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Q4 RESULTS 2017/18

20 November 2018

BOPARAN HOLDINGS – Q4 2017/2018 RESULTS (13 weeks ended 28th July 2018)

Transformation of Group: New team focused on operational turnaround;
Major disposals strengthen balance sheet



Q4 2017-18

Q4 2016-17

Y-o-Y Change

LFL sales¹




LFL Operating Profit¹,²




LFL operating profit margin %¹,²








Total sales




Operating Profit²




Operating profit margin %



(130) bps

(Loss)/Profit after exceptional items, before interest and tax3




Retained loss after exceptional items, interest & tax




Net Debt








Proforma Leverage5




¹ Like for like (LFL) sales and operating profit are based on the 13 weeks ended 28th July 2018  compared to the 13 weeks ended 29 July 2017, with prior year adjusting for the impact of exchange translation and both periods in question stated to include only those businesses that were owned throughout both periods. For example both Q4 FY18 and Q4 FY17 exclude the results of the disposed businesses Goodfellas pizza and Red Meat.

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

³ Profit after exceptional items includes the loss on the disposal of the Red Meat business and non-cash exceptionals totalling £60.2m.

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

5 Proforma leverage is stated as Net debt divided by the LTM EBITDA for businesses owned throughout the period in question

Key Q4 highlights

  • New management team accelerating turnaround plan and executing transformation strategy

    • New Executive Board appointments (CEO and CFO) during Quarter 4
    • Creation of transformation team reporting to CEO; new structure for the protein business
    • Much still to deliver, but on track to build sustainable improvements in new financial year with margin improvements expected from third quarter.

    Further disposals and strong cash management

    • Balance sheet significantly strengthened – net debt down year-on-year £193.4m to £601.8m
    • Successful completion of the sale of the Red Meat business to add to the Goodfellas disposal
    • Agreement to sell Manton Wood sandwiches business in 2018/19, subject to regulatory clearances
    • Three disposals (including Manton Wood) enterprise value of £370m – market-leading EBITDA multiples (c. 9 times)

    Simplifying business and focus on core strengths

    • Exits/closures of loss-making sites
    • Turnaround plan on UK and European poultry with impacts commencing Q3 2018/19

    Transformational customer agreement in Chilled business

    • Five-year agreement with strategic customer
    • Provides expansion opportunities for leading Ready-Meals business


Ronald Kers, CEO, 2 Sisters Food Group, said:

“Our Q4 results reflect the difficult macro-economic backdrop and the challenges we have faced in our own business. Against this backdrop we have a clear strategic plan which we are executing at pace to improve business performance. 

We remain focused on addressing our core UK and European poultry operations and providing the right environment for our Chilled and Branded businesses to flourish.  The high level of non-cash exceptional costs reported during the period reflects a reset of the baseline of the business and provides a platform for turnaround.

I am pleased to report a significant new customer contract in our Chilled business with a strategic customer, which underlines future growth and investment. 

The completion of two major disposals (with a further expected to complete in early 2019) strengthens our cash position and improves our financial flexibility, and I have immediately begun our transformation with a strengthened leadership team.

Under my leadership we will strive for excellence in execution of everything we do, improve our processes and systems and ultimately build a high performance culture that’s about discipline, agility and making products that realise as much value for us as they do for our customers.

By focusing on our core with a new team, we are laying strong foundations for a more consistently performing and profitable future. I expect to see the margin improvements associated with the turnaround programme from our third quarter onwards.”


Management changes

CEO Ronald Kers and CFO Craig Tomkinson both joined the executive Board and took full responsibilities in June and July respectively. Further senior hires have included:

Andrew McInnes joined the business on October 29th as Managing Director of UK Poultry. Andrew joins from Muller where he was Managing Director of Milk & Ingredients, previously having an 11-year track record at Muller as CFO and in various commercial finance roles.

Seb Jones joins after a 23-year career at Muller, most recently as Global Group Integration Director. He brings significant experience in change, programme management and strategy roles as well as UK operational leadership experience in both branded and private label FMCG industries.

Lee Greenbury takes up the role of Group People & Compliance Director after seven years at Muller, most recently as Director of Legal for Muller UK & Ireland. 

Ronald Kers added: “To truly become a leading international food business, trusted and respected by all stakeholders, we need to have the strongest possible leadership team. We continuously need to set the bar higher and deliver for our customers, consumers and ourselves.”


Q4 performance overview

This quarter reflects the harsh external environment coupled with underperformance in some parts of our business which have negatively affected profit margins. Reduced sales and profit reflect business disposals as well as the tough operating environment. Retailer price pressure and a lag on customer price increases, inflation, the weak pound and weather have all been factors, in addition to site closures and the associated short-term operational disruption.  Our improved cash position means we have been able to reduce debt levels to £601.8m.


Divisional performance


Like-for-like sales in our Protein division in Q4 were up 1.3% to £492.2m (Q4 2016/17: £485.8m). However, like-for-like operating profit was down to -£3.3m (Q4 2016/17: £5.5m). The year-on-year sales growth is driven by strong growth in our European operation.  Unrecovered inflation and cost inefficiencies in our UK protein business continues to hinder total protein margins, despite improving margins in our European business.



Our Chilled division saw like-for-like sales increase of 4.3% to £137.3m (Q4 2016/17: £131.7m) and like-for-like operating profit rose by £2.7m to £4.7m (Q4 2016/17: £2.0m) reflecting the year on year benefit of cost reduction efforts, volume increases and contract wins.



The Branded division like-for-like sales fell by 2.6% to £64.5m (Q4 2016/17: £66.2m), and like-for-like operating profit reduced to £3.5m (Q4 2016/17: £4.1m). Biscuits have been impacted this quarter by consumers switching out of biscuits during the hot summer, impacting branded sales in particular, with ongoing retailer pressure on pricing combined with some commodity inflation impacting profitability.


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 considering the uncertainty in the macroeconomic environment, management have reviewed the proposed repayment schedule for the 2019 bonds, and will repay £95m before end of the calendar year, £95m in April and £60m in May.

In addition the Group has a renewed its Revolving Credit Facility (to March 2021) and increased its size to £80m providing flexibility to the Group’s capital structure.

Our Net debt at the end of the quarter was £601.8m; this represents an improvement of £193.4m compared to the previous year, primarily driven by cash generated by disposal activity.



There is substantive and clear action taking place to stabilise and grow our businesses. Continuing disposal activity and a new management team driving through a clear transformation strategy means we are taking the right steps to address performance, and we expect margin improvements from Q3 onwards.

Our Protein business is in turnaround, and will take time to recover as many of the key turnaround actions take hold, but we will be taking further actions to increase margin and reduce the cost base. Our Chilled business is benefitting from strategic customer contract wins and we expect to see our Branded business return to growth during the second half of 2018/19.

We remain confident that the new management team and transformation strategy will enable us to strengthen our balance sheet, stabilise our core operations and position us to move forwards positively into the new financial year.



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About Boparan Holdings:

Boparan Holdings is the parent company for 2 Sisters Food Group with headquarters in Birmingham. We are a leading 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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