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BOPARAN HOLDINGS Q2 2013/14 RESULTS, 18 MARCH 2014
(RESULTS FOR THE 13 WEEKS ENDED 25 JANUARY 2014)

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its second quarter (Q2) results for the 13 weeks ended 25 January 2014.

Q2 2013/14 Financial highlights

 

Q2 2014

Q2 2013

Q2 2014 vs Q2 2013

Total sales

£848.0m

£626.5m

+35.3%

LFL sales*

£647.2m

£623.0m

+3.9%

Operating profit** before exceptional items

£13.3m

£26.1m

 

(£12.8m)

LFL Operating profit** before exceptional items

£15.3m

£26.2m

 

(£10.9m)

Loss for the period after
exceptional items, interest and
taxation

(£27.5m)

(£12.3m)

 

(£15.2m)

Net cashflow from operating activities

£33.6m

£82.5m

 

(£48.9m)

 

Net debt***

£572.3m

£524.5m

 

+£47.8m

 

Net Debt: EBITDA

3.45

2.70

 

(0.75)

* Like for like (LFL) sales are based on the 13 weeks ended 25 January 2014 compared to the 13 weeks ended 26 January 2013. LFL excludes sales in relation to the Vion acquisition and foreign currency effects.
** Operating profit before exceptional items includes 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 £132.5m (Q2 2013: cash balances of £174.3m)

Q2 2013/14 Operational highlights

  • In tough trading conditions Q2 was in line with expectations:
    • Like for like (LFL) sales up 3.9%
    • Good performance in Protein. Vion integration progressing on plan
    • Steady improvement in Branded
    • Chilled operational performance impacted by significant investment in  around 100 new products for Autumn launch & to deliver Christmas ranges for our customers as explained
    • Working with our customers to stabilise and deliver profitable growth in Chilled

 

  •  Investing in growth and lowering cost base:
    • Investing in added value capacity in Cambuslang
    • Investing in capacity for growth in Meal Solutions and specialist bakery
    • Closed loss making Haughley Park in November
    • Addressing higher poultry cost base in Scotland by exit of Letham site and improving efficiency at Coupar Angus
    • Announced consultation on 7 February 2014 at Corby and Avana

Ranjit Singh, CEO of 2 Sisters Food Group, said: “This has been a very challenging quarter, but we delivered a creditable performance in Q2, despite the tough and competitive market conditions. We delivered for our customers over the key Christmas trading period, but in line with expectations, this impacted profitability in Chilled due to the significant investment made in product launches and disruption costs of new ranges. Protein made good progress with the integration of Vion on plan, we continued to make steady progress in Branded and we are taking actions to address Chilled performance and investing in capacity to meet our customer growth plans.

“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 Group to bring about long-term growth benefits.

“We continue to invest in capacity to fuel our growth and to address our cost base, which means we have to make tough decisions and following the exit of two sites in Q1, regrettably on 7 February 2014 we announced consultation on the future of the sites at Corby and Avana.”

Q2 2013/14

Group like for like (LFL) sales increased by 3.9% and total sales including Vion were ahead 35.3%. LFL operating profit before exceptional items for Q2 was £15.3m (Q2 2012/13: £26.2m) with improvements in Protein and Branded offset by lower profitability in Chilled.

Group operating profit including Vion before exceptional items was £12.8m lower than last year at £13.3m with Vion integration on plan. We continue to address our cost base and exceptional items in Q2 comprise mainly the impairment charge of £20.7m relating to Corby and Avana which are in consultation.

Protein

Protein LFL sales increased by 13.8% versus Q2 last year driven by business gains and annualised inflation offset by lower volumes and promotions.
LFL operating profit was ahead of Q2 last year driven by the business gains and improved efficiency through investment in sites.

The integration of Vion is progressing on plan to return to profitability with a single management team responsible for all UK poultry operations. Our European business continues to diversify its customer base with retail and other channels, in line with our strategy.

We continue to address our cost base and save future capital expenditure by restructuring our Scottish poultry business with the exit of the Letham site and shift changes at Coupar Angus.

As well as addressing the cost base, we are investing in growth as we announced a substantial expansion plan in poultry cooking at our site at Cambuslang, Scotland.

Chilled

Chilled LFL sales for Q2 were down 5.5% with an increase in sales in Meal Solutions driven by the significant number of new product launches offset by lower sales in  Food To Go.

Chilled profitability was significantly lower, in line with expectation, as we invested heavily in additional costs  to deliver a significant  re-launch of ready meals in the Autumn to bring consumers back into the category and to deliver for our customers in the key Christmas period.  Sales and profitability were also impacted by operational disruption due to the proposed closure of the Corby and Avana sites.

We are investing in capacity at our four Meal Solution sites and our specialist bakery site to meet customer growth and improve efficiency.

Branded

We were pleased to see further improvement in Branded profitability with Frozen showing significant recovery and Biscuits stabilising. LFL sales in Branded were 3.6% lower, with pizza driving improvement in Frozen, whilst Biscuits sales were impacted as we addressed sales and promotion mix.

Branded operating profit improved driven by new product launches, more focussed promotions and tight cost management. We launched Goodfella’s Extra Thin as well as developing our new product pipeline in Biscuits.

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 and with the seasonal working capital improvement, net cash inflow from operating activities was £33.6m before interest, tax and capital expenditure. Our medium term strategy to lower our leverage ratio towards investment grade metrics by 2015 remains unchanged. Net debt at 25 January 2014 was £572.3m, which included cash balances of £132.5m.

Outlook

Looking ahead, we remain cautious on the outlook, reflecting the challenging market conditions. We continue to adapt to changing retail and consumer environment . And we believe we are taking the right actions in the long term to address these challenges to support recovery and invest for future growth.

Enquiries:

Steve Henderson, Group Finance Director                            +44 1924 831300
Nick Murray, Head of Communications                                +44 7809 595831

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 serving every meal occasion and putting our customers at the heart of everything we do.

Next update: Our Q3 2014 announcement will be made on 17th June 2014.

BOPARAN HOLDINGS – Q1 2013/14 RESULTS, 17 DECEMBER 2013
(RESULTS FOR THE 13 WEEKS ENDED 26 OCTOBER 2013)

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 2014

Q1 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

-£4.0m

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

+£18.4m

 

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

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

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.

Branded

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.

Outlook

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.

Enquiries:

Steve Henderson, Group Finance Director                            +44 1924 831300
Nick Murray, Head of Communications                                +44 7876 577282

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.

BOPARAN HOLDINGS – FULL YEAR 2013 RESULTS, 29 OCTOBER 2013
(RESULTS FOR THE 52 WEEKS ENDED 27 JULY 2013)

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its full year results for the 52 weeks ended 27 July 2013.

FY13 Financial highlights

 

  FY 2013 FY 2012 % change
Total sales £2,884.6m £2,339.2m 23.3%
LFL sales* £2,447.8m £2,316.9m 5.6%
Operating profit** £92.2m £107.7m -14.4%
Operating profit margin % 3.2% 4.6% -1.4%
LFL operating profit** £103.5m £107.7m -3.9%
LFL operating profit margin % 4.2% 4.6% -0.4%
(Loss) / profit for the year after
exceptional items, interest and
taxation
(33.5m) £42.5m -178.8%
Net cash flow from operating
activities (statutory)
£150.6m £253.8m -103.2m
Net debt*** £566.7m £533.8m £32.9m
Net Debt: EBITDA 3.18 2.80 0.38

*Like for like (LFL) sales are based on the 52 weeks ended 27 July 2013 compared to the prior 52 weeks ended 28 July 2012. LFL excludes 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 calculated pre exceptional items however includes profit / loss on the Group share of joint venture operations. LFL excludes 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.
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £133.3m (FY 2012: cash balances of £144.8m).

FY13 Operational highlights

  • Strong sales (LFL up 5.6%) in tough trading conditions, with results in line with expectations
  • Strong sales performance in Protein; building new business
    • Branded recovery continues driven by Frozen, new Biscuits team in place to drive Fox’s brand
    • Weaker performance in Chilled; headwinds of consumer reaction to horsemeat scare in beef based ready meals category, combined with inflation and sales mix
    • Progressing consolidation of processing sites to reduce cost base
    • Building our leadership team
  • Strong cash generation with net cash balances of £133.3m, Net Debt:EBITDA at 3.18x.
  • Transformational acquisition of Vion UK’s Poultry and Red Meat Businesses, unconditionally cleared by OFT on 18 June 2013

Ranjit Singh, CEO of 2 Sisters Food Group, said: “trading conditions have been very tough with inflation impacting cash squeezed consumers and the impact of the horsemeat scandal on the food sector. By working with our customers we delivered good sales growth although profitability was lower due to the impact of the headwinds in Chilled and dilution from the Vion acquisition.

We successfully completed the acquisition of Vion UK’s Poultry and Red Meat businesses and received unconditional clearance from the OFT on 18 June 2013. This is a strategic acquisition increasing capacity in poultry for future growth and serving more meal occasions. Whilst Vion poultry is currently loss making, we have started to implement our integration plan and aim to get the business to break even in 2014.

We are consolidating our manufacturing facilities to improve efficiencies and improve profitability with 3 sites closed during the year. On 14 October 2013, we announced the closure of Haughley Park and will be transferring products to other sites.

We have strengthened our leadership with key appointments to the board, COO Chilled & Branded, Commercial & Marketing, Innovation and Agriculture to further build these areas of the business.

We expect the economic environment to remain tough and we will work with our customers to deliver quality and value to consumers, invest in our brands, in innovation and our people, and improve efficiency.”

FY13 and Q4 2013 performance

Group like for like (LFL) sales increased by 5.6% for FY13, with Group LFL sales in Q4 up 7.7%. Group sales including the Vion acquisition were up 23.3% for FY13.

In tough trading conditions, LFL Q4 operating profit was slightly ahead of last year although full year pre exceptional operating profit was 14.4% behind last year at £92.2m including the Vion acquisition which was loss making. Full year operating % margins are lower as the group has a greater weighting to Protein sector which operates with lower % margin than Chilled and Branded.

Protein

The Protein division saw strong sales growth driven by inflation and business gains with LFL sales increase by 9.2% for the full year, and 18.2% for Q4. LFL operating profit was slightly ahead for the year despite the delay in recovering feed inflation and competitive conditions in the UK and Europe, as we invested in efficiency projects and in customer sales growth. We recruited an Agriculture Director to drive quality and agricultural strategy across our Protein business.

We expect the impact of price inflation to continue to impact volumes in the short term and are working with customers to offer value to consumers.

European Poultry continued to diversify into retail customers and reduce cost base with two factories closed during the year and production transferred into the other sites.

Sales from the Vion businesses for the 20 weeks in the year were £365.2m and are performing in line with our expectations as we started to implement our integration plans.

Chilled

Chilled delivered an increase in LFL sales of 5.2% for the full year and LFL up 3.1% for Q4. In difficult trading conditions, operating profits for the full year and Q4 were lower than last year with the horsemeat issue impacting the beef related ready meals sector, under-recovery of commodity inflation, adverse sales mix and disruption from product transfers. We are taking actions to address these issues, but expect these factors to impact profitability in the first half.

We have refocused our Chilled business into Meal Solutions and Food to Go to address margin and operational improvement. We have a significant program of new product launches in the new year to support recovery of the chilled beef ready meals sector. We are taking actions on cost and we closed the Leicester factory in June 2013, transferring products to other sites. In addition, on 14 October 2013 we announced the closure of the Haughley Park site and will transfer products to other sites.

