Building a Great British Food Company
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Premier Foods plc plc Foods Premier Premier Foods plc Premier House Centrium Business Park Building a great Premier Foods plc The new Premier Foods Griffiths Way Annual report St Albans British food company and accounts 2007 Hertfordshire AL1 2RE Annual report and accounts 2007 and accounts Annual report T 01727 815850 F 01727 815982 www.premierfoods.co.uk The acquisitions of Campbell’s and RHM have allowed us to create a great British food company with a passion for creating great food and brands that people love. Financial highlights Branded portfolio highlights £2,247.6m 15.5p No.1 Turnover Adjusted earnings per share** 7 of our top 10 brands hold No.1 (2006: £840.7m) (2006: 16.0p) positions in their respective food categories £280.2m 6.5p Trading profit* Dividends per share*** £1.2bn (2006: £129.4m) (2006: 12.0p) Retail sales of our top 10 brands £76.1m Operating profit 99.4% (2006: £100.5m) of British households bought a Premier Foods brand last year**** 43m people eat a Premier Foods branded product every two weeks**** * Trading profit is defined as operating profit before exceptional items, amortisation of intangible assets, the revaluation of foreign exchange contracts under IAS 39 and pension credits or charges in relation to the difference between the expected return on pension assets and interest costs on pension liabilities. ** Adjusted earnings per share is defined as trading profit, less net cash interest, regular amortisation of debt issuance cost and underlying taxation, divided by the weighted average number of ordinary shares in issue in the year. *** 2006 dividend per share restated for the effect of the Rights Issue in 2006. **** Source: TNS worldpanel UK data to 4 November 2007. Book I Book II Book III 01 In every British kitchen 25 Accountability 49 Financial statements on every British table 26 Directors’ report 50 Independent auditors’ report to the 02 Scale brings competitive 29 Corporate governance members of Premier Foods plc – advantage in many areas 39 Directors’ remuneration report The Group 03 Uniquely positioned to help 51 Independent auditors’ report to the retailers meet consumer needs members of Premier Foods plc – 04 Creating efficiencies in the The Company supply chain 52 Consolidated income statement 05 One integrated business 53 Consolidated balance sheet 06 Chairman’s statement 54 Consolidated statement of 10 Chief Executive’s summary recognised income and expense 12 Business review 55 Consolidated cash flow statement 18 Financial review 56 Notes to the financial statements 22 Board of directors 96 Premier Food plc – Company 23 Senior management financial statements 24 Premier Foods’ brands 97 Notes to the Company financial statements 100 Corporate information Premier Foods plc plc Foods Premier Premier Foods plc Premier House Centrium Business Park Building a great Premier Foods plc The new Premier Foods Griffiths Way Annual report St Albans British food company and accounts 2007 Hertfordshire AL1 2RE Annual report and accounts 2007 and accounts Annual report T 01727 815850 F 01727 815982 www.premierfoods.co.uk The acquisitions of Campbell’s and RHM have allowed us to create a great British food company with a passion for creating great food and brands that people love. Financial highlights Branded portfolio highlights £2,247.6m 15.5p No.1 Turnover Adjusted earnings per share** 7 of our top 10 brands hold No.1 (2006: £840.7m) (2006: 16.0p) positions in their respective food categories £280.2m 6.5p Trading profit* Dividends per share*** £1.2bn (2006: £129.4m) (2006: 12.0p) Retail sales of our top 10 brands £76.1m Operating profit 99.4% (2006: £100.5m) of British households bought a Premier Foods brand last year**** 43m people eat a Premier Foods branded product every two weeks**** * Trading profit is defined as operating profit before exceptional items, amortisation of intangible assets, the revaluation of foreign exchange contracts under IAS 39 and pension credits or charges in relation to the difference between the expected return on pension assets and interest costs on pension liabilities. ** Adjusted earnings per share is defined as trading profit, less net cash interest, regular amortisation of debt issuance cost and underlying taxation, divided by the weighted average number of ordinary shares in issue in the year. *** 2006 dividend per share restated for the effect of the Rights Issue in 2006. **** Source: TNS worldpanel UK data to 4 November 2007. Book I Book II Book III 01 In every British kitchen 25 Accountability 49 Financial statements on every British table 26 Directors’ report 50 Independent auditors’ report to the 02 Scale brings competitive 29 Corporate governance members of Premier Foods plc – advantage in many areas 39 Directors’ remuneration report The Group 03 Uniquely positioned to help 