Premier Foods PLC has announced the suspension of pension deficit contribution payments from 1 April 2024, earlier than originally expected, due to the strong performance of the pension scheme following a segregated merger in June 2020. This move will result in an increased free cash flow of £33m for the financial year ending 29 March 2025. The Group anticipates no further contributions to be payable after this date, subject to the results of the next triennial valuation.
Duncan Leggett, Chief Financial Officer, highlighted the significant progress in the funding position of the pension scheme, enabling the company to take an important step towards the expected full resolution of the Scheme by the end of 2026. The suspension of pension payments substantially increases the free cash flow available to the company and presents enhanced capital allocation options to deliver on growth ambitions. The Scheme's strong position is attributed to the Trustee's stewardship over the years, and the company plans to continue collaborative efforts to further de-risk the Scheme.
The last actuarial triennial valuation of the Scheme showed a surplus in the RHM section and a deficit in the Premier Foods section. The next triennial valuation is scheduled for 31 March 2025, and deficit contributions may recommence if the Scheme is underfunded at that time. The Group has arranged Letters of Credit in favor of the Scheme, equal to the suspended deficit contributions. Additionally, the dividend match mechanism remains unchanged.
Premier Foods PLC, one of the UK's largest food businesses, employs over 4,000 people and operates from 15 sites across the country. The company supplies a range of retail, wholesale, foodservice, and other customers with iconic brands such as Ambrosia, Batchelors, Bisto, Loyd Grossman, Mr. Kipling, Oxo, and Sharwood's. The company is committed to creating great tasting products that contribute to healthy and balanced diets, nurturing its people and local communities, and pursuing a healthier planet in line with its Purpose of 'Enriching Life Through Food'.