Branded

Branded LFL sales were 1.9% down for the full year and 8.6% down in Q4 as the legislation changes to promotions had an impact and we exited selected own label business in Biscuits. However, we delivered a steady profit improvement for the year with tight cost management and efficiency improvement as we continue our Frozen recovery plan.

We appointed a new Biscuits MD and management team in the year and our focus is on growing the Fox’s brand across all channels with a number of new product launches in Autumn 2013 supported by media campaigns.

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) which remains undrawn.

We continue to relentlessly focus on cash and deleveraging, resulting in net cash inflow from operating activities of £150.6m before interest, tax and capital expenditure. Our Net debt:EBITDA ratio increased to 3.18 times (from 2.80 times) after an adverse foreign exchange movement of £22m on the Euro element of the Bond, reversing gains in the prior year. The currency exposure of 75% of principal and interest was hedged to maturity in the second half of the year.

Our debt strategy remains unchanged to achieve Investment Grade metrics of 2x-2.5x by 2015. Net debt at 27 July 2013 was £566.7m, including cash balances of £133.3m, with the £40m RCF remaining undrawn.

Q1 trading and Outlook

We expect the economic environment to remain tough with commodity inflation and cash squeezed consumers and headwinds in Chilled.

Despite the tough environment, we believe we are taking the right actions to improve margin by addressing cost base through Vion integration and consolidation of processing sites, driving our brands and innovation and addressing inflation recovery and sales mix in Chilled.

By putting our customers at the heart of what we do in delivering quality, service and value to consumers and invest in our people. we will continue to make progress.

Enquiries:

Steve Henderson, Group Finance Director +44 1924 831300
Nick Murray, Head of Communications +44 7876 577282

About Boparan Holdings:

Boparan Holdings is the holding company for 2 Sisters Food Group based 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.

Next update: Our Q1 2013/14 announcement will be made on 17th December 2013.

BOPARAN HOLDINGS – Q3 2012/13 RESULTS, 25 JUNE 2013
(RESULTS FOR THE 13 WEEKS ENDED 27 APRIL 2013)

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 2013

Q3 2012

Q3 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

£594.7m

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).

Protein

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

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.

Branded

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.

Outlook

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.

Enquiries:
Steve Henderson, Group Finance Director                            +44 1924 831300
Nick Murray, Head of Communications                                +44 7876 577282

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.

BOPARAN HOLDINGS – Q2 2012/13 RESULTS, 19 MARCH 2013 (RESULTS FOR THE 13 WEEKS ENDED 26 JANUARY 2013)

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its second quarter (Q2) results for the 13 weeks ended 26 January 2013.

Q2 2012/13 Financial highlights

 

Q2 2013

Q2 2012

Q2 2013 vs Q2 2012

Total sales

£626.5m

£571.8m

+ 9.6 %

LFL sales*

£597.4m

£566.7m

+ 5.4%

Operating profit** before exceptional items

£26.1m

£25.7m

+ £0.4m

 

Net debt***

£524.5m

£630.8m

- £106.3m

 

Net Debt: EBITDA

2.7

3.6

 Reduced by 0.9

*Like for like (LFL) sales are based on the 13 weeks ended 26 January 2013 compared to the 13 weeks ended 28 January 2012. LFL excludes discontinued operations, the acquisition of Brookes Avana which was completed on 30 December 2011 and the impact of exchange translation.
** Operating profit is after loss/profit on Joint Venture
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £174.3m (Q2 2012: cash balances of £67.2m). 

Q2 2012/13 Operational highlights

  • Q2 like for like (LFL) sales up 5.4% in a tough and competitive market
    • Christmas business solid but driven by higher promotional activity
    • Solid performance in Chilled; challenging outlook in second half
    • Branded remains tough; Frozen recovery offset by Biscuits
    • Poultry feed price inflation recovered on plan; inflation remains challenging
  • Acquisition of VION Poultry and Red Meat businesses completed on 8th March 2013; good strategic fit to increase capacity and secure British supply; further diversifies our meal occasions
  • Continued progress in deleveraging; Net Debt:EBITDA at 2.7x with cash balances of £174.3m

Ranjit Singh, CEO of 2 Sisters Food Group, said: “We delivered a solid performance in Q2, despite the tough and competitive market conditions. Every one of our 18,000 colleagues helped to ensure our seasonal Christmas business – which served meal occasions including ready meal accompaniments, festive sandwiches, Christmas biscuits and Christmas puddings – delivered on plan for our customers.

“We made good progress to complete our phased recovery of higher feed costs by the end of Q2, but forward feed prices remain volatile. Looking forward, we also expect considerable volume reduction in our ready meals business during the second half year following media coverage of horsemeat issues, which have impacted the food industry as a whole and beef related ready meals in particular. As a result, we remain cautious on the outlook, with continued inflation and competitive trading conditions in a tough economic environment, alongside the dilutive effect of our VION acquisition. We will need to invest with our customers to maintain sales growth for the remainder of our financial year.”

Q2 2012/13

Our focus on the customer saw Group like for like (LFL) sales (adjusted to exclude Brookes Avana sales) increase by 5.4% for Q2 2012/13.

Q2 Group operating profit, before restructuring costs, was £27.3m (Q2 2011/12 operating profit: £25.6m) and after an exchange loss of £13.4m (Q2 2011/12: gain of £11.8m) on restating the euro element of the bond, there was an overall loss before tax of £7.7m (Q2 2011/12: profit £16.8m). Q2 operating profit margin was broadly in line with the prior year at 4.4% (Q2 2011/12: 4.5%). Net interest costs were £18.6m (Q2 2011/12: £18.7m).

Poultry

Our Poultry division saw year on year LFL sales increase by 2.2% for Q2. LFL operating profit margin in Poultry was slightly ahead after the impact of higher feed costs, which we recovered with a lag. As with many food commodities, we expect feed price inflation to continue.  We are investing in new capacity at several of our Poultry processing sites to support existing business and for future growth. Looking ahead to H2 in our European business, we expect to see the effects of new retail business won last year.

Chilled

Chilled Q2 LFL sales were up 9.7% whilst LFL operating profit margin was down during the quarter, in tough market conditions. This reflected the impact of inflation, investing with customers to maintain sales growth in a competitive market and the poor weather during January, as many consumers stayed at home. In a solid run up to Christmas, Chilled delivered over two million ready meal accompaniments and two million festive sandwiches, and our product offerings continue to remain popular. Our Christmas puddings business once again delivered indulgent and popular products for our customers. Looking forward, we expect considerable volume reduction in beef related ready meals during the second half year, following horsemeat issues affecting the food industry.

Branded

In Branded, year on year LFL sales were up 6.2% with Frozen recovery continuing and Biscuits remaining tough during the quarter, reflecting consumers trading into own label and higher promotional activity. LFL operating profit margin was broadly flat year on year. Frozen continued to implement its marketing plans for the Goodfella’s brand and also launched a microwaveable version of San Marco pizza, targeted at cash conscious consumers. In Biscuits, our seasonal business delivered on plan, but with higher levels of promotions needed to drive sales. Our new MD, Colin Smith, is now in place to drive our Fox’s brand in a tough Biscuits sector..

Acquisition of VION UK Poultry and Red Meat businesses

On 4th March 2013 we announced the acquisition of VION UK’s Poultry and Red Meat businesses. The acquisition, which was funded from cash and completed on 8th March, will help to further diversify the meal occasions which we serve. It provides us with additional capacity to meet our customers’ demands for quality and value for money products. The acquisition also helps secure a viable future for these businesses, which have faced an uncertain future in recent months, and safeguards a key supply chain for British meat. The Poultry business in particular lost large volumes of business over the last 12 months, and faces significant trading losses, having struggled in tough and competitive market conditions. We will bring our poultry sector skills to implement a two year turnaround plan, and support development of the Red Meat business with our strong customer relationships.

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 and with the seasonal working capital improvement, net cash inflow from operating activities was £82.5m before interest, tax and capital expenditure.  Our net debt:EBITDA ratio improved slightly at 2.69 times (2.77 times at the end of Q1) but does not include the effects of the acquisition of VION’s UK Poultry and Red Meat businesses, which was completed on 8th March 2013. Our medium term strategy to lower our leverage ratio towards investment grade metrics by 2015 remains unchanged. Net debt at 26 January 2013 was £524.5m, which included cash balances of £174.3m.

Outlook

Looking ahead, we remain cautious on the outlook, reflecting the tough and competitive market conditions. We expect continued food commodity inflation, volatile feed prices, high levels of promotions and considerable volume impact in the ready meals sector during the second half, following the media coverage on horsemeat. These, together with the VION acquisition which is currently loss making, are expected to dilute our % margins for the second half of our financial year. Reflecting these challenges, we will need to invest with our customers to maintain sales growth for the remainder of our financial year.

Enquiries:
Steve Henderson, Group Finance Director                            +44 1924 831300
Nick Murray, Head of Communications                           +44 7876 577282

A copy of this announcement and existing announcements, including our Q1 update, is available at www.2sfg.com under the Bond Investors section

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 serving every meal occasion and putting our customers at the heart of everything we do.

Next update: Our Q3 2013 announcement will be made on 25 June 2013.

2 Sisters Food Group agrees acquisition of VION’s UK poultry and red meat, securing a viable future for these businesses

March 4, 2013

Boparan Holdings Limited (BHL), the holding company for 2 Sisters Food Group, today announces that it has agreed to acquire VION’s poultry and red meat processing businesses in the UK. The acquisition secures a viable future for these businesses, as well as providing certainty to their UK supply chain, which is underpinned by British farmers. The acquisition will help to meet growing demand from 2 Sisters’ poultry customers and further diversifies the company’s offering to include red meat, supporting 2 Sisters’ strategy of serving more meal occasions.  

The acquisition follows the announcement by VION’s Dutch parent company on 19 November 2012 of its plan to exit its UK operations. VION’s poultry and red meat businesses are suppliers of poultry, beef and lamb to the retail and food service sectors in the UK and Europe. They have 11 processing sites in the UK and approximately 6,000 employees and have suffered from challenging trading conditions, in particular in poultry, with the loss of a number of major contracts.

Ranjit Singh, Chief Executive of 2 Sisters Food Group, said:
“We are delighted to be acquiring VION UK’s poultry and red meat businesses. They have faced significant uncertainty and tough trading in recent months, but today’s acquisition secures a viable future. With the majority of the operations being in Scotland and Wales, we are delighted that the Scottish and Welsh governments are supportive of this deal and we look forward to working with them and developing a sustainable future for these businesses.

This acquisition will safeguard a key supply chain for high quality British poultry and meat, offering reassurance to farmers in England, Scotland and Wales and upholding the quality and provenance that UK customers and consumers deserve.

At 2 Sisters, we put the customer at the heart of everything we do and in line with our customers’ strategies, these businesses will help us to shorten the supply chain for consumers and meet growing demand for British sourced food. Our immediate focus will be to improve performance, as we have successfully done with our previous acquisitions. We look forward to welcoming VION colleagues to 2 Sisters Food Group, and to working together to grow our business.”

Edwina Hart AM, Welsh Business Minister, said:
“I welcome today's announcement that 2 Sisters is to acquire VION’s poultry and red meat businesses, which safeguards the future of their operations in Wales. We have been working closely with both VION and 2 Sisters to help secure this deal in order to sustain the future for the workers and the supply chain in Wales.”  

John Swinney MSP, Secretary for Finance, Employment and Sustainable Growth in the Scottish Government, said:
“I welcome the decision by the 2 Sisters Food Group to buy Vion. Today's announcement is a significant step forward and my officials and I look forward to working with 2 Sisters over the coming months in order to secure a sustainable future for the plants in Scotland. This is a time of significant opportunity in building the food sector in Scotland and the involvement of 2 Sisters assists that process.”

