Premier Foods : Financial Reporting Document

Premier Foods plc

16 November 2022

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

Half year results for the 26 weeks ended 1 October 2022

Strong first half, expectations for full year on track

Financial headlines

Headline measures (excluding The Spice Tailor)

• Group revenue up +6.2%, Q2 revenue up +6.4%
• Branded revenue growth up +3.9% in H1 and +3.6% in Q2
• Trading profit1 up +6.2%, margins maintained in line with prior year
• Adjusted profit before tax up +11.9%, adjusted earnings per share up +11.4% Statutory measures (including The Spice Tailor)
• Group revenue up +6.6%
• Statutory profit before tax up +37.1%
• Basic earnings per share of 4.2p, up +68.0%
• Combined pensions surplus of £961.8m, up +1.8% compared to 2 April 2022

Strategic & operational headlines

• Branded growth model delivered 5.0% average UK branded revenue growth over last three years
• Gross margins in line with last year as input cost inflation offset by cost savings and increased pricing
• International revenue growth up +11%8 with broad based growth in target markets
• Doubled new categories revenue through brand extensions including Rubs & Marinades, Ice-cream and Porridge
• Completed highly complementary acquisition of The Spice Tailor
• On track to deliver full year expectations

Alternative performance measures above are defined on pages 13-14 and reconciled to statutory measures throughout

Headline results presented for FY22/23 H1 exclude ownership of The Spice Tailor. Statutory measures include one months' ownership of The Spice Tailor for FY22/23 H1.

Trading profit is stated including software amortisation; FY21/22 H1 comparative is re-stated accordingly

Reconciliations for Revenue and Trading profit between statutory and headline measures are provided in the appendices

Alex Whitehouse, Chief Executive Officer

"We have again made very good financial and strategic progress in the first half of this year, reporting strong Group and branded revenue growth in what continues to be a challenging environment. Our margins were in line with last year, and we delivered adjusted PBT growth of nearly 12% due to our consistently good trading performance and lower interest costs following our refinancing in H1 last year."

"We continue to deliver against our five pillar growth strategy: our UK Branded revenue has now grown 5% on average over the last three years; we continue to invest in our supply chain to drive efficiencies; revenue from extending our brands into new categories more than doubled, and International revenue increased by 11%8. Additionally, we have welcomed the highly complementary brand The Spice Tailor into our portfolio in the first half; our first acquisition for over 15 years."

"The financial resilience of the Group is illustrated by our strong underlying cash generation, our 2026 dated fixed rate bonds following our 2021 refinancing, continued commitment to a leverage target of 1.5x and limited direct exposure to the US Dollar."

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"The current economic climate is undoubtedly challenging for consumers, and our broad range of affordable brands have always played a key role for families when times are tough. With people starting to eat out less, they often find the best restaurant in town is at home, where you can make nutritious and tasty meals more affordably. In this environment, our portfolio of brands continues to display strong momentum and are well placed to deliver further growth."

"As we look to the second half of the year, we will be launching more consumer insight driven new products such as Plantastic branded Millionaire Flapjacks, Mr Kipling Brownie Bites and pigs-in-blanket flavour Bisto granules for Christmas, in addition to further advertising behind our major brands. A big feature of our brand activation will be helping people cook and prepare affordable meals at home for just £1 per serving through our "Best Restaurant in Town" campaign."

"We continue to see further input cost inflation, which we expect to recover through a combination of cost savings and our annual price increase in quarter four this year. Following a strong first half and with good momentum as we enter H2, we are on track to deliver on expectations for FY22/23."

Environmental, Social and Governance (ESG)

The Group unveiled its 'Enriching Life Plan' ESG strategy just over a year ago and has made strong progress. The 'Enriching Life Plan' is articulated through the three key strategic pillars of Product, Planet and People. The Group has set out a series of major sustainability targets under each pillar which can be found on the Company's website.

Under the product pillar, a unique, full range of non-HFSS(non-high fat, salt & sugar) Mr Kipling Deliciously Good cakes have been launched this year. A category first, not only do these cakes benefit from 30% less sugar and lower fat, they are also made with higher levels of fibre and fruit compared with the standard Mr Kipling range. Additionally, the percentage of total packaging and plastics which are recyclable across the Group have now reached 96% and 80% respectively. Progress in the planet workstreams includes the submission of emissions targets to SBTi for validation, and also being promoted to Tier 1 of the Business Benchmark on Farm Animal Welfare (BBFAW) for the first time. In the people pillar, mental health awareness training has been completed by 93% of the Group's management population, we have also agreed a new corporate charity partnership with FareShare and launched a colleague volunteering scheme.

Outlook

Following the delivery of a strong financial performance in the first half of the year, the Group takes good momentum into H2 as it continues to successfully navigate the evolving macroeconomic climate. As it looks ahead to the second half, it has plans for more consumer-insight driven new product launches and further brand investment. With its leading portfolio of affordable brands, the Group considers it is well placed to perform well in the current challenging environment and it remains on track to deliver on expectations for the full year. In the medium term, the Group will continue to realise further shareholder value through the ongoing delivery of its five pillar growth strategy and its target of 1.5x Net debt/EBITDA remains unchanged.

Strategy overview

The Group delivers growth and creates value, through its five pillar strategy, outlined below.

1. Continue to grow the UK core business

We have a well established and growing UK business which provides the basis for further expansion. The branded growth model which we employ in the UK is at the heart of what we do and is core to our success. Leveraging our

leading category positions, we launch new products to market driven by consumer trends, support our brands with sustained levels of marketing investment and foster strong customer and retailer partnerships.

