The buzz
24 May 2018
Re: Warren Buffet Sorry I cannot give a definitive statement re projected pension surplus/ deficit as I think that the legislation may be changed as time goes on. I was aware many years ago of one company with a huge pension surplus merging with another company large pension deficit so that they could merge the two pension schemes. I believe that these days the two PFD pension schemes must be deemed as separate schemes, albeit they might be added in the calculation of total liabilities.From memory, in the past pension schemes that had more that 105% surplus were forced to reduce this surplus by the company having a pension holiday and/or increase employee benefits. Sadly the 105% funding came limit out of cloud cuckoo land and when the markets turned it exposed many companies to huge projected pension deficits. So I suspect that there might be a bit of a bun fight if PFD takes extended pension holidays. I am sure that someone in the RHM scheme is far better qualified than me to advise on this point.Now a company in a similar position to PFD a few years ago was Wincanton. They had a huge pension scheme deficit, but fortunately they have managed to grow their business to the point that the pension contributions were not too onerous and their share price has done really well ever since. If PFD can repeat the Wincanton route, then the share price could easily double or treble over a 5 year (or less?) period. I am not saying that we are there yet, but there are signs (green shoots?) to me that a virtuous circle of higher profit reducing liabilities has commenced. Could this type of view explain the small recent increase in the share price?The B
thirty fifty twenty
23 May 2018
Warren Buffet "float" & Premier Foods a question …does anyone know what happens at the end of a pension if there is a surplusI presume at some point (albeit maybe 20 or 30 years away)some pension schemes have paid their last pensioner and have surplus assets?who is the legal over of these assets?i ask , as i think it is very relevant to the valuation one might put on PFDi agree with the sentiments raised by others that PFD is potentially at an interesting inflexion point where increasing profits, are attacking a reducing debt burden with a reducing pension deficit all being in a viscious circle which will reduce future financing costs..... I think these factors alone jsutify a reasonable risk reward on the current share price.My real interest though relates to the Pension Surplus in the RHM scheme.So we can assume that the company wont be able to 'take' any of the CASH out of the scheme as the pension Trustees will be very protective to keep their assets. But what does happen when all these pensioners have died? Who owns the surplus.if there is a surplus in 20 years time (that is a long time horizon) then even discounted at an agressive 8% compound rate that still means the currrent Net present Valaue is 20% of the current suprlus i.e 20% of 750m = 150m (18p a share) ....So i think understadning this is very critical before making an investment decision in PFD. My header comes from the logic that perhaps even more positively the current surplus could be seem as a "float" (in the saem way WB makes money in his insuracen businesses). In effect the RHM Pension pension scheme has surplus assets and these surplus assets will make a compound increased return for the pension scheme whilst the liabilities remain unchanged (actuarial assumptions aside). Thus if you owned the benefit of the surplus now - it would compounding in the background as the scheme reduces to its last pensioner. We are talking a long time ahead but in 20 years possibly that 750m will have grown to several billion.. a 5% compound retunr would turn that 750m into a 3bn surplus inn 20 years time which (from my calcs above) would be worth 20% of that i.e 600m NPV in todays terms. Now i dont suppose that many of the posters on here have a 20 year maybe even 30 year time horizon - but a larger multi national would have.if could get access to some decent brands,debt costs would reduce being part of a larger organsiationand there would be PLC and general synergies,but the golden egg could be paying 400m for a business that has alongside it a 600m asset which will grow at 5% a year though you will not get your hands on for 20 years . In effect they would be buying the 'certainty' of an asset of a pension scheme in surplus and get a growing food business (albeit with the premier Foods Pension deficit) thrown in for free!!Seems interesting.. but i would rather know the legal standing behind my assumptions before taking a lagrer share holdings.All IMHO, DYOR + BoLPFD is in my portfolio
The buzz
18 May 2018
Re: share Price Andy,Yes I have been with PFD with varying sized holding for many years so am well acquainted with the long term fall. That said I have on several occasions nipped in when the price had fallen below what I thought was reasonable and made a modest profit in the process.My take was that PFD was clobbered by falling interest rates resulting in their PFD pension fund having a huge projected pension deficit. They really needed to increase turnover and profit to not only pay down the pension deficit but to also invest in the company. In effect the company was only being kept afloat to reduce the pension deficit.The recent results have given me reason to be more optimistic than before as (as per my earlier posts some months ago) I did not see an investment case. The main reasons being that the pension deficit is falling (and I doubt if interest rates will fall further), the profit is getting better and the debt pile is reducing. ie It looked like a pivot point in their fortunes - continued increase in turnover and profit will make a big difference. Agreed that it may take a few years for the pension deficit to be largely eliminated, but it is heading the right way. With the pension scheme under control, and lower levels of debt then the company will become a different entity. The big question is - is this a false dawn - well with their big partners, and increasing overseas sales (no doubt helped by the falling value of the £
