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18 NOVEMBER 2014
BOPARAN HOLDINGS – FULL YEAR 2014 RESULTS
(RESULTS FOR THE 53 WEEKS ENDED 2 AUGUST 2014)
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 full year consolidated results for the 53 weeks ended
2 August 2014.
FY14 Financial highlights
Total sales
LFL sales*
Operating profit**
EBITDA**
Operating profit margin %
LFL operating profit**
LFL operating profit margin %
(Loss) / profit for the year after
exceptional items, interest and
taxation
Net cash flow from operating
activities (statutory)
Net debt***
Net Debt: EBITDA
FY 2014
£3,419.2m
£2,868.7m
£89.5m
£180.3m
2.6%
£97.3m
3.4%
FY 2013
£2,884.6m
£2,801.4m
£92.2m
£178.0m
3.2%
£91.9m
3.3%
change
+18.5%
+2.4%
(2.9)%
+1.3%
(0.6)%
+5.9%
+0.1%
£(143.3)m
£(33.5)m
£(109.8)m
£79.2m
£664.6m
£150.6m
£566.7m
£(71.4)m
£97.9m
3.69
3.18
(0.51)
*Like for like (LFL) sales and operating profit are based on the 53 weeks ended 2 August 2014 compared to the prior 52 weeks ended
27 July 2013. excluding the impact of the 53rd week, 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 and EBITDA are calculated pre exceptional items and include profit / loss on the Group share of joint venture
operations..
*** Net debt comprises bank loans, bonds and finance leases, after offsetting cash and cash equivalents of £168.3m (FY 2013:
£134.3m).
FY14 Operational highlights
Total sales have increased to £3,419.2m (up 18.5%) LFL (*) sales are up
2.4% in tough trading conditions, with results in line with expectations
LFL (*) operating profit increased by £5.4m to £97.3m (up 5.9%)
o Strong sales performance in Protein; pre-exceptional operating profit
including share of JV (£0.6m) £69.1m
o Vion integration on track – a number of sites have been consolidated
and continue to be reviewed with a new embedded leadership team
o Branded continues its turnaround, reporting a pre-exceptional
operating profit of £25.8m
o In Chilled, sales were down 8.0% reflecting the difficult trading
environment and the business exits and a pre-exceptional operating
loss of £5.4m was recorded
One-off exceptional items (including factory sales, closures and refinancing
costs) have negatively impacted profit for the full year
Working capital continues to be tightly managed and with net cash balances
of £168.3m, Net Debt:EBITDA stands at 3.69x, after absorbing financing
costs.
Group EBITDA** is in line with guidance given during the refinance at
£180.3m (2013: £178.0m)
Ranjit Singh, CEO of 2 Sisters Food Group, said: “Our LFL (*) sales and operating
profit performance are satisfying after a transformational year for our business.
We have made a series of tough decisions and taken action throughout the year to
ensure we build a strong foundation for our business which will set us up for success
in the longer term.
Investing in growth and lowering our cost base were the key themes of our operating
focus over the past 12 months.
In Protein, we completed the investment and consolidation of cooked meats at
Cambuslang following the closure of Haughley Park in H1, although we still have
efficiency improvements to make. We progressed our cost reduction plan in
Scotland, consolidated production at Coupar Angus and exited the Letham poultry
site. Our Chilled business announced exit from loss making salads and cakes
businesses and we invested in capacity for growth in Meal Solutions and our
specialist bakery.
Clearly the costs incurred in this exceptional activity have impacted our overall result,
but our LFL (*) operating profit performance has improved by a commendable 5.9%.”
“We expect the economic environment to remain tough and we will work to deliver
quality and value to consumers. We are committed to investing in our Brands,
innovation and our people as we take the Group to the next stage of its
development.”
FY14 and Q4 2014 performance
Group like for like (LFL) (*) sales for the year increased by 2.4% although in a tough
environment, were down by 3.3% in Q4 on a comparable basis. Group sales
including the Vion acquisition were up 18.5% for FY14.
