024. The
Committee has delegated responsibility
from the Board for ensuring the integrity
of the Group’s Financial Statements,
reviewing the effectiveness of the Group’s
financial reporting systems and internal
controls, and for the risk management
process which identifies, assesses and
reports on risk.
The Committee also keeps under review
the relationship with the external auditors,
including the terms of their engagement
and fees, their independence and
expertise, resources and qualification, and
the effectiveness of the audit process.
All members of the Committee are
independent non-executives, who
collectively have a broad range of FMCG,
commercial, operational, IT, financial
and marketing experience relevant to
the Group’s business. I have recent,
relevant financial experience, having spent
over 40 years in corporate finance and
investment banking, advising a wide range
of companies and industries, particularly
those in the consumer and retail sectors,
and previously having served as Audit
Committee Chair of CPP Group plc. Further
details of Committee memberships,
directors’ experience and meeting
attendance are set out on pages 76 to 80.
In addition to the Committee members,
the CEO, CFO, Group Chair, Group Financial
Controller, Director of Internal Audit
and Risk and external audit partner are
regularly invited to attend and present at
the Committee’s meetings.
I was appointed as Audit Committee
Chair in July 2023, having served on the
Committee for three years, following
the retirement of Simon Bentley from
the Board. Following my appointment, I
undertook a comprehensive induction,
holding meetings with the CFO, external
audit lead partner, members of the senior
finance team, the Director of Internal
Audit & Risk and Director of ESG. I also
visited the Company’s shared service
centre in Manchester and met with senior
leadership.
Areas of review
During the financial period, the Committee
held four scheduled meetings. Key areas of
review were as follows:
•
Monitored the integrity of financial
reporting, including the Annual
Report and the full-year, half-year and
quarterly results announcements;
•
Ensured the Annual Report and
Accounts are fair, balanced and
understandable, and in compliance
with relevant regulations;
•
Considered the going concern and
viability statements for the Group;
•
Reviewed the ongoing impact of
macro-economic developments on
the Group’s performance and viability,
including the inflationary pressures on
input costs;
•
Reviewed the assessment and
reporting of non-trading items in the
financial statements and provided
challenge to both the external auditor
and management. The Committee also
reviewed and approved the principles
used by the Group when determining
the classification of items as non-
trading;
•
Reviewed and agreed a new valuation
model for share based payments
relating to the TSR element of the LTIP;
•
Reviewed the use of alternative
performance measures, ensuring
there was clear rationale for use and
that their use complied with relevant
guidance;
•
Reviewed the statutory audit plan with
the lead audit partner to assess the
scope, methodology and areas of key
risk and materiality;
•
Reviewed the Group’s policy on
Auditor Independence and Non-Audit
Services;
•
Received regular reports from the
internal audit function, monitored its
activities, effectiveness and resourcing,
and approved both the annual internal
audit plan and internal audit charter;
•
Reviewed the adequacy and
effectiveness of the Group’s risk
management systems and mitigation
programmes;
•
Received regular updates on upcoming
changes in governance and financial
reporting requirements, including the
requirements of the recently published
FRC Corporate Governance Code and
monitored the implementation of the
plans for enhancing, where necessary,
the internal control framework in
preparation for the new disclosures
regarding internal controls; and
•
Reviewed the adequacy of the Group’s
whistleblowing helpline, and the calls
received through the service and
management’s response to them.
External auditors tender and
appointment
The Committee confirms that it has
complied with the requirements of the
Competition & Markets Authority’s
Statutory Audit Services Order 2014
during the financial year. As highlighted
in last year’s Annual Report, the
Company undertook a formal audit
tender exercise in 2022, following which
PricewaterhouseCoopers LLP (‘PwC’)
was appointed by the Board in August
2022 to act as its independent auditors
for the financial year ended 1 April
2023. The current lead audit partner is
Richard Porter. PwC’s reappointment was
approved by shareholders at the AGM
in July 2023, with 99.99% of votes cast
being in favour. The Board will propose a
resolution for shareholders to approve the
reappointment of PwC as independent
auditors for the financial year ending 29
March 2025 and for the Audit Committee
to be authorised to set the auditors’
remuneration.
Having conducted a comprehensive and
competitive tender process and appointed
a new external auditor in August 2022, the
latest point to undertake the next tender
will be after the FY31/32 year end, at
which point the current external auditor
could be reappointed for a further 10-year
term, following a competitive tender.
At least one director is from a
minority ethnic background
As at 30 March 2024, the Board was
compliant with the recommendation.
Ethnic diversity at senior
management level
In light of the Parker Review
recommendations published in March
2023, the Group has set an ambition
for 7% of senior management (defined
as the ELT and their direct reports) to
be colleagues from ethnic minorities by
December 2027. If achieved, this would
represent a near doubling from our current
level of 3.6%.
We have set this target after reviewing
the most recent census data for where
we operate and taking into account our
current diversity level, our talent and
succession pipeline and potential vacancy
opportunities. We feel this target is
stretching and appropriate.
Inclusion and Diversity is one of the
core principles of Premier Food’s People
strategy, which forms part of the Group’s
Enriching Life Plan. Premier Foods is
committed to creating an inclusive culture
across its whole organisation and aims to
ensure all existing and potential colleagues
are provided with equal opportunity and
are respected, valued and encouraged to
bring their authentic selves to work. The
Group has adopted the following diversity
targets:
•
Achieving gender balance for the
senior management population by
2030; and
•
Ensuring diversity KPIs at our sites
reflect their regional demographic
by 2030.
The Group has developed and launched
a Reverse Mentoring Programme, which
is designed to help address the gender
imbalance within senior roles across
the business. There has been a strong
improvement in female representation
within senior management (the ELT and
their direct reports), increasing from 28%
in FY20/21 to 41% in FY23/24.
During 2022, the Group introduced a
Sponsorship Programme for diverse
colleagues across the graded management
population with the assistance of an
external partner, which is designed to
enable diverse talent to develop and
excel. The Group continues to promote a
range of programmes to raise awareness
of inclusion and diversity throughout the
business.
Continued progress has been made over
the year in recording colleague diversity
data. Colleagues are able to provide their
personal data by different methods, which
include the completion of a paper-based
application, via a tablet, by scanning a QR
code or a unique URL link for connected
users. The questions included in the
survey are based around nine protected
characteristics, which include gender
identification, ethnic background, sexual
orientation, age demographic and
parental/carer status. Colleagues are
presented with a pick list of answers and
always offered a ‘prefer not to say’ option.
Further information on our approach to
Inclusion and Diversity across the business
is set out in the section on our values and
culture, on pages 10 and 11, and progress
against our KPIs is set out on pages 188
and 189.
Information/data on the diversity on the
Board and ELT, as required under Listing
Rule, LR 9.8.6(9)-(10), is presented in the
tables below. These set out the position as
at the year-end (30 March 2024), and no
changes have occurred up to 16 May 2024.
Tim Elliott
Appointed May 2020 (appointed
Committee Chair July 2023)
Tania Howarth
Appointed March 2022
Roisin Donnelly
Appointed April 2022
Committee membership
Gender identity or sex
Number
of board
members
Percentage of
the board
Number of senior
positions of the board
(CEO, CFO, SID and
Chair)
Number in
executive
management
Percentage
of executive
management
Men
6
60%
4
8
80%
Women
4
40%
–
2
20%
Not specified/prefer not to say
–
–
–
–
–
Ethnic background
Number
of board
members
Percentage of
the board
Number of senior
positions of the board
(CEO, CFO, SID and
Chair)
Number in
executive
management
Percentage
of executive
management
White British or other White
(including minority-white groups)
9
90%
4
9
90%
Mixed/Multiple Ethnic Groups
–
–
–
–
–
Asian/Asian British
1
10%
–
1
10%
Black/African/Caribbean/ Black British
–
–
–
–
–
Other ethnic group, including Arab
–
–
–
–
–
Colin Day
Nomination Committee Chair
16 May 2024
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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Nomination Committee report continued
Audit Committee report
External auditors’ independence,
effectiveness and non-audit services
The effectiveness of the external
auditor is monitored by the Committee
through regular engagement with senior
management and private meetings
held with the external auditor without
the presence of management. Their
effectiveness is also considered as part
of the Committee’s annual evaluation
process. Following the completion of the
first financial year-end audit by PwC, a
full day meeting was held between PwC
and management to discuss the audit
process and make recommendations
for enhancements. In addition, a formal
effectiveness evaluation was undertaken
by the Director of Internal Audit & Risk,
via the use of a survey of key management
involved in the audit process. Noted areas
of strength of the statutory auditor were,
the experience, integrity, judgement, and
the technical knowledge of the audit team.
A number of areas were identified where
processes could be enhanced, including
aspects of overall project management
and, the phasing of the audit work pre
and post year-end, which have been
incorporated into the FY23/24 audit plan.
The Committee has reviewed the
auditors’ independence and assessed the
effectiveness of the external audit process
by reference to: the scope of the audit
work undertaken; presentations to the
Committee; feedback from management
involved in the audit process; the
separate review meetings held without
management present; relevant UK
professional, regulatory requirements;
the Company’s Auditor Independence
and Non-Audit Services policy; and the
relationship with the auditors as a whole,
including the provision of any non-audit
services.
In accordance with our policy, the
Committee has continued to review the
level of non-audit fees with management
during the year. The Committee also
received an update from PwC’s lead
audit partner on the internal controls,
which they employ to safeguard
their independence, integrity and
objectivity. The Group’s policy on Auditor
Independence and Non-Audit Services,
which is aligned with the FRC Revised
Ethical Standard 2019, is available on the
Group’s website.
Non-audit fees for the period amounted
to £242,450 (FY22/23: PwC £219,000)
representing 17% of the audit fee. As part
of the Group’s ongoing ESG strategy, PwC
was engaged to perform independent
limited assurance procedures on selected
FY23/24 ESG performance measures.
In addition, as with previous years,
the external auditor was engaged to
provide royalty statements, which are
required under the Group’s Cadbury
licence with Mondelez International and
Loyd Grossman licence. The Committee
remains mindful of guidelines in respect
of non-audit services and the potential
threat to auditor independence, as set
out in the FRC’s Revised Ethical Standard
2019. The Committee assessed that, in
each case, the nature of the work would
be best performed by PwC due to their
size and knowledge of the business,
the timescale required for completing
the assignments, and the overall cost
in undertaking the work. In addition,
PwC consulted their own internal Audit
Quality and Risk Management team prior
to agreeing the engagements. PwC’s
procedures for ensuring compliance with
quality control standards, maintaining
independence, integrity and objectivity
were also reviewed and no matters were
identified that might impair the auditors’
independence and objectivity.
Following these reviews, the Committee
is satisfied that PwC is independent and
effective, and has recommended to the
Board that PwC be reappointed as external
auditors at the AGM in 2024.
Risk management
The Group has a risk management
framework to identify, evaluate, mitigate
and monitor the risks the business
faces. The risk management framework
incorporates both a top-down and a
bottom-up approach to ensure all the
Group’s risks are identified.
The Committee carried out an assessment
of the principal risks facing the business,
including climate-related risk, on two
occasions over the year. The output from
these assessments have, subsequently,
been presented to and reviewed by the
Board, who retain ultimate accountability
for risk management for the Group, for
further review and discussion.
Details of our risk management process are
set out in the Risk management section, on
pages 63 to 70.
Task Force on Climate-related
Financial Disclosures (‘TCFD’)
The Committee provides oversight
of the Group’s compliance with the
recommendations of TCFD. A TCFD
steering group was established in FY21/22
to develop the Group’s approach to TCFD,
raise awareness of climate-related risks
around the business and to report on
progress to the Committee. The TCFD
steering group also co-ordinates the
adoption of TCFD recommendations into
the Group’s Enterprise Risk Management
processes and ensures visibility and
oversight of the programme by the ESG
Governance Committee. Over the year, the
Committee reviewed progress against the
various work streams, the Group’s TCFD
roadmap and the four disclosure pillars
(Governance, Strategy, Risk Management,
and Metrics and Targets). The Group’s
TCFD disclosure is set out on pages
42 to 55.
Internal controls
The Committee maintains responsibility
for reviewing the process for identifying
and managing risk and for reviewing
internal controls. It receives reports
from management, the Director of
Internal Audit and Risk, and the statutory
auditors, in addition to the results of
any investigations performed as a result
of colleague whistleblowing reports, or
otherwise. The Committee considers
the implications of findings from the risk
management process and from both
the internal and external auditors to the
Group’s controls framework. Any issues are
reported and discussed, and management
are challenged as to what actions they are
taking to improve the control framework
and minimise the likelihood of their
reoccurrence.
The Board has delegated authority to the
Committee to monitor internal controls
and conduct the annual review. This
review covers all material controls, such as
financial, operational and compliance, the
preparation of the Group’s consolidated
financial statements, and also the
overall risk management system in place
throughout the year under review, up
to the date of this Annual Report. The
Committee reports the results of this
review to the Board for discussion and,
when necessary, agreement on the actions
required to address any material control
weaknesses. The Committee confirms
that it has not been advised of any failures
of material controls or material control
weaknesses during the year and the
Committee concluded that the Group’s
internal controls framework remains
effective.
During the year, the Committee
continued to receive updates related to
developments on the UK Government’s
corporate reform proposals, including
the FRC’s revisions to the UK Corporate
Governance Code, and on the Group’s
preparations to ensure that it meets its
responsibilities. A Steering Committee,
chaired by the CFO, oversees a Project
Execution Team with the support of a
third-party specialist implementation
partner. During FY23/24 activities have
focused on review of existing, and where
necessary supplementation with new,
business process and IT risk and control
matrices (‘RACMs’). This was accompanied
by a broad testing programme to ensure
the internal control framework operates
effectively.
Internal audit
The Internal Audit function carried out
a range of reviews across the Group
providing independent assurance to the
Committee on the design and operating
effectiveness of internal controls to
mitigate financial, operational and
compliance risks. The purpose, authority
and responsibilities of Internal Audit
are embodied in the Internal Audit
Charter, which the Committee reviews
and approves on an annual basis. The
Director of Internal Audit and Risk has dual
reporting lines to the Audit Committee
Chair and the Group CFO.
The Committee discussed and approved
the FY23/24 audit plan to be executed
by the Internal Audit team at the start
of the year, ensuring its alignment
with the Group’s strategic priorities,
risk management outputs, and routine
compliance control and monitoring
requirements. Following a tender exercise
involving the Audit Committee Chair, CFO
and Director of Internal Audit and Risk, a
new Internal Audit co-source assurance
partner was appointed. The Internal
Audit assurance partner is utilised to
ensure complex or bespoke areas of risk
are adequately appraised and, where
appropriate, provide additional resource to
implement the annual audit programme.
During FY23/24, internal audit reviews
covered areas such as key financial
transaction cycles, travel and expenses
governance, classification of costs
relating to the Knighton factory closure,
IT application controls and customs and
duties.
The Committee reviewed the results
of the internal audit reports during
each meeting, looking in detail at any
reports where processes and controls
require improvement. The Committee
is also provided with updates on the
implementation of agreed management
actions and overall control environment
improvement at each meeting. For any
management action requirement not met
to its agreed timetable, the responsible
management are required to provide a
full explanation to the Committee as to
the reasons for the delay before a new
deadline is agreed.
The internal audit resource is monitored
such that, if internal or external
circumstances should give rise to an
increased level of risk, the audit plan can
be supplemented accordingly during the
year. During the year, the Internal Audit
function’s head count was increased.
The audit plan remains flexible and
any changes to the agreed audit plan
are presented to, and agreed by, the
Committee. The effectiveness of the
Internal Audit function is reviewed on an
annual basis and the Committee concluded
that the Internal Audit function has
remained effective.
Risk management and internal
control over financial reporting
The directors have key procedures
established to confirm that they have
reviewed the effectiveness of the system
of risk management and internal control of
the Group during the year, the key features
of which are as follows:
•
An annual budgeting process with
regular re-forecast of outturn,
identifying key risks and opportunities.
•
Regular reporting of financial
information and performance to the
Board, management monitors the
results throughout each financial year.
•
An Internal Audit and Risk function
which reviews key business processes
and business controls, reporting to the
Audit Committee.
•
Third party reviews commissioned
periodically by the Group of areas
where significant inherent risks have
been identified, such as health and
safety, ESG, and cyber security.
•
An organisational structure with clearly
defined limits of responsibility and
authority to promote effective and
efficient operations.
•
A performance management appraisal
system, which covers the Group’s
senior management based on agreed
financial and other performance
objectives.
•
Significant emphasis on cash flow
management. Bank balances and
available liquidity are reviewed on
a regular basis and cash flows are
compared to forecast.
•
Reporting to the Board and/or its
committees on specific matters
including updated key risks, taxation,
pensions, insurance, treasury
management, interest and commodity
exposures. The Audit Committee
approves the Group’s treasury policies.
•
Defined capital expenditure and other
investment approval procedures,
including due diligence requirements
where businesses are being acquired
or divested, or there is a material
change in operational or corporate
structure.
•
Policy suite that covers regulatory
requirements, including anti-bribery
and corruption, cyber security, health
and safety and hazard awareness,
Corporate Criminal Offence, with
training and compliance monitoring.
Any control weaknesses that these
procedures identify are monitored
and addressed in the normal course of
business. No control failings or weaknesses
that are material to the Group as a whole
have been identified in the year to 30
March 2024.
Process for preparing
consolidated financial statements
The Group has established internal
control and risk management systems
in relation to the process for preparing
consolidated financial statements. The key
features of these internal control and risk
management systems are:
•
The Internal Audit and Risk function
and management conduct various
checks on internal financial controls
periodically.
•
Management regularly monitors and
considers developments in accounting
regulations and best practice in
financial reporting, and where
appropriate, reflects developments in
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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Audit Committee report continued
the consolidated financial statements.
Appropriate briefings and/or training
are provided to key finance personnel
on relevant developments in
accounting and financial reporting. The
Audit Committee is also kept appraised
of such developments.
•
Any recommendations from the
auditors, the Financial Reporting
Council, and others in respect of
financial reporting are assessed with
a view to continuous improvement
in the quality of the Group’s financial
statements.
•
The monthly financial performance of
the Group is subject to review by both
the ELT and the Board.
•
The Group’s financial results, which
consolidates the results of each
operating segment and makes
appropriate consolidation adjustments,
is subject to various levels of review by
the Group Finance function.
•
The draft consolidated financial
statements are reviewed by an
individual independent from those
individuals who were responsible for
preparing the financial statements.
The review includes checking internal
consistency, consistency with other
statements and arithmetical accuracy.
•
The Audit Committee and the Board
review the draft consolidated financial
statements. The Audit Committee
receives reports from management
and the external auditors on significant
judgements, changes in accounting
policies, changes in accounting
estimates and other pertinent matters
relating to the consolidated financial
statements.
•
The financial statements are subject to
external audit.
•
The Group uses the same firm of
statutory auditors to audit all material
Group companies.
Alternative Performance Measures
(‘APMs’)
The Group’s performance measures
continue to include a number of measures
that are not defined or specified under
IFRS. The Audit Committee has considered
presentation of these additional measures
in the context of the guidance issued by
the European Securities and Markets
Authority (‘ESMA’) and the FRC in relation
to the use of APMs, challenge from the
external auditor, and the requirement
that such measures provide meaningful
insight for shareholders into the results
and financial position of the Group. The
Committee reviewed the APMs used within
the Group’s financial statements, how the
APMs were defined and the rationale for
their use.
APMs are defined relative to the equivalent
IFRS measures on page 62.
Fair, balanced and understandable
The Board requested that the Audit
Committee confirm whether the Annual
Report and accounts taken as a whole
were fair, balanced and understandable
and whether it provided the necessary
information for shareholders to assess
the Group’s position and performance,
business model and strategy. The Audit
Committee recommended that the Board
make this statement, which is set out on
page 119.
In making this recommendation, the
Committee considered the process for
preparing the Annual Report, which
included regular cross functional reviews
from the teams responsible for preparing
the different sections of the report, senior
management review and verification of
the factual contents. The review also
considered:
•
the balance and consistency of
information;
•
the disclosure of the risks facing the
business;
•
whether the overall message of the
narrative reporting is consistent with
the financial statements;
•
whether the overall message of the
narrative reporting is appropriate, in
the context of the industry and the
wider economic environment;
•
whether the Group Chair’s statement
and CEO’s review include a balanced
view of the Group’s performance and
prospects; and
•
whether the Annual Report is
consistent with messages already
communicated to investors, analysts
and other stakeholders.
Significant issues in relation to the
financial statements
The Committee considered the following
significant issues in relation to the financial
statements with management and the
internal and external auditors during
the year:
Commercial arrangements
Commercial payments to customers in the
form of rebates and discounts represent
significant balances in the income
statement and balance sheet. Calculations
of these balances require management
assumptions and estimates, including
volumes sold and the period of the
arrangements. The Committee reviewed
the assumptions and estimates and the
level of accruals and provisions in detail.
Further information is set out in note 3.3
on page 141.
Carrying value of goodwill and brands
Goodwill and brands represent a significant
item on the balance sheet and their
valuation is based on future business
plans whose outcome is uncertain. The
value of goodwill is reviewed annually by
management and the Committee and the
brands are reviewed at each reporting
date to establish if there is an indicator
of impairment, an impairment test of the
brand assets only being conducted if there
are indicators of impairment. There were
no indicators of impairment at year end
(FY22/23: None). The impairment testing
for goodwill and brands is based on a
number of key assumptions that rely on
management judgement.
For the purpose of goodwill, the Group
has three cash-generating units (‘CGUs’)
– Grocery, Sweet Treats and International.
The Committee reviewed the results
of the goodwill impairment testing of
the Grocery CGU and the review of the
carrying value of certain of the Group’s
brands. The goodwill attributable to
the Sweet Treats CGU was impaired in
2015 and the International CGU has no
goodwill or intangible assets. The results
of the impairment testing included
management’s assumptions in respect
of cash flows, long-term growth rates
and discount rates. The Committee also
considered sensitivities to changes in
assumptions and related disclosure, as
required by IAS 36. This year’s review
concluded that no impairment of
goodwill or brands was required. Further
information is set out in notes 12 and 13
on pages 150 to 152.
Carrying value of the Parent
Company’s investments in
subsidiaries
The carrying value of the Parent
Company’s investments in its subsidiaries is
a significant item on the Parent Company’s
balance sheet. The investment is reviewed
annually for impairment by management
and the Committee. The cash flow
forecasts used in the impairment model
are based on the latest Board-approved
five-year Strategic Plan, sensitivities then
being applied to reflect the potential
impact of future inflation and impact
of climate change in line with RCP 8.5.
This year’s review concluded that no
impairment of the Parent Company’s
investment in its subsidiaries was required.
Further information is set out in note 4 to
the Parent Company’s financial statements
on page 180.
Defined benefit pension plans
The Group operates several defined
benefit schemes. The schemes are closed
to future accrual but hold substantial
assets and liabilities. With effect from 30
June 2020, the Premier Foods Pension
Scheme (PFPS) and Premier Grocery
Products Pension Scheme (PGPPS) were
merged on a segregated basis with the
RHM Pension Scheme. Valuation of the
scheme liabilities is based on a number of
assumptions, such as inflation, discount
rates and mortality rates, each of which
could have a material impact on the
valuation under IAS 19 included in the
balance sheet. The Group’s RHM Pension
Scheme also holds assets for which quoted
prices are not available. As at 30 March
2024, the RHM Pension Scheme reported
a surplus of £799.2m and the Premier
Schemes reported a deficit of £(197.7)m
(FY22/23: RHM Pension Scheme surplus
of £948.3m; Premier Schemes deficit of
£(182.8)m). Asset values and liabilities
fell in both sections of the schemes due
primarily to lower returns of scheme
assets reducing pension asset valuations.
The Committee reviewed the basis for
management’s assumptions and the
movements in the IAS 19 valuation in detail
over the year. The financial assumptions
were based on the same methodology as
last year. Further information is set out in
note 14 on pages 153 to 159.
Acquisition accounting
The acquisition of FUEL10K was a
significant transaction for the Group during
the year and the Committee reviewed the
purchase price allocation and accounting
for the transaction. The purchase price
allocation workstream established a fair
value for the Purchase Consideration,
including the estimation of the fair value of
the earn-out (the additional consideration
payable to the vendor contingent on
business performance), before deducting
acquired net assets to give Excess
Consideration for allocation to the value of
Brand asset acquired and residual goodwill.
The brand asset was determined to have a
15-year useful economic life, which reflects
that FUEL10K is a younger brand with
significant growth potential. A relief from
royalty approach was then taken to value
the brand asset, with the remaining Excess
Consideration being residual goodwill
representing the benefit of acquiring the
brand, together with the other assets,
as a going-concern that operates as a
business. Further information is set out in
note 28 to the Group financial statements
on pages 172 and 173.
Non-trading items
In identifying non-trading items,
management have applied judgement
including whether i) the item is related to
underlying trading of the Group; and/or ii)
how often the item is expected to occur.
PwC undertook comprehensive testing of
items that have been considered ‘non-
trading’, at both the half year and full year.
The Committee also reviewed these items,
and provided challenge to management,
in order to ensure these items do require
separate disclosure by virtue of their
nature and size, so that the users of the
financial statements obtain a clear and
consistent view of the Group’s underlying
trading performance. Following this
review, the Committee confirmed that the
approach taken was appropriate.
Viability and going concern
The Audit Committee conducted detailed
reviews of the Group’s viability and going
concern, taking into account downside
assumptions modelled as a severe,
but plausible, downside, including the
potential impact of inflation and continued
global political uncertainty driven by
current conflicts. The Committee provided
challenge to management on the risks
considered as part of the assessment.
Following the review, the Committee
concluded that it was reasonable for the
Board to expect that the Group would
have adequate resources to operate for
the foreseeable future and, therefore,
recommended that the viability statement
(set out on pages 71 and 72) and the going
concern statement (set out in note 2.1 on
pages 133 and 134 could be supported.
Committee evaluation
As part of the external Board evaluation
exercise conducted during the year (see
pages 82 to 83 for more information), a
review of the Committee’s effectiveness
was also undertaken. The review included
the management of meetings, quality
of papers and presentations, and the
Committee’s effectiveness in assessing the
work of the internal and external auditors,
the financial statements, risk management
and internal controls. Following the review,
it was confirmed that the Committee
remained effective. An action plan for
the coming year was agreed, which
included the need to maintain focus on
the implementation of the Group’s Internal
Controls procedures, enhance the risk
management process and continue to
support and strengthen the Internal Audit
function.
The Committee met with the internal
and external auditors on four occasions
in the year without the presence of
management. This provides an opportunity
for the Committee to discuss matters
independently of management, assess the
relationship between management and
both the internal and external auditors,
and to discuss any potential areas of
concern. In addition, as Committee Chair
I also met independently with the CFO,
lead audit partner and Director of Internal
Audit and Risk, on several occasions, to
discuss key audit matters.
Tim Elliott
Audit Committee Chair
16 May 2024
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
94
95
GOVERNANCE
Audit Committee report continued
Annual Statement
Dear shareholder,
On behalf of the Board, I am pleased
to present the Directors’ remuneration
report for the 52-week period ended 30
March 2024.
Overview of performance
The business delivered a very strong
performance over the year, making good
progress against each of the Group’s
strategic pillars. The Group delivered
branded revenue growth of 13.5%,
demonstrating the continued success
of the Group’s branded growth model.
Revenue from new categories increased by
72.3%, driven by Ambrosia porridge pots,
and the International business grew by
12% (at constant currency), with Mr Kipling
building distribution in the USA and cake
reaching a record market share of 16.1%
in the year in Australia. In October 2023,
the Group announced the acquisition of
the FUEL10K breakfast brand, providing a
platform to accelerate expansion into the
breakfast category.
Headline revenue of £1,122.6m was
+15.1% versus prior year, and Trading
profit of £179.5m was +14.0% versus prior
year, both ahead of market expectations.
Net debt, which included the impact
of the acquisition of the FUEL10K
acquisition, reduced by £39m. Taking into
consideration the economic headwinds
over the past 12 months, the Board
believes that these results demonstrate
the effectiveness of the Group’s branded
growth model and the capabilities of the
management team.
In addition, in March 2024, the Group
announced the suspension of future
pension deficit contribution payments
from 1 April 2024. The suspension of
contributions has taken place earlier than
originally expected, reflecting the strong
performance of the pension scheme, and
means that the Group will benefit from
£33m of increased free cash flow for the
financial year ending 29 March 2025.
This provides us with enhanced capital
allocation options to deliver the Group
growth ambitions.
Annual Bonus performance
outcome for FY23/24
As highlighted above, the Group has
continued to make good progress with
the execution of the Group’s growth
strategy, delivering strong Trading profit
and operating cash flow, resulting in both
of the financial targets in the annual bonus
plan being exceeded. The Committee also
assessed the non-financial targets set for
the CEO and CFO, which were based on
strategic and ESG objectives and, following
strong performances against the stretching
objectives set, it was determined that both
the CEO and CFO had fully achieved these
objectives.
In assessing the annual bonus outcome,
the Committee also undertook a review
of each director’s individual performance,
the overall performance of the business
and the experiences of key stakeholders,
including shareholders, colleagues,
suppliers and customers. Taking this into
account, the Committee awarded a bonus
of 100% of maximum to Alex Whitehouse
(£833,372, representing 150% of salary)
and a bonus of 100% of maximum to
Duncan Leggett (£476,602, representing
125% of salary). Full details of the targets
and performance over the period are
provided on pages 102 and 103.
One-third of the annual bonus payment
will be made in the form of shares,
deferred for a three-year period under the
Deferred Bonus Plan (DBP). Details of the
DBP are set out on page 104.
Long-Term Incentive Plan (‘LTIP’)
The Committee assessed the performance
conditions for the 2021 LTIP award.
TSR performance was above the upper
quartile compared to the FTSE All-Share
comparator group (positioned between
39th and 40th out of 353 companies),
and adjusted EPS of 13.7p exceeded the
maximum target set, meaning that both
elements of the award will vest in full in
June 2024, and be subject to a two-year
holding period. Full details of the targets
and performance over the period are
provided on page 104.
When assessing the annual bonus and
LTIP outcomes, the Committee undertook
an assessment ‘in the round’, to ensure
that the outcomes are a fair reflection of
overall Company performance and aligned
with the experience of other stakeholders.
As part of this, the Committee took into
account the strong performance context,
set out earlier in this Annual Statement,
as well as the fact that the success of the
business over the last three years has been
shared with colleagues and has resulted in
a significant increase in the share price and
creation of shareholder value. Colleagues
have also been able to benefit from this
share price growth, through participation
in the Group’s Sharesave scheme – the
2020 Award vested on 1 February 2024
and provided a return of 93% (based on
the share price on the date of vesting). The
increased financial strength of the business
has enabled the reintroduction of dividend
payments in 2021, and a final dividend
for FY23/24 of 1.728p per share has been
recommended by the Board, representing
an increase of 20% versus prior year.
Taking all of the above into account,
alongside the wider performance context
detailed elsewhere in this Annual Report,
the Committee considered that the
annual bonus and LTIP outcomes are a
fair reflection of Company and individual
performance in the year. As such, the
Committee has not exercised its discretion
to adjust the formulaic outcomes.
2023 Director’s Remuneration Policy
review and arrangements for FY24/25
Our 2023 Directors’ Remuneration Policy
was put to a binding shareholder vote
at AGM in July 2023, and we would like
to thank shareholders for their strong
support, with over 96% voting in favour. A
summary of the key elements of the Policy
is set out on page 99.
The Committee considers that the
Remuneration Policy operated as
anticipated over the financial period, and
no changes are proposed to the Policy for
FY24/25.
During the year, the Committee carried out
a review of arrangements, to ensure the
overall remuneration strategy for executive
directors and senior management
remained competitive and continued to
drive the right behaviours and support the
implementation of the Group’s strategy.
Executive directors’ salaries
As highlighted above, the Group continues
to deliver very strong performance.
This strong operational and strategic
performance over the last year has led
to the creation of significant shareholder
value of c.£250m, and has allowed the
Group to deliver a shareholder return of
23%, outperforming the FTSE 250 index
(which was up 10% in the period). Over
a longer period of five years, broadly
aligned with when Alex Whitehouse was
appointed as CEO and Duncan Leggett was
appointed as CFO, the Group has delivered
a shareholder return of 381%, significantly
outperforming the FTSE 250 index (which
was up 20% over the period). In that time,
Premier Foods has also been promoted
from the FTSE SmallCap Index to the FTSE
250 Index and is now positioned in the
top half of that index (the Group’s current
market cap of c.£1.4bn places us at around
position 102 in the FTSE 250).
Over the course of the year, the
Committee has reviewed the approach to
base salaries to ensure that they reflect
the performance of the Group and the
individuals, and the increased size and
complexity of the organisation, as outlined
above. With this in mind, it is proposed
that the executive directors’ salaries are
increased, with effect from 1 July 2024, as
follows:
Salary for
FY24/25
Salary as at 30
March 2024
Change
Alex Whitehouse
£620,000
£562,275
10.3%
Duncan Leggett
£415,000
£385,875
7.5%
The Committee recognises that these
salary increases will be above the likely
salary review for colleagues not involved
in collective bargaining, which is expected
to be between 3% and 3.5%. However,
the Committee is conscious that current
salaries have fallen behind market for the
size and scope of our organisation, and
these increases bring salaries more in line
with comparable roles at companies with
a similar market capitalisation to Premier
Foods. The Committee believes that the
proposed salaries are a fairer reflection of
our organisational size, the complexity of
the executive directors’ roles as the Group
continues to grow both within the UK and
internationally, and the sustained excellent
performance of the executive directors in
delivering against our strategy and creating
value for shareholders.
These changes will position the CEO’s total
maximum compensation package just
below the FTSE 250 median, and the CFO’s
total maximum compensation package
between the FTSE 250 lower quartile and
median. The Committee considers that
this market positioning is an appropriate
reflection of the increased size and
complexity of the business, the executive
directors’ sustained excellent performance
in role, and our improved positioning
within the FTSE 250.
It is the Committee’s current intention
that any increases next year will be in line
with colleagues not involved in collective
bargaining.
Group Chair and NED fees
Due to the increased size and complexity
of the business, the Committee also
reviewed the Group Chair and NED
fees during the course of the year and
determined that an increase, in line
with the salary review for colleagues
not involved in collective bargaining,
in July 2024 (currently expected to be
between 3% and 3.5%), is appropriate.
In making this decision, the Board was
mindful that the NED base fee and fees
for chairing a Committee have not been
increased for well over 10 years, that the
Senior Independent Director fee was last
increased in 2015, and that the Group
Chair fee was last increased in 2022.
Annual Bonus measures
For FY24/25, the annual bonus will
continue to be based 50% on Trading
Profit, 20% on operating cash flow and
30% on strategic and ESG measures.
LTIP measures
Following a review of the performance
measures for the LTIP, it was agreed that
the current measures of 50% relative TSR
and 50% adjusted EPS remain the most
appropriate for the Group and continue to
be aligned with the delivery of the Group’s
strategy.
