Boparan - comment

Boparan Q2 numbers were weaker than our model, and working capital outflows vs our expectation of inflows helped lead to a £50m RCF draw. The RCF draw does concern us as Q3 is a cash flow positive quarter, and LTM EBITDA is well above the £75m trigger. What is the rationale? Working capital was an £8m outflow, our model had a £23m inflow, we will ask if this is likely to reverse in the coming months. EBITDA was £12m below our forecast, £5m lower gross profit and £7m higher operating costs. We had expected a lag in cost recovery and a reduction in EBITDA at Meals but the Poultry business disappointed us with EBITDA well beneath our forecast, albeit better than last year. Non-ratchet cost recovery is still challenging in the Poultry business. More after the call at 1230 (London time) today.