LFL (*) Q4 operating profit was ahead of last year at £28.6m (2013: £19.3m) resulting
in full year LFL(*) operating profit increasing by 5.9% to £97.3m. Total full year pre
exceptional operating profit was slightly behind last year at £89.5m (2013: £92.2m)
including a full year impact of the acquired Vion business which was loss making at
the time of acquisition in March 2013.
In total, full year operating margins (%) were lower in FY14 at 2.6% (2013: 3.2%) as
the group increased its weighting to the Protein sector (following the acquisition of
Vion), which traditionally operates with lower operating margins (%) than Chilled and
Branded. Both Protein and Branded increased their operating margin %’s, whilst
Chilled delivered a negative operating margin in the year.
The loss for the year after interest and taxation of £143.3m (2013: £33.5m) was
adversely affected by restructuring costs and other exceptional items amounting to
£101.1m (2013: £25.5m) and financial charges of £62.4m in relation to refinancing
the Group’s debt capital.
Protein
The Protein division saw strong sales growth driven both by the acquisition, business
gains and inflation with sales increasing by 35.4% for the full year, and up 4.6% for
Q4. Operating profit was ahead for the year at £69.1m (2013: £35.4m).
Due to falling commodity prices, the impact of recent price inflation has reversed
during Q1 of the new financial year, and we are working with our customers to offer
further value to consumers.
European Poultry continued to diversify into retail customers and our restructured
Red Meat business will realise new commercial opportunities in the new financial
year.
Chilled
Chilled sales decreased by 8.0% for the full year and were down by 15.6% in Q4. At
the half year we announced withdrawal from the loss making salads and cakes
businesses. This clearly had a negative impact on our full year performance. Recent
business wins and new launches have reversed this trend in the first quarter of the
new financial year.
Building on this success, we will continue to improve efficiency, invest in our
innovation capability and in capacity at Meal Solutions and our specialist bakery sites
to provide a platform for future growth with customers.
Branded
Branded sales were 3.0% down for the full year and down 1.3% in Q4 as we
focussed on margin improvement. Encouragingly, pre-exceptional operating profit
grew by 40.2% to £25.8m.
In Frozen, we grew pizza sales and continue to explore new channels such as
exports and a wider distribution of Holland’s pies.
High-profile Fox’s Biscuits marketing drive and TV advertising in the new financial
year will help reinvigorate the brand as new markets, packaging and product
opportunities will be realised in the new financial year.
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 of £79.2m before interest, tax and capital
expenditure. Our Net debt:EBITDA ratio increased to 3.69 times (from 3.18 times) as
a result of the refinancing, although future interest costs were substantially reduced
in the process, Net debt at 2 August 2014 was £664.6m, including cash balances of
£168.3m.
Board Changes
On June 16, 2014 we announced the appointment of our new Company CFO,
Stephen Leadbeater. Mark Hunter, Non Executive Director resigned from the board
on September 25, 2014 following his appointment as CEO & President of Molson
Coors. In addition Andrew Cripps, Non Executive Director and Audit Committee Chair
has taken on the role of Senior Independent Non Executive Director.
Outlook
We expect the economic environment to remain tough with an equally tough trading
environment with our customers. As a result we expect profitability in the next quarter
to not be as strong as the comparative period last year.
Despite the challenging conditions, we believe we are taking the right actions to
improve margin by addressing our cost base, improving the operational effectiveness
of our manufacturing sites, whilst making targeted prudent investments throughout
the business.
We will continue to transform our business by improving efficiency in Protein, driving
our Brands performance and stabilising and turning around our Chilled business.
By putting our customers at the heart of what we do and consistently delivering
quality, service and value, we are well positioned for the future.
Enquiries:
Please go to the Investor Relations section of the corporate website
www.2sfg.com/investor-relations/investor-contacts/
A copy of this announcement will also be made available at
www.2sfg.com/investor-relations/
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 Q1 2014/15 announcement will be made on 18th December 2014.