The Committee reviewed the targets for
the annual bonus and LTIP in FY24/25,
and agreed that they are challenging and
set at levels that will reward very good
performance. They are also considered
to be aligned with the Group’s strategic
priorities – further details of the measures
are provided on page 114.
Relationship between ESG matters
and remuneration arrangements
Our ESG strategy continues to be a critical
part of our business strategy and remains
important to our stakeholders. ESG
performance has been assessed within
the executive directors’ annual bonus
goals since FY20/21. ESG will again form
part of the executives’ annual bonus goals
for FY24/25. In addition, as part of their
overall review of the Group’s remuneration
strategy, the Committee ensures that
arrangements encourage behaviour that
is aligned with the Group’s ESG strategy.
Further information regarding the Group’s
Enriching Life Plan is set out on pages
30 to 41.
Wider workforce
The management team remains aware
of the ongoing impact of the inflationary
environment on the workforce as a whole
and this has been recognised when
setting salary increases for colleagues
over the year. In addition, reflecting the
Group’s strong performance in FY23/24,
a discretionary bonus was paid in March
2024 to colleagues who are not part of
the annual bonus scheme, to enable all
colleagues to share in the Group’s success.
During the year, as Workforce Engagement
NED, I have provided updates to the
Remuneration Committee on meetings
held with colleagues across the business,
which covered a range of topics, including
engagement on executive remuneration
and how it aligns with pay for the wider
workforce. The Committee also reviewed
information on broader workforce pay
policies and practices, which provided
important context for the decisions on
executive pay taken during the year. The
pension levels for the executive directors
are aligned with that available to the rest
of the workforce. The operation of the
annual bonus scheme is consistent for all
participants and any financial measures are
aligned with the overall Group targets. The
executive directors have other additional
constraints on their remuneration package,
which are not applicable to the wider
management population, such as bonus
deferral and the LTIP holding period.
The Group also operates an all-employee
Sharesave Plan, which allows all colleagues
to share in the success of the Group. The
colleague participation rate in this scheme
is currently 36%.
I look forward to receiving your support for
the Directors’ Remuneration Report at the
2024 AGM.
On behalf of the Board
Helen Jones
Remuneration Committee Chair
16 May 2024
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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GOVERNANCE
Directors’ remuneration report
Overall approach to
remuneration
At Premier Foods, the Remuneration Policy
is designed to attract, retain and motivate
a high-calibre management team. Focus is
placed on driving exceptional performance
and creating shareholder value in a
sustainable way, as well as aligning the
interests of the executive directors with
key stakeholders.
The Committee applies the following
broad principles when considering
the design, implementation and
assessment of remuneration, in line
with the recommendations set out in
Provision 40 of the 2018 UK Corporate
Governance Code:
Clarity – remuneration arrangements
should be transparent and promote
effective engagement with
shareholders and the workforce
The Company’s Remuneration Policy is
designed to support the delivery of the
Group’s strategic objectives, which are
aligned with the long-term interests of
both shareholders and key stakeholders,
including employees. The Committee
is committed to being transparent in
respect of the elements of remuneration,
quantum, the rationale for targets set
and performance outcomes. The work of
the Workforce Engagement NED provides
an opportunity for engagement with
colleagues on executive remuneration.
The Committee engages with shareholders
and is keen to understand their views and
priorities. Recent engagement has included
discussion to understand shareholder
views on the 2023 Directors’ Remuneration
Policy, which was submitted for shareholder
approval at the AGM in July 2023 (further
information is set out on page 99).
Simplicity – remuneration structures
should avoid complexity and their
rationale and operation should be
easy to understand
The Committee believes the current
arrangements for executive directors to
be simple. These consist of the following
elements:
•
A fixed element that comprises salary,
pension and taxable benefits.
•
A variable element that is subject
to performance conditions and
comprises:
–
short-term goals via the annual
bonus plan; and
–
long-term goals via the Long-Term
Incentive Plan.
The Committee considers that the current
arrangements are clear, easy to understand
and provide an appropriate balance
between fixed and variable remuneration.
During the year, the Committee reviewed
the annual bonus and LTIP measures for
the executive directors and believes that
they remain aligned to the delivery of
the Group’s strategy and that targets are
suitably stretching.
Risk – remuneration arrangements
should ensure reputational and other
risks from excessive rewards, and
behavioural risks that can arise from
target-based incentive plans, are
identified and mitigated
Targets are reviewed to ensure they
reflect the overall risk appetite set by the
Board and that they do not encourage
inappropriate behaviours or excessive
risk-taking.
Mitigation is provided through the
recovery provisions that apply to both
the annual bonus and LTIP. Malus and
clawback provisions apply in line with
current best practice expectations. Holding
periods are in place for awards under the
Deferred Bonus Plan and LTIP. In addition,
a formal post-employment shareholding
guideline was introduced as part of the
2023 Directors’ Remuneration Policy.
Predictability – the range of possible
values of rewards to individual
directors and any other limits or
discretions should be identified and
explained at the time of approving
the Policy
The Committee assesses the potential
outcome of future reward by reference to
potential pay-outs that can be received
at a range of outcomes (minimum, target
and maximum), as set out in the 2023
Directors’ Remuneration Policy, which is
included in the FY22/23 Annual Report. In
addition, the effect of future share price
growth under the LTIP is also considered,
based on a 50% increase in share price
over the period.
Proportionality – the link between
individual awards, the delivery
of strategy and the long-term
performance of the company should
be clear. Outcomes should not reward
poor performance
The Committee seeks to ensure that
targets for the annual bonus and long-term
incentives are aligned with the Group’s
strategy and the long-term sustainable
development of the business.
The focus of our remuneration strategy is
on rewarding performance – the majority
of executive remuneration (over 75% at
maximum) is variable and only payable if
demanding performance targets are met.
The targets for the annual bonus and the
LTIP are designed to be appropriately
stretching. The majority of variable pay is
payable in the form of shares.
When setting targets for variable elements
of pay, the Committee carefully considers
the targets to minimise the risk of
excessive reward.
When assessing performance against the
annual bonus and LTIP, the Committee also
considers:
•
the overall performance of the
business;
•
the experience of key stakeholders
including shareholders, employees,
suppliers and customers;
•
the quality of earnings when
assessing the achievement of financial
targets; and
•
the market in which the Company
operates.
The Committee retains discretion to
override formulaic outcomes produced
by the performance conditions where, in
the Committee’s view, they do not reflect
the performance of the business or the
individual over the period, or where events
happen that cause the Committee to
determine that the conditions are unable
to fulfil their original intended role.
Alignment to culture – incentive
schemes should drive behaviours
consistent with company purpose,
values and strategy
As part of the preparation of the 2023
Directors’ Remuneration Policy, the
Committee reviewed the overall design
of the Group’s remuneration strategy
and believes that it is consistent with the
Company’s purpose, values and strategy,
and is aligned with the Group’s culture.
When setting the goals for the annual
bonus and LTIP award, the Committee
considers a range of different potential
measures, in order to select those
which it believes are most likely to drive
the successful delivery of the Group’s
strategy and those which are aligned with
shareholders’ interests to deliver earnings
growth and improved shareholder value in
the medium-term (further details are set
out on page 99).
Summary of the Directors’ Remuneration Policy
The current Directors’ Remuneration Policy was approved by shareholders at the AGM on 20 July 2023 (with 96.24% votes in
favour). The following table presents a summary of the key elements of the current Directors’ Remuneration Policy and how it will
be implemented in FY24/25. The full policy is available in the FY22/23 Annual Report, which can be found on the Group’s website at
www.premierfoods.co.uk
Current elements of remuneration and operation
How we plan to implement the Policy in FY24/25
Salary
Set at levels to attract and retain talented individuals with reference to the size
and complexity of the business, the specific experience, skills and responsibilities
of the individual, and the market rates for companies of comparable size and
complexity and internal Company relativities.
Normally reviewed annually (currently with effect from 1 July) in conjunction
with those of the wider workforce.
No change to Policy.
For FY24/25:
•
CEO – £620,000 (10.3% increase)
•
CFO – £415,000 (7.5% increase)
Further context for these salary increases is
provided on page 97.
Benefits
Benefits include: cash allowance in lieu of company car; fully expensed
fuel; private health insurance; life insurance; permanent incapacity benefit;
professional memberships; and other ancillary benefits.
No change to Policy.
Pension
Pension contributions in line with that offered to the rest of the workforce
(currently a salary supplement of 7.5% of base salary up to an earnings cap).
No change to Policy.
Annual Bonus
Maximum opportunity:
• CEO: 150% of salary
• CFO: 125% of salary
One-third of earned bonus is deferred into shares for three years.
Awards are subject to malus and clawback provisions.
No change in maximum opportunity.
Awards will be subject to the following
performance measures:
•
Trading profit (50% weighting);
•
Operating cash flow (20% weighting); and
•
Strategic and ESG objectives (30% weighting).
Awards are also subject to a Trading profit
underpin.
Long-Term Incentive Plan
The Premier Foods Long-Term Incentive Plan (‘LTIP’) provides a clear link to our
strategic goal of delivering profitable growth with sustainable share price growth
over the medium to long-term.
Maximum opportunity:
• CEO: 200% of salary
• CFO: 150% of salary
Awards are subject to a three-year performance period, followed by a two-year
holding period.
Awards are subject to malus and clawback provisions.
No change in LTIP award levels for FY24/25.
Awards are subject to the following performance
measures:
•
Relative TSR (50% weighting); and
•
Adjusted EPS (50% weighting).
Shareholding guideline
200% of salary.
Executive directors are expected to retain 50% of shares from vested awards
under the DBP and LTIP until they reach the guideline.
No change to Policy.
The current shareholdings are:
•
CEO – 720% of salary
•
CFO – 307% of salary
Post-employment shareholding guideline
100% of in-employment shareholding guideline (or actual shareholding at the
date of departure, if lower) to be held for the first year post-cessation, and 50%
in the second year.
No change to Policy.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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Directors’ remuneration report continued
Annual Report on Remuneration
An advisory vote on the Directors’ Remuneration Report will be put to shareholders at the 2024 AGM. The Committee believes that the
Remuneration Policy operated as intended in the year.
Single figure table for total remuneration (audited)
Single figure for the total remuneration received by each executive director for the 52 weeks ended 30 March 2024 (FY23/24) and the
52 weeks ended 1 April 2023 (FY22/23).
Alex Whitehouse
Duncan Leggett
FY23/24
£’000
FY22/23
£’000
FY23/24
£’000
FY22/23
£’000
Salary
556
529
381
363
Taxable benefits1
41
42
26
25
Pension
15
14
15
14
Total fixed remuneration
612
585
422
402
Annual bonus2
833
661
477
363
LTIPs3, 4
978
1,365
404
527
Total variable remuneration
1,811
2,026
881
890
Single figure for total remuneration
2,423
2,611
1,303
1,292
1 Both directors were granted an award over 2,886 shares under the all-employee Sharesave Plan on 15 December 2023. An amount of £817 has been included within benefits
with respect to this plan, which represents the 20% discount to the share price on the grant date (see the executive share awards table on page 107 for more information).
2 One-third of the annual bonus will be deferred into shares for three years, which are awarded under the terms of the DBP. Further details on DBP awards are set out on page
104. The awards are subject to continued employment and forfeiture and clawback provisions.
3 The figures for share-based payments for FY23/24 are an estimate of the value of the 10 June 2021 LTIP awards (representing 688,073 shares for the CEO and 284,403 shares
for the CFO), which will vest in full in June 2024, based on the three-month average price to 30 March 2024 of 142.09p. The share price at the date of grant was 108.6p so
23.6% of the value reported in the single figure is attributable to share price appreciation in the period (representing £230,472 for the CEO and £95,262 for the CFO). No
discretion has been exercised in relation to this (see page 104 for further information).
4 In line with statutory reporting requirements, the FY22/23 share-based award figures have been adjusted from that in last year’s report, to show the value upon vesting of the
June 2020 LTIP award on 25 June 2023, based on a share price of 129.0p.
Base salary and fees (audited)
The Committee sets base salary by reference to the size and complexity of the business, based on factors such as market capitalisation,
revenue, market share and total enterprise value.
The salary increases for executive directors for FY23/24, effective from 1 July 2023, were lower than the average rate of increase for the
Group’s colleagues.
Salary as at
30 March 2024
Salary as at
1 April 2023
Change
Alex Whitehouse
£562,275
£535,500
+5.0%
Duncan Leggett
£385,875
£367,500
+5.0%
Benefits (audited)
Benefits provided for the period related to the provision of car allowance, private fuel, private medical insurance, permanent health
insurance and professional membership.
Pension (audited)
Under the Company’s current Remuneration Policy, pension entitlements for executive directors are aligned with those available to the
rest of the workforce, which currently equates to a contribution of 7.5% of basic pay up to an earnings cap (£205,200 for the 2023/24
tax year). Executive directors have the right to participate in the Group’s defined contribution (‘DC’) pension plan, with any contribution
above their annual allowance paid as cash. During the year, Alex Whitehouse and Duncan Leggett both participated in the Group’s DC
pension plan. Neither executive director participated in the Group’s Defined Benefit pension scheme by reason of qualifying service.
The table below provides details of the executive directors’ pension benefits in FY23/24:
Cash in lieu of contributions to the
DC-type pension plan
£’000
Company contributions to the
Group’s DC pension plan
£’000
Alex Whitehouse
5
10
Duncan Leggett
5
10
Annual bonus (executive directors) (audited)
Each year, the Committee sets individual performance targets and bonus opportunities for each of the executive directors. Annually,
the Committee reviews the level of achievement against the performance targets set and, based on the Committee’s judgement,
approves the bonus of each executive director. Annual bonus payments are not pensionable.
Performance assessment for FY23/24
In line with the Remuneration Policy, for FY23/24, the CEO and CFO had maximum bonus opportunities of 150% of salary and 125%
of salary respectively. Performance was measured against targets relating to Trading profit (50% weighting), operating cash flow
(20% weighting), strategic objectives (20% weighting) and ESG (10% weighting).
The Committee undertook a full and detailed review of the performance of each executive director against their financial and non-
financial targets, including a ‘performance in the round’ assessment, which is set out below and in the Committee Chair’s Annual
Statement.
As stated earlier in this Annual Report, despite a number of challenges, the Group delivered a strong set of results in FY23/24. Trading
profit was £179.5m, up +14.0% and Operating cash flow was £168.7m, up +18.6%, versus last year, driven by the effective execution of
the Group’s strategy by the management team.
The tables below set out performance compared to the financial and non-financial targets set at the start of the year.
Financial measures (audited)
Annual bonus FY23/24
Performance measure
Threshold
(0%)
Target
(50%)
Stretch
(100%)
Performance
outcome
Weighting
Performance
(% of max
bonus)
Financial targets (subject to a Trading profit underpin of £158.0m)
Trading profit
£158.0m
£163.0m
£170.0m
£179.5m
50.0%
50.0%
Operating cash flow
£119.4m
£124.4m
£130.4m
£168.7m
20.0%
20.0%
70.0%
70.0%
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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Directors’ remuneration report continued
Strategic and ESG measures (audited)
Alex Whitehouse
Performance measure
Performance outcome
Weighting
Performance
(% of max
bonus)
Non-financial targets (subject to a Trading profit underpin of £158.0m)
Strategic
New category development: Increased turnover of Ambrosia porridge
pots by +111% over the year, ahead of the stretch target. This was
facilitated by freeing additional capacity at the Lifton site, ahead of plan.
In addition, Board approval was obtained for a significant investment in a
new production line, to help meet forecast demand.
International expansion: Increased listings for Cake in the USA to over
3,000 stores, ahead of the stretch target and sales of strategic focus
brands within the Group’s strategic growth markets increased to £40m,
also ahead of the stretch target.
20.0%
20.0%
Environment, Social
and Governance (ESG)
Product: Over the year, the business launched or reformulated 209
products which support high nutritional standards and 142 products
which offer an additional health and/or nutrition benefit, including
reducing salt across the Sharwood’s noodles range and extending the
Mr Kipling Deliciously Good range to Cherry Bakewell and Loaf Cakes.
As a result, turnover of products that meet high nutritional standards
increased to £397m, ahead of the stretch target.
Planet: Development of a new approach to managing key waste streams
at our Lifton factory helped to reduce food waste across our operations by
-8.4% versus prior year, ahead of the target.
People: Continued to make progress improving accessibility to leadership
roles through enhanced recruitment, development and mentoring
programmes. The proportion of women in senior management roles
increased to 41%, (up from 28% in FY20/21, when we launched the
target) and we are on track to achieve our long-term goal of gender parity
by 2030.
10.0%
10.0%
30.0%
30.0%
Final outcome
100.0%
100.0%
Duncan Leggett
Performance measure
Performance outcome
Weighting
Performance
(% of max
bonus)
Non-financial targets (subject to a Trading profit underpin of £158.0m)
Strategic
Margin and cost savings: Led Group wide margin and savings programme,
including supply chain, procurement and wider margin management, to
fund additional investment in the business. This delivered costs savings
above the stretch target.
Internal controls over financial reporting: Appointed external
implementation partner and additional internal resource to strengthen
the Internal Control function. Significant progress made to complete the
initial phase of project covering enhancement of process documentation,
identification of key financial controls and the implementation of
management testing and remediation plans. On track to implement
the Group’s enhanced internal control framework to align with the
requirements of the UK Corporate Governance Code 2024.
20.0%
20.0%
Environment, Social
and Governance (ESG
TCFD Reporting: Strengthened disclosure of metrics used to assess
and manage climate-related risks and opportunities. Adopted SASB
(Sustainable Accounting Standards Board) Food and Beverage sector
template for the first time and continued to assure key ESG metrics to
ISAE3000. Achieved full TCFD compliance for FY23/24.
Internal Audit and Risk: Strengthened Internal Audit with additional
in-house resource and the appointment of new Internal Audit co-source
partner. A programme to enhance the risk management process was
launched in the year and significant progress made to develop an
enhanced internal control framework to align with the UK Corporate
Governance Code 2024 requirements, in line with the Board’s
expectations.
10.0%
10.0%
30.0%
30.0%
Final outcome
100.0%
100.0%
The Committee considered the executives’ achievements against their strategic and ESG objectives and the maximum bonus outturn in
the round, taking into account both the very strong progress delivered in the year and the announcement, in March 2024, regarding the
suspension of future pension deficit contributions, in determining that a 100% pay-out for these elements was appropriate.
The Committee considered the formulaic outcomes of the annual bonus assessment in the context of the current external environment,
wider company and individual performance, the shareholder experience, the customer experience and the treatment of colleagues
throughout the rest of the Group. In addition to the operational highlights set out above, in FY23/24, Premier Foods has created
approximately £250m of shareholder value, and delivered a shareholder return of 23% during the period, outperforming the FTSE 250
index (which was up 10% in the period).
The Committee believes that the executive directors continued to respond both decisively and effectively to the macro-economic
challenges posed by significant inflationary pressures, enabling the Group to perform successfully during FY23/24. In light of the Group’s
excellent financial performance, the strategic progress, and focus on the overall colleague experience, the Committee concluded that the
formulaic outcomes of the annual bonus assessment were justified, and that no discretion was required. Further detail is provided in the
Annual Statement by the Committee Chair.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
102
103
GOVERNANCE
Directors’ remuneration report continued
Long-Term Incentive Plan (‘LTIP’)
Performance assessment for the June 2021 LTIP award (audited)
The performance conditions for the 10 June 2021 LTIP award were based on a relative TSR condition (comprising two-thirds of the
award) and an adjusted EPS condition (comprising one-third of the award). The Committee assessed the two performance conditions in
May 2024 and concluded that both the relative TSR target and the adjusted EPS target had been fully achieved, which will result in full
vesting of the LTIP award in June 2024. Awards are also subject to a two-year holding period. The TSR of Premier Foods over the three-
year performance period was 58.7%, representing significant shareholder value creation and was significantly above the upper quartile
TSR in the comparator group of circa 30.5%. The adjusted EPS performance of 13.7p was ahead of target and market expectations.
The 2021 LTIP award was granted in June 2021 following a period of significant share price growth and was therefore made at a higher
share price than the 2020 LTIP awards, so there are no ‘windfall gains’ associated with this award. The Committee considered that the
vesting reflected the underlying performance of the business and was appropriate. The Committee’s view is that the share price growth
delivered since grant reflects the continued strong delivery against our strategy and the actions taken by management and, therefore, it is
considered appropriate that participants are rewarded for this. Details of the vesting outcomes are provided in the table below.
June 2021 LTIP
Targets
Outcome
No. of shares
to vest3
No. of shares
to vest3
Performance
measure
Weighting
Below
threshold
Threshold
Target
Stretch
Actual
performance
Payout
Alex
Whitehouse
Duncan
Leggett
Relative TSR¹
2/3
< Median
Median
N/A
Upper
quartile
Between
39th and
40th out
of 353
companies
100%
688,073
284,403
Adjusted EPS
1/3
< 10.6p
10.6p
11.1p
11.6p
13.7p
100%
% of relevant portion
of award vesting2
0%
20%
50%
100%
1 Measured against the constituents of the FTSE All Share Index (excluding investment trusts) at the start of the period.
2 FY21/22 base year adjusted EPS was 11.0p.
3 Straight-line vesting between threshold and target and between target and stretch.
4 Dividend equivalent shares will be added, once the award has vested.
Scheme interests awarded during the financial year
Deferred Bonus Plan (‘DBP’) award FY23/24 (audited)
One-third of any annual bonus payment awarded to executive directors is made in the form of shares. These shares are awarded under
the terms of the DBP, which was approved by shareholders in July 2017. Awards will normally be made within six weeks following the
announcement of the Group’s full year results. The awards will normally vest on the third anniversary of grant and be awarded in the
form of nil cost options (with no performance conditions other than continued employment), which will be exercisable up until the tenth
anniversary of grant. The shares are subject to forfeiture and clawback provisions. DBP awards were granted on 8 June 2023, as nil cost
options based on a share price of 133.12p (representing the closing middle market quotation (MMQ) on the five dealing days prior to the
date of grant), as set out below:
FY22/23
Annual bonus
Bonus deferral
(one-third)
No. of shares
awarded
Deferral period
Alex Whitehouse
£661,407
£220,469
165,616
08.06.23 – 07.06.26
Duncan Leggett
£363,125
£121,042
90,926
08.06.23 – 07.06.26
June 2023 LTIP award for FY23/24 (audited)
Details of the LTIP award, granted in the form of nil-cost options on 8 June 2023, are set out below.
Basis of award
No. of shares
awarded
Face value on
award date1
Performance period
Alex Whitehouse
150% of salary
603,403
£803,250
01.04.23 – 31.03.26
Duncan Leggett
100% of salary
276,066
£367,500
01.04.23 – 31.03.26
1 Determined based on the closing MMQ on the five dealing days ending 7 June 2023 of 133.12p.
Targets
Performance measure
Weighting
Below
threshold
Threshold
Target
Stretch
Relative TSR¹
50%
< Median
Median
N/A Upper quartile
Adjusted EPS2
50%
< 12.3p
12.3p
12.8p
13.3p
% of relevant portion of award vesting3
0%
20%
50%
100%
1 Measured against the constituents of the FTSE 250 Index (excluding investment trusts) at the start of the period.
2 FY22/23 base year adjusted EPS was 12.9p.
3 Straight-line vesting between threshold and target and between target and stretch.
August 2023 LTIP award for FY23/24 (audited)
As set out in last year’s Annual Report, as part of the Company’s 2023 Directors’ Remuneration Policy, shareholder approval was sought
to increase the LTIP opportunity for the CEO (from 150% to 200% of base salary) and for the CFO (from 100% to 150% of base salary).
Following shareholder approval for the 2023 Directors’ Remuneration Policy at the AGM held on 20 July 2023, the following additional
LTIP awards were granted in the form of nil-cost options on 2 August 2023. To ensure consistency with the initial 2023/24 LTIP award, the
same performance conditions and performance period have been applied.
Basis of award
No. of shares
awarded
Face value on
award date1
Performance period
Alex Whitehouse
50% of salary
208,657
£267,749
01.04.23 – 31.03.26
Duncan Leggett
50% of salary
143,197
£183,750
01.04.23 – 31.03.26
1 Determined based on the closing MMQ on the five dealing days ending 2 August 2023 of 128.32p.
Targets
Performance measure
Weighting
Below
threshold
Threshold
Target
Stretch
Relative TSR¹
50%
< Median
Median
N/A Upper quartile
Adjusted EPS2
50%
< 12.3p
12.3p
12.8p
13.3p
% of relevant portion of award vesting3
0%
20%
50%
100%
1 Measured against the constituents of the FTSE 250 Index (excluding investment trusts) at the start of the period.
2 FY22/23 base year adjusted EPS was 12.9p.
3 Straight-line vesting between threshold and target and between target and stretch.
Additional context on these performance measures, weightings and targets was provided in the FY22/23 Directors’ Remuneration Report.
Dilution limits
Awards under certain executive and all-employee share plans may be satisfied using either newly issued shares or shares purchased in
the market and held in the Group’s Employee Benefit Trust (which held 6,721,393 shares as at 30 March 2024). The Group complies with
the Investment Association guidelines in respect of the dilutive effect of newly issued shares. The current dilutive impact of share awards
over a 10-year period is approximately 5.2%.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
104
105
GOVERNANCE
Directors’ remuneration report continued
Share ownership guidelines, vesting and retention periods
To align executive directors’ interests with those of shareholders, executives must hold 200% of salary in shares (valued at year-end),
and the Committee reviews progress against these requirements (see Statement of directors’ shareholdings and share interests table
below). Retention periods are in place for both the annual bonus scheme and LTIP, to encourage a focus on the long-term sustainable
development of the business. One-third of any annual bonus award is deferred into shares for three years under the DBP and any shares
which vest under LTIP awards granted since 2018 will be deferred for a further two-year period.
Y1
Y2
Y3
Y4
Y5
Annual bonus (DBP)
LTIP
Performance period
Retention period
Post-employment shareholding guideline
As part of 2023 Directors’ Remuneration Policy that was approved by shareholders at the AGM last year, the Remuneration Committee
introduced a formal post-employment shareholding guideline. Executives are required to maintain 100% of their in-employment guideline
(or their actual shareholding at departure, if lower) for the first year post-cessation, and 50% in the second year.
Share ownership for the wider Group
The Committee recognises the importance of aligning colleagues’ interests with those of shareholders and encourages share ownership in
order to increase focus on the delivery of shareholder return. All members of the ELT participate in the LTIP. Participation in the Sharesave
Plan currently represents approximately 36% of colleagues.
Statement of directors’ shareholdings and share interests (audited)
The following table shows executive directors’ interests in Company shares. Awards under the LTIP are subject to a three-year vesting
period and will only vest if stretching performance conditions are met. Awards are also subject to a two-year holding period post vesting.
The figures shown represent the maximum number of shares a director could receive following the end of the vesting period if all
performance targets were achieved in full. All of the awards were granted in the form of options.
No. of shares
owned as
at 30 March
20241
No. of shares
owned as at
1 April 2023
Share
ownership
guideline2
DBP
Awards
LTIP
Awards
(vested)3
LTIP
Awards
(unvested)
Sharesave
Awards
Total
Alex Whitehouse
575,971
461,703
720%
674,518
3,208,123
2,141,051
10,704
6,034,396
Duncan Leggett
151,999
115,478
307%
307,823
856,748
996,896
10,704
2,172,171
1 There were no changes in directors’ share interests between year-end and 16 May 2024.
2 The Group’s shareholding guidelines require executive directors to hold 200% of their salary in shares. The percentage stated includes the post-tax value of awards held under
the Deferred Bonus Plan and vested LTIP awards, valued at the share price at year-end of 149.4p.
3 Vested but unexercised nil cost options.
Executive share awards (audited)
Date of
grant
Balance
as at
1 April
2023
Awarded in
the year/
dividend
equivalents
Exercised
in the
year
Vested in
the year2
Lapsed in
the year
Balance
as at
30 March
2024
Option
price (p)
Share
price on
date of
grant (p)
Share price
on date of
exercise
(p)
Date of
vesting/
becomes
exercisable
Maximum
Expiry
date
Alex Whitehouse
LTIP1
13.06.17
225,852
–
225,852
–
–
–
–
40.50
154.2
13.06.20
12.06.24
08.08.18
779,497
–
–
–
–
779,497
–
41.20
–
08.08.21
07.08.25
07.06.19
907,843
–
–
–
–
907,843
–
34.00
–
07.06.22
06.06.26
25.06.20
1,040,145
17,738
–
1,057,883
–
1,057,883
–
69.50
–
25.06.23
24.06.27
24.09.20
449,250
13,650
–
462,900
–
462,900
–
91.40
–
24.09.23
23.09.27
10.06.21
688,073
–
–
–
–
688,073
–
108.60
–
10.06.24
09.06.31
09.06.22
640,918
–
–
–
–
640,918
–
120.00
–
09.06.25
08.06.32
08.06.23
–
603,403
–
–
–
603,403
–
131.00
–
08.06.26
07.06.33
02.08.23
–
208,657
–
–
–
208,657
–
123.60
–
02.08.26
01.08.33
DBP
25.06.20
138,254
2,357
–
140,611
–
140,611
–
69.50
–
25.06.23
24.06.30
10.06.21
191,131
–
–
–
–
191,131
–
108.60
–
10.06.24
09.06.31
09.06.22
177,160
–
–
–
–
177,160
–
120.00
–
09.06.25
08.06.32
08.06.23
–
165,616
–
–
–
165,616
–
131.00
–
08.06.26
07.06.33
Sharesave Plan2
15.12.20
7,531
–
7,531
–
–
–
71.70
95.00
150.0
01.02.24
31.07.24
16.12.21
4,067
–
–
–
–
4,067
83.20
104.00
–
01.02.25
31.07.25
19.12.22
3,751
–
–
–
–
3,751
85.40
107.40
–
01.02.26
31.07.26
15.12.23
–
2,886
–
–
–
2,886
103.50
131.80
–
01.02.27
31.07.27
5,253,472
1,014,307
233,383 1,661,394
–
6,034,396
Duncan Leggett
LTIP1
13.06.17
53,833
–
53,833
–
–
–
–
40.50
154.2
13.06.20
12.06.24
25.06.20
401,459
6,846
–
408,305
–
408,305
–
69.50
–
25.06.23
24.06.27
24.09.20
435,220
13,223
–
448,443
–
448,443
–
91.40
–
24.09.23
23.09.27
10.06.21
284,403
–
–
–
–
284,403
–
108.60
–
10.06.24
09.06.31
09.06.22
293,230
–
–
–
–
293,230
–
120.00
–
09.06.25
08.06.32
08.06.23
–
276,066
–
–
–
276,066
–
131.00
–
08.06.26
07.06.33
02.08.23
–
143,197
–
–
–
143,197
–
123.60
–
02.08.26
01.08.33
DBP
25.06.20
34,289
584
–
34,873
–
34,873
–
69.50
–
25.06.23
24.06.30
10.06.21
91,246
–
–
–
–
91,246
–
108.60
–
10.06.24
09.06.31
09.06.22
90,778
–
–
–
–
90,778
–
120.00
–
09.06.25
08.06.32
08.06.23
–
90,926
–
–
–
90,926
–
131.00
–
08.06.26
07.06.33
Sharesave Plan2
15.12.20
7,531
–
7,531
–
–
–
71.70
95.00
150.0
01.02.24
31.07.24
16.12.21
4,067
–
–
–
–
4,067
83.20
104.00
–
01.02.25
31.07.25
19.12.22
3,751
–
–
–
–
3,751
85.40
107.40
–
01.02.26
31.07.26
15.12.23
–
2,886
–
–
–
2,886
103.50
131.80
–
01.02.27
31.07.27
1,699,807
533,728
61,364
891,621
–
2,172,171
1 The 2020 LTIP and DBP awards, which vested in 2023, have been updated to include dividend equivalent shares representing notional dividends paid during the performance
period up until the date of vesting. The Remuneration Committee has determined that the TSR and EPS elements of the 2021 LTIP awards will vest in full in June 2024 (see
page 104 for more information).
2 Executive directors are eligible to participate in the Group’s Sharesave Plan on the same basis as all other eligible employees. Alex Whitehouse and Duncan Leggett were
granted an award over 2,886 shares under the all-employee Sharesave Plan on 15 December 2023. An amount of £817 has been included within taxable benefits, which
represents the value of the 20% discount to the share price on the date of grant.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
106
107
GOVERNANCE
Directors’ remuneration report continued
Total shareholder return
The market price of a share in the Company on 28 March 2024 (the last trading day before the end of the financial period) was 149.4p;
the range during the financial period was 113.2p to 155.8p.
The graph shows the value, by 30 March 2024, of £100 invested in Premier Foods plc on 30 March 2014, compared with the value of
£100 invested in the FTSE Food Producers Index and FTSE 250 Index (excluding Investment Trusts) on the same date. The Committee
considers these to be the most appropriate comparator indices to assess the performance of the Group, given the Group’s position as
a FTSE 250 Food Producer. The other points plotted are the values at intervening financial year-ends.
0
50
100
150
200
250
Value (£) (rebased)
Premier Foods
FTSE 250 (excluding Investment Trusts)
FTSE Food Producers
30/03/2024
01/04/2023
02/04/2022
03/04/2021
28/03/2020
30/03/2019
31/03/2018
01/04/2017
02/04/2016
04/04/2015
30/03/2014
Chief Executive’s single figure for total remuneration (audited)
The table below shows the single figure for total remuneration and the annual bonus and LTIP vesting as a percentage of maximum
opportunity for the previous 10 financial periods.
Year
CEO
Single figure for
total remuneration
Annual bonus as a
of maximum
LTIP vesting as a %
of maximum
FY23/24
Alex Whitehouse
£2,422,852
100%
100%
FY22/23
Alex Whitehouse2
£2,610,611
100%
100%
FY21/22
Alex Whitehouse
£2,705,795
100%
100%
FY20/21
Alex Whitehouse
£2,025,254
100%
100%
FY19/20
Alex Whitehouse1
£742,575
81.5%
33.3%
FY19/20
Alastair Murray1
£683,776
64.2%
33.3%
FY18/19
Alastair Murray
£158,297
53.0%
–
FY18/19
Gavin Darby
£1,241,708
60.0%
–
FY17/18
Gavin Darby
£1,229,383
35.0%
–
FY16/17
Gavin Darby
£862,455
–
–
FY15/16
Gavin Darby
£1,750,933
57.0%
–
FY14/15
Gavin Darby
£1,736,749
23.4%
–
1 Alex Whitehouse was appointed as CEO on 30 August 2019 and Alastair Murray stepped down as Acting CEO and Chief Financial Officer.
2 The figures for FY22/23 have been adjusted, in line with statutory reporting requirements, to reflect the actual value upon vesting of the LTIP award on 25 June 2023. Full
details of the single figure for total remuneration are set out on page 100.
