Boparan Holdings Limited 2 Sisters Food Group Q4 2017/18 Update Bond Holder Presentation 20 TH NOVEMBER 2018 1
This presentation is for information purposes only and must not be used or relied upon for the purpose of making any investment decision or engaging in any investment activity. Whilst the information contained herein has been prepared in good faith, neither Boparan Holdings Limited (the “Company”), its subsidiaries (together, the “Group”) nor any of the Group’s directors, officers, employees, agents or advisers makes any representation or warranty in respect of the fairness, accuracy or completeness of the information or opinions contained in this presentation and no responsibility or liability will be accepted in connection with the same. The information contained herein is provided as at the date of this presentation and is subject to updating, completion, Disclaimer revision, verification and further amendment without notice. This presentation contains forward-looking statements in relation to the Group. By its very nature, forward-looking information requires the Company to make assumptions that may not materialise or that may not be accurate. Forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Nothing in this presentation should be construed as a profit forecast. Past performance cannot be relied on as a guide to future performance. 2
Agenda 1 | Executive S ummary 2 | Financial Performance and Financing Update 3 | M&A Update 4 | S trategy and Turnaround Plan 5 | Outlook 3
2017 was challenging but root causes are being addressed FY 2017/2018 was a tough year but despite operational challenges we were still able to strengthen our balance sheet FY FY YoY £m 2017/18 2016/17 Change Revenue 3,339.1 3,288.9 1.5% Group Highlights of the year EBITDA 118.4 161.2 (26.6)% • Challenging year in the Core Revenue 2,338.9 2,268.6 3.1% • Net Debt reduction Protein programme initiated EBITDA 30.6 65.1 (53.0)% • Successful execution of planned disposals Revenue 609.2 612.1 (0.5)% Chilled • New Management team in EBITDA 44.6 38.6 15.5% place Revenue 391.0 408.2 (4.2)% Branded EBITDA 43.2 57.5 (24.9)% 4
Agenda 1 | Executive S ummary 2 | Financial Performance and Financing Update 3 | M&A Update 4 | S trategy and Turnaround Plan 5 | Outlook 5
Q4 2017/2018 Results Q4 Q4 YoY Group Q4 Performance overview 17/18 16/17 change Q4 2017/2018 Results • Underlying LFL sales growth offset by impact of Revenue , £m 803.7 815.7 (1.5)% Goodfella's disposal within the period EBITDA , £m 27.6 38.9 (29.0)% • Profit margins have weakened due to performance in the UK poultry business LTM EBITDA , £m 118.4 161.2 (26.6)% • Net debt has reduced by 24.3% year on year due to successful execution of the disposal programme Revenue LFL, £m 694.0 683.7 1.5% • Comparable leverage has moved from 4.9x to 5.8x year EBITDA LFL, £m 27.1 33.0 (17.9)% on year highlighting the imperative to improve EBITDA in the core business EBITDA LFL Margin % 3.9% 4.9% (100)bps LFL LTM EBITDA, £m 103.6 136.5 (24.1)% 1. Like for like (LFL) sales and EBITDA are adjusted for the impact of exchange translation and including only those businesses that were owned throughout both periods. Therefore, both Q4 FY18 and Q4 FY17 exclude the results of the disposed businesses Net debt, £m 601.8 795.2 (24.3)% Goodfella's pizza and Red Meat. 2. EBITDA is stated before depreciation, amortisation and pension scheme Proforma Leverage 5.81x 4.93x 0.88x administration costs. 6
Protein Q4 2017/18 Results Q4 Q4 YoY £m 17/18 16/17 change Revenue LFL 492.2 485.8 1.3% Revenue 601.9 587.8 2.4% EBITDA LFL 9.2 16.3 (43.6)% EBITDA LFL Margin 1.9% 3.4% (150)bps EBITDA 9.7 17.0 (42.9)% • Double digit growth in European business • 150 basis points margin decline driven by performance in UK • Feed costs continue to increase by 3.3% yoy in the quarter • Progress with site closures Like for like (LFL) sales and EBITDA are adjusted for the impact of exchange translation and including only those businesses that were owned throughout both periods. Therefore, both Q4 FY18 and Q4 FY17 exclude the results of the disposed businesses Goodfella's pizza and Red Meat. 7
