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Q4 Results 2016/2017

7 November 2017

Sales remain strong amid tough external environment;
Management team focused on turnaround: driving cash and margin opportunities 

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 and 52 weeks ended 29th July 2017. 


Q4 2016-17 

Q4 2015-164


Total sales




LFL sales¹




Operating Profit²




Operating profit margin %




LFL operating profit¹,²




LFL operating profit margin %¹,²




(Loss) / profit after exceptional items, before interest and tax 




Retained (loss) / profit after exceptional items, interest and tax




Net debt









4.93 x 

3.90 x 

1.03 x 

  1. Like for like (LFL) sales and operating profit are based on the 13 weeks ended 29th July 2017 compared to the 13 weeks ended 30th July 2016, excluding the impact of exchange translation. 

  2. Operating profit is calculated pre-exceptional items and includes profit / (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 and includes profit / (loss) on the Group’s share of joint ventures. 

  4. The comparative Q4 2015-16 results have been restated to take into account first time adoption of FRS 102 during the period ended 30 July 2016. The effect of adopting FRS102 on Q4 2015-16 results was to increase operating profit in total by £3.0m from the £26.3m previously reported, to reflect the allocation of pension scheme admin costs to Q1, Q2 & Q3 2015-16, which were previously all reported in Q4. 

Q4 headlines

  • Revenues remain strong against tough backdrop; total sales up 5.3% to £815.7m
  • Like-for-like sales up 3.5% to £802.2m
  • Like-for-like operating profit at £14.8m; ahead of Q3 at £13.1m
  • Margins severely affected by further inflation & foreign exchange on commodities and one-off costs 


Ranjit Singh, 2 Sisters Food Group CEO, said:

“The business continues to face into an extremely tough trading environment with further increases in input costs. Clearly margin performance improvement is a top priority, and this will be underpinned by working hard on the action plans that make the most difference to our core business. Nevertheless, we remain positive about our top line growth and how that positions us with our customers.

“We continue to progress our Poultry footprint changes, which delivers quality, safety and a shorter, leaner, more transparent supply chain. We are investing in our people and our sites, with a view to optimising available capacity.

“Our Meals division has benefitted from rationalisation and investment which will also provide a springboard for further growth. However, as with our Branded businesses, cost inflation has negatively affected margins, and our teams are taking ongoing actions to redress the balance.

“Whilst this will not happen overnight, our management team are focused on delivering our step change plan to enable us to continue on our journey of producing high quality and safe food.” 


Performance overview 

Profitability has been adversely affected in the quarter by higher than anticipated commodity inflation not being fully offset by price increases and cost reduction efforts.

During the period, the Group has also been affected by several exceptional items. The most significant drivers of these costs were in relation to financial reporting and control issues at one of our small standalone businesses, impairment of assets as a result of this, together with redundancy & disruption costs relating to the poultry site closure in Q4. 


Divisional performance


Overall like-for-like sales in our Protein division in Q4 were up 6.2% at £575.7m (Q4 2015/16: £542.0m). However, operating profit was down by £6.6m to £5.4m (Q4 2015/16: £12.0m), driven by inflationary pressures.

Our UK poultry business has continued to enjoy strong underlying volume growth, and our European business has stabilised post the avian influenza issues suffered earlier in the year, although there is an ongoing impact from continuing export restrictions. Growth in poultry sales was however offset by lost volumes and lower realised prices in Red Meat due to a change in mix between retail and non-retail customers. 



Our Chilled division saw like-for-like sales fall to £131.6m (Q4 2015/16: £140.3m), largely due to a pizza contract loss and operating profit fall to £2.0m (Q4 2015/16: £5.7m), due to the contract loss, together with commodity inflation, which was partially addressed by promotional increases and cost reduction efforts. 



The Branded division reported Q4 like-for-like sales increase of 2.4% to £94.9m (Q4 2015/16: £92.7m), but overall operating profit reduced to £8.0m (Q4 2015/16: £11.6m) as the division faced into currency headwinds and further commodity inflation.

Biscuits performance was driven by pricing and promotion efforts in own label business and sustained growth with retail customers, which partially offset the commodity inflation.

In Frozen, inflation and exchange related price increases have been agreed with customers and the lean programme continues to deliver cost savings into the sites. However, again, these were only partially successful in offsetting the external headwinds faced. 


Debt funding and cash flow

Our long term funding includes the senior 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 January 2019).

Our Net debt at the end of the quarter increased to £795.2m, largely due to the heavy capital investment in the last 12 months and Net Debt:adjusted EBITDA ratio is now 4.93 times (Q4 2015/16: 3.90 times). 

Guardian/ITV investigation

Management updated investors with a conference call on 3rd October 2017.

The facility at the centre of the undercover investigations, Site D in West Bromwich, suspended operations on 1st October, which will impact our Q1 results. Following a comprehensive colleague retraining programme the site has recommenced supply to customers from 6th November. 


The impact of commodity inflation was particularly acute in the quarter and price recovery, efficiency and targeted investments have not fully mitigated this in the period. This will continue into Q1, which will also be impacted by the above mentioned Site D issues.

Nevertheless, we remain a solid business, with attractive growing core poultry and chilled markets with the scale to maximise efficiencies and margin. We remain committed to our step change programme so we can deliver for our customers on safety and quality.

We have a clear strategy to turnaround each business but recognise that this will take time. Once we successfully negotiate our way through short term issues, we will be in a stronger position to deliver growth.


Please go to the Investor Relations section of the corporate website

A copy of this announcement will also be made available at


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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