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Q2 Results 2017/2018

22 March 2018

Clear focus on cash generation in face of difficult trading environment

Boparan Holdings Limited, the parent company for 2 Sisters Food Group, a leading food manufacturer with strong positions in Protein, Chilled and Branded categories, today announces its consolidated results for the 13 weeks ended 27 January 2018.  


Q2 2017-18

Q2 2016-17


Total sales




LFL sales1




Operating profit2




Operating profit margin %




LFL operating profit1,2




LFL operating profit margin % 1,2




Profit after exceptional items, before interest and tax




Retained loss after exceptional items, interest & tax




Net Debt




LTM Adjusted EBITDA3




Net Debt: LTM Adjusted EBITDA3

5.67 x

4.21 x

1.46 x

1. Like for like (LFL) sales and operating profit are based on the 13 weeks ended 27th January 2018 compared to the 13 weeks ended 28th January 2017, with prior year excluding the impact of exchange translation.

2. Operating profit is calculated pre-exceptional items and includes the loss on the Group’s share of joint ventures and defined benefit pension scheme administration costs.

3. EBITDA is stated before depreciation, amortisation and pension scheme administration costs.

Financial and strategic highlights

  • Robust revenue generation despite tough market conditions
  • Total sales up 2.0% to £849.7m; like-for-like sales up 1.5%
  • Strong cash generation, underpinned by a renewed focus on efficient use of working capital
  • Consultation exercise underway regarding the potential closure of three UK poultry sites as we seek to consolidate our Poultry operations around modern specialist manufacturing sites, which will improve the efficiency, transparency and reliability of our supply chain
  • Ongoing value realisation with the £200m disposal of Goodfella’s Pizza brand
  • Further improvement expected in the second half driven by performance improvement, positive macro tailwinds and early benefits of change programme


Management changes

On 27 February 2018 we announced that after 25 years, Ranjit Boparan, co-founder, owner and CEO of Boparan Holdings Limited, would step up into the role of President. Ranjit will continue to oversee the strategic direction of the company, with a focus on reducing debt, supporting development of a world-class leadership team and continuing the drive towards the creation of a better, more transparent and simpler business.

We expect to announce a permanent Chief Executive in due course, following a review of internal and external candidates.  In the interim period, Martyn Fletcher, our Chief Operating Officer, is taking full charge of our operations.

These management changes are part of our commitment and strategy to ensure the business has the right management teams and operational structures in place to create long term sustainable value and take the business forward to the next stage of its growth and development.


Ranjit Singh, President of Boparan Holdings Limited, said:

“During the second quarter we have delivered a solid top line revenue performance, but our near term profitability has been impacted by the major challenges we have faced during the period.  We are focused on the basics, and the investments we are making provide a clear springboard to drive through meaningful and lasting change across the business. 

Despite the recent challenges in our UK poultry operations, our change programme is building on firm foundations, with strong core businesses; over 22,000 hard-working and dedicated employees and strong, long standing customer relationships. We will be working with renewed vigour with our customers and through our people to deliver what has always been at the heart of our business - delivering great quality food at competitive prices for our customers.


Martyn Fletcher, Chief Operating Officer, said:

“In everything we do there is a relentless focus on delivering great quality, service and value to our customers. We have a clear and comprehensive improvement plan in place and are making good progress so far. There is more to do, but already we are seeing the impact of lots of small, but important changes we’re making at our production sites and across the company. We are determined to achieve the highest quality products, standards and best in class service our customers rely on.” 


Financial overview

There has been an improved cash flow underpinned by working capital performance in the quarter.  We achieved a net working capital inflow of £33.5m (Q2 2016/17: £9.8m) and we continue to focus on making     further sustainable inroads in this area. We continue to manage capital expenditure very tightly and the agreed sale of Goodfella’s Pizza for £200m will strengthen the balance sheet further still.


Divisional performance 


Like-for-like sales in our Protein division in Q2 were up 3.1% to £569.6m (Q2 2016/17: £552.3m). However, like-for-like operating profit was down by £13.5m; with an operating loss of (£9.0m) in the quarter (Q2 2016/17: £4.5m profit).

The year-on-year volume growth has been more than offset by the impact of the temporary Site D production suspension, and the inevitable time delay in securing price increases with customers.


As expected, our Chilled division saw like-for-like sales reduce to £171.6m (Q2 2016/17: £175.7m) however operating profit rose by £1.3m to £7.1m (Q2 2016/17: £5.8m).

Performance has been strong as the division has benefitted from the phasing in of price increases and year on year restructuring benefits, offsetting underlying inflation.


The Branded division reported broadly flat Q2 like-for-like sales to £108.5m (Q2 2016/17: £109.1m), but like-for-like operating profit reduced to £7.6m (Q2 2016/17: £9.4m). In Frozen, commodity inflation in the quarter was not fully mitigated, and in Biscuits price recovery will not be fully realised until the second half of the year.

Debt funding and cash flow

Our long term funding includes the senior loan notes, £250m 5.25% notes due 2019; £330m 5.50% notes due 2021 and €300m 4.375% notes due 2021, which provide the principal funding for the Group. In addition the Group has a £60m Revolving Credit Facility (to July 2019).

Our Net debt at the end of the quarter was £788.7m; this represents an improvement of £34.9m compared to the previous quarter driven by renewed focus on efficient use of working capital.


We are taking action across the business to address underperforming areas. Our change programme demonstrates the positive strategic moves we are making. This is being supplemented by our effects to drive through price increases across the business. We are already seeing improvements coming through in Chilled and we can see clear evidence of further Branded recovery due in the second half of our financial year.

Our commitment to producing safe and quality food remains at the heart of the business, as does our determination to deliver a stronger overall position for our second half.



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About Boparan Holdings:

Boparan Holdings is the Parent company for 2 Sisters Food Group headquartered in Birmingham. We are a leading diversified food manufacturer with strong market positions in Protein, Chilled, Bakery and Frozen categories. We focus on delivering the highest quality products to our customers at the lowest cost.

This announcement contains forward-looking statements in relation to Boparan Holdings Limited (the “Company”) and its subsidiaries. By its very nature, forward-looking information requires the Company to make assumptions that may not materialise or that may not be accurate. Forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise, except as required by law.

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