Percentage change in remuneration of directors and employees
For the purpose of this table, remuneration is defined as salary, benefits and annual bonus. Where directors have been appointed part
way through the prior financial year, comparative figures have been calculated using an annualised figure. Tania Howarth, Lorna Tilbian
and Roisin Donnelly were appointed as non-executive directors on 1 March, 1 April and 1 May 2022, respectively. Yuichiro Kogo does
not receive a fee. The increase in fees for Tim Elliott reflects his appointment as Audit Committee Chair during the year. The directors
are the only employees of the Company, so the average pay of colleagues in the wider Group has also been included for the purposes of
comparison.
Base salary % change
Benefits % change
Annual bonus % change
FY23/24
FY22/23 FY21/22 FY20/21 FY23/24 FY22/23 FY21/22 FY20/21 FY23/24
FY22/23
FY21/22
FY20/21
Executive
directors
Alex Whitehouse
+5.0% +4.3%
+3.2%
+5.3%
-2.9%
+34.5%
+0.2%
-5.7%
+26.1%
+4.2%
+1.5%
+61.4%
Duncan Leggett
+5.0% +11.7%
+12.5%
+12.7%
+2.8%
+21.8%
-1.8%
+4.5%
+31.3%
+11.7%
+9.1%
+33.1%
Non-executive
directors
Colin Day
0% +8.5%
+0.8%
0%
–
–
–
–
–
–
–
–
Richard Hodgson
0%
0%
0%
0%
–
–
–
–
–
–
–
–
Roisin Donnelly
0%
0%
–
–
–
–
–
–
–
–
–
–
Tim Elliott
+15.8%
0%
0%
0%
–
–
–
–
–
–
–
–
Tania Howarth
0%
0%
0%
0%
–
–
–
–
–
–
–
–
Helen Jones
0% +12.9%
0%
0%
–
–
–
–
–
–
–
–
Yuichiro Kogo
–
–
–
–
–
–
–
–
–
–
–
–
Lorna Tilbian
0%
0%
–
–
–
–
–
–
–
–
–
–
Former Directors
Simon Bentley2
0%
0%
0%
0%
–
–
–
–
–
–
–
–
All Group
employees
+3.4% +11.1%
-0.8%
+5.6%
–
–
–
–
+38.2%
-31.2%
+40.7%
+49.3%
1 The salary increase for colleagues not involved in collective bargaining in FY21/22 was 2%.
2 Simon Bentley resigned from the Board with effect from 12 July 2023.
Senior management and the wider workforce
The remit of the Committee includes oversight of remuneration for senior management (who are defined as the Group’s Executive
Leadership Team and Senior Leadership Team), as well as reviewing workforce remuneration and related policies, and the alignment of
incentives and rewards with culture. Remuneration for executive directors is set within the context of the Group’s remuneration policy
for the wider workforce. The key differences of quantum and structure in pay arrangements across the Group reflect the different scope
of roles and levels of accountability required for the role, and that executive directors and senior management have a much greater
emphasis on performance-based pay through the annual bonus and the LTIP.
Salaries for management grades are normally reviewed annually (currently in July each year) and take account of both business and
personal performance. Specific arrangements are in place at each site, which may be annual arrangements or form part of a longer-term
arrangement, and the Board is regularly updated on these arrangements.
Each year, the Committee reviews the level of salary increases for colleagues not involved in collective bargaining and reviews the annual
bonus plan for the general management population. Financial objectives for executive directors and the management population are
aligned and strategic objectives are cascaded down the management structure. Senior management participate in long-term incentive
arrangements, reflecting their contribution to Group performance and enhancing shareholder value. All colleagues are encouraged to
own shares in the Company via the Sharesave Plan and executive directors through our shareholding guidelines.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
108
109
GOVERNANCE
Directors’ remuneration report continued
CEO pay ratio
The table below sets out a comparison of the CEO’s total earnings as compared to the wider workforce, based on colleagues’ pay at the
25th percentile, median and 75th percentile. Premier Foods is a food manufacturing business employing around 4,000 colleagues, the
majority of whom are based at our manufacturing sites.
We apply the same reward principles for all colleagues – that overall remuneration should be competitive when compared to similar roles
in similar organisations. For manufacturing colleagues, we benchmark against the general pay conditions for similar roles in the relevant
local area, including other food manufacturers. For the CEO, we benchmark the specific experience, skills and responsibilities of the
individual, and the market rates for companies of comparable size and complexity (including factors such as turnover, market capital and
enterprise value). The key differences of quantum and structure in pay arrangements between the CEO and the majority of colleagues
reflect the different levels of overall accountability, responsibilities, skill and experience required for the role. The CEO’s pay has a much
greater emphasis on performance-based pay through the annual bonus and the LTIP. The ratios may, therefore, vary significantly year-on-
year, depending on bonus and LTIP outcomes.
Year
Method
25th percentile
Median
Pay ratio
75th percentile
FY23/24
B
89:1
69:1
47:1
FY22/23
B
79:1
75:1
61:1
FY21/22
B
93:1
78:1
61:1
FY20/21
B
82:1
61:1
49:1
FY19/20
A
60:1
49:1
35:1
FY23/24
Base salary
£26,043
£25,728
£47,186
FY23/24
Total pay and benefits
£27,227
£35,249
£51,225
The CEO single figure for total remuneration was £2,422,852 (FY22/23: £2,610,611), as set out on page 100 of this report. The single
figure for FY22/23 (and associated percentile ratios) has been adjusted, in line with statutory reporting requirements, to reflect the actual
value upon vesting of the 2020 LTIP award on 25 June 2023. The change in ratios from last year reflects that the colleague at the 25th
percentile did not receive overtime allowance, the colleague at the 75th percentile had a higher base salary, and the value attributed to
the CEO’s vesting LTIP award in FY23/24 was lower. The Committee confirms that the ratio is consistent with the Company’s wider policies
on employee pay, reward and progression.
The Group has calculated the ratio in line with the reporting regulations using method B, which uses the most recent hourly rate gender
pay gap information for all UK employees of the Company to identify three UK employees as the best equivalents. This uses data which
is already reported externally as part of the Group’s gender pay gap reporting. Due to the fact that the Group has a significant number of
part-time employees and a range of different weekly working hours and shift allowances at various sites, the calculation of comparable
full-time equivalents under method A was considered particularly complex. The results for this year were checked against colleagues’
pay at either side of the data points selected, to ensure the results were representative and the figures provided are considered to be
reflective of pay at the relevant sites where the colleagues are based. No adjustments or estimates have been used.
The workforce comparison is based on:
1. Payroll data as at 5 April 2023 for all colleagues, including part time colleagues and the CEO, but excluding non-executive directors.
2. Total pay comprising salary and taxable benefits (including shift allowance, overtime, car allowance and performance-related pay) as
at 30 March 2024. Employers’ pension contributions and bonus are not included in the data under the requirements of the gender
pay gap reporting, but have been included in the total pay and benefits figures for the three colleagues listed in the table above for
comparative purposes.
Gender pay gap reporting
Details of gender pay gap reporting are provided on page 188 and the full report is available on the Group’s website.
Payments for loss of office (audited)
There were no payments for loss of office in the year (FY22/23: £Nil).
Payments to former directors (audited)
There were no payments to former directors in the year (FY22/23: £Nil).
Relative importance of spend on pay
The following table sets out the amounts and percentage change in total employee costs and distributions to shareholders (dividends and
share buybacks). The Company has recommended the payment of a final dividend of 1.728p per share for the financial period, subject to
shareholder approval at the AGM in July 2024, which represents a 20% increase on the prior year.
FY23/24
FY22/23
Increase/
Decrease
Total employee costs
£212.1m
£209.2m
+1.4%
Distributions to shareholders
£12.4m
£10.3m
+20.4%
Non-executive directors
Fees payable to non-executive directors are determined by the Board. The level of fee is set in the context of the time commitment and
responsibilities required by the role. As a result, additional fees are payable to the Chairs of the Audit and Remuneration Committees and
for the role of Senior Independent Director.
Non-executive directors (audited)
Single figure for the total remuneration received by each non-executive director for the financial periods ended 30 March 2024 and 1
April 2023.
FY23/24
FY22/23
Fees
£’000
Expenses3
£’000
Total
£’000
Fees
£’000
Expenses3
£’000
Total
£’000
Colin Day
235
3
238
235
2
237
Richard Hodgson
67
–
67
67
–
67
Roisin Donnelly1
57
1
58
52
1
53
Tim Elliott
66
6
72
57
1
58
Tania Howarth
57
1
58
57
1
58
Helen Jones
68
–
68
64
–
64
Yuichiro Kogo2
–
–
–
–
–
–
Lorna Tilbian
57
4
61
57
1
58
Former directors:
Simon Bentley4
20
–
20
70
–
70
1 Roisin Donnelly was appointed as a non-executive director on 1 May 2022. Simon Bentley retired as a director on 12 July 2023
2 Yuichiro Kogo was appointed pursuant to a relationship agreement with our largest shareholder and does not receive a fee for his role as a non-executive director.
3 Expenses relate to taxable travel costs in connection with the attendance at Board and Committee meetings during the year. The amounts in the table above include the
grossed-up cost of UK tax paid by the Company on behalf of the non-executive directors.
4 Simon Bentley resigned from the Board with effect from 12 July 2023.
Non-executive directors’ fees
The fees of our non-executive directors (NEDs) are set out below. No increases were awarded in FY23/24, see the ‘Statement of
implementation of the remuneration policy in FY24/25’ section for details of proposed increases to the Group Chair and NED fees in
FY24/25.
FY23/24
FY22/23
Increase/
Decrease
Group Chair’s fee
£235,000
£235,000
–
Basic NED fee
£57,000
£57,000
–
Additional remuneration:
Audit Committee Chair fee
£13,000
£13,000
–
Remuneration Committee Chair fee
£10,500
£10,500
–
Senior Independent Director fee
£10,000
£10,000
–
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
110
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GOVERNANCE
Directors’ remuneration report continued
Directors’ terms of appointment
All non-executive directors have entered into letters of appointment/amendment as detailed in the table below. The appointments are
subject to the provisions of the Companies Act 2006 and the Company’s Articles. Terms of appointment are normally for three years or
until the date of the AGM immediately preceding the third anniversary of appointment. Non-executive directors’ continued appointments
are evaluated annually, based on their contributions and satisfactory performance. Following the expiry of a term of appointment, non-
executives may be reappointed for a further three-year period. The terms of appointment for Yuichiro Kogo are governed by the terms of
the relationship agreement between the Company and Nissin, our largest shareholder.
Director
Date of original appointment
Expiry of current
appointment/amendment
letter
Notice period
Alex Whitehouse
30 August 2019
–
6 months
Duncan Leggett
10 December 2019
–
6 months
Colin Day
30 August 2019
AGM 2025
3 months
Richard Hodgson
6 January 2015
AGM 2024
3 months
Roisin Donnelly
1 May 2022
AGM 2025
3 months
Tim Elliott
15 May 2020
AGM 2026
3 months
Tania Howarth
1 March 2022
AGM 2024
3 months
Helen Jones
15 May 2020
AGM 2026
3 months
Yuichiro Kogo
25 March 2021
–
–
Lorna Tilbian
1 April 2022
AGM 2024
3 months
Non-executive directors’ interests in shares (audited)
NED
Ordinary shares owned
as at
30 March 20243
Ordinary shares owned
as at
1 April 20233
Colin Day
250,000
200,000
Richard Hodgson
–
–
Roisin Donnelly1
45,651
45,651
Tim Elliott
15,000
10,000
Tania Howarth
–
–
Helen Jones
10,000
10,000
Yuichiro Kogo2
–
–
Lorna Tilbian
–
–
Former directors:
Simon Bentley1
N/A
–
1 Roisin Donnelly was appointed as a non-executive director on 1 May 2022. Simon Bentley retired as a director on 12 July 2023.
2 Yuichiro Kogo is a shareholder representative director appointed pursuant to a relationship agreement with Nissin, our largest shareholder.
3 There were no changes in directors’ share interests between year-end and 16 May 2024.
Statement of implementation of the remuneration policy in FY24/25
Base salary and fees
Over the course of the year, the Committee has reviewed the approach to base salaries to ensure that they reflect the performance
of the Group and the individuals, and the increased size and complexity of the organisation, as outlined above. With this in mind, it is
proposed that the executive directors’ salaries are increased with effect from 1 July 2024, as follows:
Salary for
FY24/25
Salary as at
30 March
2024
Change
Alex Whitehouse
£620,000
£562,275
+10.3%
Duncan Leggett
£415,000
£385,875
+7.5%
The Committee recognises that these salary increases will be above the likely salary review for colleagues not involved in collective
bargaining, which is expected to be between 3% and 3.5%. These changes will position the CEO’s total maximum compensation package
just below the FTSE 250 median, and the CFO’s total maximum compensation package between the FTSE 250 lower quartile and median.
The Committee considers that this market positioning is an appropriate reflection of the increased size and complexity of the business,
the executive directors’ sustained excellent performance in role, and our improved positioning within the FTSE 250. Further context for
the salary increases is provided on page 97.
It is the Committee’s current intention that any increases next year will be in line with colleagues not involved in collective bargaining.
Group Chair and NED fees
Due to the increased size and complexity of the business, the Committee also reviewed the Group Chair and NED fees during the course
of the year and determined that an increase, in line with the salary review for colleagues not involved in collective bargaining in July
2024 (currently expected to be between 3% and 3.5%), is appropriate. In making this decision, the Board was mindful that the NED base
fee and fees for chairing a Committee have not been increased for well over 10 years, that the Senior Independent Director fee was last
increased in 2015, and that the Group Chair fee was last increased in 2022.
Benefits
Benefits for FY24/25 will be in line with the approved Remuneration Policy.
Pension
Pension entitlements for FY24/25 will be in line with the approved Remuneration Policy and on the same basis as that offered to the rest
of the workforce (currently a salary supplement of 7.5% of base salary up to an earnings cap).
Annual bonus
The Committee agreed that, for FY24/25, the financial targets would represent 70% of the total bonus opportunity. The performance
measures will be linked to the Group’s strategy to focus on revenue growth, cost efficiency and cash generation with the aim to deliver
the Group’s growth strategy. As with last year, the financial targets comprise Trading profit and operating cash flow goals. Trading profit is
a Group KPI (see page 26).
Non-financial objectives are focused on strategic opportunities to drive sales, generate cost savings and improve free cash flow in support
of the Group’s growth strategy. The element relating to ESG is aligned with the delivery of the Group’s ESG strategy, the Enriching Life Plan
(see pages 30 to 41 for more information). The Board considers the financial and non-financial targets to be commercially sensitive, but
has agreed that they will be disclosed as part of the performance assessment in next year’s Annual Report. The financial and non-financial
targets both contain Trading profit underpins.
There are no proposed changes to the maximum opportunities which will remain at 150% of salary for the CEO and 125% of salary for the
CFO. The Committee has set stretching targets for the FY24/25 performance period. One-third of any annual bonus awarded in respect of
FY24/25 will be deferred in shares for three years under the Deferred Bonus Plan.
Alex Whitehouse
Duncan Leggett
Maximum opportunity as a % of salary
150%
125%
Performance measure
Weighting
Weighting
Financial objectives (subject to a Trading profit underpin)
Trading profit
50%
50%
Operating cash flow
20%
20%
70%
70%
Non-financial objectives (subject to a Trading profit underpin)
Strategic and Environmental, Social and Governance (ESG)
30%
30%
100%
100%
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
112
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GOVERNANCE
Directors’ remuneration report continued
LTIP award for FY24/25
There are no proposed changes to the LTIP award levels which will remain at 200% of salary for the CEO and 150% of salary for the CFO.
For the FY24/25 award, the Committee proposes to use the same measures and weightings as for the FY23/24 LTIP award, i.e. relative
TSR (50%) and adjusted EPS (50%), which are aligned with the Group’s growth strategy to focus on revenue and profit growth, cost
efficiency, cash generation and investment in the business, in order to generate sustainable shareholder return over the medium-term.
The Committee believes that these measures are fully aligned with the interests of shareholders and that awards will only vest following
the achievement of stretching performance targets.
The TSR condition requires at least a median ranking to be achieved for 20% of this part of the award to vest, with full vesting taking
place for an upper quartile ranking against the constituents of the FTSE 250 Index (excluding investment trusts), which is considered an
appropriate index to use as the Company is now an established member of the FTSE 250 Index.
The adjusted EPS target is 14.2p, with a range of 13.7p at threshold to 14.8p at maximum, which represents a circa 11.0% increase on
the prior year’s targets. In setting these targets, the Committee took into account the Group’s five-year strategic plan and the impact of
the closure of the Charnwood business that was confirmed in March 2024. The Committee has set stretching targets for the three-year
performance period, to ensure that participants are motivated to deliver shareholder value without excessive risk-taking. In line with its
usual approach, the Committee will review performance in the round to ensure that final vesting outcomes reflect the broader business
and individual context in the period.
Basis of
award
Face value on
award date
Performance
period
Alex Whitehouse
200%
£1,124,550
01.04.24 – 31.03.27
Duncan Leggett
150%
£578,813
01.04.24 – 31.03.27
Targets
Performance measure
Weighting
Below
threshold
Threshold
Target
Stretch
Relative TSR¹
50%
< Median
Median
N/A Upper quartile
Adjusted EPS
50%
< 13.7p
13.7p
14.2p
14.8p
% of relevant portion of award vesting2
0%
20%
50%
100%
1 Measured against the constituents of the FTSE 250 Index (excluding investment trusts) around the start of the period.
2 Target EPS of 14.2p (at which 50% vests) with straight-line vesting between threshold and target and between target and stretch.
The Committee
Director
Date of appointment to Committee
Helen Jones
May 2020 (appointed Committee Chair July 2022)
Richard Hodgson
December 2017
Tim Elliott
May 2020
Roisin Donnelly
April 2022
Details of the Committee meeting attendance is set out on page 80. I was appointed as Chair of the Remuneration Committee on 20 July
2022, having served as a member of the Remuneration Committee for two years. Throughout the financial period, all members of the
Committee have been independent. In addition, the Group Chair, CEO, HR Director and the remuneration advisers attended Committee
meetings by invitation. In accordance with the Committee’s terms of reference, no one attending a Committee meeting may participate
in discussions relating to his/her own terms and conditions of service or remuneration. Over the course of the year, the Committee held
four scheduled meetings.
Role of the Remuneration Committee
The Committee has been delegated authority by the Board to: approve the overall design of the Remuneration Policy for executive
directors and senior management; to agree the terms of employment (including recruitment and termination terms) of executive
directors; approve the design of all share incentive plans; recommend appropriate performance measures and targets for the variable
element of remuneration packages; and determine the extent to which performance targets have been achieved. The Committee’s remit
has also been extended to review the remuneration arrangements for the wider workforce and to ensure there is alignment between the
Group’s remuneration arrangements and culture.
The key activities of the Committee during the financial period were as follows:
•
Assessed and confirmed the final performance testing of the FY22/23 Annual Bonus and 2020 LTIP Award;
•
Reviewed the FY23/24 salary increase for all colleagues not involved in collective bargaining, including executive directors and the ELT;
•
Reviewed and recommended executive directors’ and senior managers’ annual bonuses in respect of the financial period, and set the
targets for the FY23/24 annual bonus, ensuring they were aligned with the strategic objectives of the Group;
•
Granted the 2023 awards under the Company’s all-employee Sharesave plan and monitored colleague participation;
•
Granted the 2023 awards under the Company’s executive share plans to executive directors and senior managers and agreed the
targets for awards due to be made in 2024, ensuring they are aligned with the strategic objectives of the Group;
•
Reviewed shareholder feedback and the voting results for the 2023 Directors’ remuneration report and Directors’ Remuneration
Policy at the 2023 AGM;
•
Undertook an annual review of remuneration arrangements for executive directors;
•
Reviewed remuneration arrangements for the ELT to ensure they remain competitive and continue to support the Group’s evolving
strategy, and aid the retention and recruitment of senior management;
•
Together with the Board, received regular updates on the remuneration arrangements for the wider workforce, the ongoing impact
of the inflationary environment on colleagues, site pay negotiations, and the options to extend long-term incentive arrangements for
management below the ELT;
•
Considered the results of the Committee’s evaluation and the action plan for the coming year; and
•
Reviewed and discussed developments in best practice in order to keep the Committee up to date with current market practice.
Committee evaluation
As part of the internal Board evaluation exercise conducted during the year (see pages 82 and 83 for more information), a review of the
Committee’s effectiveness was also undertaken. The review included the management of meetings, quality of papers and presentations,
an assessment of overall remuneration strategy and whether it supported the delivery of the Group and ESG strategies, the Committee’s
understanding of remuneration arrangements for the wider workforce and the views of key stakeholders. It was confirmed that the
Committee remained effective and an action plan for the coming year was agreed. A review was also undertaken of the performance of
the Committee’s adviser, and it was confirmed that they had performed effectively in supporting the Committee over the period.
Advisers
Following a tender exercise undertaken in 2020, Deloitte LLP (‘Deloitte’) was appointed as adviser by the Committee in January 2021.
The Deloitte engagement team have no other connection with the Group or its directors that is considered to impair their independence.
Deloitte did not provide any other services to the Group in the year. Deloitte is a founding member of the Remuneration Consultants
Group and, as such, adheres to its Code of Conduct. The Committee is satisfied that the advice received from Deloitte is objective and
independent. During the financial period, Deloitte received fees of £64,000 (FY22/23: £88,250) on a time and material basis, in respect of
their advice to the Committee.
External appointments
The Board is open to executive directors who wish to take on a non-executive directorship with a publicly quoted company in order to
broaden their experience. Executives may be entitled to retain any fees they receive. However, any such appointment would be reviewed
by the Board on a case-by-case basis. The current executive directors do not hold any external appointments with publicly quoted
companies.
Statement of voting at the Annual General Meeting
The details of the voting on the resolutions at the AGM held on 20 July 2023 are set out below (full details of the voting results for each
resolution are available on the Group’s website: www.premierfoods.co.uk).
Approval of
Directors’
Remuneration
Report FY22/23
% of votes
cast
Approval of the
current Directors’
Remuneration
Policy
% of votes
cast
Date of AGM
20 July 2023
20 July 2023
Votes for
717,755,279
98.28%
702,864,358
96.24%
Votes against
12,587,600
1.72%
27,460,333
3.76%
Total votes cast
730,342,879
100%
730,324,691
100%
Votes withheld
75,353
93,541
The Directors’ Remuneration Report was approved by the Board on 16 May 2024 and signed on its behalf by:
Helen Jones
Remuneration Committee Chair
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
114
115
GOVERNANCE
Directors’ remuneration report continued
Directors’ report
The directors’ report consists of pages 08 to 119 and has been drawn up and presented
in accordance with, and in reliance upon, applicable English company law, and the
liabilities of directors in connection with that report shall be subject to the limitations and
restrictions provided by such law. In the directors’ report, references to the ‘Company’ are
in reference to Premier Foods plc, and references to the ‘Group’ or ‘Premier Foods’, are
references to Premier Foods plc and its subsidiaries.
The Directors’ report is covered on pages 116 to 119, as well as in the following sections of
this Annual Report:
Item
Location
Financial risk management
Note 19 to the financial statements
Current Board membership
Pages 76 and 77
Governance report
Pages 73 to 119
Strategic report
Pages 9 to 72
Risk management and viability statement
Pages 63 to 72
Employee engagement
Pages 10 and 11 and pages 40 and 41
Directors’ remuneration report
Pages 96 to 115
Share capital
Note 23 of the Financial statements
Greenhouse gas emissions
Pages 54 and 55
Enriching Life Plan
Pages 30 to 41
Enriching Life Plan disclosure Tables
Pages 182 to 189
The following information, required by Listing Rule 9.8.R, is also incorporated into the
directors’ report: Details of long-term incentive plans – see director’s remuneration report
on pages 104 and 105.
Profit and dividends
The profit before tax for the financial year
was £151.4m (FY22/23: profit of £112.4m).
The Board has adopted a progressive
dividend policy and the directors have
proposed a final dividend of 1.728 pence
per share for the financial period ended
30 March 2024 (FY22/23: 1.44 pence),
representing a 20% increase on the prior
year. Subject to shareholder approval, the
final dividend will be payable on 26 July
2024 to shareholders on the register at the
close of business on 28 June 2024.
Research and development
Applied research and development
work continues to be directed towards
the introduction of new and improved
products; the application of new
technology to reduce unit and operating
costs; and to improve service to customers.
Total research and development spend
(including capitalised development costs)
was £16.3m (FY22/23: £14.6m).
Branches
Certain of the Group’s activities are
operated through overseas branches,
which are established in a number of
countries and are subject to the laws and
regulations of those jurisdictions.
Share capital information
The Company’s issued share capital, as at
30 March 2024, comprised 868,795,815
ordinary shares of 10p each. During the
period, 697,605 ordinary shares were
allotted to satisfy the vesting of awards
made under the all-employee Sharesave
Scheme and details of the movements
can be found in note 23 on pages 169 to
171. All of the ordinary shares rank equally
with respect to voting rights and the rights
to receive dividends and distributions
on winding up. In accordance with the
Articles, there are no restrictions on share
transfers, limitations on the holding of any
class of shares or any requirement for prior
approval of any transfer with the exception
of certain officers and employees of the
Company, who are required to seek prior
approval to deal in the shares of the
Company, and are prohibited from any
such dealing during certain periods under
the requirements of the Market Abuse
Regulation.
Colleagues who hold shares under the
Premier Foods plc Share Incentive Plan
may instruct the trustee to vote on their
behalf in respect of any general meeting.
The directors were granted authority at
the 2023 AGM to allot relevant securities
under two separate resolutions: (i) up
to one-third of the Company’s issued
share capital; and (ii) up to two-thirds
of the Company’s issued share capital
in connection with a rights issue. This
authority will apply until the conclusion
of the 2024 AGM. A similar authority will
be sought from shareholders at the 2024
AGM. The Company does not currently
have authority to purchase its own shares,
and no such authority is being sought at
the 2024 AGM.
Significant contracts – change
of control
The Company has various borrowing
arrangements, including a revolving
credit facility and Senior Secured
notes. These arrangements include
customary provisions that may require
any outstanding borrowings to be
repaid and any outstanding notes to be
repurchased upon a change of control of
the Company. In addition, the Cadbury
licensing agreement also includes a
change of control provision, which could
result in the agreement being terminated
or renegotiated if the Company were to
undergo a change of control in certain
limited circumstances.
The Company’s executive and all-employee
share plans contain provisions, as a result
of which options and awards may vest and
become exercisable on a change of control
in accordance with the plan rules.
Articles of association
The Company’s Articles (which are
available on the Group’s website www.
premierfoods.co.uk) may only be amended
by a special resolution at a general
meeting. Subject to the provisions of the
statutes, the Company’s Articles, and any
directions given by special resolution, the
directors may exercise all the powers of
the Company.
Substantial shareholdings
Information provided to the Company pursuant to the Financial Conduct Authority’s (FCA)
Disclosure and Transparency Rules (DTRs) is published on a Regulatory Information Service
and on the Company’s website. As at 30 March 2024, the Company has been notified of
the following interests of 3% or more in the Company:
Principle
No. of
ordinary
shares
% of share
capital
Nissin Foods Holdings Co., Ltd.
210,836,846
24.43
Kempen Capital Management N.V.
69,531,163
8.00
JPMorgan Asset Management Holdings Inc.1
44,559,230
5.22
M&G Plc
34,916,779
4.05
1 Held in the form of shares and as a total return swap.
For the period 1 April 2024 up to and including 15 May 2024 (the latest practicable date
for inclusion in this report), there have been no further notifications pursuant to DTR 5.
Powers of directors
The powers of the directors are set out
in the Company’s Articles of Association
and may be amended by way of a special
resolution of the Company.
Board composition and appointments
As at the date of this report, the Board
is comprised of two executive directors,
seven independent non-executive directors
and one non-independent non-executive
director. These directors were in office
throughout FY23/24 and the details of
these directors can be found on pages 76
and 77. On 12 July 2023, it was announced
that Simon Bentley would step down as an
independent non-executive director, with
immediate effect.
The Board has the power to appoint
one or more additional directors. Under
the Articles, any such director holds
office until the next AGM when they are
eligible for election. Shareholders may
appoint, reappoint or remove directors
by an ordinary resolution. In addition, the
appointment of Yuichiro Kogo is subject to
the terms of the Shareholder Relationship
Agreement (see Conflicts of interest on
page 80).
Directors’ and officers’ liability
insurance
This insurance covers the directors and
officers against the costs of defending
themselves in civil proceedings taken
against them in their capacity as a director
or officer of the Company and in respect of
damages resulting from the unsuccessful
defence of any proceedings.
Access to external advice
Directors are allowed to take independent
professional advice in the course of their
duties. In addition, all directors have access
to the advice and services of the Company
Secretary. If any director were to have a
concern over any unresolved business
issue following professional advice, they
are entitled to require the Company
Secretary to minute that concern. Should
they later resign over a concern, non-
executive directors are asked to provide
a written statement to the Chair for
circulation to the Board.
Political donations
The Company’s policy is not to make
political donations and no such donations
were made in the financial period.
Employment of people with
disabilities
It is our policy to give full and fair
consideration to applications for
employment received from people
with disabilities, having regard to their
particular aptitudes and abilities. Wherever
possible, we will continue the employment
of, and arrange appropriate training for,
employees who have become disabled
during the period of their employment.
We provide the same opportunities
for training, career development and
promotion for people with disabilities as
for other colleagues.
Stakeholder engagement
Details of engagement with key
stakeholders is provided on pages 84 to 87.
Colleague engagement
The Board and its committees receive
regular updates on workforce matters,
which include:
•
Updates on key issues raised at
Premier Voice Forums, which have
been established at sites across the
business;
•
Site-based pay negotiations;
•
Results of biennial employee
engagement exercises and action plans
to address the issues raised; and
•
All employee share schemes.
Additional feedback mechanisms, via
the Board’s Remuneration and Audit
Committees, include:
•
Understanding of remuneration
arrangements for the workforce across
the business;
•
Updates on the management bonus
scheme and pay arrangements for
colleagues across the business; and
•
Periodic reporting of issues raised
via the Company’s confidential
whistleblowing helpline and
management’s response to them.
Further information on how we have
engaged with employees during the
financial period can be found in the
following sections:
•
Workforce Engagement NED: page 79.
•
Engaging with our stakeholders and
Section 172(1) statement: pages
84 to 87.
Colleague communication
We continue to place a high degree of
importance on communicating with
colleagues, at all levels of the organisation,
which is facilitated further by investment
in this area, with large digital news screens
at every site, our mobile-enabled intranet,
a fortnightly news round-up email and
posters.
We also video stream our colleague
briefing sessions directly to all sites, in
addition to cascading it through local
briefings. We believe it is important to
hear views from our colleagues in order to
understand how the working environment
can be improved. In our manufacturing
sites, we have constructive relationships
with our Trade Union colleagues, while at
head office, we run ‘Listening Groups’ and
‘Lunch and Learn’ events.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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117
GOVERNANCE
Other statutory information
Anti-corruption and anti-bribery
The Group has in place an Anti-Bribery and
Corruption Policy which provides guidance
for complying with anti-corruption laws.
These are circulated to graded managers
and those who operate in commercial
roles, together with formal training and
annual refreshers. Training covers, amongst
other things, guidance on dealings with
third parties, facilitation payments, gifts
and hospitality, and charitable and political
donations. We do not tolerate any form
of bribery or corruption and expect all
colleagues, business partners, suppliers,
contractors, joint venture partners,
customers, agents, distributors and other
representatives to act in accordance with
all laws and applicable Group policies. The
current Anti-Bribery and Corruption Policy
was approved by the Audit Committee in
March 2024 and a summary is available on
the Group’s website.
Code of conduct and
whistleblowing helpline
The Group is committed to ensuring that
everyone who comes into contact with
the business is treated with respect, and
that their health, safety and basic human
rights are protected and promoted. The
Board has approved a code of conduct,
which sets out the standards of behaviour
all employees are expected to follow,
and provides useful guidance to help
colleagues when it comes to doing the
right thing. The code was introduced in
2012 and is updated and reissued on
a periodic basis. A copy of the code is
included in the induction pack for new
joiners and is available on the Group’s
intranet and corporate website. The code
is made up of 10 key elements, including:
acting honestly and complying with the
law; competing fairly; food safety; and
treating people fairly.
We also have a confidential whistleblowing
call line to enable anyone who comes
into contact with our business (whether
colleagues, contractors, agency workers,
customers, suppliers or distributors),
to raise any concerns they have, which
cannot be dealt with through the
normal channels. Calls logged with the
whistleblowing service are followed up
promptly by the appropriate person
within the business and the issues
raised, and management’s response,
are reviewed by the Audit Committee.
The Audit Committee also reviews the
whistleblowing service, annually, and
arranges for it to be refreshed and
communicated to sites.
Modern slavery
We are committed to tackling all forms
of hidden labour exploitation, including
slavery and human trafficking, and we
ensure that all new members of the
Procurement team receive specific
training on modern slavery and trafficking
as part of their induction. The training
utilises both internal and external training
resource materials and is tailored to raise
awareness of the issues around modern
slavery in supply chains and to empower
team members to recognise and respond
to indicators of human rights abuse. Our
Modern Slavery Statement is reviewed and
approved by the Board on an annual basis
and is available to view on the Group’s
website.
Financial risk management
Details relating to financial risk
management in relation to the use of
financial instruments by the Group,
can be found in note 19 of the financial
statements.
Going concern and Viability
Statement
The directors have a reasonable
expectation that the Company and Group
have adequate resources to continue in
operational existence for the at least the
next 12 months and, therefore, continue to
adopt the going concern basis in preparing
the consolidated financial statements.
Further information on the basis of
preparation is set out in note 2.1 on pages
133 and 134. The Company’s Viability
Statement, where the directors confirm
that they have a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities as they
fall due over the five-year period to 31
March 2029, is set out on pages 71 and 72.
Related parties
Details on related parties can be found in
note 27 on pages 171 and 172.
Subsequent events
Details relating to subsequent events can
be found in note 30 on page 175.
The directors are responsible for preparing
the Annual Report for the 52 weeks
ended 30 March 2024 and the financial
statements in accordance with applicable
law and regulation.
Company law requires the directors to
prepare financial statements for each
financial year. Under that law, the directors
have prepared the Group financial
statements in accordance with UK-adopted
international accounting standards and
the Company financial statements in
accordance with United Kingdom Generally
Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising
FRS 101 ‘Reduced Disclosure Framework’
and applicable law).
Under company law, directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and Company and of the profit or loss of
the Group for that period. In preparing
the financial statements, the directors are
required to:
•
select suitable accounting policies and
then apply them consistently;
•
state whether applicable UK-adopted
international accounting standards
have been followed for the Group
financial statements and United
Kingdom Accounting Standards,
comprising FRS 101 have been
followed for the Company financial
statements, subject to any material
departures disclosed and explained in
the financial statements;
•
make judgements and accounting
estimates that are reasonable and
prudent; and
•
prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue in
business.
The directors are responsible for
safeguarding the assets of the Group and
Company and hence for taking reasonable
steps for the prevention and detection of
fraud and other irregularities.