2. Supply chain investment

We invest in operational infrastructure to increase efficiency and productivity across our manufacturing and logistics operations, providing a virtuous cycle for brand investment. Capital investment in our sites also facilitates growth through our innovation strategy and enhances the safety and working conditions of our colleagues.

3. Expand UK business into new categories

We leverage the strength of our brands, using our proven branded growth model to launch products in adjacent,

new food categories.

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4. Build international businesses with critical mass

We are building sustainable business units with critical mass overseas, applying our brand building capabilities to

deliver growth in our target markets of Republic of Ireland, Australia, North America and Europe. Our primary brands to drive this expansion are Mr Kipling, Sharwood's and The Spice Tailor.

5. Inorganic opportunities

We will utilise our brand building and commercial expertise to expand across a wider portfolio, accelerating value creation through bolt-on and targeted acquisition opportunities.

Further information

A presentation to investors and analysts will be webcast today at 9:00am GMT.

To register for the webcast follow the link:www.premierfoods.co.uk/investors/investor-centreA recording of the webcast will be available on the Company's website later in the day.

A conference call for bond investors and analysts will take place today, 16 November 2022, at 1:30pm GMT. Dial in details are outlined below:

A factsheet providing an overview of the Half year results is available at:

www.premierfoods.co.uk/investors/results-centre

A Premier Foods image gallery is available using the following link:

www.premierfoods.co.uk/media/image-gallery/

Further information on the 'Best Restaurant in Town' can be found at:

www.bestrestaurantintown.co.uk/

As one of Britain's largest food producers, we're passionate about food and believe each and every day we have the opportunity to enrich life for everyone. Premier Foods employs over 4,000 people operating from 15 sites across the country, supplying a range of retail, wholesale, foodservice and other customers with our iconic brands which feature in millions of homes every day.

Through some of the nation's best-loved brands, including Ambrosia, Batchelors, Bisto, Loyd Grossman, Mr Kipling, Oxo and Sharwood's, we're creating great tasting products that contribute to healthy and balanced diets, while committing to nurturing our people and our local communities, and going further in the pursuit of a healthier planet, in line with our Purpose of 'Enriching Life Through Food'.

- Ends -

This announcement may contain "forward-looking statements" that are based on estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements are all statements other than statements of historical fact or statements in the present tense, and can be identified by words such as "targets", "aims", "aspires", "assumes", "believes", "estimates", "anticipates", "expects", "intends", "hopes", "may", "would", "should", "could", "will", "plans", "predicts" and "potential", as well as the negatives of these terms and other words of similar meaning. Any forward-looking statements in this announcement are made based upon Premier Foods' estimates, expectations and beliefs concerning future events affecting the Group and subject to a number of known and unknown risks and uncertainties. Such forward-looking statements are based on numerous assumptions regarding the Premier Foods Group's present and future business strategies and the environment in which it will operate, which may prove not to be

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accurate. Premier Foods cautions that these forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in these forward-looking statements. Undue reliance should, therefore, not be placed on such forward-looking statements. Any forward-looking statements contained in this announcement apply only as at the date of this announcement and are not intended to give any assurance as to future results. Premier Foods will update this announcement as required by applicable law, including the Prospectus Rules, the Listing Rules, the Disclosure and Transparency Rules, London Stock Exchange and any other applicable law or regulations, but otherwise expressly disclaims any obligation or undertaking to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

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Financial results

Overview

The table above is presented excluding the impact of The Spice Tailor, with the exception of Basic earnings per share

Group revenue (excluding The Spice Tailor) increased by 6.2% in the first half of the year, with branded revenue ahead 3.9% and non-branded revenue up 22.8%. Growth was consistently strong across the period, with quarter 1 and quarter 2 revenue growth of 6.0% and 6.4% respectively. Divisional contribution grew by 8.4% to £83.5m, as margins expanded by 40 basis points. Trading profit increased by 6.2% to £56.7m, with group and corporate costs rising, reflecting wage and salary inflation, additional strategic roles and a provision release in the prior year. Adjusted profit before tax and adjusted earnings per share increased by 11.9% and 11.4% respectively, reflecting lower interest costs. Basic earnings per share (including The Spice Tailor) increased by 68.0% from 2.5p to 4.2p in the period.

Group revenue including one month's contribution from The Spice Tailor increased by 6.6% in H1 and by 7.1% in Q2.

Trading performance

Grocery

The table above is presented excluding the impact of The Spice Tailor

Revenue in the Grocery business (excluding The Spice Tailor) increased by 6.7% in the first half of the year to £303.0m. Branded revenue grew by 4.6% to £256.1m while non-branded revenue increased by 19.5%. Divisional contribution was £70.2m, a 9.2% increase on the comparative period, with margins expanding by 50 basis points.

In the second quarter, Grocery revenue increased by 6.9%, demonstrating the consistency of top-line growth through the period, with branded revenue up 4.6% and non-branded revenue ahead 21.8%. Market share grew by 34 basis points in the first half of the year, illustrating the strength and resilience of the Group's portfolio as consumers budgets are becoming increasingly stretched. Non-branded revenue growth reflected strong pricing benefits, the recovery of out of home business to business volumes and contract wins.

The Group's branded growth model leverages the strength of its market leading brands, launching insightful new products, supporting the brands with emotionally engaging advertising and building strategic retail partnerships. Branded revenues in the UK have grown by 5.0% on a three-year compound annual growth rate basis, serving to illustrate the success of this strategy.

In the first half of the year, Batchelors, Loyd Grossman, Sharwood's, Homepride and Nissin all delivered particularly strong year on year growth. New product development, driven by key consumer trends included Homepride pasta

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