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07 March, 2008
Page 10 
This week, I was passed down a family recipe hailing from the Gwendraeth Valleys in West Wales - one which utilises bread in a hitherto forgotten way. It's called siencyn (pronounced shen-kin). Imagine the following delight: tea, sugar, bread and lumps of cheese, all in a bowl. That's right, cheesy bready tea. Yum.
To my spoiled 21st-century eyes, siencyn, while no doubt a treat in the 1940s, is a prime example of 'it seemed a good idea at the time'. The same could be said of Premier's acquisition of RHM, which, 12 months down the line, may be proving equally unpalatable to shareholders, who are facing a 50% cut in dividends (pg 4).While Warburtons has been flying high, Premier Foods' ambitious purchase of RHM last year has been less successful. Warbies is going from strength to strength, up 18% in value sales in 2007, according to figures from AC Nielsen (pg 6). Contrast that with the fortunes of Hovis, which fell 4.5%. A revitalised Kingsmill, jumping 6%, merely rubs Premier's nose in it.Nobody could pretend that things have gone swimmingly, and, unfortunately for Premier, market conditions following the buyout could not have been worse. Who could have foreseen the pitfalls lurking around the corner a year ago, such as wheat prices doubling? This contributed to a near-50% drop in trading profits for the company's Bread Bakeries Division, which comprises RHM.The firm is unrepentant about the landmark acquisition, which cost £1.2bn. And who wouldn't be, having splashed out in such spectacular fashion to become the UK's undisputed heavyweight of the food industry?Chief executive Robert Schofield says that Premier is on track to meet its cost synergies, recover the bulk of the ingredients cost inflation through price rises in the first quarter of 2008, and invest in capital and new recipes. But the company has put the brakes on promotional activity, at least for the first half of this year, which must be music to the ears of both Warburtons and Kingsmill.As an afterthought, if I see siencyn on Pret A Manger's menu in six months, I'll be claiming royalties.



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