13th Oct 2005 07:01
Premier Foods plc13 October 2005 13 October 2005 Premier agrees disposal of tea business to Apeejay Surrendra Group Premier Foods plc ("Premier") announces that it has agreed to sell its teabusiness to Apeejay International Tea Limited, a subsidiary of the ApeejaySurrendra Group ("Apeejay"), for £80 million. The consideration will be paid incash and the transaction is expected to complete shortly. Premier will use theproceeds to reduce net debt. The business being sold includes the Typhoo, London Fruit & Herb, Lift and otherassociated brands, own label contracts and Premier's tea blending and packingfacility at Moreton, Wirral, which employs 249 people. In the year to 31December 2004 the tea business had net sales of £70.2 million and operatingprofit of £11.2 million after estimated attributable administrative overheads(1)The book value of the assets being sold was £25.7m at 2 July 2005. Premier and Apeejay have entered into agreements whereby Premier will provideservices to Apeejay following completion, including transitional commercial andadministrative support, logistics and the manufacture of Lift and Typhoo QTinstant teas. Robert Schofield, Chief Executive of Premier, said: "Typhoo is a great brand but after a thorough review we believe it will benefitfrom the focus and investment a vertically integrated tea business like Apeejaycan bring. Our strategy is to drive growth through the active management of ourbrand portfolio focusing on those brands with leading market positions." Reclassification of product groups As a result of this sale, Premier's remaining beverages business including theCadbury manufacturing licence will be incorporated into the Spreads and Dessertsproduct group. Following the disposal, the 2004 pro forma branded sales mix ofthe group will drop from 61% to 59%(2). A pro forma product group sales andoperating profit analysis with IFRS adjustments is attached as appendix 1 tothis announcement. Premier will be hosting a teleconference call for analysts at 9.30am on 13October 2005 on 020 8322 3331. This will be available for replay for 7 days on020 7081 9440, account number 801102, recording number 311050. A live audio webcast of the presentation can also be accessed via the Premierwebsite www.premierfoods.co.uk at 9.30am on 13 October 2005. Analysts wishing toask questions must dial in on the teleconference to do so. Please note that theQ&A session of the presentation will not be available on the webcast. 1. The estimated attributable overheads is that element of the group'sadministrative overheads that will either transfer to the purchaser onacquisition or be eliminated by Premier following the transaction. 2. Pro forma for the acquisition of the Bird's and Quorn businesses and thedisposal of the tea business. For further information, please contact: Premier Foods plc Tel: 01727 815 850Paul Thomas, Finance DirectorRobert Lawson, Director of Mergers & Acquisitions and Investor RelationsGwyn Tyley, Investor Relations Manager Citigate Dewe Rogerson Tel: 020 7638 9571Sara BatchelorAnthony Kennaway Notes to editors Brands being disposedLaunched in 1903 by Birmingham grocer John Summer, Typhoo has been waking thenation with its favourite cuppa for nearly 100 years. Today, Typhoo is one ofBritain's favourite teas. As well as producing original tea bags and producing the UK's number onedecaffeinated tea, there are a number of other alternatives in the Typhoo rangewith "Typhoo Fruit & Herb", "Typhoo Green Tea" and "Typhoo QT" instant whitetea. Other brands included in the sale include the London Fruit & Herb, Naturelandand Heath & Heather fruit and