I am optimistic that things could be about to turn around. Alternatively, looking at the share price over the last 6 months or so, my take is that the company is in a far better position than 6 months ago, so if the share price of 6 months ago was justifiable, than a similar or higher price is justifiable now.Then of course is the potential of a windfall gain if another trade buyer expressed an interest in taking on PFD.So far my strategy has got me nowhere as my break even price is close to the current trading price, but it is still early days.The B
Andy Reilly
18 May 2018
Re: share Price TB - the long term chart is not a pretty picture! The share price started to crash in 2007! So it has been a very long and unpleasant hold for some.... I can only hope that the SP gets back to a much better level - they do say that 'every dog has its day'! So here's wishing you and all holders lots of luck and a speedy recovery of the SP! ATB
Andy Reilly
18 May 2018
Re: share Price tb - the problem with PFD is that it has put its shareholders through hell, when it crashed and burned some years back, and that memory will only be errased when the recovery is 'confirmed' - I must say I havent followed PFD at all closely, but sentiment really needs a boost to shift it. Maybe that will come soon..... Who knows, but its always very difficult to be certain about where sentiment is... I can only say that I hope it recovers soon as its been a very long time acoming! ATB
The buzz
17 May 2018
share Price I must admit that I am a bit disappointed with the share price over the last day or so. I won't bore you with my other purchases, but have more or less got my quota. I noticed yet again that as soon as I placed a buy order there were immediately 2 small sells go through. As if there is a pre-programmed response to stifle any rise in price! Oh I seem to have triggered lots of activity and a further drop to the share price (groan!), but at least there are quite a few buys going through as well. Now 36.55-36.8p. The price is almost back to where it was before the results came out. I find the plot of the share price v time perplexing. The company is doing better than expected and yet the share price is at the lowest end of its range.The B
The buzz
16 May 2018
Re: Final Results - At Last Some Better ... News items on results seem quite positive to me:-[link] about 38.1-38.15p (nice tight margins) - consistent with what I said yesterday that 38.1p seems to be a support level. Just had a small top up to an ISA account of 13019 at 38.125p a shareWhat I did not mention, is that one web site I use shows 5 brokers being neutral and 1 saying strong sell. Now if the latest results are reviewed by the analysts and they give a slightly more optimistic outlook, then this could be a big boos to the shares and 45p a share looks quite plausible to me.I have been trying to make sense of recent trades. Experience tells me that shorters often sell at the end of the day so that the chartists see a lower price. Hence why I was buying at the end of the day to try and capture a good price. This morning the price opened up, but as is so often the case some sellers come in and drive the price down.The B
The buzz
15 May 2018
Re: Final Results - At Last Some Better ... Finally got my order filled -got another top up of 26k shares at 34.0487...p a share. It is still a modest holding so I might add some more if the price falls a bit more. Price is still 38-38.05p - I like it when the spread is tight like this - gives more leeway to make a profit with small price changes.The B
The buzz
15 May 2018
Re: Final Results - At Last Some Better ... Well I look to see if the company is going to survive - and the improving turnover and further reduction in debt and pension deficit makes me think that a leaf has been turned. In simple terms I can now see a viable was to pay down debt and the pension deficit, whilst the improving turnover and profit should start to give PFD a bit of momentum. The business is valuable so another approach is now more likely in my view.So have just topped up with 25k at 38.37p. Put an online order for 26k and could not get a trade. That tells me that stock might be short. Put in a limit buy, but the price then bounced above my previous quote. There currently seems to be a good support level around 38.1p. (Currently 38.1-38.2p).The B
forwardloop
15 May 2018
Re: Final Results - At Last Some Better ... I need to digest the results but on face value I am pleasantly surprised.But as to any price increase here is the rub I thinkBasic EPS 0.9p, share price 38p PE = 43. What might we expect in this sector - PE 13 - 15 perhaps? What shae price does that equate to 11 - 12P??But more appropriately, is there anything in the results to suggest future earnings and a Forward PE and that might better reflect future share price?
