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Q3 Results 2016/2017

26 June 2017

Working hard on price recovery, efficiency and targeted investments

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 29th April 2017.


Q3 2017

Q3 2016

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 tax4




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




Net debt




LTM Adjusted EBITDA³




Net Debt: LTM Adjusted EBITDA³




¹ Like-for-like (LFL) sales and operating profit are based on the 13 weeks ended 29th April 2017 compared to the 13 weeks ended 30th April 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 associate and joint venture 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 Q3 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 Q3 2015-16 results was to reduce profit after exceptional items, before interest and tax in total by £0.3m from the £20.6m previously reported (+£0.7m reduction in depreciation to reflect deemed cost adjustments and (£1.0m) pension scheme admin costs).

Q3 headlines

  • Revenues remain strong in a tough market; total sales up 4.8% to £821.9m
  • Like-for-like sales up 3.1% to £809.0m
  • Protein division reporting strong sales progress year-on-year
  • Like-for-like operating profit at £13.1m; affected by one-off items
  • Results impacted by cost inflation, avian flu in Europe and disruption and redundancy costs
  • Working closely with customers on inflation price recovery; realised in part from April onwards
  • Efficiency and cost reduction programmes accelerating
  • Innovation and investment streams on track


Ranjit Singh, 2 Sisters Food Group CEO, said:

“This was a tough trading quarter for the business, but there are clear signs in the top line performance that we are pursuing the right strategy to deliver sales and margin performance improvements.

“The competitive landscape remains challenging and our sector faces currency fluctuations which have brought about higher input prices. In addition, our European poultry export business in both Poland and the Netherlands has been affected by Avian Influenza outbreaks on the continent, and we have experienced some restructuring costs elsewhere in the business.

“Our Protein footprint programme is progressing well and will ensure we have the right product, in the right location at the right time. Latest developments include expanding our cutting facilities in Scotland and reconfiguring our supply chain to achieve a leaner structure. Following Consultation, we have announced the closure of one of our Birmingham sites. We have also strengthened our commitment to reduce poultry waste by agreeing a three-year surplus supply contract with Crawshaws Butchers.

“Our Chilled and Branded businesses have been tackling commodity inflation head on, with recovery plans successfully agreed with our key customers, and they continue their focus on cost out and efficiency programmes.

“We see no major changes to the external environment for the rest of the financial year.  We remain resilient, adaptable and as committed as ever to deliver for our customers. Our Better Before Bigger strategy will achieve our long-term ambitions.”


Divisional performance


Overall like-for-like sales in our Protein division in Q3 were up 4.8% at £566.8m (Q3 2015/16: £540.8m). Operating profit* was down by £2.2m to £6.7m (Q3 2015/16: £8.9m), driven by the impact of Avian Influenza on the European Poultry business.

Primal poultry continues to enjoy strong underlying volume growth, in addition to Ready-to-Eat products and Added Value breaded lines enjoying new category growth. During the quarter, we have concluded long-term supply contracts with three strategic customers which will deliver significant volume increases.



Our Chilled division saw flat like-for-like sales of £148.0m (Q3 2015/16: £148.8m) and we incurred a small operating loss* of £0.3m (Q3 2015/16: £2.9m profit), largely as a result of disruption following the loss of a Chilled Pizza contract.

Contributing to a stable sales performance against the inflationary backdrop was the ongoing efficiency investment programmes, delivering improved product quality at lower operating cost and growing sales with customers in different segments of the market.



The Branded division reported broadly flat Q3 like-for-like sales of £94.2m (Q3 2015/16: £94.9m), but overall operating profit* reduced to £7.3m (Q3 2015/16: £9.8m) as the division has been acutely affected by currency movements and commodity inflation.

To counter this, Fox’s Biscuits has seen successful Own Label launches through its strategic customers and the ongoing investment in our bakeries has driven lower cost production. Range rationalisation has also improved efficiencies and factory restructures have removed cost and improved accountability.

In our Frozen business, strong sales continue with the Goodfella’s brand market share remaining robust over the last 52 weeks. Lean manufacturing initiatives have now been applied across three of the Irish sites, along with packaging and ingredient rationalisation projects, which have now been fully implemented.


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 £16.8m before exceptional items, interest, tax and capital expenditure (Q3 2015/16: £35.7m). 

Our Net debt at the end of the quarter increased to £794.7m, largely due to the heavy capital investment in the last 12 months.

Our Net Debt : adjusted EBITDA ratio is 4.72 times, which is a modest increase on the last quarter end (Q2 2016/17: 4.35 times; Q3 2015/16: 4.10 times).  


Board appointments

The Board is pleased to announce the appointment of Richard Pike as Group Chief Financial Officer (CFO). Richard joins the business officially on July 17th 2017 and will join the BHL board. He takes over from Stephen Leadbeater who has decided to resign from the Board due to ill health. Stephen leaves the business at the end of July, but will be retained as a consultant until the end of the calendar year.

Richard most recently worked for Associated British Foods PLC as Managing Director of British Sugar PLC, having previously held the role of Group CFO for AB Sugar. Prior to this he served as Group Operations and Finance Director for Bridgemere PLC.

We are also pleased to announce that current 2 Sisters Chief Operating Officer Martyn Fletcher will join the BHL board on July 1st 2017.



The tough challenges experienced to date in 2017 will continue but action on price recovery, efficiency and targeted investments should pay off as we head towards the end of our financial year. Work will continue to mitigate inflation and the volatile operating environment. 

As we move into Q4, we have begun to see the benefits of our actions against inflationary headwinds coming through and we remain confident that we can deliver for our customers on quality, service and price.


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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.

*The comparative Q3 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 Q3 15 -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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