Notes:

The sites acquired by 2 Sisters Food Group are:

VION UK Poultry:

Scotland

  • Coupar Angus
  • Cambuslang

Wales

  • Llangefni
  • Sandycroft

England

  • Basildon
  • Witham
  • Eye

VION UK Red Meat:

Wales

  • St Merryn Foods, Merthyr

England

  • St Merryn, Victoria
  • St Merryn, Bodmin

Scotland

  • McIntosh Donald, Portlethen

 

BOPARAN HOLDINGS – Q1 2012/13 RESULTS, 18 DECEMBER 2012

(RESULTS FOR THE 13 WEEKS ENDED 27 OCTOBER 2012)

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its first quarter (Q1) results for the 13 weeks ended 27 October 2012.

Q1 2012/13 Financial highlights

 

Q1 2013

Q1 2012

Q1 2013 vs Q1 2012

Total sales

£616.7m

£565.0m

+ 9.2 %

LFL sales*

£587.0m

£559.3m

+ 5.0 %

Operating profit before exceptional items

£30.7m

£27.1m

+ £3.6m

 

Net debt**

£542.6m

£647.2m

Reduced by 16.2 %

 

Net Debt: EBITDA

2.77

3.78

 Reduced by 1.01

* Like for like (LFL) sales are based on the 13 weeks ended 27 October 2012 compared to the 13 weeks ended 29 October 2011. LFL excludes discontinued operations, the acquisition of Brookes Avana which was completed on 30 December 2011 and the impact of exchange translation.
** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £140.4m (Q1 2012: cash balances of £65.4m).

Q1 2012/13 Operational highlights

  • A solid start to our new financial year, in line with expectations:
    • Like for like (LFL) sales up 5.0%
    • Continued growth in Chilled and Poultry
    • Good progress made in recovering higher feed prices
    • Steady performance in Branded, Biscuits market tough and highly promotional; Frozen recovery continuing
  • Brand investment in Fox’s Biscuits during Q1; TV, radio, social media
  • Brookes Avana recovering and focused on growth; consultation commenced on proposed Leicester site closure
  • Continued reduction in Net Debt:EBITDA ratio to 2.77x with cash balances of £140.4m, despite impact of 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 market conditions.  Despite the tough consumer environment and lapping sales gains made last year, we grew sales during the first quarter as we work hard to deliver food for every meal occasion.

“Trading conditions remain challenging, with high food commodity inflation, notably poultry feed costs and increased levels of promotions. Nevertheless, we have made good progress so far in recovering the impact of higher feed costs. By continuing to put the customer at the heart of everything we do, and being prepared to invest in growth, we remain well placed to grow our business.”

Q1 2012/13

Our focus on the customer saw Group like for like (LFL) sales (adjusted to exclude Brookes Avana sales) increase by 5.0% for Q1 2012/13.

Q1 Group operating profit, before restructuring costs, was £30.7m (Q1 2012 operating profit: £27.1m) and profit for the period was lower versus last year, with a loss of £(5.1)m (Q1 2011/12: profit  £2.0m), after charging exceptional costs of £12.1m, mainly in respect of the proposed Leicester site closure announced in October 2012, of which £4.3m were non-cash costs.  Q1 operating profit margin was slightly ahead of the prior year Q1 and our expectations of broadly flat margins for the full year remain unchanged, as we focus on investing to grow sales and cash margin, and recover inflation. Net interest costs were £(17.9)m (Q1 2011/12: £(19.1)m).

Poultry

Our Poultry division saw LFL sales increase by 6.2% for Q1. LFL operating profit margin % in Poultry was slightly lower in the quarter, reflecting the impact of higher feed costs, which we are progressively recovering by working closely with our customers. As previously communicated, we will see some short term margin pressure in Poultry, with a lag between the impact of higher feed prices and recovery.  In the longer term, we expect the trend for market growth in poultry to continue, driven by the relative lower cost and health attributes of poultry. Our investment to increase processing capacity to supply new business gains in H2 and longer term growth is progressing to plan. In our European business, we saw the continued build of new business supplying the retail market, in line with our strategy to develop retail customers in Europe.

Chilled

Chilled Q1 LFL sales were up 6.3% as our core markets of Ready Meals, Sandwiches, Salads and Pizza continue to grow.  Whilst LFL Operating profit margin % was slightly ahead, driven by annualised synergies, total operating profit margin % was slightly lower, which includes the Brookes Avana business.  In Ready Meals, we launched Asian cuisine and we are focusing on restoring growth to the Brookes Avana ready meals and cakes business, which we acquired in December 2011. We announced a proposal, in October 2012, to close the Brookes Avana Leicester site in 2013.  As part of the undertakings following the Brookes Avana acquisition, we sold the Avana Christmas pudding equipment, which comprised one production line, to Sargents Bakeries in October 2012 for a nominal amount. Our seasonal Christmas puddings have sold well into retailers, in line with our plan, although we anticipate a higher level of seasonal promotions this year.

Branded

In Branded, LFL sales were up 0.4% with Frozen continuing to steadily recover, driving operating profit margin % improvement, whilst Biscuits performance was impacted by higher levels of promotions, increases in own label sales and a later phasing of seasonal business. In Frozen, we saw our Goodfella’s brand maintain a steady market share and increase its new product development (NPD) programme with the launch of Goodfella’s Superiore and Flavour Fellas during the quarter.

Commodity inflation

As previously communicated, commodity input costs have increased, particularly feed costs, as well as others in the diverse basket of commodities we source.  We have made good progress, to date, to progressively recover the significant increases in wholesale feed prices, through selling price increases, volumes and efficiency.

Debt funding and cashflow

We have long term funding 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 and deleveraging, resulting in net cash inflow from operating activities of £2.1m before interest, tax and capital expenditure. This was achieved despite our seasonal working capital build ahead of Christmas, which included the impact of the seasonal business of Brookes Avana this year.  Our net debt:EBITDA ratio improved slightly at 2.77 times (2.80 times at the end of FY12) as we continue our strategy to lower our leverage ratio. Net debt at 27 October 2012 was £542.6m, reflecting the normal seasonal working capital build. Net debt included cash balances of £140.4m.

Outlook

Whilst our markets remain challenging and competitive and the wider economic outlook remains uncertain, we have made a solid start to our new financial year. We continue to remain cautious on the outlook, with food commodity inflation remaining high and high levels of promotional activity. We have made good progress, to date, on progressively recovering the impact of significant increases in wholesale feed prices impacting Poultry and protein production.  We expect markets to continue to be challenging and, reflecting our focus on top line sales growth and cash, we will invest where we see opportunities for growth.

Next update: Our Q2 2013 announcement will be made on 21 March 2012.

BOPARAN HOLDINGS – FULL YEAR 2012 RESULTS, 30 OCTOBER 2012
(RESULTS FOR THE 52 WEEKS ENDED 28 JULY 2012)

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its full year results for the 52 weeks ended 28 July 2012.

FY12 Financial highlights

 

FY 2012

PF FY 2011

% change

Total sales

£2,339.2m

£2,063.6m

 +13.4%

LFL sales*

£2,259.6m

£2,063.0m

+9.5%

EBITDA**

£190.3m

£170.0m

 +11.9%

EBITDA margin %

8.1%

8.2%

-10bps

EBITDA LFL margin %

8.4%

8.3%

+10bps

Operating profit before exceptional items

£108.1m

£89.6m

20.6%

Profit / (loss) for the year after exceptional items, interest and taxation

£42.5m

(£17.0)m

350%

Net cashflow from operating activities (statutory)

£253.8m

£59.2m

329%

 

Net debt***

£533.8m

£655.1m

-18.5%

 

Net Debt: EBITDA

2.80

3.85

+27.3%

* Like for like (LFL) sales are based on the 52 weeks ended 28 July 2012 compared to Pro Forma (PF) for the prior 52 weeks ended 30 July 2011. LFL excludes the acquisition of Brookes Avana which was completed on 30 December 2011 and the impact of exchange translation.
** EBITDA is pre-restructuring costs. Pro forma comparative is 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 of £144.8m (FY 2011: cash balances of £57.0m). 

FY12 Operational highlights

  • Good sales performance (LFL sales up 9.5%), ahead of the market:
    • Strong contributions from Chilled and Poultry to drive volumes
    • Branded recovery continues; Frozen improving and Biscuits solid
    • New Poultry business secured with Sainsbury’s for FY13
    • New retail business secured in European Poultry
  • Integration of Northern Foods nearing completion with annualised synergies delivered in line with expectations
  • Work in progress to restore growth at Brookes Avana following £30m cash acquisition in December 2011

Ranjit Singh, CEO of 2 Sisters Food Group, said: “2 Sisters Food Group delivered a good sales performance over the course of the year. Despite the challenging economic environment and the competitive sector we operate in, our focus on putting the customer at the heart of everything we do means that we have benefited from new business, with both existing and new customers.

“We continue to embed our customer and cash culture across the Group following the acquisitions of Northern Foods and Brookes Avana last year. Our Integration programme has delivered in line with our expectations and we generated synergies at the top end of our forecast range, with re-investment of synergies to drive further growth. We made good progress in deleveraging the Group and generating cash, with our leverage ratio now at 2.8 times; a good performance.

“Whilst we have made a solid start to our new financial year, looking ahead, we remain cautious in a difficult economic environment. Trading conditions are very challenging with high food commodity inflation, further recent significant increases in feed prices and cash conscious consumers.  Despite these pressures, we will continue to work with our customers to deliver quality and value to consumers, invest in our brands, in innovation and our people, and drive efficiency over the course of the year.”

FY12 and Q4 2012 performance

Our focus on the customer saw Group like for like (LFL) sales (adjusted to exclude Brookes Avana sales) increase by 9.5% for FY12, driven by volumes, with Group LFL sales in Q4 up 10.0%.

Our focus on cash margin drove FY12 EBITDA to £190.3m, which was 11.9% or £20.3m ahead of PF FY 2011. FY12 margins, at 8.1%, were in line with pro forma full year 2011 margins (PF FY 2011 EBITDA margin: 8.2%), including synergies from our integration programme, which we have re-invested to support continued growth. We expect our margins to remain flat in 2012/13 as we focus on growing sales and cash margin, and recovering inflation.

Poultry

The Poultry division saw LFL sales increase by 10.1% for the full year, and 6.2% for Q4, a good performance which reflects continued investment with customers to drive volumes.  EBITDA margins in Poultry were slightly down over the year as we focus on cash margin.  Our European business continued to diversify towards more supply into the retail market, with retail tenders secured for FY13. In the UK, we also secured significant new business with Sainsbury’s, from 2013. There have been further significant increases in feed prices over the last few months which will result in further inflation in poultry and other protein markets. We continue to work closely with our customers on recovery of these higher feed prices, as this is essential to secure the viability and supply of the poultry farming and processing capability in the UK.  However, as with previous commodity increases, we do anticipate some short term margin pressure in our Poultry segment as we see the lag between commodity price increases and recovery.

