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Financial news


Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its first quarter results for the 13 weeks ended 29 October 2011.

Q1 Financial highlights

  • Q1 revenue of £565.0m

  • Q1 pro forma like for like (LFL)* sales up 10.0% on an adjusted basis, 9.9% on an unadjusted basis

  • Q1 EBITDA** at £47.0m, up £1.5m on last year on a pro forma basis

  • Q1 net cashflow from operating activities, before interest, of £63.8m

  • Net debt*** £647.2m at 29 October 2011; cash balances were £65.4m and RCF remains undrawn after Brookes Avana completion

* Like for like sales are based on sales for the 13 weeks ended 29 October 2011 compared to Pro Forma Sales for the prior 13  weeks ended 30 October 2010 on an adjusted basis to exclude the impact of discontinued operations (the sale of Dalepak in August 2010 and the closure of Ethnic Cuisine in September 2010).
** EBITDA is pre-restructuring costs. Pro forma comparative is presented on the basis that the Group as it stood at 30 July 2011 was in existence for the entire period ended 30 July 2011 and after Uffculme feed mill and one off item adjustments.
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents. 

Q1 Operational highlights

  • Strong sales momentum in Q1 as we invested in growth with our customers:

    • Q1 Poultry LFL sales up 13.2%

    • Q1 Chilled LFL sales up 9.6%, driven by our strong product offerings across Ready Meals, Sandwiches & Salads and Chilled Pizza

    • Q1 Branded LFL sales up 4.2%, reflecting a return to sales growth in Frozen and slower growth in the Biscuits market

    • Q1 2012 Group EBITDA margins of 8.3%; in line with FY 2011 margins but lower than proforma Q1 2011 margins as previously communicated, reflecting investment in growth with our customers; full year margin expectations unchanged

    • Completed a small bolt on poultry acquisition in the Netherlands for £0.5m

    • Integration of Northern Foods and synergy delivery on plan

Ranjit Singh, CEO of 2 Sisters Food Group, said: “The first quarter of our new financial year has seen a solid start, despite the continued challenging trading and consumer environment. We have recorded strong sales growth as we work closely with our customers to deliver value to the consumer. The second quarter is progressing in line with our plan and we expect our Christmas performance will have been solid, albeit in an increasingly promotionally driven trading environment which will constrain Q2 margins.”

We delivered strong sales momentum in Q1, with LFL sales up 10.0% overall, which drove EBITDA £1.5m (3.3%) ahead of Q1 last year. Q1 EBITDA margin was in line with full year 2011 margins but, as previously communicated, lower than last year’s Q1 pro forma margins, reflecting the impact of inflation and investment in growth for our customers.

Q1 saw strong sales growth in our Poultry division including the recovery of higher feed costs during the quarter which impacted margins. Chilled delivered good volume growth across our key sectors of Ready Meals, Sandwiches & Salads, and Chilled Pizza.  Margins were slightly ahead in the division compared to full year 2011 margins. In Branded, we returned to sales growth in Frozen, aided by our Goodfella’s pizza campaign which has seen initially encouraging results, whilst in Biscuits, lower market growth led to a slower sales momentum in the first quarter, which we expect to continue in Q2.  Branded margins remained broadly in line with full year 2011 margins.

Commodity inflation

Whilst headline inflation levels have eased slightly, input costs remain high and in line with previous guidance, we do not expect to see any material easing of the effects of commodity inflation until the end of our current financial year.


Our Integration programme remains on plan.  The first synergies have been delivered during the first quarter and we remain on track to deliver our full year synergy expectations of c£15m-£25m following the acquisition of Northern Foods in April 2011.

Brookes Avana

We announced an agreement to acquire the Brookes Avana business from Premier Foods for £30m cash on 8 December 2011, which was completed on 30 December 2011.  Brookes Avana is an excellent strategic fit, with good positions in Chilled and Bakery and for the year ended 31 December 2010 the business had sales of £203.6m and made a trading loss of £(0.1m).  Brookes Avana was expected to see reduced sales and an increased trading loss in 2011 after contract losses under previous ownership in 2011, but has a good track record of delivering high quality products for its customers. We believe that with our strong customer relationships, focus on cost and Brookes Avana’s high quality heritage, we can return the business to profitability over the next 12-24 months.

Debt funding and cashflow

Our senior £400m 9.875% and €340m 9.75% notes due April 2018 provide the principal funding for the Group. In addition the group has a £40m Revolving Credit Facility (to April 2016) which remains undrawn after completion of the Brookes Avana acquisition. We continue to relentlessly focus on cash and drive working capital, resulting in net cash inflow from operating activities of £63.8m before interest payments. Net debt reduced from 30 July 2011 by £7.9m to £647.2m, with cash balances of £65.4m at 29 October 2011.

Corporate Governance

The new Board structure to ensure effective governance of the Group and to provide support to the management team is now complete. Andrew Cripps was appointed as a non-executive director and the Chair of the Audit Committee on November 15th 2011.

Q2 trading and Outlook

After a slow start to Q2, we expect a solid trading performance overall, despite the challenging and increasingly promotional Christmas period. We delivered food for every eating occasion, with nearly 20 million steamed puddings, 10 million tins of seasonal Biscuit assortment tins and 2.5 million Ready Meal accompaniments for our customers and consumers. In Biscuits, we increased promotional activity to drive sales but, as previously communicated, expect overall margins to remain broadly flat.

As we start 2012, we retain our cautious outlook for the year as a whole, reflecting the headwinds of a competitive market, increased promotions, the wider economic challenges, continued high commodity and other input costs, and increasingly cash conscious consumers.  Despite these challenges, we will continue to put the customer at the heart of everything we do, providing value for money with quality products in both own label and brands. With a strong sales momentum in the first quarter, we remain in a good position to grow our business over the year.


Please go to the Investor Relations section of the corporate website at www.2sfg.com for contact details.

About Boparan Holdings:

Boparan Holdings is the holding company for 2 Sisters Food Group. We are a leading diversified food manufacturer with strong market positions in Poultry, Chilled, Bakery and Frozen categories. We focus on delivering the highest quality products to our customers at the lowest cost.

NOTE: Boparan Holdings Limited is in the process of being renamed to 2 Sisters Food Group Holdings Limited.  We expect this to be in place for the start of our third quarter trading period.

Next update:

Our Q2 update will be made on Tuesday 20 March 2012.