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Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its third quarter (Q3) results for the 13 weeks ended 27 April 2013.

Q3 2012/13 Financial highlights

 Q3 2013Q3 2012Q3 2013 vs Q3 2012
Total sales £764.8m £603.1m +26.8%
LFL sales* £624.6m £597.8m +4.5%
LFL Operating profit* before exceptional items £20.3m £31.4m £(11.1)m
Operating profit** before exceptional items £15.5m £31.4m £(15.9)m
Net debt*** £565.4m £94.7m Improved by £29.3m
Net Debt: EBITDA 3.15 3.33 Improved by 0.18

* Like for like (LFL) sales are based on the 13 weeks ended 27 April 2013 compared to the 13 weeks ended 26 April 2012. LFLexcludes discontinued operations, the acquisition of VION’s UK Poultry and Red Meat businesses, which were completed on 8 March 2013 and the impact of exchange translation.
** Operating profit is before  loss/profit on Joint Venture
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £134.3m (Q3 2012: net cash balances of £95.0m). 

Q3 2012/13 Operational highlights

Successful progression of Transformation of the business continues:

  • Completed Strategic acquisition of VION UK’s Poultry and Red Meat businesses;
  • Office of Fair Trading (OFT) gives unconditional clearance of acquisition on June 18th
    • c£1 billion annualised sales, 5,500 employees, British sourcing
    • Provides capacity for poultry growth
    • Red meat serves more meal occasions;  
    • Turnaround plan in progress
  • Good top line sales growth, like for like (LFL) sales up 4.5%
  • Results in line with guidance in a tough trading environment compared to last years’ strong Q3:
    • Strong sales performance in Protein; building new business 
    • Weaker performance in Chilled; reflecting consumer reaction to horsemeat scare in beef based ready meals category, combined with sales and margin mix from cold spring weather
    • Branded performance steady; continued improvement in Frozen offsetting weaker Biscuits performance
  • Medium term deleveraging strategy unchanged; Net Debt:EBITDA at 3.15, reflecting VION acquisition; strong cash generation with net cash balances of £134.3m

Ranjit Singh, CEO of 2 Sisters Food Group, said: “Q3 saw the successful completion of the acquisition of VION UK’s Poultry and Red Meat businesses. This is a strategic acquisition, with around £1 billion annualised sales, capacity in poultry for future growth and serving more meal occasions. Whilst currently loss making, we are confident in delivering improvement with our turnaround plan over the next two years.

“Operationally, Q3 saw good top line sales growth with a weaker trading performance, reflecting the tough trading environment compared to a strong Q3 last year.

“As previously communicated, as well as the dilutive effect of the Vion acquisition, we saw headwinds following the consumer reaction to horsemeat in beef related ready meals, alongside continued cost inflation and margin pressure as we invested with our customers to maintain sales growth in a highly competitive market.

Q3 2012/13

Group like for like (LFL) sales saw good growth, increasing by 4.5% in the quarter.  Q3 Group operating profit, before restructuring costs, was £15.5m (Q3 2011/12 operating profit: £31.4m) and there was an overall loss before tax of £8.6m (Q3 2011/12: profit £17.9m). Q3 operating profit margin was down compared to a strong Q3 last year at 2.0% (Q3 2011/12: 5.2%). Net interest costs were £20.1m (Q3 2011/12: £18.6m).


The Protein segment comprises our existing Poultry business, together with the former VION UK Poultry and Red Meat businesses which provide us with capacity in poultry and extensions to our product range.  LFL sales – which exclude the impact of the VION acquisitions – increased strongly by 10.1% for Q3. LFL operating profit margin in Protein was slightly lower due to  the time lag in recovering the impact of higher feed costs. We continued to build supply to a major customer during the quarter as part of business secured last year.  
We successfully completed the strategic acquisition of VION UK’s Poultry and Red Meat businesses on 8th March 2013. Following unconditional clearance of the acquisition on June 18th by the OFT, we are now able to implement our turnaround plan to improve performance of these businesses over the next two years.


Chilled Q3 LFL sales were up 2.5% despite the impact of consumer’s reaction to horsemeat and traceability concerns particularly on beef related ready meals. Profitability was lower as communicated due to the horsemeat concerns, adverse mix from the cold spring weather and inflation as we invested with customers in top line sales growth. We expect chilled beef ready meals to steadily recover and are focussed on improving our margin through our sales mix. Elsewhere in Chilled, we sold over 7 million Hot Cross Buns, including several new varieties produced for the Easter period.


In Branded, year on year LFL sales were down 5.5% with Frozen recovery continuing and Biscuits remaining weak as consumers traded into own label. LFL operating profit margin was also lower due to the impact of sales volumes and mix. Marketing activity in frozen pizza continues for the Goodfella’s brand with promotional activity for the new Extra Thin pizza range, and digital campaigns. In Biscuits, following the appointment of our new MD last quarter and a strengthened management team, we are focussed on growing the Fox’s brand with new product launches planned into next year.

Debt funding and cashflow

Our long term funding remains in place, with the senior £400m 9.875% and €340m 9.75% notes due April 2018 providing the principal funding for the Group and our £40m Revolving Credit Facility (to April 2016) remains undrawn. We continue to relentlessly focus on cash, net cash inflow from operating activities was £30.9m before interest, tax and capital expenditure.  Our net debt:EBITDA ratio was 3.15 times (2.7 times at the end of Q2) reflecting the effects of the acquisition of VION’s UK Poultry and Red Meat businesses, completed on 8th March 2013. Our medium term strategy remains unchanged to lower our leverage ratio towards investment grade metrics by 2015. Net debt at 27 April 2013 was £565.4m, which included net cash balances of £134.3m.


We expect market conditions to remain tough as we see inflation continuing, meaning consumers find cash increasingly squeezed. The Vion acquisition is currently loss making and will dilute margin in the second half as will the consumers reaction to horsemeat on beef related ready meals, albeit with a steady recovery. Despite the tough environment, we believe we are taking the right actions to improve margin by addressing product and customer mix and by implementing our turnaround plan for the VION acquisition following unconditional clearance by the OFT.  By putting our customers at the heart of everything we do and driving efficiency, we will continue to make progress.


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, Red Meat, Chilled, Bakery and Frozen categories. We focus on serving every meal occasion and putting our customers at the heart of everything we do.

Next update: Our FY 2013 announcement will be made on 29 October 2013.