Chilled

Chilled delivered strong volume growth over the year, with FY12 LFL sales up 10.5% and Q4 LFL sales up 11.0%, a strong performance in the growing Ready Meals, Sandwiches and Salads markets.  We worked closely with customers on developing specific ‘British themed’ product offerings for the Queen’s Diamond Jubilee, the Euro 2012 football championship and the Olympic Games. Chilled EBITDA margins, excluding Brookes Avana, were broadly in line with the prior year. In the Brookes Avana business, we have made progress to deliver a break-even performance by the year end. We have taken tough actions to improve efficiency, including announcing the proposed closure, subject to consultation, of the Leicester factory in early October. Whilst we are attracting new business into the Rogerstone Park and Avana sites, Leicester has been operating well below capacity following business lost under previous ownership. We are proposing to close the Leicester factory by April 2013 and transfer the remaining business to other sites. At the end of July we transferred our food assembly operation at Colnbrook, near London Heathrow airport, to DHL Supply Chain. This was a non-core activity and enables DHL to manage all the logistics activity associated with the operation supplying British Airways.  We continue to supply food to British Airways on its short haul routes from London Heathrow.

Branded

Branded reflected a steady performance in Biscuits, where sales growth was driven by higher promotional activity to meet the demands of cash conscious consumers, and an improving performance in Frozen, where our work to reinvigorate the Goodfella’s pizza brand is steadily seeing our market share increase. FY12 Branded LFL sales were up 6.8% versus last year’s pro forma and up 18.1% in Q4 against a weak Q4 last year, with EBITDA margins slightly ahead, reflecting the steady improvement in Frozen. In Biscuits, we saw a number of British themed products for the summer’s sporting events, both in own label and brand.

We will see investment in new brand campaigns during Q1, including our Fox’s Biscuits, Rocky and Goodfella’s pizza brands, with multi-channel campaigns including radio, TV, social media, national press and lifestyle press. Goodfella’s will also launch a brand campaign to support new products including the premium Superiore range.

Integration

Our Integration programme and synergies delivered in line with our expectations and we have re-invested some of our synergy benefits to support continued growth.  We will continue to focus on other efficiency opportunities over the course of this year.

Commodity inflation

Input costs continue to increase in the diverse basket of commodities we source, particularly in proteins such as poultry, beef, pork and lamb. The recent significant increases in feed prices will continue to put pressure on food inflation and we will aim to progressively recover these through selling price increases, volumes and efficiency.

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) which remains undrawn. We continue to relentlessly focus on cash and deleveraging, resulting in net cash inflow from operating activities of £253.8m before interest, tax and capital expenditure. Our net debt:EBITDA ratio continued to improve, to 2.8 times (from 3.3 times at the end of Q3) as we deleverage the Group. Net debt at 28 July 2012 was £533.8m, including cash balances of £144.8m, with the RCF remaining undrawn.

Q1 trading and Outlook

In a challenging and competitive environment, we have made a solid start to our new financial year. Looking ahead, we remain cautious on the outlook, with food commodity inflation remaining high, including recent significant increases in wholesale feed prices impacting Poultry and protein production. We are working closely with our customers to recover these higher input costs – through a phased recovery – as this is essential to secure the viability and supply of the poultry farming and processing capability in the UK.

We will continue to invest in our brands, our people and in innovation, working closely with our customers to drive further sales growth over the coming year.

Next update: Our Q1 2013 announcement will be made on 18th December 2012.

Proposal for phased closure of RF Brookes, Leicester

October 2, 2012

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, has today, regrettably, announced a proposal to enter into a phased closure of the RF Brookes food manufacturing site in Leicester. To further improve efficiency, the company is proposing to transfer the remaining products from the loss making Leicester site to other company factories and close the site during the first quarter of 2013, following a 90 day consultation period with our 229 colleagues.

Since 2 Sisters Food Group acquired the three Brookes Avana facilities in December 2011, we have seen positive progress in attracting new business into the Rogerstone Park and Avana sites, to return those sites to growth. Regrettably, the Leicester site, which saw the phased exit of pie products in previous ownership, has been operating well below capacity and the site is not sustainable.

There will be no impact on revenue from the Brookes Avana business as a result of today’s announcement, with all remaining production from Leicester transferred to other facilities under the proposal. The Leicester site has a net asset value of approximately £8 million.

Enquiries:

Nick Murray, Head of Communications, 2 Sisters Food Group
+44 (0) 7876 577282

BOPARAN HOLDINGS – Q3 RESULTS
(RESULTS FOR THE 13 WEEKS ENDED 28 April 2012)

June 19, 2012

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its third quarter results for the 13 weeks ended 28 April 2012.

Q3 Financial highlights

 

Q3 2012

PF Q3 2011

% change

Group sales

£603.1m

£520.6m

15.8

LFL sales*

£562.0m

£520.6m

8.0

EBITDA**

£52.7m

£48.8m

8.0

LFL EBITDA margin %

9.2%

9.4%

-20bps

Profit / (loss) from ordinary activities before taxation (statutory)

£17.9m

(£27.2m)

n/a

Net cashflow from operating activities (statutory)

£77.3m

(£34.0m)

n/a

  • Net debt*** £594.7m at 28 April 2012 as we continue to deleverage the Group; cash balances were £95.0m and £40m RCF remains undrawn

* Like for like (LFL) sales are based on the 13 weeks ended 28 April 2012 compared to Pro Forma for the prior 13 weeks ended 29 April 2011. LFL excludes the impact of discontinued operations, the acquisition of Brookes Avana which was completed on 30 December 2011 and the impact of exchange translation.
** EBITDA is pre-restructuring costs. Pro forma comparative is 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 of £95.0m. 

Q3 Operational highlights

  • Continued sales progress in Q3 and full year expectations unchanged:

    • Sales momentum continues, driven by Chilled and Poultry, with a steady performance in Branded

    • Continued investment with customers to deliver sales growth and cash margin

    • New £100m Poultry supply secured with a major customer for 2012/13

    • Investment in Fox’s and Rocky brands to support NPD

Ranjit Singh, CEO of 2 Sisters Food Group, said: “We have continued our momentum in Q3, with strong sales in Chilled and Poultry helping us to deliver good like for like sales growth, slightly lower than H1 as we lapped last year’s inflation led price increases, as previously communicated. We remain focused on working closely with our customers to deliver value to the consumer, as we expect the challenging trading environment to continue as consumers see their cash squeezed.  Integration is delivering in line with our plan and as we move towards the end of our financial year, our full year expectations remain unchanged.”

Our focus on the customer saw Group like for like (LFL) sales (adjusted to exclude Brookes Avana sales) increase by 8.0% for Q3, driven by volumes, and our focus on cash margin drove EBITDA £3.9m ahead of Q3 last year. Q3 EBITDA margins, at 8.7%, edged up slightly versus pro forma full year 2011 margins (PF FY 2011 EBITDA margins: 8.2%), reflecting synergies from our integration programme. Like for like Q3 EBITDA % margin (excluding Brookes Avana) was 9.2%, broadly in line with last year’s Q3 pro forma as we focus on cash margin. Our guidance of broadly flat full year margins compared to last year’s pro forma remains unchanged.

In our divisions, Q3 sales growth continued in Poultry, with LFL sales up 8.2%, a strong performance which reflects continued investment with customers to drive volumes as we lapped last year’s selling price increases.  EBITDA margins in Poultry remained at a similar level as last year’s pro forma Q3. We gained significant new business with Sainsbury’s following an agreement to deliver an innovative Poultry solution. This additional supply business, which commences in Q2 next year, is expected to be worth approximately £100million on an annualised basis. In Europe, we continue to develop our supply offerings to the retail market, with further retail tenders secured in Q3.

Chilled saw continued volume growth, with Q3 LFL sales up 9.2%, driven by a strong performance in Ready Meals, offset slightly by Sandwiches and Salads. Our new product development programme saw the launch of new ‘British’ themed sandwich and salad products, including Hog Roast and Yorkshire Pudding wrap. Chilled EBITDA margins, excluding Brookes Avana, were broadly flat compared to pro forma Q3 last year. Our work to improve the performance of Brookes Avana and achieve break even by the year end is progressing to plan, with a marginal profit during Q3 offsetting losses during Q2. We have implemented tough actions on cost and we remain focused on securing new business and building on the quality heritage.

Q3 Branded LFL sales were up 5.5% versus last year’s pro forma Q3, reflecting an improving performance in Frozen following the Goodfella’s pizza relaunch and promotional campaign. Branded margins edged slightly down, reflecting continuing promotional activity and sales mix. In Biscuits, we continue to focus on new product development to reflect the challenging consumer environment, by working with our customers to deliver increases in own label sales. We launched Fox’s Magnificos in March, our first entry into the savoury biscuit market.  Q3 also saw initial marketing campaigns for our Fox’s and Rocky brands, including our ‘Vinnie’ TV advert and social media campaigns, with full campaigns to follow in our next financial year. In new product innovation, we launched Best of British selection and Rocky Chocka bars, reflecting our increasing focus on the snacking segment and in Goodfella’s we launched Delizia, a lighter pizza.   

Integration

Our Integration programme is progressing well as we move towards the end of our financial year. We expect synergy savings, on an annualised basis, to be at the top end of our previously communicated range of £15-£25 million.

Commodity inflation

Whilst headline inflation has edged down, input costs in the diverse basket of commodities we source remain high in historic terms. We continue to remain cautious on food commodities and do not see any material easing of commodity costs in the remainder of our financial year.

Debt funding and cashflow

We have long term funding in place, with 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) which remains undrawn. We continue to relentlessly focus on cash and drive working capital, resulting in net cash inflow from operating activities of £77.3m before interest, tax and capital expenditure. Our net debt position and net debt: EBITDA ratio improved to 3.3 times (from 3.6 times at the end of Q2) as we deleverage the Group. Net debt at 28 April 2012 was £594.7m, with cash balances of £95.0m and the RCF remaining undrawn.

Q4 trading and Outlook

Whilst we continue to operate in a challenging and competitive trading environment, our focus on working closely with our customers has been reflected in our continued sales momentum during Q3. Q4 trading remains on plan and we expect to deliver a good sales performance over the year as a whole.

Enquiries:

Steve Henderson, Group Finance Director                            +44 1924 831461
Nick Murray, Head of Communications                                +44 7876 577282

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 Full year 2012 announcement will be made on 30 October 2012.

BOPARAN HOLDINGS – Q2 RESULTS
(RESULTS FOR THE 13 WEEKS ENDED 28 JANUARY 2012)

March 20, 2012

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its second quarter results for the 13 weeks ended 28 January 2012.

Q2 Financial highlights

 

Q2 2012

PF Q2 2011

% change

Group sales

£571.8m

£508.0m

+12.6%

LFL sales*

£559.7m

£508.0m

+10.2%

 

 

 

 

EBITDA**

£46.4m

£41.7m

+11.3%

LFL EBITDA % of net sales

8.5%

8.2%

30 bps

Profit from ordinary activities before taxation (statutory)

£16.8m

£9.4m

+78.7%

Net cashflow (statutory)

£48.2m

£18.8m

+156%

Net debt***

£630.8m

n/a

 n/a

  • LFL EBITDA % margin of 8.5%; EBITDA margin including Brookes Avana was 8.1%

  • Net debt*** £630.8m at 28 January 2012 as we continue to deleverage the Group; cash balances were £67.2m and £40m RCF remains undrawn

* Like for like sales and EBITDA % (LFL) are based on the 13 weeks ended 28 January 2012 compared to Pro Forma for the prior 13 weeks ended 29 January 2011. LFL excludes the impact of discontinued operations and the acquisition of Brookes Avana which was completed on 30 December 2011
** EBITDA is pre-restructuring costs. Pro forma comparative is 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.