51 Independent auditors’ report to the retailers meet consumer needs members of Premier Foods plc – 04 Creating efficiencies in the The Company supply chain 52 Consolidated income statement 05 One integrated business 53 Consolidated balance sheet 06 Chairman’s statement 54 Consolidated statement of 10 Chief Executive’s summary recognised income and expense 12 Business review 55 Consolidated cash flow statement 18 Financial review 56 Notes to the financial statements 22 Board of directors 96 Premier Food plc – Company 23 Senior management financial statements 24 Premier Foods’ brands 97 Notes to the Company financial statements 100 Corporate information Brands The acquisition of Campbell’s and RHM has transformed the Our vision – a great British food company scale of our brands as well as the categories that we operate in. Total pro forma branded sales for 2007 were £1,447m. (The pro with a passion for creating great food forma presentation treats acquired businesses as if they had and brands that people love been owned for the whole of the relevant period). Retail sales value Brand Description for branded range Ranking Strategy Structure Hovis #2 brand in pre-packed bread. We make 2 million loaves of Premier Foods was floated on the London Stock Exchange The structure of the Group has been transformed from a bread a day. Our bread is bought by 78% of British households £391m No.2 in July 2004 with a clear strategy of using its scale to drive large number of small businesses to three strategic divisions. (over 19 million households). the business in three key areas: From 2008 we will report under the following three divisions: • Growth in consumer-focused brands; • Growth through customer relationships; and Mr Kipling #1 brand in ambient packaged cake. Bought by over 50% • Cost savings and business simplification. of British households. We produce 19 million mince pies £165m No.1 each year. Pro forma In addition to these was a focus on the UK and a plan to acquire Division 2007 turnover great British brands and integrate them quickly, to further contribute to our strategies based on scale. Above all, our Grocery • Cakes Batchelors #1 brand in: dried soup, canned peas, savoury noodles, aim was to improve our competitiveness against other food £1,328m • Soups savoury pasta. Found in 60% of British households. £121m No.1 manufacturers, while at the same time delivering improved • Vegetables Over 250 million mugs of Bachelors famous Cup a Soup returns to our shareholders. • Stocks • Gravies are consumed each year in Britain. This strategy is unchanged and still forms the core of all • Spreads that we seek to do. The acquisitions of Campbell’s and RHM, • Desserts • Home baking Quorn #1 brand in meat-free food, bought by over 20% of British however, gave us the opportunity to transform Premier by • Sauces and Asian meals households. £112m No.1 making a real step change in scale in each of the 3 elements • Pickles of our strategy. We believe this will in turn lead to a step • Beverages change in competitiveness. Bread & Milling • Bread Bisto #1 brand in gravy, bought by 62% of British households. £820m • Morning goods £87m No.1 • Flour • Frozen part-baked bread Chilled • Meat-free Sharwood’s #1 brand in Asian meal solutions, found in 49% of British & Ireland £407m • Ready meals households. 4,400 tonnes of Sharwood’s curries are eaten £84m No.1 • Cakes and desserts each year. • Pizza bases • Grocery business in the Republic of Ireland Cadbury #2 brand in ambient packaged cake, #2 brand in chocolate (Cakes and Spreads) spreads. (Cadbury’s is manufactured under licence). £84m No.2 Markets Ambrosia #1 brand in custard, #1 brand in ambient milk puddings, The cover of this report is printed on Think 4 Bright which is The total UK food market was worth approximately £58.1bn In 2007 total sales of branded plant bread and morning goods found in 48% of British households. £81m No.1 produced with 100% ECF (Elemental Chlorine Free) pulp that is in 2007 up 5.2% on 2006. Premier operates primarily in the amounted to £1.7bn. Premier’s share of these two markets fully recyclable and sourced from carefully managed and renewed ambient groceries and chilled food & drink markets, which was 24.5%.** In addition we estimate that we supply commercial forests, certified in accordance with the FSC (Forest collectively made up 64.3% of the total UK food market. approximately 25% of the total UK flour market. Stewardship Council). This material contains 50% post consumer Premier Foods was the largest supplier in the £21.6bn recycled fibre . ambient groceries market with a market share of Premier Foods is also one of the leading food suppliers in the Loyd Grossman #2 brand in Italian cooking sauces, #2 brand in Indian Pages 25 to 100 are printed on Think 4 Bright and pages 01 to 24 approximately 6.6%.* Republic of Ireland. cooking sauces, #1 brand in Thai cooking sauces.