Premier Foods Plc – Half-year Report

Premier Foods plc (the “Group” or the “Company”)

First half revenue ahead of guidance, firmly on track to deliver full year expectations

Non-GAAP measures above are reconciled to statutory measures throughout

Compared to 2 years ago

• Q2 Group revenue up +8.5%, Q2 branded revenue ahead +13.3%
• H1 Branded revenue up +11.4% reflecting strength of Group's branded growth model
• Trading profit +13.1% ahead
• Adjusted profit before tax £46.4m, up +46.3% due to trading performance and significant interest cost savings
• Statutory profit before tax £30.7m, up +104.7%
• Net debt substantially lower than FY19/20 H1 at £345.0m

Compared to 1 year ago

• Q2 Group revenue up +0.4%, Q2 branded revenue ahead +2.1%
• H1 Branded revenue (6.1%) lower than prior year due to lapping effect of exceptional pandemic related volumes
• Statutory profit before tax down (39.2%); Hovis disposal gain in prior year
• Net debt £58.1m lower than FY20/21 H1
• Combined pensions surplus of £607.7m, £67.8m higher than six months earlier

• Very good strategic progress in the first half of the year, revenue ahead of expectations and strong profit growth versus two years ago
• Volume and value market share gains on a two-year basis
• Branded growth model continuing to deliver sales growth through sustained consumer marketing investment and benefits from NPD program
• Successfully navigating macro and industry wide supply chain challenges and inflationary environment
• Category expansion through Cape Herb & Spice, Oxo rubs and marinades with more to come in H2
• International revenue growth up +7% vs two years ago; test launch of Mr Kipling confirmed in US for H2
• Completed earnings enhancing refinancing in H1, with interest costs set to nearly halve compared to FY19/20
• New ESG strategy, the ‘Enriching Life Plan’, announced with a series of major sustainability commitments
• Firmly on track to deliver full year profit expectations

“ We have delivered a very good first half performance, with revenue growth ahead of expectations; quarter two was particularly strong, with revenue growth of +8.5% vs two years ago. Our brands have performed especially well with growth versus two years ago of +11.4% and increased market share in both Grocery and Sweet Treats, illustrating the continued success of our branded growth model. I am particularly pleased with how well the business is successfully navigating the widely reported industry wide challenges including logistics, labour shortages and input cost inflation to deliver such a strong set of results, which again underlines the robustness of our operating capabilities.

“Adjusted profit before tax increased by +46% vs two years ago benefiting from both the trading performance and significantly reduced interest costs following the completion of our earnings enhancing refinancing earlier in the year. Net debt is more than £50m lower than this time last year.

“As we look ahead to the second half of the year, we will be launching a range of insight driven new products and supporting six of our key brands with advertising. We will expand our presence in adjacent new categories, building on the initial success of Cape Herb and Spice and Oxo Rubs & Marinades, as well as bringing to market premium Mr Kipling biscuits and a range of branded Ice cream. We will also continue to develop our overseas businesses including the full roll-out of Mr Kipling in Canada and the test launch of Mr Kipling in the USA.

“We enter the second half of the year with strong momentum, and with a series of exciting plans in place for our brands, we remain firmly on track to deliver on our profit expectations for the full year. “

On 29 October 2021, the Group announced its new 'Enriching Life Plan' ESG strategy building on the strong progress the business has made to date. The Group recognises its responsibility and the opportunity, as a leading UK food manufacturer, to forge a healthier future for people and the planet, this new strategy will build a more resilient business for the long-term, ensuring it can thrive in a changing world. During the process of developing this strengthened ESG strategy, the Group also conducted a materiality review, engaging with a range of stakeholders

This new ESG strategy 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.

The Group enters the second half of the year with strong momentum. It has a series of exciting brand plans, and with expansion into more new categories, it is well placed to deliver further strategic progress. It continues to successfully manage and navigate through industry wide challenges across the supply chain and has robust plans in place to respond to them. The Group will benefit from substantially lower interest costs from its earnings enhancing refinancing and is on track to deliver against its profit expectations for the full year.

The Group's medium-term target of approximately 1.5x Net debt/EBITDA remains unchanged and it reiterates its intention to pay a dividend on a full year basis.