Q2 Operational highlights

  • Further sales progress in Q2:

    • Solid Christmas with increased promotional activity

    • Continued focus on investing with customers to deliver sales growth and cash margin

    • Completed the acquisition of Brookes Avana on 30 December 2011 for cash consideration of £30.6m

    • Integration of Northern Foods and synergy delivery on plan; synergy expectations now at the higher end of our £15-£25m range

Ranjit Singh, CEO of 2 Sisters Food Group, said: “2 Sisters has continued to deliver good sales progress in the second quarter, building on the momentum from our first quarter and demonstrating how our virtuous circle to drive volumes and improve efficiency is working.  Despite the challenging and competitive trading environment we operate in, we have recorded good sales growth as we work closely with our customers to deliver value to the consumer. At the half-way stage of our financial year, performance remains in line with our expectations.”

We delivered strong sales momentum in Q2, with Group LFL sales (adjusted to exclude Brookes Avana sales) up 10.2%, helping to drive EBITDA £4.7m ahead of Q2 last year. EBITDA margins, at 8.1%, remained in line with pro forma full year 2011 margins and are broadly flat year on year, reflecting our investment with customers to drive volumes. Excluding Brookes Avana, our underlying EBITDA % margin was 8.5%, slightly ahead of last year’s Q2 pro forma. Our expectation of broadly flat year-on-year margins (compared to the pro forma) for the full year remains unchanged.

Across our operating divisions, Q2 saw strong sales growth in our Poultry division, with sales up 13.2% as our investment to drive volumes continues, including some new business wins year on year.  EBITDA margins in Poultry improved on Q1 but were 0.5% lower versus pro forma Q2 last year, reflecting some short term margin dilution as we focus on driving volumes. 

In Chilled, we delivered further volume growth, with LFL sales up 12.4%, a reflection of our strong product offerings in the growing chilled convenience food markets, with seasonal sandwich and ready meal products for Christmas and Chinese New Year again proving popular. Chilled EBITDA margins excluding Brookes Avana were consistent with Q1 and pro forma Q2 last year. Brookes Avana has made an encouraging start to our aim of achieving EBITDA break even by the end of the year and return to profitability within 12-24 months.

In Branded, Q2 sales were up 0.6% versus the pro forma Q2 2011, reflecting flat volumes in Biscuits and a solid Frozen performance following the Goodfella’s pizza promotional campaign. Biscuits saw increased competitor promotional activity and a higher level of promotions needed to drive sales in the run up to Christmas.  In Frozen, we saw encouraging results following our Goodfella’s pizza campaign, with our focus going forward to increase repeat purchase during 2012. Branded margin was ahead of pro forma Q2 last year but lower than Q1 reflecting increased promotional activity.

Integration

We continue to make good progress integrating Northern Foods.  Our individual workstreams continue to deliver cost synergies and we now expect synergy savings to be at the upper end of our previously communicated range of £15-£25 million for the current financial year.

Commodity inflation

Average input costs across the diverse basket of commodities we source remain high in historic terms. Our outlook for the commodity environment remains cautious and we do not see any material easing of commodity costs in the remainder of this financial year.

Brookes Avana

Brookes Avana, which we acquired on 30 December 2011 for £30.6m in cash, has made an encouraging start, with the focus on enhancing its performance in the short term by reducing cost and improving efficiency. Brookes Avana has a strong track record of delivering high quality products for its customers and it has made an encouraging start in seeking to return the business to break even this year. Our aim is to return the business to profitability within 12-24 months by cost reduction and gaining new business to utilise the spare capacity.  As communicated by the previous owner of Brookes Avana, a significant contract loss at the Leicester site will take effect in June 2012 and we continue to seek opportunities to replace lost volumes to secure the future viability of this site.  On 19 March, the Office of Fair Trading (OFT) completed its review of the purchase and we are delighted that the OFT cleared over 96% of this acquisition, namely the main Rogerstone Park chilled ready meals facility, the Avana chilled cakes, puddings and desserts facility and the Leicester chilled pies and pizza facility. Disappointingly, the OFT rejected our proposed Undertakings in Lieu (UIL) in relation to the Avana Christmas puddings business, which is a small part of the overall Brookes Avana business (less than 4% of Brookes Avana sales last year) and we believe that the OFT has failed to understand the very competitive dynamics of the own label market. We will now consider our options to deal with the OFT’s findings in respect of Avana Christmas puddings.

Debt funding and cashflow

The Group has long term funding in place. 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 £48.2m before interest payments and before the acquisition of Brookes Avana for cash consideration of £30.6m. Our net debt position improved as we continue to focus on driving cash and deleveraging the Group. Net debt at 28 January 2012 was £630.8m, with cash balances of £67.2m and the RCF remaining undrawn.

Q3 trading and Outlook

At 2 Sisters, we put the customer at the heart of everything we do, which is reflected in our strong sales momentum during Q1 and Q2.  The first month of our Q3 trading has been in line with our expectations and the Group continues to make progress as we move through our financial year. Whilst we remain cautious in our outlook for the year as a whole and mindful of the highly competitive market environment, we remain in a good position to grow our business over the year.

Enquiries:

Steve Henderson, Group Finance Director                            +44 1924 831461
Nick Murray, Head of Communications                                +44 7876 577282

A copy of this announcement will also be made available at www.2sfg.com
under the Bond Investors section.

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 Q3 update will be made on 19 June 2012.

BOPARAN HOLDINGS – Q1 RESULTS
(RESULTS FOR THE 13 WEEKS ENDED 29 OCTOBER 2011)

January 19, 2012
                       
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.

Integration

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.

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

2 Sisters Food Group reaches agreement to acquire Brookes Avana

December 8, 2011

Boparan Holdings, the holding company for 2 Sisters Food Group, today announces it has agreed to acquire the Brookes Avana business from Premier Foods for a cash sum of £30 million.

Brookes Avana is a supplier of high quality chilled convenience products, including Ready Meals, Accompaniments, Chilled Pizza and Pies from facilities based at Rogerstone Park in South Wales and Leicester. Avana is one of the UK’s leading suppliers of high quality bakery, cake and dessert products from three facilities based at Rogerstone. 

The acquisition would provide a strong strategic fit and would further strengthen 2 Sisters Food Group’s capabilities in the Chilled and Bakery markets, offering a growth platform and a more diversified range of food products for every eating occasion. Brookes Avana produces for all of the UK’s major retailers.

For the year to 31 December 2010, the Brookes Avana business had a turnover of £203.6 million and made a trading loss of £(0.1) million. All historic pension liabilities will be retained by Premier Foods.

Ranjit Singh, Chief Executive of 2 Sisters Food Group, said: “We are delighted to reach agreement on the acquisition of Brookes Avana.  The business has a strong track record in delivering high quality products for its customers and would provide a growth platform for 2 Sisters and increased product diversity to serve every eating occasion.

“This is an excellent strategic fit and, following completion, we will focus on delivering future growth opportunities and enhancing the performance of the business.”

Enquiries:

Steve Henderson. Group Finance Director                                        01924 831300
Nick Murray, Head of Communications                                +44 7876 577282

BOPARAN HOLDINGS
FULL YEAR RESULTS FOR THE 52 WEEKS ENDING 30 JULY 2011

November 18, 2011

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its full year results for the 52 weeks ending 30 July 2011.

Financial highlights (Pro Forma 52 weeks to 30 July 2011)

  • Full year Pro Forma revenue of £2.1bn

  • Full year like for like (LFL) sales up 4.1% on an adjusted* basis (Price +2.4%; Volumes +1.7%); 1.4% on an unadjusted basis

  • Pro Forma Adjusted** EBITDA at £170m

  • Net debt*** £655m at 30 July 2011

NOTE: Pro forma results for the 52 weeks ended 30 July 2011 are unaudited and are derived as though all acquisitions were owned for the whole of the 52 weeks ended 30 July 2011.  A copy of the full audited statutory accounts for the period ending 30 July 2011 is contained in the enclosed Bondholder report.

*Like for like sales are based on Pro forma sales for the 52 weeks ended 30 July 2011 compared to sales for the prior year 52 weeks ended 30 July 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)
** Pro Forma Adjusted EBITDA is pre-restructuring costs and after adjusting for Uffculme feed mill and unrealised exchange loss on retranslation of the €340m senior notes.
*** Net debt comprises senior loan notes, cash and finance leases

Operational highlights

  • Integration of Northern Foods progressing to plan; synergy expectations for FY12 unchanged (£15m-£25m before integration costs)

  • Solid result for 2011 in a tough market environment, set against the impact of inflation on manufacturers, retailers and consumers

    • Chilled division delivered steady progress in sales and margins in the growing Ready Meals and Sandwiches & Salads markets; LFL sales up 10.7%

    • UK and European Poultry traded in line with expectations after dealing with feed cost inflation; LFL sales up 4.2% and margins slightly down reflecting phasing of input cost recovery

    • Branded division saw LFL sales decrease by 3.2% (Biscuits up 7.5%; Frozen down 11.6%) reflecting continued challenging trading in Frozen division offsetting Biscuits growth; Biscuits grew sales and market share and retained solid margins, benefiting from new product development, including Fox’s Ambers and new snacking products

    • Frozen sales and margin performance remained weak as we continue our work to sharpen performance in the division; Goodfella’s pizza brand relaunched in September 2011, focusing on Italian heritage

Other developments

  • One culture and one identity being rolled out into the business – “2 Sisters Food Group”

  • New Board structure with Charles Allen CBE as independent chairman; Mark Hunter (CEO MolsonCoors UK & Ireland) appointed non-executive director and Remuneration Committee Chairman; Andrew Cripps as non-executive director and Audit Committee Chairman and Steve Henderson appointed as Group Finance Director. David Gregory already in place as non-executive director and Safety & Governance Committee Chairman

Ranjit Singh, CEO of Boparan Holdings Limited, said: “In a challenging trading environment, we delivered a solid performance for our 2010/11 financial year, which was in line with our expectations. Following the acquisition of Northern Foods in April 2011, our integration programme is progressing to plan and our synergy expectations are unchanged from our previous guidance. Across our operating businesses, our divisional structure, effective from the current financial year, will enable us to have a sharper focus on our performance”. 

Chilled

We continued to see progress in our predominantly own label Chilled division, where markets remain competitive but in steady growth, and our sales and margin momentum continued.  We continue to have strong product offerings in Ready Meals, Sandwiches & Salads and Chilled Pizza.  In our Christmas puddings business, we have a good order book for Christmas across own label and brand, including our new Fox’s branded Christmas pudding and an increased production run of last year’s successful Heston Blumenthal ‘Hidden Orange’ Christmas pudding.

Poultry

In UK and European Poultry, we saw a phased recovery of the impact of higher feed costs, edging margins slightly down for the full year. Input costs remain high and pressures on margins still exist as promotional activity continues to drive volumes.  Our new Thetford prepared poultry facility became operational during the year and is now reported as part of Chilled.  In Europe, the small acquisition we announced in July has provided an opportunity to start growing sales to retailers in Europe over the coming years.

Branded

In Biscuits, with our leading Fox’s brand, sales growth progressed, with new own label business and innovative products including Fox’s Ambers and snacking to go products, a market where we see good growth potential.  Margins were flat versus the prior year as we saw increases in promotional activity.

Frozen trading continued to be tough with sales and margins remaining weak as we continue our work to sharpen our performance in the division. Our Goodfella’s pizza brand was relaunched in September 2011 to focus the product, packaging and marketing back to its Italian roots.  Initial feedback to our Goodfella’s relaunch has been positive, but we retain our view that the reinvigoration of the brand will take time in what is a very competitive market, with high promotional levels.  In Pies & Pastry, we recently secured additional own label volume to help fill spare capacity at our Portumna site in Ireland.