The directors are also responsible for
keeping adequate accounting records that
are sufficient to show and explain the
Group’s and Company’s transactions and
disclose with reasonable accuracy at any
time the financial position of the Group
and Company and enable them to ensure
that the financial statements and the
Directors’ Remuneration Report comply
with the Companies Act 2006.
The directors are responsible for the
maintenance and integrity of the
Company’s website. Legislation in
the United Kingdom, governing the
preparation and dissemination of financial
statements, may differ from legislation in
other jurisdictions.
Directors’ confirmations
The directors consider that the Annual
Report for the 52 weeks ended 30 March
2024 and accounts, taken as a whole, is
fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s and
Company’s position and performance,
business model and strategy.
Each of the directors, whose names
and functions are listed in the Board of
directors section, confirm that, to the best
of their knowledge:
•
the Group financial statements, which
have been prepared in accordance
with UK-adopted international
accounting standards, give a true
and fair view of the assets, liabilities,
financial position and profit of
the Group;
•
the Company financial statements,
which have been prepared in
accordance with United Kingdom
Accounting Standards, comprising FRS
101, give a true and fair view of the
assets, liabilities and financial position
of the Company; and
•
the strategic report includes a fair
review of the development and
performance of the business and the
position of the Group and Company,
together with a description of the
principal risks and uncertainties that
it faces.
In the case of each director in office at the
date the directors’ report is approved:
•
so far as the director is aware, there is
no relevant audit information of which
the Group’s and Company’s auditors
are unaware; and
•
they have taken all the steps that they
ought to have taken as a director in
order to make themselves aware of
any relevant audit information and
to establish that the Group’s and
Company’s auditors are aware of that
information.
Independent auditors
PricewaterhouseCoopers LLP (‘PwC’) has
indicated its willingness to be appointed
as auditors of the Company. Upon
recommendation of the Audit Committee,
the appointment of PwC and the setting of
its remuneration will be proposed at the
2024 AGM.
The directors’ report was approved by the
Board on 16 May 2024 and signed on its
behalf by:
Simon Rose
General Counsel and Company Secretary
companysecretary@premierfoods.co.uk
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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119
GOVERNANCE
Other statutory information continued
Statement of directors’ responsibilities
In respect of the financial statements
Report on the audit of the financial statements
Opinion
In our opinion:
•
Premier Foods plc’s Group financial statements and Company
financial statements (the “financial statements”) give a true
and fair view of the state of the Group’s and of the Company’s
affairs as at 30 March 2024 and of the Group’s profit and the
Group’s cash flows for the 52 week period then ended;
•
the Group financial statements have been properly prepared
in accordance with UK-adopted international accounting
standards as applied in accordance with the provisions of the
Companies Act 2006;
•
the Company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure Framework”,
and applicable law); and
•
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the
Annual Report for the 52 weeks ended 30 March 2024 (the
“Annual Report”), which comprise: the Consolidated and Company
balance sheets as at 30 March 2024; the Consolidated statement
of profit or loss, the Consolidated statement of comprehensive
income, the Consolidated statement of cash flows, the
Consolidated and Company statements of changes in equity for
the period then ended; and the notes to the financial statements,
which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit
Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the Group in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical
Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard were
not provided.
Other than those disclosed in note 5.2 to the consolidated financial
statements, we have provided no non-audit services to the
Company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
•
Audit procedures provide coverage of 99% of revenue and 99%
of absolute profit before tax.
•
Audit procedures performed over 5 full scope components.
•
Financially significant components were Premier Foods Group
Limited and Premier Foods Group Services Limited.
Key audit matters
•
Valuation of pension liabilities and complex pension assets
(Group)
•
Accounting for commercial arrangements (Group)
•
Valuation of the brand intangible asset recognised on
acquisition of FUEL 10K Limited (Group)
•
Recoverability of investment in group undertakings (Company)
Materiality
•
Overall Group materiality: £7,575,000 (2023: £5,650,000)
based on approximately 5% of profit before taxation.
•
Overall Company materiality: £5,310,000 (2023: £3,000,000)
based on 1% of total assets.
•
Performance materiality: £5,600,000 (2023: £4,237,000)
(Group) and £3,982,500 (2023: £2,250,000) (Company).
The scope of our audit
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
120
121
FINANCIALS
Financial
Statements
Independent auditors’ report
to the members of Premier
Foods plc
121
Consolidated financial
statements
129
Notes to the consolidated
financial statements
133
Company financial statements
176
Notes to the Company
financial statements
178
Enriching Life Plan
disclosure tables
182
Additional information
190
Independent auditors’ report
to the members of Premier Foods plc
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Valuation of pension liabilities and complex pension assets (Group)
Refer to Notes 2.15 and 3.1 of the consolidated financial
statements for disclosures of related accounting policies,
judgements and estimates and Note 14 to the financial
statements.
The Group operates a number of defined benefit pension
schemes which, combined, have a total net defined benefit
pension surplus of £601.5m, comprising gross assets of
£3,565.0m and gross liabilities of £2,963.5m. The most
significant schemes held are the “RHM” schemes which have a
net retirement benefit surplus of £799.2m and the “Premier”
schemes with a net retirement benefit obligation of £197.7m at
30 March 2024.
Valuation of the liabilities requires significant levels of judgement
and technical expertise in determining the appropriate
assumptions to measure it. Changes in assumptions (including
the discount rate, inflation rates and mortality rates) can have
a material impact on the calculation of the liabilities either
individually or in combination. Management uses independent
actuaries to prepare the period end valuation under International
Accounting Standard 19, ‘Employee benefits’ (“IAS 19”).
Included within the RHM and Premier scheme assets are more
complex funds totalling £1,627.4m. Within these complex funds
are assets totalling £363.8m for which the most recent valuation
is at a date earlier than 30 March 2024. This is due to the time
required to finalise the valuation of the underlying assets. The
assets held by these funds do not have a quoted price and are
less liquid in nature, meaning the valuation is based on estimates
and judgements applied by the investment managers who
prepare the fund values recognised by the Schemes.
We focussed on the reasonableness of the key assumptions,
including the discount rate, inflation rates and mortality rates,
used in the calculation of the RHM and Premier defined benefit
liabilities and the valuation of complex assets held by the RHM
and Premier schemes.
We obtained an understanding of the pensions process
and assessed the Group’s design and implementation of
controls covering the asset and liability valuations, including
complementary user entity controls in place where service
organisations are used.
We involved our specialists in our assessment of the
reasonableness of actuarial assumptions and the overall defined
benefit pension liability calculations by comparing the key
assumptions, including the discount rate, inflation rates and
mortality rates, to benchmark ranges, performing sensitivity
analysis, checking whether methods had been consistently
applied and are reasonable, and assessing the impact of the
assumptions in combination with one another. We agreed that
the assumptions used and the methodology applied in the
defined benefit pension schemes valuations were reasonable.
We obtained external confirmations directly from the investment
managers to provide evidence of the existence and valuation of
pension assets as at 30 March 2024. In order to test the valuation
of the complex and illiquid assets, including those complex and
illiquid assets where only a lagged valuation was available, we
obtained a range of supporting evidence as available, including
recent transaction prices, audited fund financial statements
and fund control reports, to assess whether the value provided
was reliable and appropriate. We did not identify any material
misstatements from this testing. Specifically for those assets
with lagged valuations, we performed additional procedures
which included reviewing management’s assessment of both
a comparison of the valuations to indexed movements and a
lookback test to assess the reasonableness of historic estimates
against subsequent actual valuations. We noted no material
exceptions from these procedures.
Key audit matter
How our audit addressed the key audit matter
Accounting for commercial arrangements (Group)
Refer to Notes 2.3(ii) and 3.3 of the consolidated financial
statements for disclosures of the related accounting policies,
judgements and estimates and Note 18 to the financial
statements.
The Group has various types of commercial arrangements
in place with customers, offering a range of promotions
and discounts.
These arrangements vary in nature. Some of the arrangements
are subject to a higher degree of estimation, for instance when
it is dependent on the customer achieving a growth target or
the contract period is not coterminous with the Group’s financial
period. This requires management to recognise an estimate
of the accrual related to in-period promotional activity which
remains unsettled at the Group’s period end. The unsettled
liability from all commercial arrangements at 30 March 2024 was
£74.3m.
At the period end, for those arrangements subject to a higher
degree of estimation, there is a risk related to uncertainty arising
from the accuracy of estimated sales volumes attributable to
each arrangement or estimation of the final expected settlement,
which could vary based on subsequent commercial negotiations.
Additionally, there is a risk that these arrangements are not
completely accounted for which would result in revenue being
misstated as revenue is recognised net of the outflows from
these arrangements.
We obtained an understanding of the processes for accounting
for commercial arrangements and assessed the design and
implementation of the corresponding controls. We obtained an
understanding of the different types of arrangements in place
with customers, including the nature of the agreements and the
level of estimation involved in accounting for each.
For a sample of those commercial arrangements subject to
a higher degree of estimation, we traced the nature of the
arrangements to supporting documentation such as contracts,
correspondence with customers, and to invoices and settlements
as appropriate. We also evaluated the accuracy of the period
end commercial accruals balance by considering the precision
of amounts accrued compared to amounts actually settled from
promotional activity across the period. We found no material
misstatements from our testing.
We also performed flux analyses over the commercial accruals
balance for i) one month post period end (comparing the balance
at 30 April 2024 to the balance at 30 March 2024) and ii) period
on period (comparing the period end balance at FY24 to the prior
FY23 period end) with a view to corroborating the completeness
of the commercial arrangements recognised and any significant
variances that required investigation. We did not identify any
significant variances from our work.
To assess the completeness of the accounting for commercial
arrangements, including the period end promotions accrued,
we performed customer store visits and checked online vendors
in the week prior to the balance sheet date with a sample of
those products found to be on promotion traced to the Group’s
accounting records without exception.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
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FINANCIALS
Independent auditors’ report continued
to the members of Premier Foods plc
Key audit matter
How our audit addressed the key audit matter
Valuation of the brand intangible asset recognised on acquisition of FUEL 10K Limited (Group)
Refer to Notes 2.19 and 3.4 of the consolidated financial
statements for disclosures of the related accounting policies,
judgements and estimates and Note 28 to the financial
statements.
The Group completed the acquisition of FUEL 10K on 29 October
2023 for a total consideration of £36.2m, which includes an initial
cash consideration of £29.6m, and an estimated performance
linked consideration (at present value) of £6.6m at the date
of acquisition.
An intangible asset of £14.4m relating to the FUEL 10K Limited
brand was recognised as a fair value adjustment on acquisition.
The calculation of the brand fair value is subjective due to
the inherent uncertainty involved in certain key assumptions
underpinning the valuation, including revenue projections, the
discount rate and royalty rate. Changes in assumptions could
result in a materially different brand intangible asset value being
recognised and a corresponding increase or decrease in the value
of the residual goodwill recognised.
We performed audit procedures over the identification of the
brand intangible asset acquired and its valuation. We involved
our valuation specialists in our audit of the valuation of the
brand intangible asset acquired, including an assessment of the
appropriateness of the valuation model used and an assessment
of the reasonableness of the discount and royalty rates used in
the model.
We checked the revenue forecasts used in the valuation of the
brand intangible asset were consistent with the Board-approved
plan, and considered the reasonableness of revenue growth
assumptions in relation to recent trading post-acquisition.
We also considered the consistency of the FUEL 10K Limited
revenue forecasts that were used in the brand intangible asset
valuation model against those forecast cash flows used in other
asset impairment models prepared at the period end, including
those applied in management’s calculations for the Company’s
investment in group undertakings impairment assessment
referred to below.
We found that the valuation method used and the judgements
and estimates applied in the revenue forecasts, discount rate and
royalty rate used in the valuation of the brand intangible asset
acquired to be reasonable.
Recoverability of investment in group undertakings (Company)
Refer to Notes 1 and 2 of the Company financial statements for
disclosures of the related accounting policies, judgements and
estimates and Note 4 to the financial statements.
The Company held an investment in group undertakings of
£1,120.6m at 30 March 2024.
The assessment of the recoverability of this asset included
determining whether any impairment indicators had arisen
that triggered the need for a formal impairment assessment.
Management determined the existence of an impairment
indicator and therefore completed a formal impairment
assessment, which required the application of management
judgement and estimation.
Management’s assessment concluded that the recoverable
amount of the investment, supported by the value in use model,
exceeded the Company’s carrying value of the investment in
group undertakings.
In response to management’s formal impairment assessment, a
discounted cash flow model was prepared to determine the value
in use of the Group. We have assessed the consistency of the
cash flow forecasts with the Board approved five year plan and
considered the reasonableness of key assumptions in relation to
recent trading and market outlook. We also challenged the extent
to which climate change considerations had been reflected, as
appropriate, in the cash flow forecasts.
We found that the forecasts had been completed on a basis
consistent with prior years and were an appropriate basis upon
which management could base their conclusions. We evaluated
the historical accuracy of the cash flow forecasts and found these
to be reasonable. We compared certain key market assumptions
within the forecasts to available industry research data,
specifically in relation to revenue growth, which supported the
assumptions made.
We evaluated the appropriateness of management’s value in use
model, including agreeing amounts to supporting evidence and
checking mathematical accuracy of calculations, and engaging
our valuations specialists to evaluate the reasonableness of the
discount rate and long-term growth rate assumptions applied and
found the model to be prepared on an appropriate basis.
We further considered that the Group’s market capitalisation
exceeds the carrying value of the Company’s investment in group
undertakings providing corroboratory evidence to management’s
conclusion that there is no impairment.
Based on our procedures performed we concurred with
management’s conclusion that the carrying value of the
Company’s investment in group undertakings is recoverable.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls,
and the industry in which they operate.
As set out in note 4 ‘Segmental analysis’, the Group has two
reportable segments: ‘Grocery’ (which includes the grocery and
international divisions) and ‘Sweet Treats’. The Group’s financial
statements are a consolidation of reporting units, being holding
companies, intermediate holding companies and operating
companies of which the majority are in the United Kingdom. Two
reporting units, being Premier Foods Group Limited and Premier
Foods Group Services Limited, account for a significant portion of
the Group’s results. We accordingly focused our work on these two
reporting units, which were subject to audits of their complete
financial information. In addition, to increase our coverage of the
Group’s balance sheet we performed full scope audit procedures
at an additional three reporting units all located in the UK. Our in
scope components accounted for 99% of the Group’s revenue and
99% of the Group’s absolute profit before taxation.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to
understand the process management has adopted to assess
the extent of the potential impact of climate risk on the Group’s
financial statements and support the disclosures made within
the Taskforce on Climate-related Financial Disclosures (TCFD).
In addition to enquiries with management, we also understood
the governance processes in place to assess climate risk. We
challenged the completeness of management’s climate risk
assessment by comparing this to assessments performed by
other groups for completeness and reading the Group’s website/
communications to ensure details of climate related impacts
communicated to shareholders have been included. Management
considers that climate risk does not give rise to a potential
material financial statement impact. We considered impairment
of non-current assets, especially impairment of goodwill and
intangible assets, as the area to potentially be materially impacted
by climate risk and consequently we focused our audit work
in this area. To respond to the audit risks identified in this area
we tailored our audit approach to address these, in particular,
we challenged management on how the impact of climate
commitments made by the Group would impact the assumptions
within the discounted cash flow models prepared by management
that are used in the Group’s impairment assessment. We also
considered the consistency of the disclosures in relation to climate
change (including the disclosures in the TCFD section) within the
Annual Report with the financial statements and our knowledge
obtained from our audit. Our procedures did not identify any
material impact in the context of our audit of the financial
statements as a whole, or our key audit matters for the period
ended 30 March 2024.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us
to determine the scope of our audit and the nature, timing
and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Financial statements – Group
Financial statements – Company
Overall materiality
£7,575,000 (2023: £5,650,000).
£5,310,000 (2023: £3,000,000).
How we determined it
approximately 5% of profit before taxation
1% of total assets
Rationale for
benchmark applied
We believe that profit before taxation is a
key metric for investors and is used by the
Board in measuring the Group's financial
performance.
We believe that total assets is the primary measure used
by the shareholders in assessing the performance of the
Company, and is a generally accepted benchmark. The value
is capped for the purpose of the Group audit with reference
to Group materiality.
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
£3,300,000 to £5,310,000. Certain components were audited to a
local statutory audit materiality that was also less than our overall
Group materiality.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was approximately 75%
(2023: 75%) of overall materiality, amounting to £5,600,000 (2023:
£4,237,000) for the Group financial statements and £3,982,500
(2023: £2,250,000) for the Company financial statements.
In determining the performance materiality, we considered a
number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and
concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to
them misstatements identified during our audit above £295,000
(Group audit) (2023: £282,000) and £265,000 (Company audit)
(2023: £150,000) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
124
125
FINANCIALS
Independent auditors’ report continued
to the members of Premier Foods plc
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the
Company’s ability to continue to adopt the going concern basis of
accounting included:
•
Obtaining management’s Board-approved strategic plan for the
five year period ended 31 March 2029. We held discussions
with management to understand the budgeting process and the
key assumptions made in the forecasting processes;
•
Obtaining and assessing management’s going concern
assessment, supporting documents and performed a comparison
of the cash flow forecasts used in the going concern assessment
to those in the strategic plan and, where applicable, compared
these forecasts for consistency to those used elsewhere in the
business, including for impairment assessments;
•
Assessing the appropriateness of and challenging
management’s assumptions included in the assessment;
•
Reviewing management’s severe but plausible downside
scenario and challenged management on the number of
downside assumptions modelled, and whether these are
prudent enough whilst still being realistic. We have also
challenged management regarding the likelihood of these
scenarios occurring simultaneously;
•
Obtaining and reviewing external evidence in support
of revenue growth applied in the model and noted that
management’s assumptions are reasonable, as these consider
past historical trends in line with price increases and volumes;
•
Performing a breakpoint analysis to assess the reduction in
trading profit required to cause a breach in debt covenants
and the reduction in EBITDA to fully erode liquidity headroom
and deem the headroom available to support the judgement
over the going concern to be appropriate;
•
Challenging management on whether the effect of expected
capex in relation to climate change has been sufficiently
modelled in the going concern assessment;
•
We have reviewed the disclosures included within the financial
statements and deem them to be appropriate.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group’s and the Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the Group’s and
the Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied
the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in
the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the
other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated.
If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required
to report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic report and Directors’ report, we also
considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic report and Directors’
report for the period ended 30 March 2024 is consistent with the
financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and
Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the
Strategic report and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements
in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities
with respect to the corporate governance statement as other
information are described in the Reporting on other information
section of this report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
•
The directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
•
The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
•
The directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the Group’s and
Company’s ability to continue to do so over a period of at
least twelve months from the date of approval of the financial
statements;
•
The directors’ explanation as to their assessment of the
Group’s and Company’s prospects, the period this assessment
covers and why the period is appropriate; and
•
The directors’ statement as to whether they have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or
assumptions.
Our review of the directors’ statement regarding the longer-term
viability of the Group and Company was substantially less in
scope than an audit and only consisted of making inquiries and
considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements
and our knowledge and understanding of the Group and Company
and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the
financial statements and our knowledge obtained during the audit:
•
The directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess
the Group’s and Company’s position, performance, business
model and strategy;
•
The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems; and
•
The section of the Annual Report describing the work of the
Audit Committee.
We have nothing to report in respect of our responsibility to
report when the directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Statement of directors’
responsibilities, the directors are responsible for the preparation
of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair
view. The directors are also responsible for such internal control as
they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the Group’s and the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or the
Company or to cease operations, or have no realistic alternative
but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud, is detailed below.
Based on our understanding of the Group and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to breaches of food safety and hygiene,
and we considered the extent to which non-compliance might
have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact
on the financial statements such as the Companies Act 2006
and UK corporation tax legislation. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls),
and determined that the principal risks were related to posting
inappropriate journal entries to materially misstate the financial
statements and management bias in accounting estimates. Audit
procedures performed by the engagement team included:
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
126
127
FINANCIALS
Independent auditors’ report continued
to the members of Premier Foods plc
•
Performing inquiries with management at multiple levels
across the business, internal audit and the Group’s legal
counsel throughout the period, as well as at period end.
These discussions have included consideration of known
or suspected instances of non-compliance with laws and
regulations and fraud;
•
Evaluation of management’s internal controls through
inspection of internal audit report findings and their overall
risk assessment process designed to prevent and detect
irregularities;
•
Identifying and testing journal entries, in particular any
journal entries posted with unusual account combinations
(for example a credit entry to revenue with a debit entry
to an unexpected account) and journals posted by senior
management;
•
Incorporating elements of unpredictability around the nature,
timing or extent of our audit procedures performed;
•
Performing procedures to ensure the financial statements
are appropriately prepared and disclosed in line with the
Companies Act 2006; and
•
Inspecting the minutes of meetings to ensure we have
identified any possible non-compliance reported internally.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related
to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about
the population from which the sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at: www.frc.
org.uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
•
we have not obtained all the information and explanations we
require for our audit; or
•
adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
•
certain disclosures of directors’ remuneration specified by law
are not made; or
•
the Company financial statements and the part of the
Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we
were appointed by the directors on 23 August 2022 to audit
the financial statements for the 52 week period ended 1 April
2023 and subsequent financial periods. The period of total
uninterrupted engagement is 2 years, covering the 52 week
periods ended 1 April 2023 to 30 March 2024.
Other matter
As required by the Financial Conduct Authority Disclosure
Guidance and Transparency Rule 4.1.14R, these financial
statements form part of the ESEF-prepared annual financial report
filed on the National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory Technical
Standard (‘ESEF RTS’). This auditors’ report provides no assurance
over whether the annual financial report has been prepared using
the single electronic format specified in the ESEF RTS.
Richard Porter (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
16 May 2024
Note
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Revenue
4
1,137.5
1,006.4
Cost of sales
(705.2)
(648.2)
Gross profit
432.3
358.2
Selling, marketing and distribution costs
(178.8)
(142.0)
Administrative costs
(75.8)
(87.8)
Other income
6
–
3.8
Operating profit
4, 5
177.7
132.2
Finance cost
8
(30.4)
(21.7)
Finance income
8
4.1
1.9
Profit before taxation
151.4
112.4
Taxation
9
(38.9)
(20.8)
Profit for the period attributable to owners of the parent
112.5
91.6
Earnings per share (pence)
Basic
10
13.0
10.6
Diluted
10
12.7
10.4
Consolidated statement of
comprehensive income
Note
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Profit for the period
112.5
91.6
Other comprehensive (expense)/income, net of tax
Items that will never be reclassified to profit or loss
Remeasurements of defined benefit schemes
14
(237.7)
(245.6)
Deferred tax credit
9
50.6
52.7
Current tax credit
9
8.4
7.2
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation
(0.5)
0.6
Other comprehensive expense, net of tax
(179.2)
(185.1)
Total comprehensive expense attributable to owners of the parent
(66.7)
(93.5)
The notes on pages 133 to 175 form an integral part of the consolidated financial statements.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
128
129
FINANCIALS
Independent auditors’ report continued
to the members of Premier Foods plc
Consolidated statement of profit or loss
Note
As at
30 March
2024
£m
As at
1 April
2023
£m
ASSETS:
Non-current assets
Property, plant and equipment
11
190.4
185.9
Goodwill
12
702.7
680.3
Other intangible assets
13
289.6
294.4
Deferred tax assets
9
22.4
22.4
Net retirement benefit assets
14
810.0
960.1
2,015.1
2,143.1
Current assets
Inventories
15
98.9
93.7
Trade and other receivables
16
115.7
103.9
Cash and cash equivalents
17
102.3
64.4
Derivative financial instruments
19
–
0.8
316.9
262.8
Total assets
2,332.0
2,405.9
LIABILITIES:
Current liabilities
Trade and other payables
18
(264.6)
(255.4)
Financial liabilities
– short-term borrowings
20
–
(1.0)
– derivative financial instruments
19
(0.8)
(0.5)
Lease liabilities
20
(2.7)
(2.1)
Provisions for liabilities and charges
21
(9.8)
(13.3)
Current income tax liabilities
9
(0.4)
–
(278.3)
(272.3)
Non-current liabilities
Long-term borrowings
20
(325.7)
(324.4)
Lease liabilities
20
(9.5)
(11.2)
Net retirement benefit obligations
14
(208.5)
(194.6)
Provisions for liabilities and charges
21
(7.3)
(6.6)
Deferred tax liabilities
9
(152.9)
(177.9)
Other liabilities
22
(22.9)
(12.9)
(726.8)
(727.6)
Total liabilities
(1,005.1)
(999.9)
Net assets
1,326.9
1,406.0
EQUITY:
Capital and reserves
Share capital
23
86.9
86.8
Share premium
23
2.7
2.5
Merger reserve
23
351.7
351.7
Other reserves
23
(9.3)
(9.3)
Retained earnings
23
894.9
974.3
Total equity
1,326.9
1,406.0
The notes on pages 133 to 175 form an integral part of the consolidated financial statements.
The financial statements on pages 129 to 175 were approved by the Board of directors on 16 May 2024 and signed on its behalf by:
Alex Whitehouse
Duncan Leggett
Chief Executive Officer
Chief Financial Officer
Note
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Cash generated from operations
17
146.4
108.3
Interest paid
(23.9)
(20.4)
Interest received
3.6
0.8
Taxation paid
(4.4)
(1.5)
Cash generated from operating activities
121.7
87.2
Acquisition of subsidiaries, net of cash acquired
28
(29.3)
(43.8)
Purchases of property, plant and equipment
(24.7)
(15.5)
Purchases of intangible assets
(8.1)
(4.5)
Cash used in investing activities
(62.1)
(63.8)
Principal element of lease payments
(1.8)
(2.3)
Financing fees
(0.5)
(0.7)
Dividends paid
24
(12.4)
(10.3)
Purchase of shares to satisfy share awards
(6.3)
(2.5)
Proceeds from share issue
0.3
1.5
Cash used in financing activities
(20.7)
(14.3)
Net increase in cash and cash equivalents
38.9
9.1
Cash, cash equivalents and bank overdrafts at beginning of period
63.4
54.3
Cash, cash equivalents and bank overdrafts at end of period1
17
102.3
63.4
1 Cash and cash equivalents of £102.3m (2022/23: £63.4m) includes bank overdraft of £nil (2022/23: £1.0m) and cash and bank deposits of £102.3m (2022/23: £64.4m). See
notes 17 and 20 for more details.
The notes on pages 133 to 175 form an integral part of the consolidated financial statements.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
130
131
FINANCIALS
Consolidated balance sheet
Registered Number: 005160050
Consolidated statement of cash flows
1. General information
Premier Foods plc (the ‘Company’) is a public limited company incorporated in the United Kingdom and domiciled in England, registered
number 05160050, with its registered address at Premier House, Centrium Business Park, Griffiths Way, St Albans, Hertfordshire AL1 2RE.
The principal activity of the Company and its subsidiaries (the ‘Group’) is the manufacture and distribution of branded and own label food
products. Copies of the Annual Report and financial statements are available on our website:
http://www.premierfoods.co.uk/investors/results-centre.
These Group consolidated financial statements were authorised for issue by the Board of directors on 16 May 2024.
2. Accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless otherwise stated.
2.1 Basis of preparation
These Group financial statements were prepared in accordance with UK-adopted international accounting standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting under those standards. All amounts are presented to the
nearest £0.1m, unless otherwise indicated. They are prepared on a going concern basis and under the historical cost basis, except for
certain financial instruments and pension assets that have been measured at fair value.
The statutory accounting period is the 52 weeks from 2 April 2023 to 30 March 2024 and comparative results are for the 52 weeks from
3 April 2022 to 1 April 2023. All references to the ‘period’, unless otherwise stated, are for the 52 weeks ended 30 March 2024 and the
comparative period, 52 weeks ended 1 April 2023.
The preparation of financial statements in conformity with UK-adopted international accounting standards requires the use of certain
significant accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in note 3.
The following standards and amendments to published standards, effective for periods on or after 1 January 2023, have been endorsed:
International Financial Reporting Standards
Amendments to IAS 1
Presentation of Financial Statements
Amendments to IAS 8
Accounting policies, Changes in Accounting
Estimates and Errors
Amendments to IAS 12
Income Taxes
IFRS 17
Insurance Contracts
The following standards and amendments to published standards, effective for periods on or after 1 January 2024, have been endorsed:
International Financial Reporting Standards
Amendments to IAS 1
Presentation of Financial Statements
Amendments to IFRS 16
Lease Accounting
Amendments to IAS 12
Income Taxes
Amendments to IAS 7
Statement of Cash Flows
Amendments to IFRS 7
Financial Instruments: Disclosures
The Group has considered the new or revised standards above and concluded that either they are not relevant to the Group or would not
have a material impact on the financial statements of the Group.
Basis for preparation of financial statements on a going concern basis
The Group’s revolving credit facility includes net debt/EBITDA and EBITDA/interest covenants as detailed in note 20. In the event these
covenants are not met then the Group would be in breach of its financing agreement and, as would be the case in any covenant breach,
the banking syndicate could withdraw funding to the Group. The Group was compliant with its covenant tests as at 30 September 2023
and 30 March 2024.
Having undertaken a robust assessment of the Group’s forecasts with specific consideration to the trading performance of the Group,
cashflows and covenant compliance, the Directors have a reasonable expectation that the Group is able to operate within the level of
its current facilities, meet the required covenant tests and has adequate resources to continue in operational existence for at least 12
months from the date of approval of these financial statements. The Group therefore continues to adopt the going concern basis in
preparing its financial information for the reasons set out below:
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
132
133
FINANCIALS
Consolidated statement of changes in equity
Note
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Other
reserves
£m
Retained
earnings1
£m
Total
equity
£m
At 3 April 2022
86.3
1.5
351.7
(9.3)
1,076.7
1,506.9
Profit for the period
–
–
–
–
91.6
91.6
Remeasurements of defined benefit
schemes
14
–
–
–
–
(245.6)
(245.6)
Deferred tax credit
9
–
–
–
–
52.7
52.7
Current tax credit
9
–
–
–
–
7.2
7.2
Exchange differences on translation
–
–
–
–
0.6
0.6
Other comprehensive expense
–
–
–
–
(185.1)
(185.1)
Total comprehensive expense
–
–
–
–
(93.5)
(93.5)
Shares issued
23
0.5
1.0
–
–
–
1.5
Share-based payments
23
–
–
–
–
4.6
4.6
Purchase of shares to satisfy share awards
23
–
–
–
–
(2.5)
(2.5)
Deferred tax movements on share-based
payments
9
–
–
–
–
(0.7)
(0.7)
Dividends
24
–
–
–
–
(10.3)
(10.3)
At 1 April 2023
86.8
2.5
351.7
(9.3)
974.3
1,406.0
At 2 April 2023
86.8
2.5
351.7
(9.3)
974.3
1,406.0
Profit for the period
–
–
–
–
112.5
112.5
Remeasurements of defined benefit
schemes
14
–
–
–
–
(237.7)
(237.7)
Deferred tax credit
9
–
–
–
–
50.6
50.6
Current tax credit
9
–
–
–
–
8.4
8.4
Exchange differences on translation
–
–
–
–
(0.5)
(0.5)
Other comprehensive expense
–
–
–
–
(179.2)
(179.2)
Total comprehensive expense
–
–
–
–
(66.7)
(66.7)
Shares issued
23
0.1
0.2
–
–
–
0.3
Share-based payments
23
–
–
–
–
4.4
4.4
Purchase of shares to satisfy share awards
–
–
–
–
(6.3)
(6.3)
Deferred tax movements on share-based
payments
9
–
–
–
–
1.6
1.6
Dividends
24
–
–
–
–
(12.4)
(12.4)
At 30 March 2024
86.9
2.7
351.7
(9.3)
894.9
1,326.9
1 Included in Retained earnings at 30 March 2024 is £3.9m in relation to cumulative translation losses (2022/23: £3.4m loss, 2021/22: £3.7m loss).
The notes on pages 133 to 175 form an integral part of the consolidated financial statements.
Notes to the consolidated financial statements
2. Accounting policies continued
At 30 March 2024 the Group had total assets less current liabilities of £2,053.7m (2022/23: £2,133.6m), net current assets of £38.6m
(2022/23: net current liabilities of £9.5m) and net assets of £1,326.9m (2022/23: £1,406.0m). Liquidity as at that date was £284.3m,
made up of cash and cash equivalents, available overdrafts and undrawn committed credit facilities of £175.0m expiring in May 2026.
At the time of the approval of this report, the cash and liquidity position of the group has not changed significantly.
The directors have rigorously reviewed the global political and economic uncertainty driven by current conflict, the inflationary pressures
across the industry and the cost of living crisis and have modelled a severe but plausible downside case impacting future financial
performance, cash flows and covenant compliance, that cover a period of at least 12 months from the date of approval of the financial
statements. The downside case represents severe but plausible assumptions related primarily to the impact of inflation during the review
period. The directors have also considered the impact of the outbreak of an infectious disease, climate change, cyber-attacks and changes
in consumer preferences in the downside case modelled and have assumed all scenarios within the downside case impact during the
period reviewed.
Whilst the downside scenario is deemed severe but plausible, it is considered by the directors to be a robust stress test of going concern,
having an adverse impact on revenue, margin and cash flow. Should circumstances mean there is further downside, whilst not deemed
plausible, the directors, in response have identified mitigating actions within their control, that would reduce costs, optimise cashflow
and liquidity. Amongst these are the following actions: reducing capital expenditure, reducing marketing spend and delaying or cancelling
discretionary spend. The directors have assumed no significant structural changes to the business will be needed in any of the scenarios
modelled. None of the scenarios modelled are sufficiently material to prevent the Group from continuing as a going concern.
The Directors, after reviewing financial forecasts and financing arrangements, have a reasonable expectation that the Group has adequate
resources to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of this report. Accordingly,
the Directors are satisfied that it is appropriate to continue to adopt the going concern basis (in accordance with the guidance ‘Guidance
on Risk Management, Internal Control and Related Financial and Business Reporting’ issued by the FRC) in preparing its consolidated
financial statements.
Climate change
The Group has considered the impact of both physical and transitional climate change risks on the financial statements of the Group.
The Group does not consider there to be a material impact on the valuation of the Group’s assets or liabilities, including useful economic
life of property, plant and equipment, or on any significant accounting estimates or judgements. See note 14 for further details on how
the trustee of the Group’s pension scheme plans to integrate climate change considerations into their investment strategy. The Group will
continue to monitor the impact on valuations of assets and liabilities as government policy evolves.
The impact of climate change has been considered in the projected cash flows used for impairment testing where the material risks
identified in the TCFD statement, see page 42, have been modelled in the severe but plausible scenario for going concern and viability.
See note 12 for further details.
2.2 Basis of consolidation
(i) Subsidiaries
The consolidated financial statements include the financial statements of Premier Foods plc and entities controlled by the Company (its
subsidiaries). Control is achieved where the Company is exposed to or has rights to variable returns from involvement with an investee
and has the ability to affect those returns through its power over the investee.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
2.3 Revenue
Revenue comprises the invoiced value for the sale of branded and own label food products net of sales rebates, discounts, value
added tax and other taxes directly attributable to revenue and after eliminating sales within the Group. Revenue is recognised when
performance obligations are satisfied and the Group transfers control of products over to the customer. Transaction price per case is pre
agreed per the price list with any discount related to an individual customer-run promotion agreed in advance. Long-term discounts and
rebates are part of a commercial arrangement and the Group uses actual and forecast sales to estimate the level of discount or rebate.