Chilled Q4 2017/18 Results Q4 Q4 YoY £m 17/18 16/17 change Revenue LFL 137.3 131.7 4.3% Revenue 137.3 131.7 4.3% EBITDA LFL 10.7 8.5 25.9% EBITDA LFL Margin 7.8% 6.5% 130bps EBITDA 10.7 8.5 25.9% • Strong sales performance, particularly in sandwiches • Strong cost efficiencies across the chilled business Like for like (LFL) sales and EBITDA are adjusted for the impact of exchange translation and including only those businesses that were owned throughout both periods. Therefore, both Q4 FY18 and Q4 FY17 exclude the results of the disposed businesses Goodfella's pizza and Red Meat. 8
Branded Q4 2017/18 Results Q4 Q4 YoY £m 17/18 16/17 change Revenue LFL 64.5 66.2 (2.6)% Revenue 64.5 96.2 (33.0)% EBITDA LFL 7.2 8.2 (12.2)% EBITDA LFL Margin 11.2% 12.3% (110)bps EBITDA 7.2 13.4 (46.3)% • Weak period of sales for Fox's • Gross margin pressure in Fox's has led to margin dilution in the branded businesses overall • Whilst frozen sales have continued to perform well, margins are down slightly with EBITDA flat Like for like (LFL) sales and EBITDA are adjusted for the impact of exchange translation and including only those businesses that were owned throughout both periods. Therefore, both Q4 FY18 and Q4 FY17 exclude the results of the disposed businesses Goodfella's pizza and Red Meat. 9
FY £m 17/18 Profit on disposal of operations (117.4) Non-recurring costs as a result of business 3.6 disposal Impairment of fixed assets 3.3 Impairment of goodwill 31.6 Exceptional costs / Write-off of balance sheet items 9.1 (income) Redundancy, disruption and closure costs 34.2 Other claims and settlements 4.0 Other exceptional items 0.8 Total exceptional items (30.8) Cash exceptional costs £3.2m excluding disposal proceeds 10
Proforma P&L Analysis Historic Reported Revenue and EBITDA adjusted to exclude red meat and pizza, and for foreign exchange differences £m Q1 Q2 Q3 Q4 FY Commentary LFL Revenue 709.0 704.3 690.8 694.0 2,798.1 • Continued sales growth Year • Margin fell by circa 200 basis 28.0 24.9 23.6 27.1 103.6 LFL EBITDA 2017/2018 points across 2016/17 and first half of 2017/18 3.9% 3.5% 3.4% 3.9% 3.7% LFL EBITDA Margin • Q4 2017/18 includes a one-off non-trading benefit of £3m on pensions 680.2 685.0 677.6 683.7 2,726.5 LFL Revenue • Continuation of this expected in early part of 2018/19 Year LFL EBITDA 38.7 34.9 29.9 33.0 136.5 2016/2017 5.7% 5.1% 4.4% 4.8% 5.0% LFL EBITDA Margin 11
FY 2017/18 Cashflow Cashflow, £m 8.3 185.3 5.8 £118.4m 9.5 6.7 27.1 237.5 3.2 59.0 51.0 EBITDA FY Working capital Other Pensions Exceptionals Interest and Capex (net) Disposal of Financial leases Others Cash inflow 2017/18 movement operating items tax paid operations FY 2017/18 12
Debt & Financing Update Long term funding and net debt , £m £852m -193 £795m Strategy: Long Term Flexible Funding 5.25% 250 250 due 2019 • 2019s to be repaid as follows: £602m £95m by end of Dec ’18 £95m by end of Apr ’19 £60m by end of May ’19 5.50% 330 due 2021 • RCF extended to Mar 2021, increased to £80m and covenant 4.375% reduced to £75m EBITDA due 2021 245 Financial Leases 28 Committed End of Year Net Debt Net Debt Facilities excl. RCF Cash Balance 17/18 16/17 13
Agenda 1 | Executive S ummary 2 | Financial Performance and Financing Update 3 | M&A Update 4 | S trategy and Turnaround Plan 5 | Outlook 14
Update on M&A Red Meat £370m EV value Over 9x multiple Sandwiches 15
Agenda 1 | Executive S ummary 2 | Financial Performance and Financing Update 3 | M&A Update 4 | S trategy and Turnaround Plan 5 | Outlook 16
First 100 Days Report Align Diagnose Design Deliver • Agree clear roles and • 20+ site visits and review • Assessment of the senior • Structured and disciplined responsibilities b/w CEO and leadership team monthly business review • Retail & Food Services President • Clarify new organisation • Close off FY17/18 customer meetings Insights & Feedback • Align with Board: 12 month structure Opportunities • Secure adequate financing plan to stabilise the business • Key new appointments: • Direct the BUs: • Strategic Investment Review • Continue disposal program critical positions filled by FY Plan and OGSM and Approval Food Industry experts Divisional governance • Close Five Star Fish, • Brexit preparedness review • Kick off the UKP strategy Cambuslang, Basildon • Introduce the New Vision design with OC&C • UKP balance sheet review • 5 year contract won - Chilled 17
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