Customer relationships

We continue to have strong customer relationships, putting the customer at the heart of everything we do.  In a challenging economic environment, we have seen the benefits of a two-way relationship with our customers, supporting them in their growth plans and ensuring that we remain integral to their long term strategies.

Commodity inflation

We succeeded in recovering the impact of higher input costs during the year.  As an average across our basket of key commodities we saw around 6% inflation year on year. Input costs remain high and in line with our previous guidance, we do not expect to see any material easing of commodity inflation until the latter part of our current financial year.

Integration

On integration, we are making good progress with some quick wins; closing the previous Northern Foods headquarters in Leeds, moving to one Shared Service Centre in Wakefield; moving to one centralised Procurement team and focusing on a smaller number of suppliers; and developing a coordinated waste programme to minimise our waste and reduce costs. Our synergy expectations of £15m-£25m in FY 12 with associated costs of c£4-£5m are unchanged.

We have tightened our cash control across the Group, with a working capital improvement plan in progress. In line with previous guidance, we expect to keep capital expenditure at around 1.5% of sales this year.

We continue to bring our different cultures together as 2 Sisters Food Group, operating as one team where everyone counts and delivering the highest quality at the lowest cost.  We are also renaming our holding company 2 Sisters Food Group Holdings, which will take effect from January 2012. We are working to ensure we have fit for purpose structures and resource in place across the whole business, with some recent headcount reductions. We are also continuing our plans to ensure our pension schemes are affordable and sustainable in the long term, with the proposed closure of the Northern Foods defined benefit schemes to future accrual. The UK defined benefit scheme was closed to future accrual from 1st November 2011. We will commence the long term deficit reduction payments, agreed with the Trustee, of £15m per annum to the main Northern Foods UK scheme starting in 2011/12.

With our new Board structure now in place, we have the appropriate levels of governance and non-executive expertise to support our management teams.

Q1 trading

  • Q1 2012 Group like for like sales up 9.8%

  • Q1 2012 Chilled momentum continues, with LFL sales up 9.6%; Poultry LFL sales strong, up 12.9%; Branded LFL sales up 3.7%, reflecting a return to sales growth in Frozen and slower growth in Biscuits

  • Q1 2012 Group EBITDA margins will be slightly lower as we invest in growth with our customers; Full year margin expectations unchanged

The first quarter of our new financial year has seen a solid start with good sales growth as we work with our customers to deliver value to the consumer. In the short term this is expected to slightly dilute EBITDA margins, in what remains a tough trading environment, however, on a full year basis, our expectations of broadly flat margins – as previously communicated – remain unchanged.  The momentum in our Chilled division has continued, with our Thetford prepared poultry facility completing its commissioning.  Poultry performance remains solid and we are investing in growth with our customers. Branded reflects a return to sales growth in Frozen, whilst in Biscuits, lower market growth has led to a slightly slower sales momentum in the first quarter.

Q1 has also seen the first synergies coming through as part of our Integration programme.

Outlook

Whilst we have made a solid start to our new financial year and our integration programme is progressing to plan, we retain our cautious outlook for 2012, reflecting the headwinds of a competitive market environment, continued high commodity and other input costs, and increasingly cash conscious consumers. Despite these challenges, we 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. We remain in a good position to grow our business over the years ahead.

Enquiries:

Steve Henderson, Group Finance Director                            +44 7801 033039
Nick Murray, Head of Communications                                +44 7876 577282

A copy of this announcement will also be made available at www.northernfoods.com under the Bond Investors sections

Next update: A first quarter trading update for the period ending 29 October will be made on Thursday 19 January 2012.

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.

Further Board appointments at 2 Sisters Food Group

November 15, 2011

2 Sisters Food Group is pleased to announce further executive and non-executive appointments which will strengthen its Board and provide the appropriate levels of governance to support the Group’s growth plans.

Steve Henderson, currently Acting Group Finance Director, has been appointed as Group Finance Director.  Steve is an Ernst & Young qualified FCA and brings a wealth of experience to the role, including over 16 years with Northern Foods plc in a variety of finance roles.  He has extensive debt funding and M&A experience and strong pensions experience with the Northern Foods pension schemes.

Andrew Cripps has also been appointed to the Board as a non-executive director and Chair of the audit committee.  A qualified accountant, Andrew has extensive experience within the consumer goods sector, including roles in corporate strategy, finance and mergers and acquisitions, coupled with significant non-executive and audit chair credentials across a number of international listed companies.

An Economics graduate from Trinity College, Cambridge, Andrew began his career with KPMG before spending over 20 years with Rothmans International and BAT plc. He has held a number of non-executive roles including Molins plc, Trifast plc, Helphire Group plc and Carreras Group Limited. He is currently Deputy Chairman of Swedish Match AB and a non-executive director and Chair of the audit committee of Booker Group plc.

Charles Allen, Chairman of 2 Sisters Food Group, said: ““I am delighted that we have secured Steve and Andrew’s appointment to the Board of 2 Sisters Food Group. 

“Steve is an accomplished finance professional, with vast experience in the food industry and in a range of financial roles.  He will play a key role in managing the financial position of the Group as we continue our growth agenda over the coming years.

“Andrew is a strong leader who has excelled in a variety of financial and non-executive roles across the consumer goods sector. He has identified,
negotiated and led a number of large scale transactions and therefore has great experience to contribute to 2 Sisters Food Group’s growth agenda. He is also an experienced audit committee chair and will bring best practice corporate governance to the Board.”

Ranjit Singh, Chief Executive of 2 Sisters Food Group, said: “I am delighted that Steve and Andrew will be working with us as we grow our business.  They both bring a wealth of experience to 2 Sisters Food Group and with our vision to grow to £3 billion of sales, their experience will be integral to delivering this.”

Notes:

The Board of 2 Sisters Food Group comprises:

Charles Allen Chairman
Andrew Cripps Non-Executive and Chair of the Audit Committee
Mark Hunter Non-Executive and Chair of the Remuneration Committee
David Gregory Non-Executive and Chair of the Safety & Governance Committee
   
Ranjit Singh Chief Executive
Steve Henderson Group Finance Director

Enquiries:

Nick Murray, Head of Communications                                +44 7876 577282

2 Sisters Food Group appoints Mark Hunter as Non-Executive Director and Chair of Remuneration Committee

August 2, 2011

2 Sisters Food Group is pleased to announce the appointment of Mark Hunter as a Non-Executive director and Chair of the Remuneration Committee.

Mark brings a wealth of experience from consumer businesses, with a specific emphasis on sales and marketing, and brand development. He is currently Chief Executive of Molson Coors (UK), a position he has held since 2007 following a number of sales, marketing and commercial roles both in the UK and Canada. His experience in brand development led him to be appointed as President of the Incorporated Society of British Advertisers in 2009.

The appointment follows Charles Allen becoming Non-Executive Chairman of 2 Sisters Food Group earlier in July and reflects the Group’s plans to grow its business in the UK and Europe over the coming years, following the recent acquisition of Northern Foods.  Further Non-Executive appointments are expected to be made to the new Board.

Charles Allen, Chairman of 2 Sisters Food Group, said: “I am delighted that we have secured Mark’s appointment to the Board of 2 Sisters Food Group. 

“Mark is a strong leader who has excelled in a variety of management roles during his career.  He brings a wide range of experience in sales, marketing and brand development and will provide valuable counsel to the Board and to the management teams as we work to grow our business over the coming years.”

Mark Hunter, said: “This is an exciting time to be joining the Board of 2 Sisters Food Group as they develop their growth plans and food offerings for every eating occasion.”

Note to editors:

Mark's experience includes his role as Marketing Director for Bass Brewers, where he achieved 100% growth in Carling Lager in the UK over the period 1996-2005.  He has more recently led a performance step change within the Molson Coors UK business, through a focus on brand, revenue growth and portfolio development, including the establishment of the Cobra beer partnership and recent acquisition of Sharp’s brewery.

In addition to his role as CEO of Molson Coors (UK), Mark also holds the following current roles:

  • Vice Chairman and a Board Director of the British Beer & Pub Association

  • Member of the Portman Group Council

  • Trustee of Drinkaware

About 2 Sisters Food Group:

2 Sisters Food Group is a leading food manufacturer with 39 sites and 16,000 employees across the UK, Ireland and continental Europe. It has market leading positions in Poultry, Chilled, Biscuits and Frozen categories, with a combination of branded and own label products.

Enquiries:

Nick Murray, Head of Communications                                +44 7876 577282
Kate Holland, Communications Manager                              +44 (0) 7815 449215

Boparan Holdings Limited - pre-close trading update

July 13, 2011

Boparan Holdings Limited, the holding company for 2 Sisters Food Group and Northern Foods Limited, announces its first pre-close trading update prior to its financial year end on 30 July 2011.

Financial highlights

  • Full year (July 2011) revenue and adjusted EBITDA expected to be in line with proforma January 29, 2011 revenue and adjusted EBITDA of £2bn and £170m respectively (as reported in the OM)

  • Like for like sales* up 4.5% on an adjusted basis; 2.0% on an unadjusted basis

Operational highlights

  • Continued sales progress during the period:

    • Chilled division benefiting from strong market growth in both sandwiches & salads, and ready meals

    • New product development in Brands, including Fox's Ambers, Goodfella's Flatbread and Goodfella's Garlic Bread

    • UK poultry has now recovered inflation; new Thetford facility now open

    • European Poultry trading in line with expectations

  • Inflation recovery progressing in line with our plan

  • Integration of 2 Sisters Food Group and Northern Foods progressing to plan

Other developments

  • Successful Bond offering completed in April 2011 to repay acquisition debt following Northern Foods transaction, and to clear existing Northern Foods debt; new £40m Revolving Credit Facility established

  • Appointment of Charles Allen CBE as independent Chairman of the Group

Ranjit Singh, CEO of Boparan Holdings Limited, said:

"We have seen a solid financial and operating performance during the period, in what remains a challenging consumer environment and with continued commodity pressures which we are continuing to recover. Sales and profits for the full year are expected to be in line with the proforma we set out during our Bond offering in April.

"Across our operating businesses, our Chilled division continues to perform well. Market growth in chilled categories remains strong and we continue to excel for our customers in delivering high quality products and strong service levels. In Brands, promotional activity in the market is higher year on year, with volumes in Biscuits increasing and with new products being rolled out, including Fox's Ambers. In frozen pizza, we are seeking to redress the previous sales decline with new products including Goodfella's Flatbread and Goodfella's Garlic Bread. The UK poultry market has seen significant inflation, with reduced volumes as consumers focus on reducing waste. In UK and European poultry, we continue to trade in line with our expectations, with a focus on recovering the impact of higher feed costs."

"The integration work following our acquisition of Northern Foods is progressing to plan and we believe we have the right recipe to become fit for growth and further develop our business in the years ahead. We have received positive feedback from our customers and stakeholders, and we remain fully focused on delivering the highest quality for the lowest cost. To help drive the integration programme, we appointed an Integration Director in Steve Ellis, with nearly 20 years experience in lean world class manufacturing, sales, procurement and logistics. Progress to date has been good, with a number of initiatives, including the closure of the Leeds office and transferring activities to other locations in the group; the establishment of a new Leadership team to drive integration and deliver the targeted synergies in line with our plans; and we are planning to operate across five divisions from our next financial year, thereby ensuring that we have a sharper focus on our performance."

"Our appointment of Charles Allen CBE as non-executive Chairman also brings us a wealth of experience and wise counsel as we seek to grow the business over the coming years.  With Charles appointed, we will look to further develop the Board and a recruitment process for a permanent Group Finance Director is also underway."