The Group uses the ‘most likely amount’ method to estimate the value of the variable consideration. Revenue is recognised on the
following basis:
2.3 Revenue (continued)
(i) Sale of goods
Sales of goods are recognised as revenue when a customer gains control of the goods, which typically coincides with the time when the
merchandise is delivered to customers and title passes.
(ii) Sales rebates and discounts
Sales related discounts comprise:
•
Long-term discounts and rebates, which are sales incentives to customers to encourage them to purchase increased volumes and are
related to total volumes purchased and sales growth.
•
Short-term promotional discounts, which are directly related to promotions run by customers.
Sales rebates and discount accruals are treated as a reduction in the transaction price and are established at the time of sale based
on management’s best estimate of the amounts necessary to meet claims by the Group’s customers in respect of these rebates and
discounts and are reviewed for appropriateness at each reporting date. Accruals are made for each individual promotion or rebate
arrangement and are based on the type and length of promotion and nature of customer agreement. At the time an accrual is made the
nature and timing of the promotion is typically known. Accumulated experience is used to estimate and provide for rebates and discounts
and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. As there is no right to
enforce net settlement, the accruals are presented gross.
(iii) Commercial income
Commercial income received from suppliers through rebates and discounts is recognised within cost of sales over the period(s) to which
the underlying contract or agreement relates. Accrued income is recognised for rebates on contracts covering the current period, for
which no cash was received at the balance sheet date. Deferred income is recognised for rebates that were received from suppliers at the
balance sheet date but relate to contracts covering future periods.
2.4 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker
(‘CODM’). The CODM is responsible for allocating resources and assessing performance of the operating segments. See note 4 for
further details.
2.5 Foreign currency translation
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
retranslated to the functional currency at the foreign exchange rate ruling at that date.
The results of overseas subsidiaries with functional currencies other than in sterling are translated into sterling at the closing rate of
exchange ruling in the period. The balance sheets of overseas subsidiaries are translated into sterling at the closing rate. Exchange
differences arising from retranslation at the period end exchange rates of the net investment in foreign subsidiaries are recorded as a
separate component of equity in reserves. All other exchange gains or losses are recorded in the statement of profit or loss.
2.6 Dividends
Dividend distributions to shareholders are recognised as a liability in the Group’s financial statements in the period in which the dividends
are approved by the shareholders, and for interim dividends in the period in which they are paid.
2.7 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with a maturity point of less than three months at inception. Cash
and cash equivalents and bank overdrafts are offset where there is a legally enforceable right to offset the recognised amounts and the
Group intends to settle on a net basis.
Bank overdrafts which are not offset and that are repayable on demand and form an integral part of the Company’s cash management
are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.
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Notes to the consolidated financial statements continued
2. Accounting policies continued
2.8 Property, plant and equipment (‘PPE’)
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
PPE is initially recorded at cost. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to
its working condition for its intended use. Subsequent expenditure is added to the carrying value of the asset when it is probable that
incremental future economic benefits will transfer to the Group. All other subsequent expenditure is expensed in the period it is incurred.
Differences between the cost of each item of PPE and its estimated residual value are written off over the estimated useful life of
the asset using the straight-line method. Reviews of the estimated remaining useful lives and residual values of individual productive
assets are performed annually, taking account of commercial and technological obsolescence as well as normal wear and tear. Freehold
land is not depreciated. The useful economic lives of owned assets range from 15 to 50 years for buildings, 5 to 30 years for plant and
equipment and 10 years for vehicles.
All items of PPE are reviewed for impairment when there are indications that the carrying value may not be fully recoverable.
Assets under construction represent the amount of expenditure recognised in the course of an asset’s construction. Directly attributable
costs that are capitalised as part of PPE include employee costs and an appropriate portion of relevant overheads. Depreciation of an
asset is recognised from the time it is available for use. The difference between the carrying value of disposed assets and the net disposal
proceeds is recognised in profit or loss.
2.9 Intangible assets
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but
is tested annually for impairment.
In addition to goodwill, the Group recognises the following intangible assets:
Acquired intangible assets
Acquired brands and licences that are controlled through custody or legal rights and that could be sold separately from the rest of the
business are capitalised, where fair value can be reliably measured. All these assets are considered to have finite lives and are amortised
on a straight-line basis over their estimated useful economic lives that range from 15 to 40 years for brands.
Software
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the
Group are recognised as intangible assets when the project or process is technically and commercially feasible. Directly attributable costs
that are capitalised as part of the software product include the software development employee costs and an appropriate portion of
relevant overheads.
Software development costs are amortised over their estimated useful lives on a straight-line basis over a range of 3 to 10 years.
The useful economic lives of intangible assets are determined based on a review of a combination of factors including the asset
ownership rights acquired and the nature of the overall product life cycle. Reviews of the estimated remaining useful lives and residual
values of individual intangible assets are performed annually.
Cloud computing arrangements
Licences to use cloud based software are only capitalised if the Group has both the contractual right to take possession of the software
without significant penalty and the ability to run the software independently from the original supplier. All other cloud computing
arrangements are treated as service contracts and charged to the statement of profit or loss over the term of the contract.
Costs to configure or customise software under a cloud computing arrangement are charged to the statement of profit or loss alongside
the related service contract, unless they create a separately identifiable resource controlled by the Group, in which case they are
capitalised.
Research
Expenditure on research activities is charged to the statement of profit or loss in the period in which it is incurred.
2.10 Impairment
The carrying values of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at least annually
to determine whether there is an indication of impairment. For goodwill, the recoverable amount is estimated each year at the same
time. Assets that are subject to amortisation are assessed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Non-financial assets, other than goodwill, that have suffered an impairment loss are reviewed
for possible reversal of the impairment at each reporting date.
Where an indication of impairment exists, the recoverable amount is estimated based on the greater of its value in use and its fair value
less costs to sell. In assessing the fair value less costs to sell, the market approach is often used to derive market multiples from a set of
comparative assets.
The Group reviews its identified CGUs for the purposes of testing goodwill on an annual basis, taking into consideration whether assets
generate independent cash inflows. The recoverable amounts of CGUs are determined based on the higher of fair value less costs of
disposal and value in use calculations. These calculations require the use of estimates.
Impairment losses are recognised in the statement of profit or loss in the period in which they occur.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets
that generate cash inflows from continuing use that are largely independent of the cash flows of other assets or groups of assets.
2.11 Finance cost and income
Finance cost
Borrowing costs are accounted for on an accruals basis in the statement of profit or loss using the effective interest method.
Finance income
Finance income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates
applicable, taking into consideration the interest element of derivatives.
2.12 Leases
Lease recognition
At the inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
For leases of properties in which the Group is a lessee, it has applied the practical expedient permitted by IFRS 16 and will account for
each lease component and any associated non-lease components as a single lease component.
Right of use assets
The Group recognises right of use assets at the commencement date of the lease. Right of use assets are measured at cost, less
accumulated depreciation and impairment losses and adjusted for any re-measurement of lease liabilities. The cost of right of use assets
includes the amount of lease liabilities recognised, adjusted for any lease payments made at or before the commencement date, less any
lease incentives received. Right of use assets are depreciated over the shorter of the asset’s useful life or the lease term on a straight-
line basis. Right of use assets are subject to and reviewed regularly for impairment. Depreciation on right of use assets is predominantly
recognised in cost of sales and administration costs in the consolidated statement of profit and loss.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of the lease payments to
be made over the lease term. Lease payments include fixed and variable lease payments that depend on an index or rate less any lease
incentives receivable. Any variable lease payments that do not depend on an index or rate are recognised as an expense in the period in
which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily determinable. Generally, the Group uses its incremental borrowing rate as the
discount rate.
After the commencement date, the lease liability is increased to reflect the accretion of interest and reduced for lease payments made.
In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term or a change in
the fixed lease payments. Interest charges are included in finance costs in the consolidated statement of profit and loss and included in
interest paid within cash flows from operating activities. Payments for the principal element of lease liabilities are presented within cash
flows from financing activities.
Short-term leases and leases of low-value items
The Group has elected not to recognise right of use assets and lease liabilities for short-term leases of machinery and equipment that
have a lease term of less than 12 months and leases of low-value assets. Lease payments relating to short-term leases and leases of low-
value assets are recognised as an expense on a straight-line basis over the lease term.
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Notes to the consolidated financial statements continued
2. Accounting policies continued
2.13 Inventories
Inventories are stated at the lower of cost and net realisable value. Where appropriate, cost includes production and other attributable
overhead expenses as described in IAS 2 Inventories. Cost is calculated on a first-in, first-out basis by reference to the invoiced value of
supplies and attributable costs of bringing the inventory to its present location and condition. Net realisable value is the estimated selling
price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.
All inventories are reduced to net realisable value where this is lower than cost.
A provision is made for slow moving, obsolete and defective inventory where appropriate.
2.14 Taxation
Income tax on the profit or loss for the period comprises current and deferred tax.
Current tax
Income tax is recognised in the statement of profit or loss except to the extent that it relates to items recognised directly in other
comprehensive income (‘OCI’) in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income
for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of
previous periods.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred taxation is not provided on the initial
recognition of an asset or liability in a transaction, other than in a business combination, if at the time of the transaction there is no effect
on either accounting or taxable profit or loss.
Deferred tax is measured at the tax rates that are expected to apply in the periods in which the asset or liability is settled based on tax
rates (and tax laws) that have been enacted or substantively enacted as at the balance sheet date.
The measurement of deferred tax assets and liabilities reflect the directors’ intention regarding the manner of recovery of an asset or
settlement of a liability.
For the purpose of recognising deferred tax on the pension scheme surplus, withholding tax (at 25%) would apply for any surplus being
refunded to the Group at the end of the life of the scheme.
The directors have concluded that the future corporation tax rate of 25% should apply to the recognition of deferred tax on the pension
scheme surplus, reflecting the directors’ intention regarding the manner of recovery of the deferred tax asset.
Deferred tax is recognised in the statement of profit or loss except when it relates to items credited or charged directly to OCI, in which
case the deferred tax is also recognised in equity.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
difference can be utilised. Their carrying amount is reviewed at each balance sheet date on the same basis.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and when the Group
intends to settle its current tax assets and liabilities on a net basis.
When assessing whether the recognition of a deferred tax asset can be justified, and if so at what level, the directors take into account
the following:
•
Historic business performance
•
Projected profits or losses and other relevant information that allow profits chargeable to corporation tax to be derived
•
The total level of recognised and unrecognised losses that can be used to reduce future forecast taxable profits
•
The period over which there is sufficient certainty that profits can be made that would support the recognition of an asset
Further disclosures of the amounts recognised (and unrecognised) are contained within note 9.
2.15 Employee benefits
Group companies provide a number of long-term employee benefit arrangements, primarily through pension schemes. The Group has
both defined benefit and defined contribution schemes.
Defined benefit plan
A defined benefit plan is a post-employment benefit plan that defines the amount of pension benefit that an employee will receive on
retirement, usually dependent on factors such as age, years of service and compensation.
The liability or surplus recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined
benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for remeasurement and past
service costs. Defined benefit obligations are calculated using assumptions determined by the Group with the assistance of independent
actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the
estimated future cash outflows using yields of high-quality corporate bonds that are denominated in the currency in which the benefits
will be paid, and that have terms to maturity approximating to the terms of the related pension liability.
Remeasurement arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of
comprehensive income in the period in which they arise.
Past service costs, administration costs, and the net interest on the net defined benefit liability or surplus are recognised immediately in
the statement of profit or loss.
Curtailments are recognised as a past service cost when the Group makes a significant reduction in the number of employees covered
by a plan or amends the terms of a defined benefit plan so that a significant element of future service by current employees no longer
qualifies for amended benefits.
Plan assets of the defined benefit schemes include a number of assets for which quoted prices are not available. At each reporting date,
the Group determines the fair value of these assets with reference to most recently available information. The trustees of the schemes
have integrated climate change considerations into their long-term decision making and reporting processes. See note 14 for further
details.
To the extent a surplus arises under IAS 19, the Group ensures that it can recognise the associated asset in line with IFRIC 14 with no
restrictions. There are no restrictions on the current realisability of the surplus.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension
plans are recognised as an expense in the income statement in the periods during which services are rendered by employees. Differences
between contributions payable in the period and contributions actually paid are recognised as either accruals or prepayments in the
balance sheet.
2.16 Share-based payments
The Group operates a number of equity-settled share-based compensation plans. The fair value of employee share option plans is
calculated using an option valuation model, taking into account the terms and conditions upon which the awards were granted. In
accordance with International Financial Reporting Standard 2, Share-Based Payment (‘IFRS 2’), the resulting expense is charged to the
profit and loss account over the vesting period of the options. The value of the charge is adjusted to reflect expected and actual levels of
options vesting.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the share awards/options
granted, adjusted where required for the impact of any non-market vesting conditions (for example, profitability and sales growth
targets). Market conditions are included in assumptions about the number of share awards/options that are expected to vest which is
factored into the grant date fair value for awards with these conditions attached.
At each balance sheet date, the Group revises its estimates of the number of share awards/options that are expected to vest (for those
with non-market conditions) and recognises the impact of the revision to original estimates, if any, in profit and loss, with a corresponding
adjustment to equity.
2.17 Provisions
Provisions (for example property exit costs) are recognised when the Group has present legal or constructive obligations as a result of
past events, that can be reliably measured, and it is probable that an outflow of resources will be required to settle the obligation. Where
material, the Group discounts its provisions using a pre-tax rate that reflects current market assessments of the time value of money and
the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a
finance expense.
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Notes to the consolidated financial statements continued
2. Accounting policies continued
2.18 Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Trade and other receivables
Trade and other receivables are initially measured at the transaction price and at the point of recognition an expected credit loss is
recognised to reflect the future risk of default. Trade receivables are subsequently measured at amortised cost less any additional,
specific provisions for impairment. A specific provision is made for impairment when there is objective evidence that the Group will not
be able to collect all amounts due according to the terms of the receivables. Trade and other receivables are written off when the Group
has no reasonable expectation of recovering the amounts due.
Trade and other receivables are discounted when the time value of money is considered material. The Group applies the IFRS 9 simplified
approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets are grouped based on shared credit risk characteristics
and the days past due. The expected loss rates are based on the historical credit losses adjusted to reflect current and forward-looking
information on economic factors affecting the ability of the customers to settle the receivables. The Group has therefore concluded that
the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The Group has certain trade receivables which are subject to a trade receivable purchase arrangement under a non-recourse facility.
Trade receivables that are sold without recourse are de-recognised when the risks and rewards of the receivables have been fully
transferred to the facility provider. The risks and rewards of the receivables are considered to be fully transferred on receipt of proceeds
from the facility provider to settle the debtor. The facility provider has no recourse to the Group in the event of non-payment by the
debtor once the proceeds have been received from the facility provider. The associated interest is recognised as interest expense in the
income statement.
Bank borrowings
Interest-bearing bank loans and overdrafts are measured initially at fair value and subsequently at amortised cost, using the effective
interest rate method. Any difference between the proceeds (net of transaction costs and inclusive of debt issuance costs) and the
settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy
for borrowing costs.
Trade and other payables
Trade and other payables are initially measured at fair value and subsequently measured at amortised cost. Trade payables and other
liabilities are discounted when the time value of money is considered material.
Equity instruments
Equity instruments issued by the Company are recorded at the amount of the proceeds received, net of directly attributable issue costs.
Deferred contingent consideration
Liabilities for deferred contingent consideration arising on a business combination are measured at fair value and remeasured at each
reporting date. Any changes in the fair value of deferred contingent consideration are recognised immediately in profit or loss.
2.19 Business Combinations
The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain
control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity
interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement.
Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.
3. Significant estimates and judgements
The following are areas of particular significance to the Group’s financial statements and may include the use of estimates. Results may
differ from actual amounts.
Significant accounting estimates
The following are considered to be the key estimates within the financial statements:
3.1 Employee benefits
The present value of the Group’s defined benefit pension obligations depends on a number of actuarial assumptions. The primary
assumptions used include the discount rate applicable to scheme liabilities, the long-term rate of inflation and estimates of the mortality
applicable to scheme members. Each of the underlying assumptions is set out in more detail in note 14.
At each reporting date, and on a continuous basis, the Group reviews the macro-economic, Company and scheme specific factors
influencing each of these assumptions, using professional advice, in order to record the Group’s ongoing commitment and obligation to
defined benefit schemes in accordance with IAS 19 (Revised).
Plan assets of the defined benefit schemes include a number of assets for which quoted prices are not available. At each reporting date,
the Group determines the fair value of these assets with reference to most recently available asset statements from fund managers.
Where pensions asset valuations were not available at the reporting date, as is usual practice, valuations at 31 December 2023 are rolled
forward for cash movements to end of March 2024 to estimate the valuations for these assets. This approach is principally relevant
for Infrastructure Funds, Private Equity, Absolute Return Products, Property Assets, Illiquid Credits and Global Credits. Management
have reviewed the individual investments to establish where valuations are not expected to be available for inclusion in these financial
statements, movements in the most comparable indexes have then been applied to these investments to be reported as lagged
valuations to establish any potential estimation uncertainty within the results.
3.2 Goodwill
Impairment reviews in respect of goodwill are performed at least annually and more regularly if there is an indicator of impairment.
Impairment reviews in respect of intangible assets are performed when an event indicates that an impairment review is necessary.
Examples of such triggering events include a significant planned restructuring, a major change in market conditions or technology,
expectations of future operating losses, or a significant reduction in cash flows. In performing its impairment analysis, the Group takes
into consideration these indicators including the difference between its market capitalisation and net assets.
The Group has considered the impact of the assumptions used on the calculations and has conducted sensitivity analysis on the value in
use calculations of the CGUs carrying values for the purposes of testing goodwill. See note 12 for further details.
3.3 Commercial arrangements
Sales rebates and discounts are accrued on each relevant promotion or customer agreement and are charged to the statement of profit
or loss at the time of the relevant promotional buy-in as a deduction from revenue. Accruals for each individual promotion or rebate
arrangement are based on the type and length of promotion and nature of customer agreement. At the time an accrual is made the
nature, funding level and timing of the promotion is typically known. Areas of estimation are sales volume/activity, phasing and the
amount of product sold on promotion.
For short-term promotions, the Group performs a true up of estimates where necessary on a monthly basis, using real time customer
sales information where possible and finally on receipt of a customer claim which typically follows 1-2 months after the end of a
promotion. For longer-term discounts and rebates the Group uses actual and forecast sales to estimate the level of rebate. These accruals
are updated monthly based on latest actual and forecast sales. If the Commercial accruals balance moved by 5.0% in either direction this
would have an impact of £3.7m.
3.4 Estimated values of acquired intangible assets on acquisitions
During the year, the Group completed the acquisition of Fuel10K Limited. An intangible asset relating to the brand was recognised as a
fair value adjustment to the opening balance sheet. The brand asset is valued using a relief from royalty approach. The key assumptions
underpinning the brand asset valuation are the revenue projections, discount rates and royalty rates. Applying different assumptions
could result in a significantly different brand intangible asset and a corresponding increase or decrease in the value of the residual
goodwill recognised.
Judgements
The following are considered to be the key judgements within the financial statements:
3.5 Non-trading items
Non-trading items have been presented separately throughout the financial statements. These are items that management believes
require separate disclosure by virtue of their nature in order that the users of the financial statements obtain a clear and consistent view
of the Group’s underlying trading performance. In identifying non-trading items, management have applied judgement including whether
i) the item is related to underlying trading of the Group; and/or ii) how often the item is expected to occur.
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Notes to the consolidated financial statements continued
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4. Segmental analysis
IFRS 8 requires operating segments to be determined based on the Group’s internal reporting to the Chief Operating Decision Maker
(‘CODM’). The CODM has been determined to be the Executive Leadership Team as it is primarily responsible for the allocation of
resources to segments and the assessment of performance of the segments.
The Group’s operating segments are defined as ‘Grocery’, ‘Sweet Treats’, and ‘International’. The CODM reviews the performance by
operating segment. The Grocery segment primarily sells savoury ambient food products and the Sweet Treats segment sells primarily
sweet ambient food products. The International segment has been aggregated within the Grocery segment for reporting purposes as
revenue is below 10% of the Group’s total revenue and the segment is considered to have similar characteristics to that of Grocery as
identified in IFRS 8. There has been no change to the segments during the period.
The CODM uses Divisional contribution as the key measure of the segments’ results. Divisional contribution is defined as gross profit
after selling, marketing and distribution costs. Divisional contribution is a consistent measure within the Group and reflects the segments’
underlying trading performance for the period under evaluation.
The Group uses trading profit to review overall Group profitability. Trading profit is defined as pre-tax profit/loss before net finance costs,
amortisation of intangible assets, fair value movements on foreign exchange and other derivative contracts, net interest on pensions
and administrative expenses, and any material items that require separate disclosure by virtue of their nature in order that users of the
financial statements obtain a clear and consistent view of the Group’s underlying trading performance.
Revenues in the period ended 30 March 2024, from the Group’s four principal customers, which individually represent over 10.0% of total
Group revenue, are £289.9m, £156.5m, £127.9m and £109.6m (2022/23: £242.6m, £142.7m, £114.4m and £96.2m). These revenues
relate to both the Grocery and Sweet Treats reportable segments.
The Group primarily supplies the UK market, although it also supplies certain products to other countries in Europe and the rest of the
world. The following table provides an analysis of the Group’s revenue, which is allocated on the basis of geographical market destination,
and an analysis of the Group’s non-current assets by geographical location.
The segment results for the period ended 30 March 2024 and for the period ended 1 April 2023 and the reconciliation of the segment
measures to the respective statutory items included in the consolidated financial statements are as follows:
52 weeks ended 30 March 2024
52 weeks ended 1 April 2023
Grocery
£m
Sweet
Treats
£m
Total
£m
Grocery
£m
Sweet
Treats
£m
Total
£m
External revenues
850.4
287.1
1,137.5
746.8
259.6
1,006.4
Divisional contribution
219.8
33.7
253.5
189.2
27.0
216.2
Group and corporate costs
(74.0)
(62.5)
Other income
–
3.8
Trading profit
179.5
157.5
Amortisation of brand assets
(20.9)
(20.7)
Fair value movements on foreign exchange
and other derivative contracts1
(1.1)
(1.8)
Net interest on pensions and
administrative expenses
31.6
17.7
Non-trading items:
– Impairment of fixed assets2
(4.2)
(3.6)
– Restructuring costs³
(5.3)
(11.1)
– Other non-trading items4
(1.9)
(5.8)
Operating profit
177.7
132.2
Finance cost
(30.4)
(21.7)
Finance income
4.1
1.9
Profit before taxation
151.4
112.4
1 The loss of £1.1m (2022/23: loss of £1.8m) reflects changes in fair value rate during the 52-week period and movement in nominal value of the instruments held at 30 March
2024 from the 1 April 2023 position.
2 Impairment of fixed assets in the current period primarily relates to the closure of the Knighton and Charnwood sites. Impairment of fixed assets in the prior period related to
the Knighton site closure.
3 Restructuring costs in the current period includes £3.7m which primarily relates to the closure of the Knighton site with the remainder relating to the closure of the
Charnwood site. Restructuring costs in the prior period included £7.6m which relates to the closure of the Knighton site with the remainder primarily relating to some supply
chain restructuring.
4 Other non-trading items in both the current and the prior period relate primarily to M&A transaction costs.
Notes to the consolidated financial statements continued
4. Segmental analysis continued
Revenue
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
United Kingdom
1,067.1
943.1
Other Europe
34.9
28.1
Rest of world
35.5
35.2
Total
1,137.5
1,006.4
Non-current assets
As at
30 March
2024
£m
As at
1 April
2023
£m
United Kingdom
1,182.7
1,160.6
Non-current assets exclude deferred tax assets and net retirement benefit assets.
5. Operating profit
5.1 Analysis of costs by nature
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Employee benefits expense (note 7)
(212.1)
(209.2)
Depreciation of property, plant and equipment (note 11)
(19.5)
(19.9)
Amortisation of intangible assets (note 13)
(25.8)
(25.6)
Repairs and maintenance expenditure
(36.1)
(31.6)
Research and development costs
(9.2)
(8.5)
Non-trading items
– Impairment of property, plant and equipment (note 11)
(4.2)
(3.6)
– Restructuring costs
(5.3)
(11.1)
– Other non-trading items
(1.9)
(5.8)
Auditors' remuneration (note 5.2)
(1.5)
(1.5)
5.2 Auditors’ remuneration
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Fees payable to the Group’s auditors for the audit of the consolidated and parent company financial
statements of Premier Foods plc
(1.0)
(1.0)
- The audit of the Group’s subsidiaries, pursuant to legislation
(0.2)
(0.2)
Fees payable to the Group’s auditors and its associates for other services:
– Audit related assurance services¹
(0.2)
(0.2)
– Other assurance services²
(0.1)
(0.1)
Total auditors remuneration
(1.5)
(1.5)
1 Audit related assurance services includes £0.2m (2022/23: £0.2m) for the review of the half-year report.
2 Other assurance services relates primarily to sustainability assurance work.
The total operating profit charge for auditors remuneration was £1.5m (2022/23: £1.5m).
6. Other income
Other income of £3.8m in the prior period related to a receipt following temporary interruption at a manufacturing site.
7. Employees
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Employee benefits expense
Wages, salaries and bonuses
(177.2)
(169.0)
Social security costs
(18.0)
(17.1)
Termination benefits1
(2.3)
(10.3)
Share options granted to directors and employees
(4.4)
(4.6)
Contributions to defined contribution schemes (note 14)
(10.2)
(8.2)
Total
(212.1)
(209.2)
1 Termination benefits in the current period relate primarily to the closure of the Charnwood site. Termination benefits in the prior period relates to the closure of the Knighton
site and some supply chain restructuring.
Average monthly number of people employed (including executive directors):
52 weeks
ended
30 March
2024
Number
52 weeks
ended
1 April
2023
Number
Average monthly number of people employed
Management
694
624
Administration
377
380
Production, distribution and other
3,161
3,318
Total
4,232
4,322
Directors’ remuneration is disclosed in the audited section of the Directors’ Remuneration Report on pages 96 to 115, which forms part
of these consolidated financial statements.
8. Finance income and costs
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Interest payable on bank loans and overdrafts
(11.9)
(7.4)
Interest payable on senior secured notes
(11.5)
(11.5)
Interest payable on revolving facility
–
(0.3)
Other interest payable1
(5.2)
(0.6)
Amortisation of debt issuance costs
(1.8)
(1.9)
Total finance cost
(30.4)
(21.7)
Interest receivable on bank deposits
3.6
0.8
Other finance income2
0.5
1.1
Total finance income
4.1
1.9
Net finance cost
(26.3)
(19.8)
1 Included in other interest payable is £0.8m charge (2022/23: £0.6m charge) relating to non-cash interest costs on lease liabilities under IFRS 16 and £4.4m (2022/23: £nil)
relating to the unwind of the Group’s long-term provisions and contingent consideration related to Group acquisitions.
2 Other finance income primarily relates to the unwind of the discount of the Group’s long-term provisions.
9. Taxation
Current tax
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Current tax
– Current period
(14.6)
(8.1)
– Prior periods
0.6
–
Deferred tax
– Current period
(24.9)
(15.8)
– Prior periods
–
0.7
– Changes in tax rate on the opening balance
–
2.4
Income tax charge
(38.9)
(20.8)
Tax relating to items recorded in other comprehensive income included:
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Corporation tax credit on pension movements
8.4
7.2
Deferred tax credit on pension movements
50.6
52.7
59.0
59.9
The applicable rate of corporation tax for the period increased to 25.0% from 19.0% starting in April 2023. This was previously enacted in
2021 and UK deferred taxes at 30 March 2024 and 1 April 2023 have been measured using these enacted tax rates.
The tax charge for the period differs from the standard rate of corporation tax in the United Kingdom of 25.0% (2022/23: 19.0%). The
reasons for this are explained below:
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Profit before taxation
151.4
112.4
Tax charge at the domestic income tax rate of 25.0% (2022/23: 19.0%)
(37.9)
(21.4)
Tax effect of:
Non-deductible items
(1.3)
(0.1)
Impairment of tangible assets
(0.5)
–
Overseas losses not recognised
(0.8)
–
Acquisitions
1.0
–
Recognition of previously unrecognised losses
–
0.2
Adjustment due to change in tax rate on the opening balances
–
2.3
Difference between current and deferred tax rate
–
(3.5)
Tax incentives
–
1.0
Adjustments to prior periods
0.6
0.7
Income tax charge
(38.9)
(20.8)
There is no movement in losses recognised for the 52 weeks ended 31 March 2024. In the prior year £0.2m was recognised in relation to
overseas losses. Corporation tax losses are not recognised where future recoverability is uncertain.
The adjustments to prior periods of £0.6m (2022/23: £0.7m) relates primarily to the changes in prior period intangibles, movement in
provisions, capital allowances and RDEC (Research and Development expenditure credit) following verifications in submitted returns.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
144
145
FINANCIALS
Notes to the consolidated financial statements continued
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
146
147
FINANCIALS
9. Taxation continued
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates, including the UK.
The legislation will be effective for the Group’s financial year beginning 31 March 2024. The Group is in scope of the Pillar Two legislation
and has performed an assessment of the Group’s potential exposure to Pillar Two income taxes. The assessment of the potential
exposure to Pillar Two income taxes is based on the most recent country-by-country reporting prepared for the Group and based on this
assessment, the Group does not expect any material potential exposure to Pillar Two top-up taxes.
Deferred tax
Deferred tax is calculated in full on temporary differences using the tax rate appropriate to the jurisdiction in which the asset/(liability)
arises and the tax rates that are expected to apply in the periods in which the asset or liability is settled.
2023/24
£m
2022/23
£m
At 2 April 2023/3 April 2022
(155.5)
(189.8)
Business Combinations
(2.3)
(5.0)
Charged to the statement of profit or loss
(24.9)
(12.7)
Credited to other comprehensive income
50.6
52.7
Credited/(Charged) to equity
1.6
(0.7)
At 30 March 2024/1 April 2023
(130.5)
(155.5)
The Group has not recognised £10m of deferred tax assets (2022/23: £2.2m not recognised) relating to UK and international corporation
tax losses as future recoverability is considered uncertain. In addition, the Group has not recognised a tax asset of £67.8m (2022/23:
£67.8m) relating to Advanced Corporation Tax (ACT) and £75.8m (2022/23: £75.8m) relating to capital losses. Under current legislation
these can generally be carried forward indefinitely.
Deferred tax liabilities
Intangibles
£m
Retirement
benefit
obligation
£m
Leases
£m
Other
£m
Total
£m
At 3 April 2022
(64.5)
(233.9)
(3.8)
(1.3)
(303.5)
Acquisition of The Spice Tailor
(5.0)
–
–
–
(5.0)
Charge due to change in corporate tax rate
– To statement of profit or loss
(0.3)
–
–
–
(0.3)
Current period credit/(charge)
1.5
(6.7)
3.0
–
(2.2)
Credited to other comprehensive (expense)/income
–
52.7
–
–
52.7
At 1 April 2023
(68.3)
(187.9)
(0.8)
(1.3)
(258.3)
At 2 April 2023
(68.3)
(187.9)
(0.8)
(1.3)
(258.3)
Acquisition of FUEL 10K Limited
(3.6)
–
–
–
(3.6)
Current period credit/(charge)
1.7
(10.0)
0.4
1.0
(6.9)
Credited to other comprehensive income
–
50.6
–
–
50.6
At 30 March 2024
(70.2)
(147.3)
(0.4)
(0.3)
(218.2)
Notes to the consolidated financial statements continued
Deferred tax assets
Accelerated
tax
depreciation
£m
Share-based
payments
£m
Losses
£m
Other
£m
Total
£m
At 3 April 2022
51.3
3.9
57.7
0.8
113.7
Credit due to change in corporate tax rate
– To statement of profit or loss
2.3
–
0.3
0.1
2.7
Current period (charge)/credit
(13.9)
0.5
(2.2)
2.0
(13.6)
Credited to equity
–
(1.2)
–
–
(1.2)
Prior period credit
– To statement of profit or loss
0.5
0.2
–
–
0.7
– To equity
–
0.5
–
–
0.5
At 1 April 2023
40.2
3.9
55.8
2.9
102.8
At 2 April 2023
40.2
3.9
55.8
2.9
102.8
Acquisition of FUEL 10K Limited
–
–
1.3
–
1.3
Current period (charge)/credit
(11.3)
1.0
(7.4)
(0.3)
(18.0)
Credited to equity
–
1.6
–
–
1.6
Prior period (charge)/credit
– To statement of profit or loss
0.1
–
0.7
(0.8)
–
At 30 March 2024
29.0
6.5
50.4
1.8
87.7
Deferred tax asset on losses and accelerated tax depreciation
£m
As at 30 March 2024
22.4
As at 1 April 2023
22.4
Net deferred tax liability
£m
As at 30 March 2024
(152.9)
As at 1 April 2023
(177.9)
Where there is a legal right of offset and an intention to settle as such, deferred tax assets and liabilities may be presented on a net basis.
This is the case for most of the Group’s deferred tax balances except non-trading losses of £22.4m (2022/23: £22.4m). The remainder of
deferred tax assets have therefore been offset in the tables above. Substantial elements of the Group’s deferred tax assets and liabilities,
primarily relating to the defined benefit pension obligation, are greater than one year in nature.
10. Earnings per share
Basic earnings per share has been calculated by dividing the profit attributable to owners of the parent of £112.5m (2022/23: £91.6m
profit) by the weighted average number of ordinary shares of the Company.
Weighted average shares
2023/24
Number (m)
2022/23
Number (m)
Weighted average number of ordinary shares for the purpose of basic earnings per share
862.4
861.2
Effect of dilutive potential ordinary shares:
– Share options
21.1
19.5
Weighted average number of ordinary shares for the purpose of diluted earnings per share
883.5
880.7
Earnings per share calculation
52 weeks ended 30 March 2024
52 weeks ended 1 April 2023
Basic
Dilutive effect
of share
options
Diluted
Basic
Dilutive effect
of share
options
Diluted
Profit after tax (£m)
112.5
112.5
91.6
91.6
Weighted average number of shares (m)
862.4
21.1
883.5
861.2
19.5
880.7
Earnings per share (pence)
13.0
(0.3)
12.7
10.6
(0.2)
10.4
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
148
149
FINANCIALS
10. Earnings per share continued
Dilutive effect of share options
The dilutive effect of share options is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The only dilutive potential ordinary shares of the Company are share options and
share awards. A calculation is performed to determine the number of shares that could have been acquired at fair value (determined as
the average annual market share price of the Company’s shares) based on the monetary value of the share awards and the subscription
rights attached to the outstanding share options.
