Accounting overhaul brings £1.3bn Premier float closer

Premier Foods, the owner of Typhoo Tea and Branston Pickle, has changed its accounting policies, resulting in a restatement of its turnover figures for the past three years. It is also selling peripheral businesses as speculation mounts that it could announce a £1.3bn float within the next two weeks.

Premier Foods, the owner of Typhoo Tea and Branston Pickle, has changed its accounting policies, resulting in a restatement of its turnover figures for the past three years. It is also selling peripheral businesses as speculation mounts that it could announce a £1.3bn float within the next two weeks.

The company, owned by Hicks, Muse, Tate & Furst, the US private equity house, has also told its bondholders that it intends to redeem its sterling and dollar-denominated debt in September, five years before the debt comes due for repayment in 2009. It is thought that some of the proceeds from a float could be used to pay off the debt.

The decision to change its revenue recognition policies, to bring it into line with other UK food groups, is a move seen as consistent with preparing the business for a float.

Premier's decision involves certain marketing and promotional costs being reclassified from selling and distribution expenses to a deduction from sales, which has resulted in turnover figures being restated for the past three years. Its 2003 sales had been reported as £890m. Under its new accounting treatment the figure is £870m. The sales figure for 2002 fell from £889m to £865m while 2001 has been restated from £857m to £836m. The first quarter of 2004 has been revised from £252m to £246m.

It said the revisions would have no effect on its operating profits. Premier, which confirmed the appointment of Merrill Lynch in May to examine its strategic options, has also told its bondholders that it intends to spin off its French Materne spreads and desserts business.

Ownership of Materne will be passed to other private equity funds run by Hicks, Muse. The French business had sales of £96.8m in 2003 and £25.7m in the first quarter of this year.

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