Outlook

Like many predominantly UK focused businesses, we share the cautious economic outlook into our next financial year. However, we have quality products, strong brands and we will continue to progress our integration programme, both to deliver targeted synergies and to become fit for growth. 

* Like for like sales (underlying revenue) excludes the impact of discontinued operations. Adjusted like for like sales reflects the sale of Dalepak in August 2010 and the closure of Ethnic Cuisine in September 2010

Enquiries:

Steve Henderson, Acting Group Finance Director     +44 (0) 7801 033039
Nick Murray, Head of Communications                                +44 7876 577282
Kate Holland, Communications Manager                   +44 (0) 7815 449215

Full year results will be announced in the first half of November 2011 (date to be confirmed)

About Boparan Holdings:

Boparan Holdings is the holding company for 2 Sisters Food Group and Northern Foods Limited.  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 product to our customers at the lowest cost.

2 Sisters Food Group appoints Charles Allen as Non-Executive Chairman

July 11, 2011

2 Sisters Food Group is pleased to announce the appointment of Charles Allen CBE as its Non-Executive Chairman.

Charles brings a wealth of experience to the role from a range of retail and consumer business sectors, including food, hotels, entertainment, music and media. He has held the role of Chief Executive or Chairman at ITV plc, Compass Group plc, Granada Group plc, Granada Media, Forte Group and EMI.  Charles is currently Chairman of Global Radio and a senior adviser to Goldman Sachs. Until last year he was a non-executive director of Tesco plc.

The appointment follows the recent acquisition of Northern Foods.  Northern Foods is being integrated with 2 Sisters Food Group to form a business which will be the fourth largest food producer in the UK, with £2 billion of annual sales and which is seeking to grow to £3 billion of annual sales by 2015.  Charles acted as an adviser during the acquisition process and will sit as an independent Chairman of the Board of 2 Sisters Food Group.

Ranjit Singh, Chief Executive of 2 Sisters Food Group, said: "We are delighted that Charles is joining us.  He brings a wealth of experience to 2 Sisters as we work to become fit for growth and bring the teams across 2 Sisters and Northern Foods together.

"We have a vision to grow to £3 billion of sales by 2015 and the experience Charles has across many sectors will help us to deliver on this."

Charles Allen said: "This is an exciting time to be joining the Board of 2 Sisters and I am impressed by the real passion for putting the customer at the heart of everything the company does. I am really looking forward to working with Ranjit and his team as we continue to build the business."

BOPARAN HOLDINGS – Q1 RESULTS
(RESULTS FOR THE 13 WEEKS ENDED 29 OCTOBER 2011)

January 19, 2012
                       
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.

Integration

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.

Enquiries:

Steve Henderson, Group Finance Director                            +44 1924 831461
Nick Murray, Head of Communications                                +44 7876 577282

A copy of this announcement will also be made available at www.2sfg.com
under the Bond Investors section

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.

2 Sisters Food Group reaches agreement to acquire Brookes Avana

December 8, 2011

Boparan Holdings, the holding company for 2 Sisters Food Group, today announces it has agreed to acquire the Brookes Avana business from Premier Foods for a cash sum of £30 million.

Brookes Avana is a supplier of high quality chilled convenience products, including Ready Meals, Accompaniments, Chilled Pizza and Pies from facilities based at Rogerstone Park in South Wales and Leicester. Avana is one of the UK’s leading suppliers of high quality bakery, cake and dessert products from three facilities based at Rogerstone. 

The acquisition would provide a strong strategic fit and would further strengthen 2 Sisters Food Group’s capabilities in the Chilled and Bakery markets, offering a growth platform and a more diversified range of food products for every eating occasion. Brookes Avana produces for all of the UK’s major retailers.

For the year to 31 December 2010, the Brookes Avana business had a turnover of £203.6 million and made a trading loss of £(0.1) million. All historic pension liabilities will be retained by Premier Foods.

Ranjit Singh, Chief Executive of 2 Sisters Food Group, said: “We are delighted to reach agreement on the acquisition of Brookes Avana.  The business has a strong track record in delivering high quality products for its customers and would provide a growth platform for 2 Sisters and increased product diversity to serve every eating occasion.

“This is an excellent strategic fit and, following completion, we will focus on delivering future growth opportunities and enhancing the performance of the business.”

Enquiries:

Steve Henderson. Group Finance Director                                        01924 831300
Nick Murray, Head of Communications                                         +44 7876 577282

BOPARAN HOLDINGS
FULL YEAR RESULTS FOR THE 52 WEEKS ENDING 30 JULY 2011

November 18, 2011

Boparan Holdings Limited, the holding company for 2 Sisters Food Group, today announces its full year results for the 52 weeks ending 30 July 2011.

Financial highlights (Pro Forma 52 weeks to 30 July 2011)

  • Full year Pro Forma revenue of £2.1bn

  • Full year like for like (LFL) sales up 4.1% on an adjusted* basis (Price +2.4%; Volumes +1.7%); 1.4% on an unadjusted basis

  • Pro Forma Adjusted** EBITDA at £170m

  • Net debt*** £655m at 30 July 2011

NOTE: Pro forma results for the 52 weeks ended 30 July 2011 are unaudited and are derived as though all acquisitions were owned for the whole of the 52 weeks ended 30 July 2011.  A copy of the full audited statutory accounts for the period ending 30 July 2011 is contained in the enclosed Bondholder report.

*Like for like sales are based on Pro forma sales for the 52 weeks ended 30 July 2011 compared to sales for the prior year 52 weeks ended 30 July 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)
** Pro Forma Adjusted EBITDA is pre-restructuring costs and after adjusting for Uffculme feed mill and unrealised exchange loss on retranslation of the €340m senior notes.
*** Net debt comprises senior loan notes, cash and finance leases

Operational highlights

  • Integration of Northern Foods progressing to plan; synergy expectations for FY12 unchanged (£15m-£25m before integration costs)

  • Solid result for 2011 in a tough market environment, set against the impact of inflation on manufacturers, retailers and consumers

    • Chilled division delivered steady progress in sales and margins in the growing Ready Meals and Sandwiches & Salads markets; LFL sales up 10.7%

    • UK and European Poultry traded in line with expectations after dealing with feed cost inflation; LFL sales up 4.2% and margins slightly down reflecting phasing of input cost recovery

    • Branded division saw LFL sales decrease by 3.2% (Biscuits up 7.5%; Frozen down 11.6%) reflecting continued challenging trading in Frozen division offsetting Biscuits growth; Biscuits grew sales and market share and retained solid margins, benefiting from new product development, including Fox’s Ambers and new snacking products

    • Frozen sales and margin performance remained weak as we continue our work to sharpen performance in the division; Goodfella’s pizza brand relaunched in September 2011, focusing on Italian heritage

Other developments

  • One culture and one identity being rolled out into the business – “2 Sisters Food Group”

  • New Board structure with Charles Allen CBE as independent chairman; Mark Hunter (CEO MolsonCoors UK & Ireland) appointed non-executive director and Remuneration Committee Chairman; Andrew Cripps as non-executive director and Audit Committee Chairman and Steve Henderson appointed as Group Finance Director. David Gregory already in place as non-executive director and Safety & Governance Committee Chairman

Ranjit Singh, CEO of Boparan Holdings Limited, said: “In a challenging trading environment, we delivered a solid performance for our 2010/11 financial year, which was in line with our expectations. Following the acquisition of Northern Foods in April 2011, our integration programme is progressing to plan and our synergy expectations are unchanged from our previous guidance. Across our operating businesses, our divisional structure, effective from the current financial year, will enable us to have a sharper focus on our performance”. 

Chilled

We continued to see progress in our predominantly own label Chilled division, where markets remain competitive but in steady growth, and our sales and margin momentum continued.  We continue to have strong product offerings in Ready Meals, Sandwiches & Salads and Chilled Pizza.  In our Christmas puddings business, we have a good order book for Christmas across own label and brand, including our new Fox’s branded Christmas pudding and an increased production run of last year’s successful Heston Blumenthal ‘Hidden Orange’ Christmas pudding.

Poultry

In UK and European Poultry, we saw a phased recovery of the impact of higher feed costs, edging margins slightly down for the full year. Input costs remain high and pressures on margins still exist as promotional activity continues to drive volumes.  Our new Thetford prepared poultry facility became operational during the year and is now reported as part of Chilled.  In Europe, the small acquisition we announced in July has provided an opportunity to start growing sales to retailers in Europe over the coming years.

Branded

In Biscuits, with our leading Fox’s brand, sales growth progressed, with new own label business and innovative products including Fox’s Ambers and snacking to go products, a market where we see good growth potential.  Margins were flat versus the prior year as we saw increases in promotional activity.

Frozen trading continued to be tough with sales and margins remaining weak as we continue our work to sharpen our performance in the division. Our Goodfella’s pizza brand was relaunched in September 2011 to focus the product, packaging and marketing back to its Italian roots.  Initial feedback to our Goodfella’s relaunch has been positive, but we retain our view that the reinvigoration of the brand will take time in what is a very competitive market, with high promotional levels.  In Pies & Pastry, we recently secured additional own label volume to help fill spare capacity at our Portumna site in Ireland.

Customer relationships

We continue to have strong customer relationships, putting the customer at the heart of everything we do.  In a challenging economic environment, we have seen the benefits of a two-way relationship with our customers, supporting them in their growth plans and ensuring that we remain integral to their long term strategies.

Commodity inflation

We succeeded in recovering the impact of higher input costs during the year.  As an average across our basket of key commodities we saw around 6% inflation year on year. Input costs remain high and in line with our previous guidance, we do not expect to see any material easing of commodity inflation until the latter part of our current financial year.

Integration

On integration, we are making good progress with some quick wins; closing the previous Northern Foods headquarters in Leeds, moving to one Shared Service Centre in Wakefield; moving to one centralised Procurement team and focusing on a smaller number of suppliers; and developing a coordinated waste programme to minimise our waste and reduce costs. Our synergy expectations of £15m-£25m in FY 12 with associated costs of c£4-£5m are unchanged.

We have tightened our cash control across the Group, with a working capital improvement plan in progress. In line with previous guidance, we expect to keep capital expenditure at around 1.5% of sales this year.

We continue to bring our different cultures together as 2 Sisters Food Group, operating as one team where everyone counts and delivering the highest quality at the lowest cost.  We are also renaming our holding company 2 Sisters Food Group Holdings, which will take effect from January 2012. We are working to ensure we have fit for purpose structures and resource in place across the whole business, with some recent headcount reductions. We are also continuing our plans to ensure our pension schemes are affordable and sustainable in the long term, with the proposed closure of the Northern Foods defined benefit schemes to future accrual. The UK defined benefit scheme was closed to future accrual from 1st November 2011. We will commence the long term deficit reduction payments, agreed with the Trustee, of £15m per annum to the main Northern Foods UK scheme starting in 2011/12.

With our new Board structure now in place, we have the appropriate levels of governance and non-executive expertise to support our management teams.

Q1 trading

  • Q1 2012 Group like for like sales up 9.8%

  • Q1 2012 Chilled momentum continues, with LFL sales up 9.6%; Poultry LFL sales strong, up 12.9%; Branded LFL sales up 3.7%, reflecting a return to sales growth in Frozen and slower growth in Biscuits

  • Q1 2012 Group EBITDA margins will be slightly lower as we invest in growth with our customers; Full year margin expectations unchanged

The first quarter of our new financial year has seen a solid start with good sales growth as we work with our customers to deliver value to the consumer. In the short term this is expected to slightly dilute EBITDA margins, in what remains a tough trading environment, however, on a full year basis, our expectations of broadly flat margins – as previously communicated – remain unchanged.  The momentum in our Chilled division has continued, with our Thetford prepared poultry facility completing its commissioning.  Poultry performance remains solid and we are investing in growth with our customers. Branded reflects a return to sales growth in Frozen, whilst in Biscuits, lower market growth has led to a slightly slower sales momentum in the first quarter.