No adjustment is made to the profit or loss in calculating basic and diluted earnings per share.
Adjusted earnings per share (‘Adjusted EPS’)
Adjusted earnings per share is defined as trading profit less net regular interest, less a notional tax charge at 25.0% (2022/23: 19.0%)
divided by the weighted average number of ordinary shares of the Company.
Net regular interest is defined as net finance cost after excluding other interest payable and other interest receivable.
Trading profit and Adjusted EPS have been reported as the directors believe these assists in providing additional useful information on the
underlying trends, performance and position of the Group.
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Trading profit (note 4)
179.5
157.5
Less net regular interest
(21.6)
(20.3)
Adjusted profit before taxation
157.9
137.2
Notional tax at 25.0% (2022/23: 19%)
(39.5)
(26.1)
Adjusted profit after taxation
118.4
111.1
Average shares in issue (m)
862.4
861.2
Adjusted basic EPS (pence)
13.7
12.9
Net regular interest
Net finance cost
(26.3)
(19.8)
Exclude other finance income
(0.5)
(1.1)
Exclude other interest payable
5.2
0.6
Net regular interest
(21.6)
(20.3)
Notes to the consolidated financial statements continued
11. Property, plant and equipment
Land and
buildings
£m
Plant and
equipment
£m
Assets under
construction
£m
Right of use
Assets
£m
Total
£m
Cost
At 3 April 2022
101.4
348.0
8.6
12.1
470.1
Additions
1.0
9.1
6.4
5.7
22.2
Acquisition of subsidiary
–
0.1
–
–
0.1
Disposals
(0.6)
(8.8)
–
(1.3)
(10.7)
Remeasurement
–
–
–
(3.6)
(3.6)
Reclassified from intangibles
–
–
0.1
–
0.1
Transferred into use
0.7
7.0
(7.7)
–
–
At 1 April 2023
102.5
355.4
7.4
12.9
478.2
Additions
3.5
9.2
14.0
3.6
30.3
Disposals
(1.9)
(10.2)
–
(0.4)
(12.5)
Remeasurement
–
–
–
–
–
Reclassified from intangibles
–
–
0.4
–
0.4
Transferred into use
0.1
3.6
(3.7)
–
–
At 30 March 2024
104.2
358.0
18.1
16.1
496.4
Accumulated depreciation and impairment
At 3 April 2022
(45.2)
(229.0)
–
(5.0)
(279.2)
Depreciation charge
(2.6)
(15.7)
–
(1.6)
(19.9)
Disposals
0.5
8.6
–
1.3
10.4
Impairment charge
–
(3.6)
–
–
(3.6)
At 1 April 2023
(47.3)
(239.7)
–
(5.3)
(292.3)
Depreciation charge
(2.6)
(15.0)
–
(1.9)
(19.5)
Disposals
1.8
9.8
–
0.4
12.0
Impairment charge1
(2.2)
(3.2)
(0.8)
–
(6.2)
At 30 March 2024
(50.3)
(248.1)
(0.8)
(6.8)
(306.0)
Net book value
At 1 April 2023
55.2
115.7
7.4
7.6
185.9
At 30 March 2024
53.9
109.9
17.3
9.3
190.4
1 Impairment of fixed assets in the current year includes £4.2m in relation to non trading items, £1.6m recognised in administration costs and £0.4m which was recognised in
the prior year.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
150
151
FINANCIALS
11. Property, plant and equipment continued
Included in the right of use assets are the following:
Land and
buildings
£m
Plant,
equipment &
other
£m
Total
£m
Cost
Balance at 3 April 2022
8.6
3.5
12.1
Additions
4.8
0.9
5.7
Disposals
(0.5)
(0.8)
(1.3)
Remeasurement
(3.6)
–
(3.6)
At 1 April 2023
9.3
3.6
12.9
Additions
0.3
3.3
3.6
Disposals
–
(0.4)
(0.4)
At 30 March 2024
9.6
6.5
16.1
Accumulated depreciation and impairment
At 3 April 2022
(3.3)
(1.7)
(5.0)
Depreciation charge
(0.7)
(0.9)
(1.6)
Disposals
0.5
0.8
1.3
At 1 April 2023
(3.5)
(1.8)
(5.3)
Depreciation charge
(0.8)
(1.1)
(1.9)
Disposals
–
0.4
0.4
At 30 March 2024
(4.3)
(2.5)
(6.8)
Net book value
At 1 April 2023
5.8
1.8
7.6
At 30 March 2024
5.3
4.0
9.3
The Group’s borrowings are secured on the assets of the Group including property, plant and equipment.
12. Goodwill
As at
30 March
2024
£m
As at
1 April
2023
£m
Carrying value
At 2 April 2023/At April 2022
680.3
646.0
Acquisition of subsidiary (note 28)
22.4
34.3
At 30 March 2024/At 1 April 2023
702.7
680.3
Goodwill is allocated to the Group’s Grocery CGU. Goodwill impairment testing is performed at the Grocery CGU level, which is the lowest
level at which goodwill is allocated and monitored for internal reporting purposes.
Key assumptions
The key assumptions for calculating value in use are revenue growth, divisional contribution margin growth, long-term growth rate and
discount rate.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units. It is not amortised but is
tested annually for impairment.
Notes to the consolidated financial statements continued
Cash flow assumptions
The cash flows and capital expenditure to maintain these used in the value in use calculation are post-tax cash flows based on the latest
Board-approved budget for the first year and the latest Board-approved forecasts in respect of the following four years which include
consideration of the impact on the Group of climate change and actions the Group are taking to reduce carbon emissions. The costs and
capital expenditure to meet the Group’s ESG targets, on page 35, are included in cashflows.
Two of the key assumptions when forecasting cash flows are revenue growth and divisional contribution margin. Revenue growth is
forecast based on known or forecast customer sales initiatives, including, to the extent agreed, customer business plans or agreements
for the next period, current and forecast new product development, promotional and marketing strategy, and specific category or
geographical growth. External factors, including the consumer environment, are also taken into account in the more short-term forecasts.
The compound revenue growth rate over the five-year forecast period is 3.2% (2022/23: 4.9% 5-year compound revenue growth rate).
Divisional contribution margin is forecast based on the projected mix of branded and non-branded sales, raw material input costs,
purchasing initiatives, factory performance and efficiency plans and marketing and distribution costs. Management have modelled
scenarios on volume elasticity due to inflationary pressures and the adverse impact on demand due to climate change and were within
the range of Group’s existing sensitivities as disclosed within the table below. Please also see viability and going concern analysis on pages
71 to 72 for further details on additional scenario analyses performed. The climate scenarios modelled reflect the risks deemed material
through the ‘TFCD’ risk assessment see page 45 to 49.
Long term growth rate assumptions
For the purposes of impairment testing, the cash flows are extrapolated into perpetuity using growth assumptions relevant for the
business sector. The growth rate applied of 1.12% (2022/23: 1.16%) is based on the average medium term GDP growth as the directors
expect food consumption to follow GDP growth. This is not considered to be higher than the average long-term industry growth rate.
Discount rate assumptions
The discount rate applied to the cash flows is calculated using a post-tax rate based on the weighted average cost of capital (‘WACC’)
which would be anticipated for a market participant in the Group.
The Group has considered the impact of the current economic climate in determining the appropriate discount rate to use in impairment
testing. In the current period, the post-tax rate used to discount the forecast cash flows has been determined to be 8.26% (2022/23:
9.06%). On a pre-tax basis a discount rate of 10.64% (2022/23: 12.08%) would have been applied.
Sensitivity analysis
An illustration of the sensitivity to reasonably possible changes in key assumptions in the impairment test for the Grocery CGU is as
follows:
Reasonably possible change in assumption
Impact on value in use
Revenue growth
Increase/decrease by 3.0%
Increase/decrease by £407m/£477.2m
Divisional contribution margin
Increase/decrease by 2.0%
Increase/decrease by £234.9m
Long-term growth rate
Increase/decrease by 0.5%
Increase/decrease by £102.7m/£146.1m
Discount rate
Increase/decrease by 0.5%
Decrease/increase by £168.9m/£130.0m
Under each of the above sensitivities no individual scenarios would trigger an impairment for the Grocery CGU. Under a combination of
reasonably possible scenarios and taking into account mitigating actions, no impairment would be triggered.
Goodwill impairment charge
There has been no goodwill impairment charge recognised in 2023/24 (2022/23: £nil).
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
152
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FINANCIALS
13. Other intangible assets
Software
£m
Licences
£m
Brands
£m
Customer
relationships
£m
Assets under
construction
£m
Total
£m
Cost
At 3 April 2022
134.7
28.0
665.2
134.8
2.0
964.7
Additions
4.0
–
–
–
2.1
6.1
Acquisition of subsidiary
–
–
20.5
–
–
20.5
Reclassified to property, plant & equipment
–
–
–
–
(0.1)
(0.1)
Transferred into use
1.5
–
–
–
(1.5)
–
At 1 April 2023
140.2
28.0
685.7
134.8
2.5
991.2
Additions
3.3
–
–
–
3.8
7.1
Acquisition of subsidiary
–
–
14.4
–
–
14.4
Disposals
(6.2)
–
–
–
–
(6.2)
Reclassified to property, plant &
equipment
–
–
–
–
(0.4)
(0.4)
Transferred into use
1.8
–
–
–
(1.8)
–
At 30 March 2024
139.1
28.0
700.1
134.8
4.1
1,006.1
Accumulated amortisation and impairment
At 3 April 2022
(122.3)
(28.0)
(386.1)
(134.8)
–
(671.2)
Amortisation charge
(4.9)
–
(20.7)
–
–
(25.6)
At 1 April 2023
(127.2)
(28.0)
(406.8)
(134.8)
–
(696.8)
Disposals
6.1
–
–
–
–
6.1
Amortisation charge
(4.9)
–
(20.9)
–
–
(25.8)
At 30 March 2024
(126.0)
(28.0)
(427.7)
(134.8)
–
(716.5)
Net book value
At 1 April 2023
13.0
–
278.9
–
2.5
294.4
At 30 March 2024
13.1
–
272.4
–
4.1
289.6
All amortisation is recognised within administrative costs.
Included in the assets under construction additions for the period are £1.5m (2022/23: £2.8m) relating to internal software
development costs.
The Group’s borrowings are secured on the assets of the Group including other intangible assets.
The material brands held on the balance sheet are as follows:
Carrying value
at 30 March
2024
£m
Estimated
useful
life remaining
Years
Bisto
77.5
13
Oxo
61.6
22
Batchelors
40.1
12
Mr Kipling
30.1
13
The Spice Tailor
18.4
13
Sharwood's
16.9
13
Fuel10k
14.0
15
Notes to the consolidated financial statements continued
14. Retirement benefit schemes
Defined benefit schemes
The Group operates a number of defined benefit schemes under which current and former employees have built up an entitlement to
pension benefits on their retirement. Although the Premier Foods Section, Premier Grocery Products Section and RHM Section identified
below are no longer separate schemes following the merger in 2020, historically, Premier Foods companies’ pension liabilities and ex-
RHM companies’ liabilities have been shown separately. These are as follows:
(a) The “Premier” Schemes, which comprise:
Premier Foods Pension Section of RHM Pension Scheme
Premier Grocery Products Pension Section of RHM Pension Scheme
Premier Grocery Products Ireland Pension Scheme (‘PGPIPS’)
Chivers 1987 Pension Scheme
(b) The “RHM” Pension Schemes, which comprise:
RHM Section of the RHM Pension Scheme
Premier Foods Ireland Pension Scheme
The Premier Foods Pension Scheme and Premier Grocery Products Pension Scheme were wound up following the merger of assets and
liabilities on a segregated basis with the RHM Pension Scheme in June 2020. The RHM Pension Scheme operates as three sections, the
RHM Section, Premier Foods Section and Premier Grocery Products Section.
On 6 March 2024 the Group announced that following the strong performance of the pensions schemes since the 2020 segregated
merger, deficit contribution payments would be suspended from 1 April 2024. Subject to the results of the next triennial valuation due
at 31 March 2025 for all three Sections of the RHM Pensions Scheme, the Group anticipates no further contributions to be payable after
this date.
The exchange rates used to translate the overseas euro based schemes are £1.00 = €1.1587 (2022/23: £1.00 = €1.1582) for the average
rate during the period, and £1.00 = €1.1699 (2022/23: £1.00 = €1.1377) for the closing position at period end.
All defined benefit schemes are held separately from the Company under Trusts. Trustees are appointed to operate the schemes
in accordance with their respective governing documents and pensions law. The schemes meet the legal requirement for member
nominated trustees’ representation on the trustee boards. Trustee directors undertake regular training and development to ensure that
they are equipped appropriately to carry out the role. In addition, each trustee board has appointed professional advisers to give them
the specialist expertise they need to support them in the areas of investment, funding, legal, covenant and administration.
The trustee boards generally meet at least four times a year to conduct their business. To support these meetings certain aspects of
the schemes’ operation are delegated to give specialist focus (e.g. investment, administration and compliance) to committees for which
further meetings are held as appropriate throughout the year. These committees regularly report to the full trustee boards.
The schemes invest through investment managers appointed by the trustees in a broad range of assets to support the security and
funding of their pension obligations. Asset classes used include government bonds, private equity, absolute return products, swaps,
infrastructure, illiquid credits and global credits.
The scheme assets do not include any of the Group’s own financial instruments, nor any property occupied by, or other assets used
by, the Group. The RHM Pension Scheme holds a security over the assets of the Group which ranks pari passu with the banks and
bondholders in the event of insolvency, up to a cap.
The schemes incorporate a Liability Driven Investment (LDI) strategy to more closely match the assets with changes in value of liabilities.
The RHM Pension Scheme uses assets including interest rate and inflation swaps, index linked bonds and infrastructure in its LDI strategy.
In setting the investment strategy, the primary concern for the trustee of the RHM Pension Scheme is to act in the best financial
interests of all beneficiaries, seeking the best return that is consistent with a prudent and appropriate level of risk. This includes the
risk that environmental, social and governance factors, including climate change, negatively impact the value of investments held if not
understood and evaluated properly. The trustee considers this risk by taking advice from its investment advisors when choosing asset
classes, selecting managers, and monitoring performance.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
154
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FINANCIALS
14. Retirement benefit schemes continued
From 1 October 2022, the trustee is required by regulation to:
•
implement climate change governance measures and produce a Taskforce on Climate-related Financial Disclosures (TCFD) report
containing associated disclosures; and
•
publish its TCFD report on a publicly available website, accessible free of charge.
The trustee disclosed the scheme’s first TCFD report as part of the 2023 year-end reporting cycle.
The main risks to which the Group is exposed in relation to the funded pension schemes are as follows:
•
Liquidity risk – the PF and PGP Sections of the RHM Pension Scheme have significant technical funding deficits which could increase.
The RHM Section of the RHM Pension Scheme is currently in surplus, but subsequent valuations could reveal a deficit. As such this
could have an adverse impact on the financial position of the Group. The Group continues to monitor the pension risks closely
working with the trustees to ensure a collaborative approach.
•
Mortality risk – the assumptions adopted make allowance for future improvements in life expectancy. However, if life expectancy
improves at a faster rate than assumed, this would result in greater payments from the schemes and consequently increases in the
schemes liabilities. The trustees review the mortality assumption on a regular basis to minimise the risk of using an inappropriate
assumption.
•
Yield risk – a fall in government bond yields will increase the schemes liabilities and certain of the assets. However, the liabilities may
grow by more in monetary terms, thus increasing the deficit in the scheme.
•
Inflation risk – the majority of the schemes liabilities increase in line with inflation and so if inflation is greater than expected, the
liabilities will increase.
•
Investment risk – the risk that investments do not perform in line with expectations.
The exposure to the yield and inflation risks described above can be hedged by investing in assets that move in the same direction as the
liabilities in the event of a fall in yields, or a rise in inflation. The RHM Pension Scheme as a whole has largely hedged inflation and interest
rate exposure to the extent of its funding level.
The liabilities of the schemes are approximately 35.0% in respect of former active members who have yet to retire and approximately
65.0% in respect of pensioner members already in receipt of benefits.
The average duration of the sectionalised pension liabilities in the RHM Pension Scheme is 13.0 years (12.8 years for the RHM Section;
13.9 years for the PF Section and 13.4 years for the PGP Section).
All pension schemes are closed to future accrual.
At the balance sheet date, the combined principal accounting valuation assumptions were as follows:
At 30 March 2024
At 1 April 2023
Premier
Schemes
RHM
Schemes
Premier
Schemes
RHM
Schemes
Discount rate
4.80%
4.80%
4.80%
4.80%
Inflation – RPI
3.15%
3.15%
3.30%
3.30%
Inflation – CPI
2.75%
2.75%
2.85%
2.85%
Future pension increases
– RPI (min 0% and max 5%)
2.90%
2.90%
3.05%
3.05%
– CPI (min 3% and max 5%)
3.55%
3.55%
3.55%
3.55%
Notes to the consolidated financial statements continued
For the smaller overseas schemes, the discount rate used was 3.30% (2022/23: 3.65%) and future pension increases were 2.10%
(2022/23: 2.45%).
At 30 March 2024 and 1 April 2023, the discount rate was derived based on a bond yield curve expanded to also include bonds rated AA
by one credit agency (and which might for example be rated A or AAA by other agencies).
The Group continued to set RPI inflation in line with the market break-even expectations less an inflation risk premium. The inflation risk
premium of 0.3% (2022/23: 0.3%), reflects an allowance for additional market distortions caused by the RPI reform proposals.
The Group has set the CPI assumption by assuming it is 0.9% p.a. lower than RPI pre 2030 (2022/23: 1.0% lower pre 2030), reflecting
UKSA’s stated intention to make no changes before 2030, and 0.1% lower than RPI post 2030 (2022/23: 0.1% lower post 2030), this being
our expectation of the long-term average difference between CPI and CPI-H. Using this approach, the assumed difference between the
RPI and CPI is an average of 0.40% (2022/23: 0.45%) per annum.
The assumptions take into account the timing of the expected future cashflows from the pension schemes.
The RHM scheme invests directly in interest rate and inflation swaps to protect from fluctuations in interest rates and inflation.
The mortality assumptions are based on the latest standard mortality tables at the reporting date. The directors have considered the
impact of the recent Covid-19 pandemic on the mortality assumptions and consider that use of the updated Continuous Mortality
Improvement (CMI) 2022 projections for the future improvement assumption a reasonable approach.
The life expectancy assumptions are as follows:
At 30 March 2024
At 1 April 2023
Premier
Schemes
RHM
Schemes
Premier
Schemes
RHM
Schemes
Male pensioner, currently aged 65
86.3
84.6
86.5
84.7
Female pensioner, currently aged 65
88.1
87.0
88.2
87.1
Male non-pensioner, currently aged 45
87.2
85.8
87.4
86.0
Female non-pensioner, currently aged 45
89.5
88.8
89.7
89.0
A sensitivity analysis on the principal assumptions used to measure the scheme liabilities at the period end is as follows:
Change in assumption
Impact on scheme liabilities
Discount rate
Increase/decrease by 0.1%
Decrease/increase by £38.4m/£39.0m
Inflation
Increase/decrease by 0.1%
Increase/decrease by £16.8m/£16.8m
Assumed life expectancy at age 60 (rate of mortality)
Increase/decrease by 1 year
Increase/decrease by £109.6m/£118.4m
The sensitivity information has been derived using projected cash flows for the Schemes valued using the relevant assumptions and
membership profile as at 30 March 2024. Extrapolation of these results beyond the sensitivity figures shown may not be appropriate.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
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156
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FINANCIALS
14. Retirement benefit schemes continued
Premier
Schemes
£m
% of total
%
RHM
Schemes
£m
% of total
%
Total
£m
% of total
%
Assets with a quoted price in an
active market at 30 March 2024:
Government bonds
276.5
51.8
958.9
31.7
1,235.4
34.6
Cash
9.7
1.8
31.6
1.0
41.3
1.2
Assets without a quoted price in an
active market at 1 April 2024:
UK equities
–
–
–
–
–
–
Global equities
–
–
2.1
0.1
2.1
0.1
Government bonds
29.8
5.6
4.3
0.1
34.1
1.0
Corporate bonds
7.4
1.4
4.0
0.1
11.4
0.3
Global Property
72.3
13.5
376.3
12.4
448.6
12.5
Absolute return products
5.3
1.0
239.3
7.9
244.6
6.9
Infrastructure funds
22.7
4.3
355.8
11.7
378.5
10.5
Interest rate swaps
–
–
241.6
8.0
241.6
6.8
Inflation swaps
–
–
24.0
0.8
24.0
0.7
Private equity
39.2
7.4
326.3
10.8
365.5
10.3
LDI
–
–
7.2
0.2
7.2
0.2
Global credit
3.2
0.6
178.0
5.9
181.2
5.1
Illiquid credit
61.7
11.6
201.6
6.6
263.3
7.4
Cash
3.6
0.7
0.6
–
4.2
0.1
Other
1.6
0.3
80.4
2.7
82.0
2.3
Fair value of scheme assets
as at 30 March 2024
533.0
100%
3,032.0
100%
3,565.0
100%
Assets with a quoted price in an
active market at 1 April 2023:
Government bonds
197.8
35.8
815.1
25.2
1,012.9
26.7
Cash
8.2
1.5
59.1
1.8
67.3
1.8
Assets without a quoted price in an
active market at 2 April 2022:
UK equities
0.1
0.0
–
–
0.1
0.0
Global equities
2.3
0.4
4.6
0.1
6.9
0.2
Government bonds
30.5
5.5
2.1
0.1
32.6
0.9
Corporate bonds
7.4
1.4
4.9
0.2
12.3
0.3
Global Property
113.4
20.5
418.6
12.9
532.0
14.0
Absolute return products
6.8
1.2
426.6
13.2
433.4
11.4
Infrastructure funds
27.4
5
342.5
10.6
369.9
9.8
Interest rate swaps
–
–
286.6
8.8
286.6
7.6
Inflation swaps
–
–
43.4
1.3
43.4
1.1
Private equity
48.8
8.8
310.8
9.6
359.6
9.5
LDI
–
–
7.1
0.2
7.1
0.2
Global credit
4.3
0.8
205.9
6.4
210.2
5.5
Illiquid credit
101.4
18.3
227.5
7.00
328.9
8.7
Cash
0.5
0.1
0.1
0.0
0.6
0.0
Other
3.7
0.7
85.3
2.6
89.0
2.3
Fair value of scheme assets
as at 2 April 2022
552.6
100%
3,240.2
100%
3,792.8
100%
Notes to the consolidated financial statements continued
For assets without a quoted price in an active market fair value is determined with reference to net asset value statements provided by
third parties.
Pension assets have been reported using 30 March 2024 valuations where available. As is usual practice for pensions assets where
valuations at this date were not available, the most recent valuations (predominantly at 31 December 2023) have been rolled forward
for cash movements to 30 March 2024 and recognised as lagged valuations. This is considered by management the most appropriate
estimate of valuations for these assets using the information available at the time. At 30 March 2024 the financial statements include
£363.8m of assets (2022/23: £371.0m) using lagged valuations and were these lagged valuations to move by 1.0% there would be a
£3.6m (2022/23: £3.7m) impact on the fair value of scheme assets. This approach is principally relevant for Private Equity, Property
Assets, Illiquid Credits and Global Credits asset categories. Pension assets valuations are subject to estimation uncertainty due to market
volatility, which could result in a material movement in asset values over the next 12 months. The amounts recognised in the balance
sheet arising from the Group’s obligations in respect of its defined benefit schemes are as follows:
Premier
schemes
£m
RHM
schemes
£m
Total
£m
At 30 March 2024
Present value of defined benefit obligation
(730.7)
(2,232.8)
(2,963.5)
Fair value of plan assets
533.0
3,032.0
3,565.0
(Deficit)/surplus in schemes
(197.7)
799.2
601.5
At 1 April 2023
Present value of defined benefit obligation
(735.4)
(2,291.9)
(3,027.3)
Fair value of plan assets
552.6
3,240.2
3,792.8
(Deficit)/surplus in schemes
(182.8)
948.3
765.5
The aggregate surplus of £765.5m has decreased to a surplus of £601.5m in the current period. This decrease of £164.0m (2022/23:
£179.4m decrease) is primarily due to a lower return on scheme assets. Further details are provided later in this note.
The disclosures in note 14 represent those schemes that are associated with Premier (‘Premier schemes’) and those that are associated
with ex-RHM companies (‘RHM Schemes’). These differ to that disclosed on the balance sheet, in which the schemes have been split
between those in an asset position and those in a liability position. The disclosures in note 14 reconcile to those disclosed on the balance
sheet as shown below:
At 30 March 2024
At 31 April 2023
Premier
schemes
£m
RHM
schemes
£m
Total
£m
Premier
schemes
£m
RHM
schemes
£m
Total
£m
Schemes in net asset position
10.8
799.2
810.0
11.8
948.3
960.1
Schemes in net liability position
(208.5)
–
(208.5)
(194.6)
–
(194.6)
Net (Deficit)/surplus in schemes
(197.7)
799.2
601.5
(182.8)
948.3
765.5
Changes in the present value of the defined benefit obligation were as follows:
Premier
schemes
£m
RHM
schemes
£m
Total
£m
Defined benefit obligation at 3 April 2022
(1,020.2)
(3,134.9)
(4,155.1)
Interest cost
(27.0)
(83.9)
(110.9)
Settlement
0.3
–
0.3
Remeasurement gain
271.9
787.3
1,059.2
Exchange differences
(1.6)
(1.1)
(2.7)
Benefits paid
41.2
140.7
181.9
Defined benefit obligation at 1 April 2023
(735.4)
(2,291.9)
(3,027.3)
Interest cost
(33.9)
(105.8)
(139.7)
Remeasurement (loss)/gain
(1.9)
18.5
16.6
Exchange differences
0.9
0.5
1.4
Benefits paid
39.6
145.9
185.5
Defined benefit obligation at 30 March 2024
(730.7)
(2,232.8)
(2,963.5)
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
158
159
FINANCIALS
14. Retirement benefit schemes continued
Changes in the fair value of plan assets were as follows:
Premier
schemes
£m
RHM
schemes
£m
Total
£m
Fair value of scheme assets at 3 April 2022
826.3
4,273.7
5,100.0
Interest income on scheme assets
22.1
115.1
137.2
Remeasurement losses
(295.7)
(1,009.1)
(1,304.8)
Administrative costs
(4.2)
(4.4)
(8.6)
Settlement
(0.3)
–
(0.3)
Contributions by employer
40.6
4.5
45.1
Additional employer contribution1
2.7
–
2.7
Exchange differences
2.3
1.1
3.4
Benefits paid
(41.2)
(140.7)
(181.9)
Fair value of scheme assets at 1 April 2023
552.6
3,240.2
3,792.8
Interest income on scheme assets
25.9
151.0
176.9
Remeasurement losses
(40.5)
(213.8)
(254.3)
Administrative costs
(2.7)
(2.9)
(5.6)
Contributions by employer
34.8
3.9
38.7
Additional employer contribution1
3.8
–
3.8
Exchange differences
(1.3)
(0.5)
(1.8)
Benefits paid
(39.6)
(145.9)
(185.5)
Fair value of plan assets at 30 March 2024
533.0
3,032.0
3,565.0
1 Contribution by the Group to the Premier Schemes due to the payment of dividends during the year.
The reconciliation of the net defined benefit (deficit)/surplus over the period is as follows:
Premier
schemes
£m
RHM
schemes
£m
Total
£m
(Deficit)/surplus in schemes at 3 April 2022
(193.9)
1,138.8
944.9
Amount recognised in profit or loss
(9.1)
26.8
17.7
Remeasurements recognised in other comprehensive income
(23.8)
(221.8)
(245.6)
Contributions by employer
40.6
4.5
45.1
Additional employer contribution1
2.7
–
2.7
Exchange differences recognised in other comprehensive income
0.7
–
0.7
(Deficit)/surplus in schemes at 1 April 2023
(182.8)
948.3
765.5
Amount recognised in profit or loss
(10.7)
42.3
31.6
Remeasurements recognised in other comprehensive income
(42.4)
(195.3)
(237.7)
Contributions by employer
34.8
3.9
38.7
Additional employer contribution1
3.8
–
3.8
Exchange differences recognised in other comprehensive income
(0.4)
–
(0.4)
(Deficit)/surplus in schemes at 30 March 2024
(197.7)
799.2
601.5
1 Contribution by the Group to the Premier Schemes due to the payment of dividends during the year.
Notes to the consolidated financial statements continued
Remeasurements recognised in the consolidated statement of comprehensive income are as follows:
At 30 March 2024
At 1 April 2023
Premier
Schemes
£m
RHM
Schemes
£m
Total
£m
Premier
Schemes
£m
RHM
Schemes
£m
Total
£m
Remeasurement (loss)/gain on scheme
liabilities
(1.9)
18.5
16.6
271.9
787.3
1,059.2
Remeasurement loss on scheme assets
(40.5)
(213.8)
(254.3)
(295.7)
(1,009.1)
(1,304.8)
Net remeasurement loss for the period
(42.4)
(195.3)
(237.7)
(23.8)
(221.8)
(245.6)
The actual return on scheme assets was a £77.4m loss (2022/23: £1,167.6m loss), which is £254.3m less (2022/23: £1,304.8m less) than
the interest income on scheme assets of £176.9m (2022/23: £137.2m).
The remeasurement gain on liabilities of £16.6m (2022/23: £1,059.2m gain) comprises a gain due to changes in financial assumptions of
£6.9m (2022/23: £1,089.8m gain), a loss due to member experience of £21.2m (2022/23: £69.7m loss) and a gain due to demographic
assumptions of £30.9m (2022/23: £39.1m gain).
The Group expects to contribute £6.0m annually to its defined benefit schemes in relation to expenses and government levies up to 29
March 2025. An agreement has been reached with the RHM Pension Scheme Trustee to suspend deficit contributions payments from
1 April 2024, as a result of this agreement the Group will enter into a Letter of Credit in favour of the Scheme, equal to the suspended
deficit contributions.
The Group has concluded that it has an unconditional right to a refund of any surplus in the RHM Pension Scheme once the liabilities
have been discharged and, that the trustees of the RHM Pension Scheme do not have the unilateral right to wind up the scheme, so the
asset has not been restricted and no additional liability has been recognised.
The Group is aware of the Virgin Media court ruling on rule amendments to Defined Benefit schemes and that it may impact the
obligation of the legacy Defined Benefit pension plans in the UK. However, the extent of the impact is uncertain, the case is being
appealed and it is also possible that the government may intervene, using powers in the existing legislation. On this basis, the Group is
waiting for the outcome of these before taking action.
The total amounts recognised in the consolidated statement of profit or loss are as follows:
Premier
schemes
£m
RHM
schemes
£m
Total
£m
Period ended 30 March 2024
Operating profit
Administrative costs
(2.7)
(2.9)
(5.6)
Net interest (cost)/credit
(8.0)
45.2
37.2
Total (cost)/credit
(10.7)
42.3
31.6
Period ended 1 April 2023
Operating profit
Administrative costs
(4.2)
(4.4)
(8.6)
Net interest (cost)/credit
(4.9)
31.2
26.3
Total (cost)/credit
(9.1)
26.8
17.7
Defined contribution schemes
A number of companies in the Group operate defined contribution schemes, including provisions to comply with auto enrolment
requirements laid down by law. In addition, a number of schemes providing life assurance benefits only are operated. The total expense
recognised in the statement of profit or loss of £10.2m (2022/23: £8.2m) represents contributions payable to the schemes by the Group
at rates specified in the rules of the schemes.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
160
161
FINANCIALS
15. Inventories
As at
30 March
2024
£m
As at
1 April
2023
£m
Raw materials
18.5
20.6
Work in progress
3.5
3.5
Finished goods and goods for resale
76.9
69.6
Total inventories
98.9
93.7
Stock write-offs in the period amounted to £5.2m. In the prior period, £7.6m was written off and primarily related to one-offs due to
supply chain disruption and the closure of the Knighton site.
The borrowings of the Group are secured on the assets of the Group including inventories.
16. Trade and other receivables
As at
30 March
2024
£m
As at
1 April
2023
£m
Trade receivables
83.0
70.8
Trade receivables provided for
(2.5)
(2.9)
Net trade receivables
80.5
67.9
Prepayments
17.6
19.0
Corporation tax
–
0.6
Other tax and social security receivable
13.9
13.6
Other receivables
3.7
2.8
Total trade and other receivables
115.7
103.9
The borrowings of the Group are secured on the assets of the Group including trade and other receivables.
During the period, the Group continued to operate the trade receivable purchase arrangement. This is a non-recourse arrangement and
therefore amounts are derecognised when sold. As at 30 March 2024, £29.2 million was drawn (2022/23: £28.7 million) under the non-
recourse arrangement.
17. Notes to the cash flow statement
Reconciliation of profit before taxation to cash flows from operations
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Profit before taxation
151.4
112.4
Net finance cost
26.3
19.8
Operating profit
177.7
132.2
Depreciation of property, plant and equipment
19.5
19.9
Amortisation of intangible assets
25.8
25.6
Impairment of non-current assets¹
6.2
3.6
Net (gain)/ loss on disposal of non-current assets
(0.2)
0.3
Fair value movements on foreign exchange and other derivative contracts
1.1
1.8
Net interest on pensions and administrative expenses
(31.6)
(17.7)
Equity settled employee incentive schemes
4.4
4.6
Increase in inventories
(7.5)
(12.4)
Increase in trade and other receivables
(16.9)
(1.9)
Increase in trade and other payables and provisions
10.4
0.1
Additional employer contribution²
(3.8)
(2.7)
Contribution to defined benefit pension schemes
(38.7)
(45.1)
Cash generated from operations
146.4
108.3
1 Impairment off non-current assets primarily relates to the closure of the Knighton and Charnwood sites.
2 Contribution by the Group to the Premier schemes due to the payment of dividends during the year.
Notes to the consolidated financial statements continued
Reconciliation of cash and cash equivalents to net borrowings
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
2023
£m
Net inflow of cash and cash equivalents
38.9
9.1
Movement in lease liabilities
1.1
2.8
Debt issuance costs in the period
0.5
0.7
Other non-cash movements
(1.8)
(1.9)
Decrease in borrowings net of cash
38.7
10.7
Total net borrowings at beginning of period
(274.3)
(285.0)
Total net borrowings at end of period
(235.6)
(274.3)
Analysis of movement in borrowings
As at
2 April 2023
£m
Cash flows
£m
Non-cash
interest
expense
£m
Other
non-cash
movements
£m
As at
30 March
2024
£m
Bank overdrafts
(1.0)
1.0
–
–
–
Cash and bank deposits
64.4
37.9
–
–
102.3
Net cash and cash equivalents
63.4
38.9
–
–
102.3
Borrowings – Senior Secured Fixed Rate Notes
maturing October 2026
(330.0)
–
–
–
(330.0)
Lease liabilities
(13.3)
2.6
(0.8)
(0.7)
(12.2)
Gross borrowings net of cash1
(279.9)
41.5
(0.8)
(0.7)
(239.9)
Debt issuance costs2
5.6
0.5
(1.8)
–
4.3
Total net borrowings1
(274.3)
42.0
(2.6)
(0.7)
(235.6)
Total net borrowings excluding lease liabilities1
(261.0)
39.4
(1.8)
–
(223.4)
1 Borrowings exclude derivative financial instruments.
2 The non-cash movement in debt issuance costs relates to the amortisation of capitalised borrowing costs only.
Cash outflows of £2.6m (2022/23: £2.9m) in relation to repayments of lease liabilities have been included in the consolidated statement
of cash flows, including £0.8m included in interest paid within cash flows from operating activities.
