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Q1 Results 2018/19

11 December 2018

BOPARAN HOLDINGS – Q1 2018/2019 RESULTS (13 weeks ended 27th October 2018)

Turnaround on track: new team halting decline of the business;
Addressing inefficiencies and growing core categories



Q1 2018-19

Q1 2017-18

Y-o-Y Change

LFL sales¹




LFL operating profit¹,²




LFL operating profit margin %¹,²








Total sales




Operating Profit²




Operating profit margin %



(90) bps

Profit after exceptional items, before interest and tax




Retained loss after exceptional items, interest & tax




Net Debt








Proforma Leverage4




¹ Like for like (LFL) sales and operating profit are based on the 13 weeks ended 27th October 2018 compared to the 13 weeks ended 28th October 2017, with prior year adjusted 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 Q1 18/19 and Q1 17/18 exclude the results of the disposed businesses Goodfellas pizza and Red Meat.

² Operating profit is calculated pre-exceptional items and is after charging of the defined benefit pension scheme administration costs. 

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

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


Key Q1 highlights

‘Root and branch’ turnaround plan being executed

    • New management team driving through substantive, lasting change
    • Turnaround cannot be overnight and much still to deliver, but on track to build sustainable improvements within the financial year with margin improvements expected from third quarter.

Continue to simplify business and focus on core strengths

    • Exit/closure of loss-making sites
    • Net debt down year-on-year from £823.6m to £673.1m 
    • Disposal programme on track

Q1 EBITDA margin in line with previous quarters despite inflationary pressures

    • Poultry performance stabilising, despite significant feed inflation
    • Continued growth in core categories - Ready Meals and Primal Poultry
    • Successful execution of planned plant closures – Cambuslang, 5 Star Fish and Basildon


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

“We have made it clear that the size of the turnaround challenge is substantial, and to achieve success on this scale will take time. We have diagnosed the fundamental operational issues and the management team know what levers to pull to drive change through the organisation.

Positive momentum is building and we are implementing improvements, both with ‘low hanging fruit’ and longer term strategic objectives.

We are in stabilisation phase with our poultry business, and it is critical we make further operational efficiencies and improve margin as the financial year progresses to address ongoing input cost inflation.  We will also make targeted investments that deliver real, tangible financial returns, for example in our Polish poultry and Meals businesses.

We have successfully launched a number of products which will drive future growth, most notably Fox’s Milkshake Party Rings and several new ready meal lines.

There is an enormous amount of work still to do and it will take time before we see green shoots of growth. However, we are focusing on our core with a new team, laying strong foundations for a more consistent performing and profitable business and have a plan of action which is realistic and can be executed.”


Q1 performance overview

There has been a continuation of the trends seen in the previous financial year and associated headwinds. Action is being taken, but there will be a lag before full benefits are realised. There has been positive underlying LFL sales growth in core categories of Primal Poultry and our Meals Solutions business, underpinned by investment and customer expansion.  The external environment remains challenging with commodity inflation and macro-economic uncertainty accentuating margin pressure.


Divisional performance


Like-for-like sales in our Protein division in Q1 were up 0.4% to £470.8m (Q1 2018/19: £469m). Like-for-like operating loss was £3.1m (Q1 2017/18: profit £0.6m) in the face of substantial commodity headwinds.



Our Chilled division saw a like-for-like sales increase of 4.5% to £158.5m (Q1 2017/18: £151.7m) and like-for-like operating profit rose by £0.8m to £2.6m (Q1 2017/18: £1.8m) reflecting sales growth in core products in the Meal Solutions division.



Like-for-like sales fell by 8.1% to £79m (Q1 2017/18: £86m), and like-for-like operating profit reduced to £1.4m (Q1 2017/18: £3.1m). Weaker results are driven by biscuit sales volumes and phasing on seasonal lines, as well as lower Fox’s Branded sales.


Debt funding and cash flow

The Group’s debt capital structure consists of senior loan notes: £250m 5.25% notes due 2019; £330m 5.50% notes due 2021 and €300m 4.375% notes due 2021, with a £80m Revolving Credit Facility maturing in 2021.

In November 2018, the existing £60m RCF maturing July 2019 was replaced with a new £80m facility. The new facility was secured on terms maturing in March 2021.

Our Net Debt at the end of the quarter was £673.1m, this represents an improvement of 18.9% (Q1 2017/18 £823.6m) compared to the previous year, primarily driven by cash generated by disposal activities. The disposals proceeds have been used within the business for capital expenditure, pension contributions and the purchases of assets in line with our bond documentation.

As previously communicated in the Q4 2017/18 announcement in November, the Group is committed to repaying the 2019 notes with cash on the balance sheet. The first tranche of £95m will be repaid, redeemed or repurchased before the end of December, with £95m in April 2019 and the remaining £60m in May 2019.



Full stabilisation of our core businesses is on track and we will continue to capitalise on any tactical opportunities which bring near-term margin and cash benefits. There is a clear strategy now in place to improve the business and there is a strong momentum internally to push through the turnaround. There will be continuing disposal activity, a drive to reduce cost, and targeted investments when there are clear returns.

Our focus to strengthen our balance sheet and stabilise our core operations remain. These are the right steps to address performance, and given the scale of change, we anticipate margin improvements from Q3 onwards.



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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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