17 March 2015


Boparan Holdings Limited, the Parent company for 2 Sisters Food Group, a leading diversified Food manufacturer with strong positions in Protein, Chilled and Branded categories, today announces its Q2 consolidated results for the 13 weeks ended 31 January 2015.

Q2 15 Financial highlights


Q2 2015

Q2 2014


Total sales




LFL sales*




Adjusted Operating Profit**




Operating (loss) / profit***




(Loss) after exceptional items, before interest and taxation




Retained loss for the quarter after exceptional items, interest and taxation




*Like for like (LFL) sales are based on the 13 weeks ended 31 January 2015 compared to the 13 weeks ended 25 January 2014, excluding the impact of discontinued operations and the impact of exchange translation.
**Adjusted Operating profit and Adjusted EBITDA are before exceptional items and before the affect of Avian Influenza (AI) outbreaks and the costs associated with a problematic IT system implementation on Q2 2015’s results.
*** Operating (loss)/ profit is calculated before exceptional items and includes profit / loss on the Group’s share of joint ventures.  

Q2 15 Operational highlights

  • Overall adjusting for the affect on the business of one off items, performance stabilised and was in line with guidance given at our Q1 announcement:
    • Price deflation continues and volumes are generally lower
    • Against this background, LFL sales broadly flat at £807.3m
    • Adjusted operating profit flat at £13.1m (Q2 2014: £13.3m)
    • One off and exceptional items of £20.7m (Q2 2014 exceptional items: £26.3m)
    • Retained loss after tax was £16.7m, compared to a loss of £27.4m last year
  • Price deflation and other challenges contributed to a £3.6m reduction in adjusted operating profit in our Protein division.
  • Chilled LFL sales were up 2.9% with another quarter-on-quarter improvement in operating profit.
  • Branded achieved a modest operating profit in the quarter and LFL sales were broadly similar to the same period last year.
  • EBITDA for the quarter was £15.1m (Adjusted EBITDA was £32.5m; Q2 2014: £36.1m).
  • Working capital continues to be tightly managed with net cash balances of £127.5m.
  • The business has an RCF of £60m that remains undrawn at the quarter end.

Ranjit Singh, CEO of 2 Sisters Food Group, said: “This has been another challenging quarter for the Group. Against this tough backdrop, yet again we have delivered for our customers over the key Christmas trading period. Given the hurdles we are currently facing, we have delivered a creditable performance and are stabilising the business.

In our Protein business, I take great pride in our continued industry-leading investment in the fight against campylobacter, but the market remains very tough. In addition, we have had to deal with the fall-out of Avian Influenza outbreaks, as well as further negative sentiment from consumers around the release of the FSA’s campylobacter figures for retailers.

However, we continue to integrate the division following the Vion acquisition and we are taking action to deliver efficiency and output improvements across our sites.

A year ago, our Chilled division’s profitability was impacted by the aftermath of horsegate. I am pleased to report that a year on, we are making steady progress, with like-for-like sales up 2.9% and another quarter-on-quarter improvement in operating profit.

Our Branded Products continue to operate in aggressive markets and continue to see pressures on sales mix and promotions. Branded achieved a modest operating profit in the quarter and LFL sales were similar to the same period last year. We continue to invest in quality and marketing at Fox’s biscuits.

This is the toughest commercial environment I can recall for many years with substantial changes at many of our larger customers. We expect conditions to remain difficult, but are firmly focused on delivering quality and value to all our customers.”

Impact of AI and one off item

During the period the businesses results were impacted by two issues, one of which (AI) was notified at our Q1 announcement. The outbreaks of AI across Europe disrupted the business in a number of ways. For a limited period of time, the business suffered a shortfall in availability of chickens in the Netherlands which impacted both sales and the operational efficiency of the business. The outbreaks also resulted in the closure of a number of overseas markets for our by-products. This impacted the returns we were able to make from these products as well as the need to write down stock values. The combined impact of these factors on the profit of our protein division in the quarter amounted to £6.2m.

In the fourth quarter of FY 2014 the business implemented a new IT system at one of our protein sites. It has now come to light that the managerial, operational and accounting controls around this system required significant improvement. We have estimated that the results for the quarter have been adversely affected by £11.2m due to production inefficiencies and stock write offs. Controls have now been strengthened in all areas and a thorough audit of this implementation has been undertaken to ensure any subsequent implementations are adequately supported.

Q2 15 performance

Group like for like (LFL) sales for the quarter decreased by 1.3%. Group total sales were down 6.0% compared to Q2 2014, which included contributions from Corby and Avana (businesses which were disposed of in FY 2014).
Adjusted operating profit was stable at £13.1m (2014: profit £13.3m) and after accounting for the effect of AI, one off and exceptional items an operating loss of £7.6m was incurred (2014: loss £13.0m).
The loss for the quarter after interest and taxation was £16.7m (2014: loss of £27.4m).


On the back of substantial deflation within UK Poultry, the Protein division saw LFL sales decreasing by 2.8% for Q2 and reported a £3.6m reduction in adjusted operating profit.
We are currently in the process of re-engineering our UK poultry business to realise operational and cost efficiencies and deliver the right products to our customers at the right time.


LFL Chilled sales were up 2.9% as the division moves into recovery phase. This is a strong performance in a competitive market and profitability continues to recover.
In the Food to Go business, the commissioning of our new bakery at Gunstones gives us best in sector quality and our ready meals business continues to perform well with the complete relaunch of the M&S Taste range in the quarter. 


Branded LFL sales were broadly flat in a highly competitive market.
Operating profit has been adversely affected by sales mix at Fox’s Biscuits. However, recently we have seen encouraging improvements in orders with new listings to be announced later in the year.
Frozen is performing well with sales ahead by 5.4% like for like.
Market share growth with the Goodfella’s and Holland’s pies ranges is strong – up 3.9% like for like and 15% like for like over the first half year respectively.

Debt funding and cashflow

Our long term funding includes the senior £250m 5.25% due 2019; £330m 5.50% due 2021 and €300m 4.375% notes due 2021 which provide the principal funding for the Group. In addition the Group has a £60m Revolving Credit Facility (to 2021) which remains undrawn.
We continue to focus on cash and working capital management, and this resulted in a net cash inflow from operating activities in Q2 of £10.5m before interest, tax and capital expenditure.Net debt at 31 January 2015 was £702.7m, including cash balances of £127.5m (Q12015: Net Debt £681.2m; Cash £150.1m). 

Subsequent events

As part of our ongoing process to improve efficiency, on 20 February 2015 the Group announced it had entered into consultation to reorganise operations at its Llangefni poultry processing site and on 26 February 2015 the Group also announced it had entered into consultation to reorganise operations at its Fox’s Biscuits sites.


The tough trading conditions for food manufacturers and our retail customers look set to continue.
External factors have adversely impacted our poultry division’s performance, and we are working hard internally to mitigate this and improve our efficiency and effectiveness at all our UK poultry sites.
We expect Group profitability in Q3 to continue to be negatively affected by the effects of AI, as international boundaries remain closed to our products.
Despite the prevailing conditions, we are seeing improved performance across parts of the Group, such as in our Chilled division, and we will continue to address our challenges to improve margin by addressing our cost base and improving the operational effectiveness of our manufacturing sites.
We will continue to put our customers at the heart of what we do and through consistently delivering quality, service and value, we are strongly positioned for the future. 


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About Boparan Holdings:

Boparan Holdings is the Parent company for 2 Sisters Food Group headquartered 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 Q3 2014/15 announcement will be made on June 23rd 2015.