The Group has the following cash pooling arrangements in sterling, euros and US dollars, where both the Group and the bank have a legal
right of offset.
As at 30 March 2024
As at 1 April 2023
Offset
asset
Offset
liability
Net offset
asset
Offset
asset
Offset
liability
Net offset
liability
Cash, cash equivalents and bank
overdrafts
16.0
(12.5)
3.5
12.6
(13.6)
(1.0)
18. Trade and other payables
As at
30 March
2024
£m
As at
1 April
2023
£m
Trade payables
(141.6)
(141.1)
Commercial accruals
(74.3)
(67.5)
Tax and social security payables
(8.8)
(7.1)
Other payables and accruals
(39.9)
(39.7)
Total trade and other payables
(264.6)
(255.4)
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
162
163
FINANCIALS
19. Financial instruments
The Group’s activities expose it to a variety of financial risks: market risk (arising from adverse movements in foreign currency, commodity
prices and interest rates), credit risk and liquidity risk. The Group uses a variety of derivative financial instruments to manage certain of
these risks. The management of these risks, along with the day-to-day management of treasury activities is performed by the Treasury
function. The policy framework governing the management of these risks is defined by the Board. The framework for management of
these risks is incorporated into a policies and procedures manual.
The Group also enters into contracts with suppliers for its principal raw material requirements, some of which are considered
commodities, diesel and energy. These commodity and energy contracts are part of the Group’s normal purchasing activities. Some of
the risk relating to diesel is mitigated with the use of derivative financial instruments. The Price Risk Management Committee monitors
and reviews the Group’s foreign currency exchange, commodity price and energy price exposures and recommends appropriate hedging
strategies for each.
19.1 Market risk
(i) Foreign exchange risk
The Group’s main operating entities’ functional currency and the Group’s presentational currency is sterling although some transactions
are executed in non-sterling currencies, principally the euro. The transactional amounts realised or settled are therefore subject to the
effect of movements in these currencies against sterling. Management of these exposures is centralised and managed by the Treasury
function. It is the Group’s policy to manage the exposures arising using forward foreign currency exchange contracts and currency
options. Hedge accounting is not sought for these transactions.
The Group generates some of its profits in non-sterling currencies and has assets in non-sterling jurisdictions, principally the euro.
The principal foreign currency affecting the translation of subsidiary undertakings within the Group financial statements is the euro. The
rates applicable are as follows:
Principal rate of exchange: euro/sterling
52 weeks
ended
30 March
2024
52 weeks
ended
1 April
2023
Period ended
1.1699
1.1377
Average
1.1587
1.1582
The majority of the Group’s assets and liabilities are denominated in the functional currency of the relevant subsidiary.
The table below shows the Group’s currency exposures as at 30 March 2024 and 1 April 2023 that gave rise to net currency gains and
losses recognised in the consolidated statement of profit or loss as a result of monetary assets and liabilities that are not denominated in
the functional currency of the subsidiaries involved.
Functional currency of subsidiaries – Sterling
As at
30 March
2024
£m
As at
1 April
2023
£m
Net foreign currency monetary assets:
– Euro
(4.4)
(5.3)
– US dollar
1.7
1.3
– Other
7.5
(0.2)
Total
4.8
(4.2)
In addition, the Group also has forward foreign currency exchange contracts outstanding at the period end in order to manage the
exposures above but also to hedge future transactions in foreign currencies. The sterling nominal amounts outstanding are as follows:
As at
30 March
2024
£m
As at
1 April
2023
£m
Euro
(54.9)
(38.7)
Australian dollar
–
1.6
Indian rupee
(4.7)
(7.0)
Total
(59.6)
(44.1)
Sensitivities are disclosed below using the following reasonably possible scenarios:
Notes to the consolidated financial statements continued
If the euro were to weaken against sterling by 10 euro cents, with all other variables held constant, profit after tax would decrease by
£3.4m (2022/23: £2.6m decrease).
If the euro were to strengthen against sterling by 10 euro cents, with all other variables held constant, profit after tax would increase by
£4.1m (2022/23: £3.0m increase).
(ii) Commodity price risk
The Group purchases a variety of commodities for use in production and distribution which can experience significant price volatility,
which include, inter-alia, dairy, wheat, cocoa, edible oils and energy. The price risk including inflation on these commodities is managed
closely by the Group through the Price Risk Management Committee. It is the Group’s policy to minimise its exposure to this volatility by
adopting an appropriate forward purchase strategy or by the use of derivative instruments where they are available.
(iii) Interest rate risk
The Group’s borrowing facilities comprise senior secured notes and a revolving facility, in sterling. Interest on the revolving facility is
charged at floating rates plus a margin on the amounts drawn down, and at 35% of the applicable margin for the non-utilised portion of
the facility, hence the borrowings are sensitive to changes in interest rates.
Cash and deposits earn interest at floating rates based on banks’ short-term treasury deposit rates. Short-term trade and other
receivables are interest-free.
The Group’s other financial assets and liabilities are not exposed to material interest rate risk.
19.2 Credit risk
The Group’s principal financial assets are cash and cash equivalents and trade and other receivables.
Cash and cash equivalents are deposited with high-credit quality financial institutions and although a significant amount of sales is to a
relatively small number of customers these are generally the major grocery retailers whose credit risk is considered low.
The ageing of trade and other receivables was as follows:
At 30 March 2024
Fully performing
£m
Past due
1-30 days
£m
31-60 days
£m
61-90 days
£m
91-120 days
£m
120+ days
£m
Total
£m
Trade and other
receivables
Expected loss rate
2.2%
3.6%
14.0%
16.0%
11.1%
13.6%
2.9%
Gross carrying amount
trade and other receivables
76.6
6.0
0.1
0.7
0.6
2.7
86.7
Loss allowance
(1.7)
(0.2)
(0.0)
(0.1)
(0.1)
(0.4)
(2.5)
At 1 April 2023
Trade and other
receivables
Expected loss rate
3.2%
1.8%
7.0%
15.2%
19.1%
57.8%
3.9%
Gross carrying amount
trade and other receivables
54.1
13.7
3.3
1.3
0.6
0.6
73.6
Loss allowance
(1.7)
(0.2)
(0.2)
(0.2)
(0.1)
(0.4)
(2.9)
The total loss allowance includes provisions in relation to receivables from customers which are considered at risk of experiencing difficult
economic situations in the current environment.
The Group does not hold any collateral as security against its financial assets.
Movements in the provision for impairment of trade receivables are as follows:
£m
£m
As at 2 April 2023/3 April 2022
2.9
2.6
Receivables written off during the period as uncollectable
–
(0.2)
Provision for receivables impairment raised/(released)
(0.4)
0.5
As at 30 March 2024/1 April 2023
2.5
2.9
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
164
165
FINANCIALS
19. Financial instruments continued
19.3 Liquidity risk
The Group manages liquidity risk through the Treasury function. Cash flow forecasts are prepared and reviewed on a weekly basis,
normally covering a period of three months.
In addition, cash flow forecasts are prepared as part of the Group’s overall budgeting and forecasting processes and performance is
monitored against this each month. This is intended to give the Board sufficient forward visibility of debt levels.
The Group’s Net debt level can vary from month to month and there is some volatility within months. This reflects seasonal trading
patterns, timing of receipts from customers and payments to suppliers, patterns of inventory holdings and the timing of the spend on
major capital and restructuring projects. For these reasons the debt levels at the period end date may not be indicative of debt levels at
other points throughout the period.
The following table analyses the Group’s financial liabilities into relevant maturity groupings based on the contractual undiscounted
cash flows.
Within 1
year
£m
1 and 2
years
£m
2 and 3
years
£m
3 and 4
years
£m
4 and 5
years
£m
Over 5
years
£m
Total
£m
At 30 March 2024
Trade and other payables
(255.8)
–
–
–
–
–
(255.8)
Senior secured notes – fixed
(11.6)
(11.6)
(341.6)
–
–
–
(364.8)
Lease liabilities
(2.9)
(2.5)
(1.9)
(1.5)
(1.5)
(8.9)
(19.2)
At 1 April 2023
Trade and other payables
(248.3)
–
–
–
–
–
(248.3)
Senior secured notes – fixed
(11.6)
(11.6)
(11.6)
(336.7)
–
–
(371.5)
Lease liabilities
(2.6)
(2.6)
(2.2)
(1.5)
(1.4)
(6.2)
(16.5)
The secured senior credit facility (revolving) is priced to SONIA, other liabilities are not re-priced before the maturity date.
At 30 March 2024, the Group had £182.0m (2022/23: £182.0m) of facilities not drawn, expiring between two to three years (2022/23:
two to three years).
The borrowings are secured by a fixed and floating charge over all the assets of the Group.
The following table analyses the contractual undiscounted cash flows of interest on the fixed rate debt to maturity.
Within 1
year
£m
1 and 2
years
£m
2 and 3
years
£m
3 and 4
years
£m
4 and 5
years
£m
Over 5
years
£m
Total
£m
At 30 March 2024
11.6
11.6
11.6
–
–
–
34.8
At 1 April 2023
11.6
11.6
11.6
6.7
–
–
41.5
Notes to the consolidated financial statements continued
The following table analyses the Group’s derivative financial instruments into relevant maturity groupings based on the remaining period
at the balance sheet date to the contractual maturity date. The amounts disclosed are the undiscounted cash flows.
Within 1
year
£m
1 and 2
years
£m
2 and 3
years
£m
3 and 4
years
£m
4 and 5
years
£m
Over 5
years
£m
Total
£m
At 30 March 2024
Forward foreign exchange contracts:
– Outflow
(59.5)
–
–
–
–
–
(59.5)
– Inflow
58.5
–
–
–
–
–
58.5
Commodities:
– Inflow
–
–
–
–
–
–
–
Total derivative financial instruments
(1.0)
–
–
–
–
–
(1.0)
At 1 April 2023
Forward foreign exchange contracts:
– Outflow
(79.9)
–
–
–
–
–
(79.9)
– Inflow
80.0
–
–
–
–
–
80.0
Commodities:
– Inflow
0.1
–
–
–
–
–
0.1
Total derivative financial instruments
0.2
–
–
–
–
–
0.2
19.4 Fair value
The following table shows the carrying amounts (which approximate to fair value except as noted below) of the Group’s financial assets
and financial liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Set out below is a summary of methods and assumptions used to value each
category of financial instrument.
As at 30 March 2024
As at 1 April 2023
Carrying
amount
£m
Fair
value
£m
Carrying
amount
£m
Fair
value
£m
Financial assets at amortised cost:
Cash and cash equivalents¹
102.3
102.3
64.4
64.4
Trade and other receivables
72.7
72.7
63.7
63.7
Financial assets at fair value through profit or loss:
Trade and other receivables
7.8
7.8
4.2
4.2
Derivative financial instruments
– Forward foreign currency exchange contracts
–
–
0.7
0.7
– Commodity and energy derivatives
–
–
0.1
0.1
Financial liabilities at fair value through profit or loss:
Derivative financial instruments
– Forward foreign currency exchange contracts
(0.8)
(0.8)
(0.5)
(0.5)
– Commodity and energy derivatives
–
–
–
–
Other financial liabilities at fair value through profit or loss:
- Deferred contingent consideration (note 22)
(19.1)
(19.1)
(8.2)
(8.2)
Financial liabilities at amortised cost:
Trade and other payables
(255.8)
(255.8)
(248.3)
(248.3)
Senior secured notes
(330.0)
(315.0)
(330.0)
(297.8)
Bank overdrafts
–
–
(1.0)
(1.0)
¹ Re-presented to include cash and cash equivalents at amortised cost
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
166
167
FINANCIALS
19. Financial instruments continued
The following table presents the Group’s assets and liabilities that are measured at fair value using the following fair value measurement
hierarchy:
•
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
•
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices) (level 2).
•
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
As at 30 March 2024
As at 1 April 2023
Level 1
£m
Level 2
£m
Level 3
£m
Level 1
£m
Level 2
£m
Level 3
£m
Financial assets at fair value through
profit or loss:
Trade and other receivables
–
4.9
2.9
–
1.8
2.4
Derivative financial instruments
– Forward foreign currency exchange contracts
–
–
–
0.0
0.7
0.0
– Commodity and energy derivatives
–
–
–
0.0
0.1
0.0
Financial liabilities at fair value through
profit or loss:
Derivative financial instruments
– Forward foreign currency exchange contracts
–
(0.8)
–
0.0
(0.5)
0.0
Other financial liabilities at fair value through
profit or loss:
– Deferred contingent consideration (note 22)
–
–
(19.1)
–
0.0
(8.2)
Financial liabilities at amortised cost:
Senior secured notes
(315.0)
–
–
(297.8)
–
–
Fair value estimation
Derivatives
Forward exchange contracts are marked to market using prevailing market prices. Hedge accounting has not been applied to forward
contracts and as a result the movement in the fair value of £1.0m has been debited to the statement of profit or loss in the period
(2022/23: £0.4m credit).
Commodity derivatives are marked to market using prevailing prices and are also not designated for hedge accounting. As a result, the
fair value movement of £0.1m has been debited to the statement of profit or loss (2022/23: £2.2m debit).
Short and long-term borrowings, loan notes and interest payable
Fair value is calculated based on discounted expected future principal and interest rate cash flows.
Trade and other receivables/payables
The carrying value of receivables/payables with a remaining life of less than one year is deemed to reflect the fair value given their short
maturity. The fair values of non-current receivables/payables are also considered to be the same as the carrying value due to the size and
nature of the balances involved.
Deferred contingent consideration
During the period, the Group recognised other receivables with a fair value of £1.4m and deferred contingent consideration with a fair
value of £6.6m as a result of the acquisition of FUEL10k. The fair values for both are based on unobservable inputs and are classified as a
level 3 fair value estimate under the IFRS fair value hierarchy.
As a result of discount unwind and re-measurement, a debit of £4.3m was recognised in the statement of profit or loss under net
finance cost.
Notes to the consolidated financial statements continued
19.5 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares, or sell assets to
reduce debt.
The directors propose a final dividend of 1.728 pence per share for the period ended 30 March 2024 (2022/23: 1.44 pence).
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt
divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as equity
plus net debt.
The gearing ratios at the balance sheet date were as follows:
As at
30 March
2024
£m
As at
1 April
2023
£m
Total borrowings
(337.9)
(338.7)
Less cash and bank deposits
102.3
64.4
Net debt
(235.6)
(274.3)
Total equity
(1,326.9)
(1,406.0)
Total capital
(1,562.5)
(1,680.3)
Gearing ratio
15%
16%
Gearing is in line year-on-year.
Under the Group’s financing arrangement, the Group is required to meet two covenant tests which are calculated and tested on a
12-month rolling basis at the half year and full year, each year. The Group has complied with these tests at 30 September 2023 and 30
March 2024.
19.6 Financial compliance risk
Risk
The Group operates with Net debt of £235.6m (2022/23: £274.3m) and is subject to operating within banking covenants set out in its
refinancing agreement agreed with its banking syndicate, which include Net debt/EBITDA and EBITDA/interest covenant tests. In the
event these covenants are not met then the Group would be in breach of its financing agreement and, as would be the case in any
covenant breach, the banking syndicate could withdraw their funding to the Group. The banking covenants relate to the Group’s revolving
credit facility, which was undrawn at 30 March 2024 (2022/23: undrawn).
In addition to covenant compliance the Group must ensure that it manages its liquidity such that it has sufficient funds to meet its
obligations as they fall due.
It also supports one defined benefit pension scheme in the UK, which consists of three sections of the RHM Pension Scheme. One of the
three sections has significant technical funding deficits, which could have an adverse impact on the financial condition of the Group.
Mitigation
The Group has financing arrangements which provide funding until 2026.
The Group reviews its performance on an ongoing basis and formally tests and reports on covenant compliance to the Group’s banking
syndicate at each reporting date. In the event of a forecast covenant breach the Group would seek a covenant waiver or amendment
from its banking syndicate.
The Group manages liquidity risk through the Treasury function. Cash flow forecasts are prepared and reviewed on a weekly basis,
normally covering a period of three months. In addition, cash flow forecasts are prepared as part of the Group’s overall budgeting and
forecasting processes and performance is monitored against this each month.
The Group continues to monitor the pension risks closely, working with the trustee to ensure a collaborative approach.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
168
169
FINANCIALS
20. Bank and other borrowing
As at
30 March
2024
£m
As at
1 April
2023
£m
Current:
Bank overdrafts
–
(1.0)
Lease liabilities
(2.7)
(2.1)
Total borrowings due within one year
(2.7)
(3.1)
Non-current:
Transaction costs1
4.3
5.6
Senior secured notes
(330.0)
(330.0)
(325.7)
(324.4)
Lease liabilities
(9.5)
(11.2)
Total borrowings due after more than one year
(335.2)
(335.6)
Total bank and other borrowings
(337.9)
(338.7)
1 Included in transaction costs is £1.6m (2022/23: £1.7m) relating to the revolving credit facility.
Secured senior credit facility – revolving
The RCF of £175m attracts a leverage-based margin of between 2.0% and 4.0% above SONIA. Banking covenants of net debt/EBITDA and
EBITDA/interest are in place and are tested biannually.
The covenant package attached to the revolving credit facility is:
Net debt/
EBITDA1
Net debt/
Interest1
2023/24 FY
3.50x
3.00x
2024/25 FY
3.50x
3.00x
1 Net debt, EBITDA and Interest are as defined under the revolving credit facility.
During the period, the Group extended the period of its revolving credit facility (RCF) by one year to May 2026.
Senior secured notes
The senior secured notes are listed on the Irish GEM Stock Exchange. The notes totalling £330m mature in October 2026 and attract an
interest rate of 3.5%.
21. Provisions for liabilities and charges
Property
£m
Other
£m
Total
£m
3 April 2022
(7.9)
(2.7)
(10.6)
Utilised during the period
3.3
0.1
3.4
Additional charge in the period
(2.9)
(8.8)
(11.7)
Unwind of discount
1.1
–
1.1
Released during the period
0.2
0.2
0.4
Addition through business combination (note 28)
–
(2.5)
(2.5)
1 April 2023
(6.2)
(13.7)
(19.9)
Addition through business combination (note 28)
–
(1.4)
(1.4)
Utilised during the period
0.8
6.3
7.1
Additional charge in the period
(1.6)
(3.7)
(5.3)
Unwind of discount
0.2
0.3
0.5
Released during the period
0.7
1.2
1.9
30 March 2024
(6.1)
(11.0)
(17.1)
During the period, as a result of the acquisition of FUEL10k, the Group recognised provisions of £1.4m in relation to the fair value of
contingent liabilities acquired as part of the business combination. See note 28 for further details.
Property provisions primarily relate to provisions for dilapidations against leasehold properties and environmental liabilities. These
provisions have been discounted at rates between 3.92% and 4.10% (2022/23: 3.43% and 3.84%). The unwinding of the discount
is charged or credited to the statement of profit or loss under net finance cost. Other provisions primarily relate to provisions for
restructuring costs and legal matters.
Notes to the consolidated financial statements continued
The ageing of the provisions is below:
Ageing of total provisions:
As at
30 March
2024
£m
As at
1 April
2023
£m
Within one year
(9.8)
(13.3)
Between 2 and 5 years
(5.6)
(4.9)
After 5 years
(1.7)
(1.7)
Total
(17.1)
(19.9)
22. Other liabilities
As at
30 March
2024
£m
As at
1 April
2023
£m
Deferred income
(3.8)
(4.7)
Deferred contingent consideration
(19.1)
(8.2)
Other liabilities
(22.9)
(12.9)
Deferred income relates to amounts received in relation to a previously disposed business.
23. Reserves and share capital
Share premium
The share premium reserve comprises the premium paid over the nominal value of shares for shares issued.
Merger reserve
The merger reserve comprises the non-statutory premium arising on shares issued as consideration for acquisition of subsidiaries where
merger relief applies, less subsequent realised losses relating to those acquisitions.
Other reserves
Other reserves comprise the hedging reserve, which represents the effective portion of the gains or losses on derivative financial
instruments that have historically been designated as hedges.
Retained earnings
Retained earnings represents the cumulative profit or loss and the own shares reserve which represents the cost of shares in Premier
Foods plc, purchased in the market and held by the Employee Benefit Trust on behalf of the Company in order to satisfy options and
awards under the Company’s incentive schemes. 6,721,393 shares in Premier Foods plc were held by the Employee Benefit Trust at
30 March 2024, with a market value of £10.1m (2022/23: 4,511,923 shares with a market value of £5.5m).
Share capital
Number of
shares
Ordinary
shares at
nominal value
(£0.10/share)
£m
Share
premium
£m
Total
£m
At 3 April 2022
862,785,277
86.3
1.5
87.8
Shares issued under share schemes
5,312,933
0.5
1.0
1.5
At 1 April 2023
868,098,210
86.8
2.5
89.3
Shares issued under share schemes
697,605
0.1
0.2
0.3
At 30 March 2024
868,795,815
86.9
2.7
89.6
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
170
171
FINANCIALS
23. Reserves and share capital continued
Share award schemes
The Company’s share award schemes are summarised as follows:
1. A Long-Term Incentive Plan (‘LTIP’) for executive directors and senior managers, approved by shareholders in 2011 and a 10-year LTIP
approved by shareholders in 2021. The LTIP is comprised of performance shares whereby participants have the right to subscribe
for ordinary shares at nil cost. These awards are equity-settled and have a maximum term of three years. The vesting of the 2020,
2021 and 2022 Performance Share awards are conditional on achievement of a combination of absolute adjusted earnings per share
targets and relative TSR targets. The targets for 2020 and 2021 were based 1/3 absolute adjusted earnings per share targets and 2/3
relative TSR targets. The targets for 2022 and 2023 were based ½ absolute adjusted earnings per share targets and ½ relative TSR
targets. During the period the EPS and TSR elements of the 2020 LTIP vested in full. The EPS and TSR targets for the 2021 LTIP award
have been achieved which will result in full vesting for both elements of the award. The June 2023 LTIP award TSR element was
valued using a Monte Carlo pricing model, the weighted average fair value of the TSR awards was 80p. The key inputs into the Monte
Carlo model were weighted average share price, weighted average exercise price, the expected volatility and the risk-free rate. The
weighted average fair value for the 2023 EPS element was 125p.
2. A Restricted Stock Plan (‘RSP’) which provides specific ad hoc share awards to managers. Awards are normally subject only to
continued employment and may be equity-settled or cash-settled and normally have a retention term of two to three years for senior
management.
3. A Share Incentive Plan (‘SIP’) for all employees. An award of free shares was made to all employees in 2014 by the Company under
this HMRC tax-advantaged plan. Free shares are held by a trustee for a minimum of three years. Subject to continuing employment,
participants may elect to remove shares from the trust after this three-year holding period, however, there are tax and National
Insurance advantages for the employee should the shares be left in the trust for over five years. No further awards under this plan are
currently anticipated.
4. A Deferred Bonus Plan (‘DBP’). One third of any annual bonus payment awarded to executive directors is made in the form of shares.
These shares are awarded under the terms of the DBP which was approved by shareholders in July 2017. Awards will normally be
made within six weeks following the announcement of the Group’s full year results in the form of nil cost options. The awards will
normally vest on the third anniversary of grant and, if awarded in the form of nil cost options, will then be exercisable up until the
tenth anniversary of grant.
Details of the share awards during the period are as follows:
At 30 March 2024, the maximum number of shares which could be awarded under the Group’s Long-Term Incentive Plan schemes was
18,159,343 (2022/23: 15,635,840), of which 9,861,749 (2022/23: 5,513,858) had vested and were exercisable at the end of the period.
During the period, conditional share awards were granted for 3,666,034 (2022/23: 2,617,621) shares and rights to 334,524 (2022/23:
3,401,923) shares lapsed or were forfeited.
At 30 March 2024, the maximum number of shares which could be awarded under the Group’s Restricted Stock Plan schemes was
195,307 (2022/23: 248,594), of which nil (2022/23: 1,500) had vested and were exercisable at the end of the period. During the period,
no awards were granted (2022/23: no awards) and rights to 43,287 (2022/23: 10,313) shares lapsed or were forfeited.
At 30 March 2024, the number of shares outstanding under the Group’s Share Incentive Plan was 313,586 (2022/23: 370,157), of which
313,856 (2022/23: 370,157) were exercisable at the end of the period. During the period, no awards (2022/23: no awards) were granted
and rights to 44,000 (2022/23: 49,500) shares were exercised.
At 30 March 2024, the number of shares outstanding under the Group’s Deferred Bonus Plan schemes was 982,341 (2022/23: 722,858),
of which 172,543 (2022/23: 172,543) had vested and were exercisable at the end of the period. During the period, awards were granted
for 259,483 (2022/23: 269,831) shares and rights to nil (2022/23: nil) shares were transferred or sold.
Share option schemes
The Company’s share option schemes are summarised as follows:
A Savings Related Share Option Scheme (‘Sharesave Plan’) for all employees. The employees involved in this HMRC tax-advantaged save
as you earn scheme have the right to subscribe for up to 17.1 million ordinary shares. The number of shares subject to options, the
periods in which they were granted and the periods in which they may be exercised are given below. These options are equity-settled,
have a maximum term of 3.5 years and generally vest only if employees remain in employment to the vesting date.
At 30 March 2024, the number of shares outstanding under the Group’s Sharesave Plan was 9,443,747 with a weighted average exercise
price at the date of exercise of 90p (2022/23: 10,948,349 shares, 76p), including 468,164 shares which had vested and were exercisable
at the end of the period with a weighted average exercise price of 72p (2022/23: 644,584 shares, 29p). The options outstanding at
the end of the period had a range of exercise prices from 72p to 104p (2022/23: 29p to 85p) and a weighted average life of 1.8 years
(2022/23: 1.7 years).
Notes to the consolidated financial statements continued
During the period, options were granted under the Sharesave Plan for 3,294,340 shares with a weighted average exercise price at
the date of exercise of 104p (2022/23: 3,296,113 shares, 85p). During the period options were exercised for 4,081,474 shares with
a weighted average exercise price of 66p (2022/23: 5,312,933 shares, 30p) and options for 717,468 shares with a weighted average
exercise price of 76p lapsed or were forfeited (2022/23: 791,807 shares, 67p).
The Group uses the Black-Scholes model to determine the fair value of share options at grant dates offered under the Sharesave plan. Fair
values determined from the model use assumptions that are revised for each share-based payment arrangement.
The expected Premier Foods plc share price volatility was determined using an average for food producers as at the date of grant. Current
dividend yield and risk-free rate determined from market yield curves for government gilts with outstanding terms equal to the average
expected term to exercise for each relevant grant.
In 2023/24, the Group recognised an expense of £4.4m (2022/23: £4.6m), related to all equity-settled share-based payment transactions.
24. Dividends
The following dividends were declared and paid during the period:
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
w2023
£m
Ordinary final of 1.44 pence per ordinary share (2022/23: 1.2 pence)
12.4
10.3
After the balance sheet date, a final dividend for 2023/24 of 1.728 pence per qualifying ordinary share (2022/23: 1.44 pence) was
proposed for approval at the Annual General Meeting on 18 July 2024 and will be payable on 26 July 2024. Dividend distributions are
recognised as a liability in the period in which the dividends are approved by Group’s shareholders.
25. Capital commitments
The Group has capital expenditure on property, plant and equipment contracted for at the end of the reporting period but not yet
incurred at 30 March 2024 of £17.3m (2022/23: £8.9m).
26. Contingencies
There were no material contingent liabilities at 30 March 2024 (2022/23: none).
27. Related party transactions
The following transactions were carried out with related parties:
27.1 Key management compensation
Key management personnel of the Group are considered to be the executive and non-executive directors and the Executive Leadership
Team. Details of their remuneration are set out below in aggregate for each of the categories specified in IAS 24 ‘Related Party
Disclosures’. Further information about the remuneration of individual directors is provided in the audited section of the Directors’
Remuneration Report on pages 96 to 115.
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
w2023
£m
Short-term employee benefits
6.8
5.8
Share-based payments
3.4
3.9
Total
10.2
9.7
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
172
173
FINANCIALS
27.2 Other related parties
As at 30 March 2024 the following are also considered to be related parties under the Listing Rules and IAS 24 due to their shareholdings
exceeding 10% of the Group’s total issued share capital:
•
Nissin Foods Holding Co., Ltd. (‘Nissin’) is considered to be a related party by virtue of its 24.84% (2022/23: 24.86%) equity
shareholding in Premier Foods plc and its right to appoint a member to the Board of directors.
Transactions with related parties
52 weeks
ended
30 March
2024
£m
52 weeks
ended
1 April
w2023
£m
Sale of services:
– Nissin
0.2
0.2
Total sales
0.2
0.2
Purchase of goods:
– Nissin
29.1
26.1
Total purchases
29.1
26.1
30 March
2024
£m
1 April
2023
£m
Trade receivables:
– Nissin
0.2
–
Total receivables
0.2
–
Trade payables:
– Nissin
(3.6)
(3.7)
Total payables
(3.6)
(3.7)
27.3 Retirement benefit obligations
As stated in note 14, the Group has entered into an arrangement with the Pension Scheme Trustees as part of the funding requirements
for any actuarial deficit in the Scheme. Full details of this arrangement are set out in note 14 to these financial statements.
28. Acquisition of subsidiary
Acquisition of FUEL 10K Limited
On 29 October 2023, the Group acquired 100% of the ordinary share capital of FUEL 10K Limited (‘FUEL10K’) for initial consideration of
£29.6m. A minimum further deferred consideration of £4.0m will be payable in 2026/27, with any increment to this dependent upon
certain growth targets, and subject to a maximum cap of total consideration (comprising initial consideration and additional deferred
consideration) of £55m. The acquisition provides an ideal platform to accelerate the Group’s expansion into the Breakfast category,
building on the recent successful launch of Ambrosia porridge pots and possessing a differentiated category position, with its protein
enriched product range and appealing to a younger demographic.
Notes to the consolidated financial statements continued
The following table summarises the Group’s provisional assessment of the consideration for FUEL10K, and the amounts of the assets
acquired and liabilities assumed.
Recognised amounts of identifiable assets acquired and liabilities assumed
IFRS book
value at
acquisition
£m
Fair value
adjustments
£m
Fair value
£m
Brands and other intangible assets
–
14.4
14.4
Deferred tax asset
–
1.5
1.5
Inventories
2.0
0.3
2.3
Trade and other receivables1
3.7
1.4
5.1
Cash and cash equivalents
0.3
–
0.3
Trade and other payables
(4.8)
–
(4.8)
Deferred tax liability
–
(3.6)
(3.6)
Provisions
–
(1.4)
(1.4)
Total identifiable net assets
1.2
12.6
13.8
Goodwill on acquisition
22.4
Initial consideration transferred in cash
29.6
Deferred contingent consideration
6.6
Total consideration
36.2
1 Fair value adjustment relates to the recognition of indemnification assets in relation to contingent liabilities acquired
Identifiable net assets
The fair values of the identifiable assets and liabilities acquired have been determined provisionally at the acquisition date. As permitted
under IFRS 3 the Group may, within twelve months of the acquisition date, retrospectively adjust the provisional amounts recognised to
reflect new information obtained about facts and circumstances that existed and, if known, would have affected the measurement of the
amounts recognised as at the acquisition date.
As a result of the business combination, the Group recognised provisions of £1.4m in relation to the fair value of contingent liabilities
acquired which relate primarily to future tax liabilities in line with IAS 37.
The fair value of the trade and other receivables acquired as part of the business combination was £5.1m. This includes an
indemnification asset of £1.4m in relation to the contingent liabilities assumed, and trade receivables amounting to £3.7m which
approximated to the contractual cash flows.
Consideration transferred
Consideration included cash of £29.6m transferred on completion of the acquisition. An additional £6.6m was recognised in relation to
the fair value of deferred contingent consideration being a minimum payment of £4.0m payable in 2026/27 with an increment to this
subject to growth targets dependent on future performance. The deferred contingent consideration is included within non-current other
liabilities.
The fair value of deferred contingent consideration represents the present value of estimate payments measured at the time of
acquisition based on the Group’s estimate of future performance. The fair value is based on unobservable inputs and is a classified as a
level 3 fair value estimate under the IFRS fair value hierarchy. See note 19 for further details.
Acquisition-related costs amounting to £1.8m are not included as part of consideration transferred and have been recognised as an
expense in the consolidated statement of profit or loss, as part of administrative expenses.
Goodwill
Goodwill amounting to £22.4m was recognised on acquisition and while FUEL10K brand forms much of the enterprise value of the
business, there is a premium associated to the purchase of a pre-existing, well positioned business. This goodwill is not expected to be
deductible for tax purposes and is allocated to the Group’s Grocery CGU.
FUEL10K contribution to the Group results
From the date of the acquisition to 30 March 2024, FUEL10K contributed £8.1m to the Group’s Revenues and a profit before taxation of
£0.8m. Had the acquisition occurred on 2 April 2023, on a pro forma basis, the Group’s Revenue for the period to 30 March 2024 would
have been £1,149.1m and profit before taxation for the same period would have been £151.5m.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
174
175
FINANCIALS
29. Investments
In accordance with Section 409 of the Companies Act 2006 and The Large and Medium-sized Companies and Groups (Ac and Reports)
Regulations 2008, as amended by The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015, a full list of
subsidiary undertakings, associate undertakings and joint operations (showing the country of incorporation, registered address and
effective percentage of equity shares held) as at 30 March 2024 is disclosed below.
