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Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its first quarter (Q1) results for the 13 weeks ended 26 October 2013.

Q1 2013/14 Financial highlights

 Q1 2014Q1 2013% change
Total sales £885.3m £616.7m +43.6%
LFL sales* £670.3m £616.7m +8.7%
Operating profit before exceptional items** £26.5m £30.5m
LFL Operating profit £31.3m £30.5m +£0.8m
Net cashflow from operating activities £27.0m £2.1m +£24.9m
Loss for the year after exceptional items, interest and taxation £12.1m £5.1m -£7.0m
Net debt*** £561.0m £542.6m
Net Debt: EBITDA 3.18 2.77 +0.41

* Like for like (LFL) sales are based on the 13 weeks ended 26 October 2013 compared to the 13 weeks ended 27 October 2012. LFL excludes sales in relation to the Vion acquisition.
** Operating profit before exceptional items including the Group’s share of operating profit/(loss) from joint ventures.
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £146.9m (Q1 2013: cash balances of £140.4m), the year-on-year movement in net debt principally reflects currency movements on euro denominated loans. 

Q1 2013/14 Operational highlights

  • A solid start to our new financial year, in line with expectations:
    • Like for like (LFL) sales up 8.7% driven by Protein growth and satisfying customer demand for quality
    • Branded recovery continues
    • Vion integration proceeding well and on plan
    • Addressing headwinds in Chilled in H2, focus in Q2 on investing in new launches and delivering Christmas ranges for our customers
  • Continued focus on costs in business:
    • Closure of loss making Haughley Park, addressing higher poultry cost base in Scotland by exiting Letham and improving efficiency  at Coupar Angus
  • Good cash performance; net cashflow from operating activities was £27.0m compared to £2.1m in Q1 last year. Net Debt:EBITDA ratio of 3.18 is in line with the July 2013 year end despite our seasonal working capital build.

Ranjit Singh, CEO of 2 Sisters Food Group, said: “We have made a solid start to our new financial year, in challenging and competitive market conditions as inflation continues to squeeze consumers spend.  We delivered good like for like sales growth delivering food for every meal occasion.

“Our strategy remains in working with our customers to drive organic growth aligned with utilising our experience of turning around acquired businesses and integrating them into our wider Group to bring about long-term growth benefits.

“The integration of Vion in our Protein Division is progressing on plan and our Branded recovery continues. During Q1 we have invested in our Chilled business, and our approach in understanding our customers and helping them to innovate is reflected in the significant number of new product launches in the first half of the year.  We are taking actions to address Chilled performance once Christmas is delivered for our customers and would expect to see the benefits coming through in the second half. We will continue to work with our customers to reinvent our ranges in order to maintain our position as a leading Ready Meals manufacturer.”

Q1 2013/14

Group like for like (LFL) sales increased by 8.7% in Q1 with total sales including the Vion acquisition 43.6% ahead of last year.

In tough trading conditions, LFL operating profit before exceptional items for Q1 was £0.8m ahead of last year at £31.3m. Group operating profit before exceptional items including Vion was £4m lower than last year at £26.5m and we are making good progress in delivering the Vion integration. We continue to focus on our cost base and the exceptional items in Q1 include impairment and other costs relating to the exit of the Haughley Park and Letham sites.


Protein increased LFL sales by 20.0% for Q1 driven by business gains and cost recovery in the UK and Europe. As we communicated at the year end, sales in the UK poultry business grew in value driven by annualised business gains and inflation recovery with volumes lower. We are working with customers to offer value to consumers. Our European business continues to diversify its customer base through business gains in retail and other channels, in line with our strategy.

LFL operating profit was ahead of Q1 last year driven by business gains and improved efficiency through investment in sites in the UK and Poland. We continue to address our cost base and announced proposals to consolidate our Scottish poultry production by exiting the Letham site and improving efficiency and performance at Coupar Angus.


Chilled sales for Q1 were 1.6% ahead of last year in tough trading conditions whilst operating profit was lower than last year in line with our expectations. The reduction in profit compared to Q1 last year stems from the under-recovery of commodity inflation, adverse sales mix and disruption from product transfers. We are taking action to improve performance with plans for each site. We  announced transfers of production which allowed closure of the Haughley Park site. We have invested with our customers in significant new product launches to bring consumers back to beef ready meals and are also investing to deliver  Christmas ranges for our customers which in the short term will impact margin in Q2. We would expect to see benefits coming through in the second half from these actions.


Recovery continued in Branded and whilst sales were down 3.8% due to lower promotions and addressing sale mix in Biscuits, Branded operating profit continued to improve reflecting tight cost management as we change the focus to driving Biscuit brands through new product launches and exit uneconomic own label lines. New product introductions in frozen pizza and tight cost management improved results in Frozen, but trading conditions remain tough, particularly in Ireland with increasing competition from discounters. 

Debt funding and cashflow

Our long term funding includes the senior £400m 9.875% and €340m 9.75% notes due April 2018 which provide the principal funding for the Group. In addition the Group has a £40m Revolving Credit Facility (to April 2016).

We continue to relentlessly focus on cash and deleveraging, resulting in strong net cash inflow from operating activities of £27.0m (Q1 2012/13: £2.1m) before interest, tax and capital expenditure as we tightly managed working capital.

As a result, we reduced net debt at 26 October 2013 by £5.7m to £561.0m, despite our seasonal working capital build. The Euro element of the Bond is now hedged and Net debt:EBITDA ratio remains at 3.18 times. At 26 October 2013, the Group had cash balances of £146.9m and our £40m Revolving Credit Facility remained undrawn.


Whilst our markets remain challenging, we have made a solid start to our new financial year with good progress in Protein and Branded and in integrating Vion. We are investing further in Chilled to deliver launches and Christmas ranges in Q2 and would expect to see the benefits of improvement actions in the second half. We expect markets to continue to be challenging and remain cautious on the outlook, but will continue to invest where we see opportunities for growth.


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.

Next update: Our Q2 2014 announcement will be made on 18th March 2014.