pyueck
15 May 2018
Re: Final Results - At Last Some Better News... Management must be pulling their hair out. Really good results, hardly any share price movement. Seems good results increase the share price by 2% bad reduce it by 20%.I guess shareholders struggle to see based on current profitability how the company will be able to quickly pay down debt to a level where the dividend can be resumed. But come on, this company is cheap as chips for the brands it has. OK I know the company has weaker brands, is infinitely poorer run and has a much smaller international presence than Unilever but compare the valuations, PFD: £323m ULVR: £123bn! Now I am not saying for a second that PFD and ULVR can be compared, what I am saying is that PFD could be gobbled up for £700m no problem, ULVR get some really good brands they can develop and the purchase not even register on their balance sheet. Takeover opportunity all over this. What the latest results show is that PFD has some brands that are not dead and have real value.Good to see the results improving and praise where praise is due to management, they promised after Q1 full year results would be a lot better, I was sceptical but they were right. However, based on the market reaction and my own feelings still not sure the current setup is the best way of maximising these brands value.
The buzz
15 May 2018
Final Results - At Last Some Better News! A very quick look at the final results[link] some good results in the areas that interested me. For a start the Premier Foods pension deficit has dropped from £489m to £437m (the RHM pension scheme is well in surplus).Turnover and profit and turnover are looking quite positive for a change. Plus debt is also reduced. International sales are also showing very encouraging progress.Key statements:-"We are pleased to report revenue growth of +3.6%, our strongest performance for over five years. After a slower start in the first quarter, performance accelerated during the year as planned, with revenue in the second half up +5.3% and +7.0% higher in quarter four.Trading Profit progress in the year benefitted from this encouraging commercial performance as well as our disciplined focus on cost and efficiency. We reduced Net Debt to less than £500m and are now targeting a Net debt to EBITDA ratio below 3.0x - our initial target level - by March 2020."In the year ahead, we expect to make further progress on our key priorities, building on the strong momentum we created in 2017/18."ie PFD is no longer looking quite a basket case as it has been looking for a while. If they can keep up this traction there is a realistic hope that the profits will continue to grow, the debt reduced to a safer level - plus the Premier Foods pension deficit will continue to reduce and become less of a threat to the company.Conclusion - I was wondering if I should have my finger on the sell button this morning. Instead it looks like PFD should have a good day and I am hopeful that I am right (for a change) and that the share price goes up. Where to is another question - but looking back to where it has been, then 45p should be quite feasible over the next few weeks?The B
The buzz
08 May 2018
Re: Share Price Weakness Well after a bit more deliberation and watching the share price apparently steadying, I decided to buy 10k shares at 36.05p. I felt that 40p might be achievable if the results are consistent with the earlier trading statement, especially if the shorters cut their losses. Alternatively, if the price falls lower then the CE could get the chop and a new bid approach might materialise.There is of course the uncertainty regarding recent trading performance that might also get a mention in the RNS.
The buzz
08 May 2018
Share Price Weakness The shares are down again today to about 36p and well down on the price when there was a trading statement that I commented on 16.1 2017 when I expressed some reservations, but felt that they were not too bad. The results come out on 15.5.2018 so I am wondering what is going on?Three logical possibilities are that
a) The results are poor and the market has wind of it, or(b) Shorters are selling PFD on the expectation of poor results, or(c) Some fundamentals have changed. eg Sainsbury/ Asda merger might be deemed poor for PFD, or the pension liability parameters have gone worse.The key question is what will the share price do once the results come out? The price has dropped quite a bit now so is the probability of a share price rise significantly higher than it falling further? The £ has weakened recently - will that help exports? What is the exit price having bought back in? Looking a the recent plot I would suggest that 38p is quite viable, but is a quick 2p a share worth bothering with?The B
The buzz
01 Feb 2018
Oh Dear - Hope this Hovis Driver is OK? [link] to the share price. I posted earlier that I was mildly impressed by the latest results, but felt that there were some issues, so despite what pyueck giving a 'Buy' recommendation the share price seems to have gone nowhere. I suspect that it is not going to do anything until some numbers come up.As for the departure of the CEO - has he been overpaying himself with lots of bonuses at the expense of the pension funds? One could suggest that after Carillion that a number of CEO's are looking over their shoulders!The B