Company
% Held by the
Company
% Held
by Group
companies, if
different Share Class
Country
Registered Address
Premier Foods Investments Limited
100%
100% £1.00 Ordinary shares
England &
Wales
Premier House
Griffiths Way
St Albans
Hertfordshire
AL1 2RE
Premier Foods Finance plc
0%
100% £1.00 Ordinary shares
Premier Foods Group Services Limited
0%
100% £0.01 Ordinary shares
Premier Foods Group Limited
0%
100% £0.25 Ordinary shares
Centura Foods Limited
0%
100% £1.00 Ordinary shares
Premier Foods (Holdings) Limited
0%
100% £1.00 Ordinary shares
H.L. Foods Limited
0%
100% £1.00 Ordinary shares
Hillsdown Europe Limited
0%
100% £1.00 Ordinary shares
Hillsdown International Limited
0%
100% £1.00 Ordinary shares
RHM Frozen Foods Limited
0%
100% £1.00 Ordinary shares
Knighton Foods Limited
Knighton Foods Properties Limited
0%
0%
100%
100%
£1.00 Ordinary shares
£1.00 Ordinary shares
Company
% Held by the
Company
% Held
by Group
companies, if
different Share Class
Country
Registered Address
The Spice Tailor Limited
0%
100% £0.001 Ordinary shares
£0.001 B shares
£0.001 C shares
£0.001 D shares
Premier House
Griffiths Way
St Albans
Hertfordshire
AL1 2RE
The Spice Tailor (Direct) Limited
0%
100% £0.01 Ordinary shares
Vic Hallam Holdings Limited**
Hillsdown Holdings Pension Trustees Limited*
Premier Foods Group Life Plan Trustees
Limited*
RHM Pension Trust Limited*
The Specialist Soup Company Limited**
James Robertson & Sons Limited**
PFF Old Co Limited**
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
£0.25 Ordinary shares
£1.00 redeemable
cumulative preference
shares
£1.00 Ordinary shares
£1.00 Ordinary shares
£1.00 Ordinary shares
£1.00 Ordinary shares
£1.00 Ordinary shares
£1.00 Ordinary shares
England &
Wales
PIFUK Old Co Limited
0%
100% £1.00 Ordinary shares
RH Old Co Limited*
Fuel 10k Limited
0%
0%
100%
100%
£1.00 Ordinary shares
£0.00001 A Ordinary
£0.00001 B Ordinary
£0.00001 C Ordinary
£0.00001 O Ordinary
£0.00001 V18
£0.00001 V30
Citadel Insurance Company Limited
0%
100% £1.00 Ordinary Shares Isle of Man Ioma House
Hope Street
Douglas
Isle of Man
IM1 1AP
Notes to the consolidated financial statements continued
Company
% Held by the
Company
% Held
by Group
companies, if
different Share Class
Country
Registered Address
Woolgate Nitrovit Limited**
0%
100% £0.25 Ordinary shares
England &
Wales
2 Woolgate Court St
Benedicts Street
Norwich
Norfolk
NR2 4AP
Diamond Foods Lebensmittelhandel GmbH
0%
100% €0.5113 Ordinary
shares
Germany
Gärtnerstraße 3,
25485 Hemdingen,
Germany
Premier Brands Limited*
Beatties Northern Limited (SC018898)**
0%
0%
100%
100%
£1.00 Ordinary shares
£1.00 Ordinary shares
Scotland
Summit House
4-5 Mitchell Street
Edinburgh
Scotland
EH6 7BD
Premier Foods, Inc.
0%
100% US$0.01 Common Stock
shares
United
States
The Corporation Trust
Company
Corporation Trust
Centre
1209 Orange Street,
Wilmington
DE 19801, USA
Premier Foods ROI Limited
Premier Foods Ireland Manufacturing Limited*
0%
0%
100%
100%
€1.00 Ordinary shares
€1.26 Ordinary shares
Ireland
25-28 North Wall
Quay
Dublin 1
Ireland
G P Woolgate Limited**
0%
100% £1.00 Ordinary shares
England &
Wales
PWC LLP, Benson
House 33 Wellington
Street, Leeds, LS1 4JP
The Spice Tailor (Australia) PTY Limited
0%
100% AUD$1.00
Ordinary shares
NSW,
Australia
Level 5, 461 Bourke
Street, Melbourne
3000, Victoria,
Australia
The Spice Tailor (Canada) Limited
0%
100% Common Stock @
no par value
British
Columbia
Canada
1800-1631 Dickson
Ave. (Landmark 6)
Kelowna BC V1Y 0B5,
Canada
*Dormant entities
**Restored companies
30. Subsequent events
On 16 May 2024, the directors have proposed a final dividend of 1.728 pence for the period ended 30 March 2024 for approval at the
Annual General Meeting. See note 24 for more details.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
176
177
FINANCIALS
Company balance sheet
Registered Number: 005160050
Note
As at
30 March
2024
£m
As at
1 April
2023
£m
Non-current assets
Investments in Group undertakings
4
1,120.6
1,117.8
Trade and other receivables
5
28.5
49.5
Deferred tax assets
6
–
1.5
1,149.1
1,168.8
Current assets
Trade and other receivables
5
15.0
12.5
Cash and cash equivalents
0.2
0.2
Total assets
1,164.3
1,181.5
Trade and other creditors
7
(4.7)
(3.1)
Net current assets
10.5
9.6
Total assets less current liabilities
1,159.6
1,178.4
Net assets
1,159.6
1,178.4
Equity
Called up share capital
8
86.9
86.8
Share premium account
2.7
2.5
Retained earnings1
1,070.0
1,089.1
Total equity
1,159.6
1,178.4
1 The company has taken advantage of the exemption permitted by Section 408 of the Companies Act 2006 not to publish its individual profit and loss account and related
notes. During the period, the company made a loss of £4.1m (2022/23: £41.6m profit).
The notes on pages 178 to 181 form an integral part of the financial statements.
The financial statements on pages 176 to 181 were approved by the Board of directors on 16 May 2024 and signed on its behalf by:
Alex Whitehouse
Duncan Leggett
Chief Executive Officer
Chief Financial Officer
Company statement of changes in equity
Called up
share capital
£m
Share
premium
account
£m
Retained
earnings
£m
Total
£m
At 3 April 2022
86.3
1.5
1,055.8
1,143.6
Profit for the period
–
–
41.6
41.6
Share-based payments
–
–
4.6
4.6
Purchase of shares to satisfy share awards
–
–
(2.5)
(2.5)
Shares issued
0.5
1.0
–
1.5
Dividends
–
–
(10.3)
(10.3)
Deferred tax movements on share-based payments
–
–
(0.1)
(0.1)
At 1 April 2023
86.8
2.5
1,089.1
1,178.4
At 2 April 2023
86.8
2.5
1,089.1
1,178.4
Loss for the period
–
–
(4.1)
(4.1)
Share-based payments
–
–
4.4
4.4
Purchase of shares to satisfy share awards
–
–
(6.3)
(6.3)
Shares issued
0.1
0.2
–
0.3
Dividends
–
–
(12.4)
(12.4)
Deferred tax movements on share-based payments
–
–
(0.7)
(0.7)
At 30 March 2024
86.9
2.7
1,070.0
1,159.6
The Company has considered the profits available for distribution to shareholders. At 30 March 2024, the Company had retained earnings
of £1.1bn (2022/23: £1.1bn) of which the unrealised profit element was £0.5bn (2022/23: £0.5bn). The Company had profits available for
distribution of £0.6bn (2022/23: £0.6bn) for the payment of dividends or purchases of own shares. Determining the Company’s reserves
available for distribution is complex and requires, in some instances, the application of judgement. The Company has determined what
is realised and unrealised in accordance with the Companies Act 2006 and the guidance included in ICAEW Technical Release TECH
02/17BL ‘Guidance on realised and distributable profits under the Companies Act 2006’. The Company’s reserves available for distribution
include adjustments to retained earnings in respect of the unrealised portion of dividends in specie received by the Company, profit on
intercompany interest received from subsidiaries, post employment benefit surpluses and share-based payment charges capitalised to
investments.
The notes on pages 178 to 181 form an integral part of the financial statements.
1. Accounting policies
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(‘FRS 101’).
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”). In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements
of UK-adopted international accounting standards (“Adopted IFRSs”), but makes amendments where necessary in order to comply with
Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
•
Cash flow statements and related notes
•
Presentation of comparative period reconciliations
•
Share-based payments
•
Financial instruments and capital management
•
Standards not yet effective
•
Disclosures in respect of compensation of key management personnel
•
Certain disclosures regarding revenue
•
Certain disclosures regarding leases
The loss for the period of £4.1m (2022/23: £41.6m profit) is recorded in the financial statements of Premier Foods plc. The prior year
included dividend income of £45.0m receivable from group undertakings.
The Company has ensured that its assets and liabilities are measured in compliance with FRS 101. The financial statements have been
prepared under the historical cost convention.
The preparation of the financial statements requires the directors to make estimates and assumptions that affect the reported amounts
of assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. The key estimates and
assumptions are set out in the accounting policies below, together with the related notes to the financial statements.
The directors consider that the accounting policies set out below are the most appropriate and have been consistently applied.
The Directors have determined that the preparation of the Company financial statements on a going concern basis is appropriate.
The Company is exempt as permitted under Financial Reporting Standard 101 from disclosing related party transactions with entities that
are wholly owned subsidiaries of the Premier Foods plc Group.
Investments
Investments are stated at cost less any provision for impairment in their value.
Impairment of non-financial assets (including investments)
The carrying amounts of the Company’s non-financial assets, including investments in subsidiaries, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are
recognised in the statement of profit or loss in the period in which they occur.
Taxation
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the profit and loss account except to
the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in
equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised.
Share-based payments
The Company operates a number of equity-settled share-based compensation plans. The fair value of employee share option plans
is calculated using an option valuation model, taking into account the terms and conditions upon which the awards were granted. In
accordance with International Financial Reporting Standard 2, Share-Based Payment (‘IFRS 2’), the resulting expense is charged to
the profit and loss account over the vesting period of the options for employees employed by the Parent Company, or treated as an
investment in subsidiaries in respect of employees employed by the subsidiaries where the expense is recharged. The value of the charge
is adjusted to reflect expected and actual levels of options vesting.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the share awards/options granted,
excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of share awards/options that are expected to vest. At each balance sheet date, the
Company revises its estimates of the number of share awards/options that are expected to vest and recognises the impact of the revision to
original estimates, if any, in profit and loss or investment in subsidiaries, with a corresponding adjustment to equity.
Dividends
Dividend distributions to shareholders are recognised as a liability in the Group’s financial statements in the period in which the dividends
are approved by the shareholders, and for interim dividends in the period in which they are paid. Dividend distributions are recognised as
a liability in the period in which the dividends are approved by Company’s shareholders.
2. Significant estimate
Investment in Group undertakings
Impairment reviews in respect of investments in Group undertakings are performed at least annually and more regularly if there is
an indicator of impairment. The carrying amounts of the Company’s non-financial assets, including investments in subsidiaries, are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
The key assumptions used in the impairment test which include long-term growth rates and discount rates are the same as that used for
the Grocery CGU described further in note 12 of the consolidated financial statements.
3. Operating (loss)/profit
Details of the remuneration of the Company’s auditors for the audit of the Company and Group financial statements are disclosed in Note
5.2 of the consolidated financial statements.
In 2023/24, the Company had two employees (2022/23: two). Directors’ emolument disclosures are provided in the Single Figure Table
on page 100 of this Annual Report.
4. Investments in Group undertakings
£m
£m
Carrying amount at 2 April 2023/3 April 2022 ¹
1,117.8
1,114.8
Additions
2.8
3.0
Carrying amount at 30 March 2024/1 April 2023
1,120.6
1,117.8
¹ Re-presented to reflect historic disposals not previously derecognised.
In 2023/24 a capital contribution of £2.8m (2022/23: £3.0m) was given in the form of share incentive awards to employees of subsidiary
companies which were reflected as an increase in investments.
Refer to note 29 of the consolidated financial statements for a full list of the undertakings.
Impairment testing for the period ended 30 March 2024 has identified that the value in use of the investment in Premier Foods
Investments Limited of £2.3bn is sensitive to reasonably possible changes in assumptions as set out in the table below.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
178
179
FINANCIALS
Notes to the company financial statements
4. Investments in Group undertakings continued
The key assumptions used in the impairment test which include long-term growth rates and discount rates are the same as that used for
the Grocery CGU described further in note 12 of the consolidated financial statements. An illustration of the reasonably possible changes
in key assumptions in the impairment test for the investment in Premier Foods Investments Limited are as follows:
Reasonably possible change in assumption
Impact on headroom
Revenue growth
Increase/decrease by 3.0%
Increase/decrease by £475.9m/£578.7m
Divisional contribution margin
Increase/decrease by 2.0%
Increase/decrease by £370.7m
Long-term growth rate
Increase/decrease by 0.5%
Increase/decrease by £142.3m/£199.7m
Discount rate
Increase/decrease by 0.5%
Decrease/increase by £231.0m/£179.7m
Under each of the above sensitivities no individual scenarios would trigger an impairment for the Group CGU. Under a combination of
reasonably possible scenarios and taking into account mitigating actions, no impairment would be triggered.
5. Debtors
Amounts due after less than one year
As at
30 March
2024
£m
As at
1 April
2023
£m
Amounts owed by Group undertakings1
15.0
12.5
Total debtors
15.0
12.5
1 The receivables provided for 2023/24: £nil (2022/23: £nil).
The amounts owed by Group undertakings are repayable on demand, unsecured and interest free.
Amounts due after more than one year
As at
30 March
2024
£m
As at
1 April
2023
£m
Amounts owed by Group undertakings
28.6
49.6
Receivables provided for
(0.1)
(0.1)
Total debtors
28.5
49.5
The amounts owed by Group undertakings are repayable on demand, unsecured and interest free. However, there is no intent or
expectation to settle within 12 months.
6. Deferred tax asset
2023/24
£m
2022/23
£m
At 2 April 2023/3 April 2022
1.5
1.3
(Charged)/Credited to the statement of profit and loss
(0.8)
0.3
Charged to equity
(0.7)
(0.1)
At 30 March 2024/1 April 2023
(0.0)
1.5
The deferred tax asset relates to share-based payments.
7. Creditors: amounts falling due within one year
As at
30 March
2024
£m
As at
1 April
2023
£m
Amounts owed to Group undertakings
(3.7)
(2.3)
Other payables
(1.0)
(0.8)
Total creditors
(4.7)
(3.1)
The amounts owed to Group undertakings are repayable on demand, unsecured and interest free.
The losses surrendered as Group Relief between UK members of the Group have been surrendered for no consideration.
8. Called up share capital and other reserves
a) Called up share capital
As at
30 March
2024
£m
As at
1 April
2023
£m
Authorised, issued and fully paid
868,795,815 (2022/23: 868,098,210) ordinary shares of 10 pence each
86.9
86.8
All of the ordinary shares rank equally with respect to voting rights and the rights to receive dividends and distributions on a winding up.
b) Share-based payments
The costs reflect the Company’s share option schemes in operation. Further details are available in note 23 of the consolidated financial
statements.
The charge relating to employees of the Company amounted to £1.6m (2022/23: £1.6m). Further details of these schemes can be found
in the Directors’ Remuneration Report on page 96 to 115.
9. Dividends
The following dividends were declared and paid during the period:
52 weeks
ended
1 April 2023
£m
52 weeks
ended
2 April 2022
£m
Ordinary final of 1.44 pence per ordinary share (2022/23: 1.2 pence)
12.4
10.3
On 16 May 2024, the directors have proposed a final dividend of 1.728p per share for the period ended 30 March 2024 subject to the
ratification at the AGM by the shareholders. Dividend distributions are recognised as a liability in the period in which the dividends are
approved by Company’s shareholders.
10. Subsequent events
On 16 May 2024, the directors have proposed a final dividend for the period ended 30 March 2024 for approval at the Annual General
Meeting. See Note 9 for more details.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
180
181
FINANCIALS
Notes to the company financial statements continued
We will annually disclose information
to demonstrate our progress against
our Enriching Life Plan, and other key
Environmental, Social and Governance
measures.
All targets are for 2030 against a 2020 baseline, unless otherwise
stated. Several of these measures are newly developed and will
evolve with improvements in available data and information from
suppliers and other parties. In some areas, information from
prior years may be updated if better information, subsequently,
becomes available and changes prior year disclosures by more
than 5%, or where it makes a meaningful difference to the
interpretation of performance. More information is available in the
accompanying notes following the tables.
Independent assurance
PricewaterhouseCoopers LLP (‘PwC’) have performed an
Independent Limited Assurance engagement on selected
balances within the 2023/24 data, shown with the symbol A ,
in accordance with the International Standard on Assurance
Engagements 3000 (Revised) ‘Assurance Engagements other
than Audits or Reviews of Historical Financial Information’
and International Standard on Assurance Engagements 3410
‘Assurance engagements on greenhouse gas statements’, issued by
the International Auditing and Assurance Standards Board.
The Independent Limited Assurance Report can be found at
https://www.premierfoods.co.uk/sustainability/our-progress/ESG-
Disclosure-Assurance-Report-2023-24/accept. Our Methodology
Statement – the basis on which the KPIs are calculated and on
which the limited assurance is given – can be found at
https://www.premierfoods.co.uk/sustainability/our-progress/
Premier-Foods-reporting-criteria-for-specified-ESG-performance-
metrics-2023-24.pdf.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
182
183
FINANCIALS
Enriching Life Plan disclosure tables
Products
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Make great tasting, healthier and more nutritious food
More than double
sales of products that
meet high nutrition
standards
Total company branded
sales, in £m, of foods
scoring less than 4 and
drinks scoring less than 1
on the UK Department of
Health’s Nutrient Profiling
Model
www.gov.uk/government/
publications/the-nutrient-profiling-
model
320
335
397 A
More than 50% of our
products will provide
additional health or
nutrition benefits
Proportion of products which
meet the requirements for a
regulated health or nutrition
claim
Defined as products scoring less
than 4 and drinks scoring less than
1 on the UK Department of Health’s
Nutrient Profiling Model that also
qualify for a regulated health or
nutritional claim. Calculated at a
Stock Keeping Unit (SKU) level.
https://www.gov.uk/government/
publications/great-britain-nutrition-
and-health-claims-nhc-register
38%
43%
44%
Support the nation’s shift to plant based diets
Grow sales of plant-
based products to
£250m. p.a.
Value of sales of plant
based products
Total company branded sales. Plant
based products are products made
to a vegan recipe. They do not, by
design, contain meat, dairy, eggs
and other animal products, and
all principal ingredients are plant
based.
157
199
248
Each core category
has plant based
offering
Number of core categories
with a plant based/meat or
dairy free offering
Core categories are those strategic
growth categories where our
product ranges constitute at
least 10% of the revenue of total
category.
53%
(8/15)
80%
(12/15)
87%
(13/15)
Products
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Reduce the environmental impact of our packaging
100% of packaging
to be reusable,
recyclable or
compostable by
2025 1
Percentage of total
packaging (by weight)
which meets the On-Pack
Recycling Labelling Scheme
(OPRL) Recycled Categories
Primary, secondary and tertiary
packaging which is recyclable
either at kerbside, recycling points
or front of store using latest OPRL
definitions. Based on tonnage.
https://www.oprl.org.uk/
94%
96%
96%
Percentage of plastic
packaging (by weight)
which meets the On-Pack
Recycling Labelling Scheme
(OPRL) Recycled Categories
Percentage of plastic consumer
packaging which is recyclable
either at kerbside, recycling points
or front of store using latest OPRL
definitions. Based on tonnage.
70%
82%
86%
Total weight of metal
packaging (tonnes)
Tonnage of primary, secondary &
tertiary packaging.
7,734
5,245
4,776
Total weight of glass
packaging (tonnes)
Tonnage of primary, secondary &
tertiary packaging.
33,490
24,331
20,433
Total weight of paper & card
packaging (tonnes)
Tonnage of primary, secondary &
tertiary packaging.
25,550
19,700
21,051
Total weight of plastic
packaging (tonnes)
Tonnage of primary, secondary &
tertiary packaging.
9,251
7,531
7,689
Total packaging weight
(tonnes)
Tonnage of primary, secondary &
tertiary packaging.
76,025
56,806
53,949
Total recycled content (%)
Proportion of packaging materials
which are made up of recycled
material.
46%
45%
1 Packaging data covers branded and own brand packaging from the prior calendar year to align with the UK Plastics Pact reporting requirements.
Planet
Planet
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
184
185
FINANCIALS
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Take action on Climate Change
Reduce Scope 1 and 2
emissions by 67% by
2030 and achieve net
zero by 2040 2
Scope 1 Greenhouse Gas
Emissions (tCO2e)
39,113
36,668
34,614 A
Scope 2 Greenhouse Gas
Emissions – location-based
(tCO2e)
21,247
15,081
15,405 A
Scope 2 Greenhouse Gas
Emissions – market-based
(tCO2e)
33,801
28,961
21,966 A
Total Scope 1 & Scope 2
Greenhouse Gas Emissions –
location-based (tCO2e)
60,359
51,749
50,019 A
Absolute reduction in Scope
1 & Scope 2 Emissions since
2020/21 – location-based (%)
14.3%
17.1%
Total Scope 1 & Scope 2
Greenhouse Gas Emissions –
market-based (tCO2e)
72,913
65,629
56,580 A
Absolute reduction in Scope
1 & Scope 2 Emissions since
2020/21 – market-based (%)
10.0%
22.4%
Overall Scope 1 & Scope
2 Intensity (tCO2e per £m
revenue) – location-based
64.6
51.4
44.6
Overall Scope 1 & Scope
2 Intensity (tCO2e per £m
revenue) – market-based
78.0
65.2
50.4
Total Energy Usage (MWh)
This is the energy consumption
underlying the scope 1 Greenhouse
Gas emissions and scope 2
Greenhouse Gas emissions –
location based, using the same
activity data (excluding fugitive
emissions data).
286,883
259,555 247,118 A
Energy use ratio (MWh per
£m revenue)
307.1
257.9
220.1
Percentage of total energy
usage that is grid electricity
30.0%
30.1%
Percentage of total energy
which comes from renewable
sources
A combination of self generation,
green tariffs and REGOs. Renewable
sources include: solar, wind, hydro,
biomass and geothermal. This is a
new measure and not available for
years before 2022/23.
4.7%
11.0%
Percentage of total electricity
which comes from renewable
sources
A combination of self generation,
green tariffs and REGOs. Renewable
sources include: solar, wind, hydro,
biomass and geothermal. This is a
new measure and not available for
years before 2022/23.
15.7%
36.4%
Enriching Life Plan disclosure tables continued
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Take action on Climate Change (continued)
Reduce scope 3
emissions by 25% by
2030 and target net
zero by 2050
Total Scope 3 emissions
(tCO2e) 3
Reported using the GHG Protocol.
https://ghgprotocol.org/
918,926
905,495
755,944
Purchased goods and
services (tCO2e)
807,319
622,319
Upstream transport and
distribution (tCO2e)
34,960
34,737
Downstream transport and
distribution (tCO2e)
6,930
38,379
Other relevant scope 3
emissions (tCO2e) 3
56,286
60,509
Carbon Disclosure Project
(CDP) Climate Change
Benchmark
https://www.cdp.net/en
F
C
C
Protect our natural resources
Deforestation free
and conversion free
palm and beef supply
chain by 2025
Percentage of palm
purchased that is RSPO
Certified
https://rspo.org/
100%
100%
100%
Percentage of palm directly
purchased which is RSPO
certified (segregated
supply)
57%
67%
73%
Percentage of palm directly
purchased which is RSPO
certified (mass balance)
43%
33%
27%
Carbon Disclosure Project
(CDP) Forest Benchmark
– Palm
https://www.cdp.net/en
C
C
Percentage of beef
products directly and
Indirectly purchased which
are from low risk origins or
certified deforestation free
86%
93%
94%
Carbon Disclosure Project
(CDP) Forest Benchmark –
Cattle Products
https://www.cdp.net/en
D
C
Planet
Planet
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
186
187
FINANCIALS
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Protect our natural resources (continued)
Deforestation free
and conversion free
across supply chain
by 2030
Percentage of soy products
directly purchased which
are from a low risk origin
or certified
https://responsiblesoy.org/
100%
100%
100%
Percentage of soy sourced
through certified credit
schemes where purchased
as part of an ingredient
100%
100%
100%
Percentage of soy sourced
through certified credit
schemes where used as
feed in animal farming
for products in our supply
chain
100%
100%
100%
Percentage of paper &
board purchased directly
which are from low risk
origins or PEFC or FSC
certified
100%
100%
100%
Percentage of sugar
purchased directly which
is from areas of low risk
origin or is deforestation
free certified
93%
96%
97%
Percentage of cocoa
powder and chocolate
directly purchased which is
mass balance certified or
verified
This is a new measure and
not available for years before
2022/23.
47%
97%
Carbon Disclosure Project
(CDP) Forest Benchmark –
Soy Products
https://www.cdp.net/en
C
C
Champion
regenerative
agricultural practices
for key ingredients
Percentage of key suppliers
in critical ingredients
categories supporting
sustainable agricultural
practices and initiatives 4
Critical categories include dairy,
wheat and flour, sugar beet and
cane, potato, apple, tomato,
maize, rice, oils and onion. This is
a new measure and not available
for years before 2022/23.
23%
35%
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Reduce waste across our value chain
Halve our food waste
Total food waste (tonnes) 5
Using Champions 12.3
methodology.
8,012
6,803
6,088
Absolute reduction versus
2017
-15.1%
-24.0%
Total food waste (% of
production) 5
2.4%
2.1%
2.0%
Reduction versus 2017
-12.5%
-17.5%
Support our suppliers
to halve their food
waste
Percentage of key
ingredients and finished
goods suppliers with
targets aligned to halving
food waste by 2030. 6
Suppliers with no material impact
on food waste (i.e. packaging and
agents) are excluded from this
measure.
29%
33%
Use the strength
of our brands to
engage shoppers and
consumers to reduce
food waste in the
home
Number of brand led
initiatives to encourage
shoppers and consumers
to reduce food waste in the
home
Third successful activation of on
pack partnership with FareShare.
2
1
Other key environmental and supply chain measures
Total production (tonnes)
367,992
305,449
290,675
Total water withdrawn (m3)
All incoming water including
abstraction (groundwater and
surface water) and mains derived.
776,026
708,774
682,327
Total water consumed (m3)
Estimated water consumed
through incorporation into our
products.
66,125
85,628
40,397
Carbon Disclosure Project
(CDP) Water Benchmark
https://www.cdp.net/en
C
C
Number of operational
sites with ISO 14001
certification
8/8
9/9
8/8
2 All disclosures follow the Greenhouse Gas protocol and the reporting criteria used can be found on our website www.premierfoods.co.uk/CorporateSite/media/documents/
sustainability/Premier-Foods-reporting-criteria-for-specified-ESG-performance-metrics-2023-24.pdf.
3 2023/24 Scope 3 emissions data covers the 2023 calendar year. Includes: capital goods, fuel and energy-related activities, waste generated in operations, business travel,
employee commuting, and the end-of-life treatment of sold products (packaging). Since the prior disclosure the calculation methodology has been improved to adopt more
up-to-date emission factors for key ingredients, and to recategorise some emissions as Downstream transport from other categories. Premier Foods purchased FUEL10K in
autumn 2023. Activity associated with FUEL10K products is not included in the 2023 scope 3 emissions data. It will be included in future disclosures.
4 Key suppliers are our 70 most impactful suppliers based on greenhouse emissions and other environmental impacts.
5 Food waste reporting is aligned with the Champions 12.3 and UK Food Reduction Roadmap and, therefore, covers prior calendar year. Baseline year is 2017.
6 We have updated the criteria for suppliers with no material impact on food waste and the 2022/23 data has been restated to reflect revised supplier responses to our original
questionnaire.
Enriching Life Plan disclosure tables continued
People
People
7 Senior management is considered to be our Executive Leadership Team and their direct reports. We would like to reach a position where females make up between 45%
and 55% reflecting that it is a relatively small team and, therefore, percentage measures can be impacted by short-term fluctuations in individual roles. This approach also
recognises that some individuals do not identify with traditional binary gender definitions.
8 Data includes direct product and financial donations to programmes supporting food redistribution to those in food poverty and food insecurity. 1 meal = 420g for product
donations, as per guidance from WRAP, and £0.25 through 2023 and £0.21 through 2024 for financial donations, as per guidance from FareShare.
9 New measure and data is not available for prior years.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
Premier Foods plc
www.premierfoods.co.uk
188
189
FINANCIALS
Enriching Life Plan disclosure tables continued
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Create a diverse, healthy and inclusive culture
Gender balance in
our senior leadership
team 7
Percentage of Senior
Management roles which
are held by females
Senior management is considered
to be our Executive Leadership
Team and their direct reports.
27.0%
40.4%
41.1%
Percentage of general
management roles which are
held by females
General management roles are all
graded roles (grades 0-5; these
employees all have access to the
Management Bonus Scheme).
43.5%
46.9%
46.4%
Percentage of total
colleagues that are women
36.7%
36.7%
36.0%
Mean gender pay gap
(hourly)
https://www.premierfoods.co.uk/
sustainability/our-progress/gender-
pay-gap-2023
8.4%
5.6%
6.9%
Mean gender pay gap
(bonus)
37.8%
40.5%
29.3%
Our Diversity kpis
will reflect regional
demographics
Percentage of employees
who are non-white vs
national average
Premier Foods data is compared
against people from a non-white
backgrounds at 18% according to
the 2021 Census.
10.6%
14.2%
14.4%
Percentage of Senior
Management roles which
are held by those from an
ethnic minority
9
Senior management is considered
to be our Executive Leadership
Team and their direct reports.
3.6%
Percentage of employees
who are self identifying as
LGBTQ+ vs national average
Premier Foods data is compared
against figures from the 2021
Census stating that 3.2% of the UK
population reports to be part of the
LGBTQ+ community.
4.8%
4.6%
All sites will achieve
platinum level
Health & Wellbeing
accreditation
Number of sites achieving an
external Health & Well-being
accreditation
Accreditation programme started in
2022/23 with a phased roll-out over
coming years.
2
5
Be a leading developer of people in the Food & Drink industry
We will provide skills
programmes and work
opportunities for the
young and excluded
groups to enable a
fulfilling career in the
Food Industry
Number of apprenticeships
Total number of employees
participating in an apprenticeship
programme.
87
94
90
Number of partnerships
with groups who can help
us support the young
and excluded groups into
employment
Number of partnerships with
local schools, colleges, charities
or social enterprises developing
employability skills.
2
5
10
Support employees
to develop key
skills with 75% of
Science, Technology,
Engineering and
Maths (STEM)
vacancies filled by
internal candidates
Percentage of STEM
vacancies filled by internal
candidates
Percentage of all roles which
require STEM skills which are filled
by internal candidates, apart from
first entry level.
39%
47%
Number of T-level
placements
First T-level placements started in
autumn 2022.
2
3
Commitment
KPI Measure
Comments
Baseline
(2020/21 unless
otherwise stated)
2022
/23
2023
/24
Number of STEM
apprenticeships
Number of apprenticeships in roles
requiring STEM skills.
43
47
70
80% of colleagues
will feel they have
opportunity to
develop and grow
Percentage of colleagues
stating that they feel they
have opportunities to
develop and grow
Results from biannual colleague
survey. 2020/21 baseline figure are
from the survey results gathered
in 2021.
53%
N/A
60%
Other key employee measures
Colleague survey
participation
Results from biannual colleague
survey. 2020/21 baseline figure are
from the survey results gathered
in 2021.
88%
N/A
87%
Staff turnover (%)
Colleague turnover is calculated
using average total headcount and
total leavers made up of resignations,
retirements & death in service.
4.4%
12.1%
11.5%
Total headcount
Excludes all contractors, interim
colleagues and agency staff.
4,385
4,098
4,048
Lost Time Accidents (LTA)
per 100,000 hours worked
0.10
0.14
0.18
RIDDOR (Reporting of
Injuries, Diseases and
Dangerous Occurrences
Regulations) per 100,000
hours worked
UK food manufacturing average:
0.50
0.02
0.09
0.12
Work-related fatal injuries
0
0
0
Be a caring community partner
We will donate 1
million meals p.a. to
those in food poverty
Number of meals provided
to charities
Data includes direct product and
financial donations. 8
593,859
726,530
949,040
Be more of a force
for good in our
communities by
volunteering at least
1,000 colleague days
each year
Number of days
volunteered by colleagues
to charities or registered
good causes
1 day is at least 8 hours of
employee time from their paid
hours. Recorded from 2022
onwards.
270
502
Total Community
Investment contribution
value (in £000’s)
Community investment is defined as
the value of monetary (or equivalent)
contributions to community-based
organisations and initiatives that
extend beyond our core business
activities to help address a wide range
of issues and causes aligned to our
Enriching Life Plan. Not all community
investment will be made directly to
a charity, but the intention of the
activities being funded or supported
will be to deliver community benefit.
This includes all direct and leveraged
contributions including financial, in-
kind, donations and volunteering.
£841.2
£1,239.5
£1,323.9
The production of this report supports the work of the
Woodland Trust, the UK’s leading woodland conservation
charity. Each tree planted will grow into a vital carbon store,
helping to reduce environmental impact as well as creating
natural havens for wildlife and people.
Premier Foods plc
Annual Report for the 52 weeks ended 30 March 2024
190
Additional information
Shareholder enquiries
The Company’s Register of Members
is maintained by our registrar, Equiniti.
Shareholders with queries relating to
their shareholding should contact Equiniti
directly using the details given below:
Equiniti, Aspect House, Spencer Road,
Lancing, West Sussex, BN99 6DA.
Telephone – 0371 384 2040
(or +44 371 384 2040), if calling from
outside the UK). Calls to this number are
charged at a national rate. Lines are open
8.30 am to 5.30 pm Monday to Friday,
excluding UK public holidays.
Or visit Equiniti’s Shareview website:
www.shareview.co.uk
Company advisors
Independent Auditors
PricewaterhouseCoopers LLP
1 Embankment Place, London, WC2N 6RH
Joint corporate brokers
Jefferies International
100 Bishopsgate, London, EC2N 4JL
Peel Hunt LLP
100 Liverpool Street, London, EC2M 2AT
Shore Capital
Cassini House, 57 St James’s Street,
London, SW1A 1LD
Financial PR advisers
Headland
Cannon Green, 27 Bush Lane, London,
EC4R 0AA
Trademarks
The Company’s trademarks are shown
in italics throughout this Annual Report.
The Company has an exclusive worldwide
licence to use the Loyd Grossman name
on certain products. The Company has
an exclusive licence to use the Cadbury
trademark in the UK and Republic of
Ireland (and a non-exclusive licence for use
in other specified territories) on a variety
of ambient cake products. Cadbury is a
trademark of the Mondelēz International
Group. Cup Noodles and Soba noodles are
trademarks of Nissin Foods Holding Co.,
Limited (‘Nissin’), who is the Company’s
largest shareholder. The Company has
entered into a co-operation agreement
with Nissin to market and distribute certain
Cup Noodles and Soba noodles products in
the UK and certain other jurisdictions.
Cautionary statement
The purpose of this Annual Report is
to provide information to shareholders
of Premier Foods plc (‘the Company’).
The Company, its directors, employees
and advisors do not accept or assume
responsibility to any other person to
whom this document is shown, or into
whose hands it may come, and any such
responsibility or liability is expressly
disclaimed. It contains certain forward-
looking statements with respect to the
financial condition, results, operations
and businesses of the Company. These
statements and forecasts involve risk and
uncertainty, because they relate to events
and depend upon circumstances that will
occur in the future. There are a number
of factors that could cause actual results
or developments to differ materially from
those expressed or implied by these
forward-looking statements and forecasts.
Nothing in this Annual Report should be
construed as a profit forecast.
Premier Foods plc
Premier House
Centrium Business Park
Griffiths Way
St Albans
Hertfordshire
AL1 2RE
01727 815850
www.premierfoods.co.uk
Registered in England and Wales No. 5160050