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Q2 Results 2016/2017

23 March 2017

Taking action to mitigate expected challenges;
Tough environment and economic uncertainty set to continue

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 28th January 2017.  


Q2 2016-17

Q2 2015-164

Y-o-Y Change 

Total sales




LFL sales1




Operating profit2




Operating profit margin %




LFL operating profit1,2




LFL operating profit margin %




Profit after exceptional items, before interest and tax




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




Net Debt




LTM Adjusted EBITDA3




Net Debt: LTM Adjusted EBITDA3

4.35 x

4.05 x

(0.3) x

1. Like-for-like (LFL) sales and operating profit are based on the 13 weeks ended 28th January 2017 compared to the 13 weeks ended 30th January 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 defined benefit pension scheme administration costs.  Current Year LTM Adjusted EBITDA excludes the impact of exchange translation.

4. The comparative Q2 2015-16 results have been restated to take into account first time adoption of FRS 102 during the period ended 30th July 2016.  The effect of adopting FRS102 on Q2 2015-16 results was to reduce operating profit in total by £0.2m from the £22.1m previously reported (+£0.8m - reduction in depreciation to reflect deemed cost adjustments and (£1.0m) pension scheme admin costs).

Q2 headlines

  • Performance in line with expectation
  • Expected headwinds affecting overall margin performance in the short-term
  • Revenues remain strong in tough market; total sales up 5.2% to £833.0m
  • Like-for-like up sales up 2.6% to £812.8m
  • Chilled division reported operating profit improvements
  • Like-for-like operating profit at £18.0m compared to £21.9m last year
  • Net debt:LTM Adjusted EBITDA ratio at 4.35 times is broadly flat with Q1 2016/17
  • Efficiency and cost reduction programmes accelerated to counter inflationary and currency pressures
  • Strong foundations being laid through innovation and investment streams

Ranjit Singh, 2 Sisters Food Group CEO, said:

“Our results reflect the very tough trading environment we face. The market is as competitive as ever and currency fluctuations have brought about higher input prices. It is unsurprising that this has put a margin squeeze on a lot of businesses, including our own.

“However, there is underlying positive momentum across the business, as we have seen over the past four trading quarters. Sales are rising, and we are well positioned to grow with our customers in new markets.

“Competing in our markets requires investment for the long-term, so our supply chain is efficient, sustainable and fit for the future. This has been our approach when making investment decisions, and we are still focusing strongly on a ‘cost out’ and efficiency culture.

“Our Protein footprint programme progresses at pace. We are proud of the substantial upgrade to our facility in Scunthorpe, making it one of the largest and most advanced in Europe. Also we progress with our restructuring at other poultry locations, and we have now completed a similar exercise in our Red Meat business.

“Investment projects in our Chilled division at a number of sites, have improved quality and efficiency and the merger of functions across the division will bring substantial annualised savings.

“Our Brands have been more acutely affected by ingredient inflation. However, both Frozen and Biscuits have seen robust sales figures with new contract wins and, like the rest of the business, both have implemented major efficiency drives.

“We have seen an increased outbreak of Avian Influenza this year however our strict biosecurity measures have limited the impact on our agriculture although the outbreaks have caused the temporary closure of some overseas markets.

“The market will remain challenging, but as we continue to create a good environment for the long-term sustainability of the business, remain resilient and deliver for customers, our Better Before Bigger strategy will achieve our long-term ambitions.


Divisional performance 


Overall like-for-like sales in our Protein division in Q2 were up 1.4% at £531.0m (Q2 2015/16: £523.6m). Operating profit* was down to £4.5m (Q2 2015/16: £7.1m).

Our supply chain optimisation programme is creating leaner, more effective delivery systems, and we have already started re-configuring our UK facilities, with more planned for later this year. Our consolidation of the retail packing function at Red Meat is now complete and will release significant cost savings going forward. 


Our Chilled division saw like-for-like sales increase by 5.9% to £175.5m (Q2 2015/16: £165.7m) and like-for-like operating profit* up £1.6m to £5.7m (Q2 2015/16: £4.1m).

Contributing to the continued growth in chilled was the focus on cost out and efficiency programmes in the face of significant inflation across all commodity groups, supplemented by new launches of coated fish, soup, sandwiches and a robust performance over the Christmas period.



The Branded division reported Q2 like-for-like sales up 3.5% to £106.3m (Q2 2015/16: £102.7m) and overall operating profit* down marginally to £9.2m (Q2 2015/16: £10.7m). Our branded Division has seen the largest element of inflation in Q2 driven by both commodity and currency impacts.

In Fox’s Biscuits, to address these inflationary pressures, action has been taken both on the cost base and pricing. On costs, not only have further improvements in waste and efficiency helped to drive performance, but action has been taken to further streamline management and support structures at two of our factories. We have also engaged with our customers to seek to increase prices or change pack configurations.

In Frozen, strong sales continue with the Goodfella’s brand market share remaining solid with further new launches planned. New frozen pizza contracts have been secured, in addition to new own label pastry contracts. Lean manufacturing initiatives have now been implemented across three of the Irish sites and these are delivering cost and waste savings and a packaging and ingredient rationalisation programme is currently under way.


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 2019).

We continue to focus on cash and working capital management, and this resulted in a net cash inflow from operating activities for the quarter of £44.1m before interest, tax and capital expenditure (Q2 2015/16: £65.9m).  Our Net debt at the end of the quarter was £763.2m, an improvement of £14.4m compared to the last quarter (Q1 2016/17: £777.6m). Year on year net debt has increased (Q2 2015/16 (£687.4m), largely due to the heavy capital investment in the last 12 months amounting to £141.2m.

Our Net Debt : adjusted EBITDA ratio is 4.35 times, which is broadly in line with the prior quarter end (Q1 2016/17 4.31 times).


The strong headwinds forecast for 2017 have affected the business, but with a series of tactical and strategic actions, the business is confident these can be mitigated. Efficiency and innovation, supplemented by targeted investment, will help drive profitable sales and protect the business in a volatile operating environment. EU exit uncertainty, as well as cost pressures and the tough grocery market are likely to remain for the foreseeable future. However, we are well placed to deliver for our customers on quality, service and price.


Please go to the Investor Relations section of the corporate website:

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.

*The comparative Q2 2015-16 results have been restated to take into account first time adoption of FRS 102 during the period ended 30 July 2016. Further details of the effect of adopting FRS 102 on Q2 2015 -16 results are included in Note 4 below the table on page 1.

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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