Q1 has also seen the first synergies coming through as part of our Integration programme.

Outlook

Whilst we have made a solid start to our new financial year and our integration programme is progressing to plan, we retain our cautious outlook for 2012, reflecting the headwinds of a competitive market environment, continued high commodity and other input costs, and increasingly cash conscious consumers. Despite these challenges, we 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. We remain in a good position to grow our business over the years ahead.

Enquiries:

Steve Henderson, Group Finance Director                            +44 7801 033039
Nick Murray, Head of Communications                               +44 7876 577282

A copy of this announcement will also be made available at www.northernfoods.com under the Bond Investors sections

Next update: A first quarter trading update for the period ending 29 October will be made on Thursday 19 January 2012.

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.

Further Board appointments at 2 Sisters Food Group

November 15, 2011

2 Sisters Food Group is pleased to announce further executive and non-executive appointments which will strengthen its Board and provide the appropriate levels of governance to support the Group’s growth plans.

Steve Henderson, currently Acting Group Finance Director, has been appointed as Group Finance Director.  Steve is an Ernst & Young qualified FCA and brings a wealth of experience to the role, including over 16 years with Northern Foods plc in a variety of finance roles.  He has extensive debt funding and M&A experience and strong pensions experience with the Northern Foods pension schemes.

Andrew Cripps has also been appointed to the Board as a non-executive director and Chair of the audit committee.  A qualified accountant, Andrew has extensive experience within the consumer goods sector, including roles in corporate strategy, finance and mergers and acquisitions, coupled with significant non-executive and audit chair credentials across a number of international listed companies.

An Economics graduate from Trinity College, Cambridge, Andrew began his career with KPMG before spending over 20 years with Rothmans International and BAT plc. He has held a number of non-executive roles including Molins plc, Trifast plc, Helphire Group plc and Carreras Group Limited. He is currently Deputy Chairman of Swedish Match AB and a non-executive director and Chair of the audit committee of Booker Group plc.

Charles Allen, Chairman of 2 Sisters Food Group, said: ““I am delighted that we have secured Steve and Andrew’s appointment to the Board of 2 Sisters Food Group. 

“Steve is an accomplished finance professional, with vast experience in the food industry and in a range of financial roles.  He will play a key role in managing the financial position of the Group as we continue our growth agenda over the coming years.

“Andrew is a strong leader who has excelled in a variety of financial and non-executive roles across the consumer goods sector. He has identified,
negotiated and led a number of large scale transactions and therefore has great experience to contribute to 2 Sisters Food Group’s growth agenda. He is also an experienced audit committee chair and will bring best practice corporate governance to the Board.”

Ranjit Singh, Chief Executive of 2 Sisters Food Group, said: “I am delighted that Steve and Andrew will be working with us as we grow our business.  They both bring a wealth of experience to 2 Sisters Food Group and with our vision to grow to £3 billion of sales, their experience will be integral to delivering this.”

Notes:

The Board of 2 Sisters Food Group comprises:

Charles Allen Chairman
Andrew Cripps Non-Executive and Chair of the Audit Committee
Mark Hunter Non-Executive and Chair of the Remuneration Committee
David Gregory Non-Executive and Chair of the Safety & Governance Committee
   
Ranjit Singh Chief Executive
Steve Henderson Group Finance Director

Enquiries:

Nick Murray, Head of Communications                                         +44 7876 577282

2 Sisters Food Group appoints Mark Hunter as Non-Executive Director and Chair of Remuneration Committee

August 2, 2011

2 Sisters Food Group is pleased to announce the appointment of Mark Hunter as a Non-Executive director and Chair of the Remuneration Committee.

Mark brings a wealth of experience from consumer businesses, with a specific emphasis on sales and marketing, and brand development. He is currently Chief Executive of Molson Coors (UK), a position he has held since 2007 following a number of sales, marketing and commercial roles both in the UK and Canada. His experience in brand development led him to be appointed as President of the Incorporated Society of British Advertisers in 2009.

The appointment follows Charles Allen becoming Non-Executive Chairman of 2 Sisters Food Group earlier in July and reflects the Group’s plans to grow its business in the UK and Europe over the coming years, following the recent acquisition of Northern Foods.  Further Non-Executive appointments are expected to be made to the new Board.

Charles Allen, Chairman of 2 Sisters Food Group, said: “I am delighted that we have secured Mark’s appointment to the Board of 2 Sisters Food Group. 

“Mark is a strong leader who has excelled in a variety of management roles during his career.  He brings a wide range of experience in sales, marketing and brand development and will provide valuable counsel to the Board and to the management teams as we work to grow our business over the coming years.”

Mark Hunter, said: “This is an exciting time to be joining the Board of 2 Sisters Food Group as they develop their growth plans and food offerings for every eating occasion.”

Note to editors:

Mark's experience includes his role as Marketing Director for Bass Brewers, where he achieved 100% growth in Carling Lager in the UK over the period 1996-2005.  He has more recently led a performance step change within the Molson Coors UK business, through a focus on brand, revenue growth and portfolio development, including the establishment of the Cobra beer partnership and recent acquisition of Sharp’s brewery.

In addition to his role as CEO of Molson Coors (UK), Mark also holds the following current roles:

  • Vice Chairman and a Board Director of the British Beer & Pub Association

  • Member of the Portman Group Council

  • Trustee of Drinkaware

About 2 Sisters Food Group:

2 Sisters Food Group is a leading food manufacturer with 39 sites and 16,000 employees across the UK, Ireland and continental Europe. It has market leading positions in Poultry, Chilled, Biscuits and Frozen categories, with a combination of branded and own label products.

Enquiries:

Nick Murray, Head of Communications                                +44 7876 577282
Kate Holland, Communications Manager                              +44 (0) 7815 449215

Boparan Holdings Limited - pre-close trading update

July 13, 2011

Boparan Holdings Limited, the holding company for 2 Sisters Food Group and Northern Foods Limited, announces its first pre-close trading update prior to its financial year end on 30 July 2011.

Financial highlights

  • Full year (July 2011) revenue and adjusted EBITDA expected to be in line with proforma January 29, 2011 revenue and adjusted EBITDA of £2bn and £170m respectively (as reported in the OM)

  • Like for like sales* up 4.5% on an adjusted basis; 2.0% on an unadjusted basis

Operational highlights

  • Continued sales progress during the period:

    • Chilled division benefiting from strong market growth in both sandwiches & salads, and ready meals

    • New product development in Brands, including Fox's Ambers, Goodfella's Flatbread and Goodfella's Garlic Bread

    • UK poultry has now recovered inflation; new Thetford facility now open

    • European Poultry trading in line with expectations

  • Inflation recovery progressing in line with our plan

  • Integration of 2 Sisters Food Group and Northern Foods progressing to plan

Other developments

  • Successful Bond offering completed in April 2011 to repay acquisition debt following Northern Foods transaction, and to clear existing Northern Foods debt; new £40m Revolving Credit Facility established

  • Appointment of Charles Allen CBE as independent Chairman of the Group

Ranjit Singh, CEO of Boparan Holdings Limited, said:

"We have seen a solid financial and operating performance during the period, in what remains a challenging consumer environment and with continued commodity pressures which we are continuing to recover. Sales and profits for the full year are expected to be in line with the proforma we set out during our Bond offering in April.

"Across our operating businesses, our Chilled division continues to perform well. Market growth in chilled categories remains strong and we continue to excel for our customers in delivering high quality products and strong service levels. In Brands, promotional activity in the market is higher year on year, with volumes in Biscuits increasing and with new products being rolled out, including Fox's Ambers. In frozen pizza, we are seeking to redress the previous sales decline with new products including Goodfella's Flatbread and Goodfella's Garlic Bread. The UK poultry market has seen significant inflation, with reduced volumes as consumers focus on reducing waste. In UK and European poultry, we continue to trade in line with our expectations, with a focus on recovering the impact of higher feed costs."

"The integration work following our acquisition of Northern Foods is progressing to plan and we believe we have the right recipe to become fit for growth and further develop our business in the years ahead. We have received positive feedback from our customers and stakeholders, and we remain fully focused on delivering the highest quality for the lowest cost. To help drive the integration programme, we appointed an Integration Director in Steve Ellis, with nearly 20 years experience in lean world class manufacturing, sales, procurement and logistics. Progress to date has been good, with a number of initiatives, including the closure of the Leeds office and transferring activities to other locations in the group; the establishment of a new Leadership team to drive integration and deliver the targeted synergies in line with our plans; and we are planning to operate across five divisions from our next financial year, thereby ensuring that we have a sharper focus on our performance."

"Our appointment of Charles Allen CBE as non-executive Chairman also brings us a wealth of experience and wise counsel as we seek to grow the business over the coming years.  With Charles appointed, we will look to further develop the Board and a recruitment process for a permanent Group Finance Director is also underway."

Outlook

Like many predominantly UK focused businesses, we share the cautious economic outlook into our next financial year. However, we have quality products, strong brands and we will continue to progress our integration programme, both to deliver targeted synergies and to become fit for growth. 

* Like for like sales (underlying revenue) excludes the impact of discontinued operations. Adjusted like for like sales reflects the sale of Dalepak in August 2010 and the closure of Ethnic Cuisine in September 2010

Enquiries:

Steve Henderson, Acting Group Finance Director     +44 (0) 7801 033039
Nick Murray, Head of Communications                   +44 (0) 7876 577282
Kate Holland, Communications Manager                   +44 (0) 7815 449215

Full year results will be announced in the first half of November 2011 (date to be confirmed)

About Boparan Holdings:

Boparan Holdings is the holding company for 2 Sisters Food Group and Northern Foods Limited.  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 product to our customers at the lowest cost.

2 Sisters Food Group appoints Charles Allen as Non-Executive Chairman

July 11, 2011

2 Sisters Food Group is pleased to announce the appointment of Charles Allen CBE as its Non-Executive Chairman.

Charles brings a wealth of experience to the role from a range of retail and consumer business sectors, including food, hotels, entertainment, music and media. He has held the role of Chief Executive or Chairman at ITV plc, Compass Group plc, Granada Group plc, Granada Media, Forte Group and EMI.  Charles is currently Chairman of Global Radio and a senior adviser to Goldman Sachs. Until last year he was a non-executive director of Tesco plc.

The appointment follows the recent acquisition of Northern Foods.  Northern Foods is being integrated with 2 Sisters Food Group to form a business which will be the fourth largest food producer in the UK, with £2 billion of annual sales and which is seeking to grow to £3 billion of annual sales by 2015.  Charles acted as an adviser during the acquisition process and will sit as an independent Chairman of the Board of 2 Sisters Food Group.

Ranjit Singh, Chief Executive of 2 Sisters Food Group, said: "We are delighted that Charles is joining us.  He brings a wealth of experience to 2 Sisters as we work to become fit for growth and bring the teams across 2 Sisters and Northern Foods together.

"We have a vision to grow to £3 billion of sales by 2015 and the experience Charles has across many sectors will help us to deliver on this."

Charles Allen said: "This is an exciting time to be joining the Board of 2 Sisters and I am impressed by the real passion for putting the customer at the heart of everything the company does. I am really looking forward to working with Ranjit and his team as we continue to build the business."

Copyright 2 Sisters Food Group 2005