Premier Foods plc Pensions Update (6719A)

TIDMPFD TIDMIRSH

RNS Number : 6719A

Premier Foods plc

28 March 2017

Premier Foods plc

("Premier Foods" the "Company")

28 March 2017

Pensions update

   --           2016 Actuarial Valuations now agreed with all UK pension schemes 
   --           Cash payments to schemes reduced by further GBP32m over next three financial years 

In March 2014, as part of a wider re-financing of the Company, Premier Foods agreed a schedule of pension deficit cash contributions with the Trustees of the Company's pension schemes, with payments fixed for nearly six years; from April 2014 until December 2019.

Following finalisation of the 2016 actuarial valuations, the Company is pleased to announce today a revised schedule of pension payments which significantly reduces the Group's cash outflow over the next three years. This new agreement includes:

   --           Reductions and re-phasing of deficit contributions to the Premier Foods' schemes(1) 
   --           No deficit contributions to the RHM schemes in the recovery plan 

-- Administration costs over the next three years to be part funded by RHM schemes by GBP2m per annum

Overall, the total cash costs from April 2017 until March 2020 to the RHM and Premier Foods Pension Schemes will be approximately GBP32m lower than outlined in our Interim Results on 15 November 2016.

Alastair Murray, Chief Financial Officer, said:

"We are pleased to have agreed a reduction in our pension scheme obligations with the scheme Trustees as we continue to focus on maximising the Company's free cash flow generation and debt reduction. While this has been a challenging negotiation, we appreciate the open and constructive dialogue which has taken place with all pension scheme Trustees in arriving at this revised agreement."

The revised schedule of payments over the next six years of the recovery period is outlined in the table below.

 
GBPm                      2017/18  2018/19  2019/20  2020/21  2021/22  2022/23 
New plan 
Deficit contributions       35       35       37       38       38       38 
Administration 
 costs                      4-6      4-6      4-6      6-8      6-8      6-8 
                          -------  -------  -------  -------  -------  ------- 
Total                      39-41    39-41    41-43    44-46    44-46    44-46 
Previous plan 
 (as November 2016) 
Deficit contributions       49       44       40       33       33       35 
Administration 
 costs                      6-8      6-8      6-8      6-8      6-8      6-8 
                          -------  -------  -------  -------  -------  ------- 
Total                      55-57    50-52    46-48    39-41    39-41    41-43 
 
Reduction/(Increase)(2)     16       11        5       (5)      (5)      (3) 
                          -------  -------  -------  -------  -------  ------- 
 

As part of these overall reductions, the Company has also agreed with the Premier Foods schemes a mechanism (including limited changes to the existing dividend matching agreement) to allow the schemes limited further cash contributions in the event the Company outperforms certain agreed profit targets. These targets are materially ahead of current market expectations for the Company.

The net present value of future deficit payments, to the end of the respective recovery periods remains at c.GBP300-320m.

For further information please contact:

 
Alastair Murray, Chief Financial 
 Officer 
 Richard Godden, Head of Investor   [phone] 
 Relations                           [phone] 
 
Maitland 
 Kate O'Neill                       [phone] 
 Tom Eckersley                       5151 
 
 

Notes to editors:

1. The Premier Foods schemes include the Premier Foods Pension Scheme and the Premier Grocery Products Pension Scheme

   2.      Assumes mid-point of reduction in payments when comparing new and previous plans 

This information is provided by RNS

The company news service from the London Stock Exchange

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March 28, 2017 02:00 ET (06:00 GMT)