herb tea brands for the export and health foodmarkets and Freshbrew, Glengettie, Melroses and Ridgeways regional andspeciality teas. HistoryPremier, then Hillsdown Holdings plc, acquired Typhoo together with a number ofother brands in 1989 when it acquired Premier Brands Limited. Premier BrandsLimited was formed in 1986 when a management buyout team acquired the businessfrom Cadbury Schweppes plc. The Lift instant tea business was acquired byPremier in 2001 from Northern Foods plc. Recent results Premier reported interim results for the six months to 3 July 2005 on 6September. The highlights of these are shown below: Six months to Six months to 3 July 2004 2 July 2005 £m £m Change Turnover* 409.2 425.8 -3.9%Trading profit*,** 45.6 38.4 18.8%Operating profit* 42.8 39.0 9.7%Profit/(loss) before tax 18.3 0.2 naOperating cash flow 61.1 58.9 3.7% * Continuing operations*\* Trading profit is defined as operating profit before exceptional items,amortisation of intangibles and the effective income statement impact of changesin pension assumptions. • Trading profit up 18.8% • Like for -for-like operating profit up 5.4% • Continued focus on growth of brands: Branded sales now 56% of grocery sales • Bird's and Quorn acquisitions performing to expectation • Cost savings programme delivering • Interim dividend of 4.75 pence per ordinary share Apeejay Surrendra GroupThe Apeejay Surrendra Group, founded in 1910 and headquartered in Calcutta, isone of India's largest groups and has a diversified portfolio of businesses withinterests in tea, hospitality, retail, shipping, financial services andproperty. Apeejay's tea operations are directed through two principal teacompanies, Apeejay Tea Limited and Empire & Singlo Tea Ltd, which have been inoperation for over 100 years and are amongst the oldest tea companies in India. Apeejay Tea is amongst the largest producers in India with a workforce of over40,000 and 17 estates producing over 21 million kilograms of tea from aplantation area of over 30,000 acres. Three of its single estate teas - Sessa,Pengaree and Khobong - are sold in Harrods and other premium tea boutiquesacross the world. Apeejay Tea also sells its teas through its own premium teaboutiques, Flurys and Cha bar, and via teastall.com. For more information visitwww.apeejaygroup.com. Appendix 1 Interim 2005 Sales Trading EBITA Amortisation Exceptional EBIT profit items £m £m £m £m £m £mCPS&Q 186.4 14.0 14.0 (0.5) 1.5 15.0SD&B 131.9 24.8 24.8 (1.8) (0.2) 22.8Grocery 318.3 38.8 38.8 (2.3) 1.3 37.8Potatoes 58.3 1.1 1.1 0.0 (1.3) (0.2)Continuing 376.6 39.9 39.9 (2.3) 0.0 37.6Discontinued 32.6 5.7 5.7 (0.3) (0.2) 5.2Total 409.2 45.6 45.6 (2.6) (0.2) 42.8 Interim 2004 Sales Trading Changes EBITA Amortisation Exceptional EBIT profit Pension items assumptions £m £m £m £m £m £m £mCPS&Q 181.1 9.7 2.3 12.0 (0.5) 0.8 12.3SD&B 119.4 22.1 1.1 23.2 (0.9) 0.6 22.9Grocery 300.5 31.8 3.4 35.2 (1.4) 1.4 35.2Potatoes 88.9 2.8 0.0 2.8 0.0 (0.6) 2.2Continuing 389.4 34.6 3.4 38.0 (1.4) 0.8 37.4Discontinued 86.1 5.9 0.4 6.3 (0.5) (2.3) 3.5Total 475.5 40.5 3.8 44.3 (1.9) (1.5) 40.9 Full year 2004 Sales Trading Changes EBITA Amortisation Exceptional EBIT profit Pension items assumptions £m £m £m £m £m £m £mCPS&Q 374.8 35.4 3.6 39.0 (0.6) (2.8) 35.6SD&B 246.9 52.8 1.9 54.7 (1.7) (6.5) 46.5Grocery 621.7 88.2 5.5 93.7 (2.3) (9.3) 82.1Potatoes 150.3 5.7 0.0 5.7 0.0 (6.5) (0.8)Continuing 772.0 93.9 5.5 99.4 (2.3) (15.8) 81.3Discontinued 124.8 13.4 0.6 14.0 (0.7) 5.4 18.7Total 896.8 107.3 6.1 113.4 (3.0) (10.4) 100.0 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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