TIDMHFG
RNS Number : 0364B
Hilton Food Group PLC
28 March 2013
Hilton Food Group plc
Preliminary results for 2012
WELL POSITIONED FOR GROWTH
Hilton Food Group plc, Europe's leading specialist retail meat
packing business supplying major international food retailers in
thirteen countries, today announces its preliminary results for the
52 weeks ended 30 December 2012.
2012 FINANCIAL HIGHLIGHTS
2012 2011 %
52 weeks 52 weeks to Change
to
30 December 1 January
2012
2012
Revenue GBP1,031.0m GBP981.3m +5.1
Operating profit GBP26.0m GBP25.9m +0.3
Profit after tax GBP18.9m GBP18.6m +1.7
Basic earnings per share 24.9p 24.7p +0.8
Closing net debt GBP5.2m GBP18.7m -72.2
Dividends paid and proposed
in respect of 2012 12.0 p 11.1 p +8.1
2012 BUSINESS HIGHLIGHTS
-- Revenue growth of 5.1% to over GBP1bn.
-- Volume growth of 4.8% despite challenging market conditions.
-- Cash generation of GBP20.5m, after the maintenance of a high
level of investment in equipment and facilities, and a 72%
reduction in net debt, from GBP18.7m to GBP5.2m.
-- Strong balance sheet with gearing at 0.1 times EBITDA and
interest cover at 21 times underpinning future expansion and a
progressive dividend policy.
-- Dividends increased by 8.1%
-- The joint venture with Woolworths Limited in Australia
announced in January 2013 marks the Group's first expansion beyond
Europe into the faster growing Asia Pacific region.
Commenting, Robert Watson OBE, Chief Executive said:
"I am pleased to report that in 2012 Hilton has delivered
another resilient performance. The Group has maintained a high
level of investment in its meat packing facilities across Europe
while exploring opportunities to progressively and profitably
expand its business. Our joint venture with Woolworths in Australia
represents the Group's first expansion beyond its European
heartland and illustrates well the transferability of its business
model."
Enquiries
Hilton Food Group Tel: 01480 387214
Robert Watson OBE, Chief Executive
Nigel Majewski, Finance Director
Citigate Dewe Rogerson Tel: 020 7638 7591
Tom Baldock
Clare Simonds
Chairman's statement
A SOUND PLATFORM FOR GROWTH
Our objective is to improve and grow our business on a
consistent and profitable basis, in order to deliver sustainable
long term value for both our retail partners and shareholders. The
Group currently supplies customers in thirteen countries across
Europe and in January 2013 entered into a joint venture with
Woolworths in Australia. Continued progress was achieved in 2012,
despite very difficult economic conditions, and our entry into the
faster growing Asia Pacific region represents an exciting next step
for the Group.
SUMMARY OF GROUP PERFORMANCE
In 2012 volumes of meat packed for Hilton's customers increased
by 5%, with revenue rising by a similar percentage to over GBP1bn.
This reflected both the growth in our new business in Denmark and
further growth in Central Europe.
Against the backdrop of a very challenging environment for the
consumer, operating profit, at GBP26m, and basic earnings per
share, at 24.9p, show marginal growth over last year's levels.
In these uncertain times, cash generation remains fundamentally
important. Capital expenditure of GBP12.4m included investment at
all our sites, to drive efficiency gains, extend product ranges,
take advantage of advances in packing technology and facilitate
continued volume growth. Despite maintaining this high level of
investment, the Group reduced its net borrowings by 72% from
GBP18.7m to GBP5.2m, and with a strong balance sheet is well
positioned to deliver sustainable growth.
The Group's results are considered in greater detail in the
Chief Executive's summary and the Financial review sections of this
report.
OUR MANAGEMENT AND EMPLOYEES
The Group currently employs over two thousand employees, in six
European countries. Its business model is decentralised, with
capable, largely self-sufficient management teams in place in each
country. We consider this structure to be important, as it achieves
close working relationships with our customers, who benefit from
dedicated, flexible and rapid support. The progress we have made in
recent years in tough trading conditions has not been achieved by
chance; credit must go to all our managers and employees, who
throughout the year have displayed a high level of commitment and
professionalism.
The Board fully understands and appreciates just how much our
progress relies on the effort, personal commitment, enthusiasm,
enterprise and initiative of our employees and I would like to take
this opportunity, on behalf of the Board, to personally thank all
of them both for their dedicated efforts during 2012 and continuing
commitment to the Group's on-going growth and development.
THE BOARD
The Board is responsible for the long-term success of the Group
and to achieve this it contains an appropriate mix of skills and
depth of practical experience, which is available to support and
guide our management teams across a progressively widening range of
countries. After a long and distinguished career with Hilton, Colin
Patten stood down from his Board role in 2012 and we wish him well
in his retirement. I would like to take this opportunity to thank
my colleagues on the Board for their continued wise counsel and
support.
HILTON'S STRATEGIC APPROACH
The Group's strategy is to build long term customer and
shareholder value by focusing on the following three key
themes:
-- Building volumes and extending product ranges and services to
existing customers;
-- Maintaining an uncompromising focus on reducing unit costs
while improving product quality and service provision; and
-- Entering new territories with new customers or in partnership
with existing customers.
We will continue to pursue measured and well thought out
geographical expansion, whilst actively developing, enriching and
expanding the scope of our existing business partnerships, playing
a full and proactive role in strongly supporting our customers and
the successful development of their brands.
OUR DIVIDEND POLICY
The Board aims to maintain a dividend policy that provides a
dividend level that grows broadly in line with the underlying
earnings of the Group. I am pleased to report that the Board has
recommended a final dividend of 8.6p per ordinary share in respect
of 2012. This, together with the interim dividend of 3.4p per
ordinary share paid in December 2012, represents an 8.1% increase
in the full year dividend, as compared with last year. The final
dividend, if approved by shareholders, will be paid on 28 June 2013
to shareholders on the register on 31 May 2013 and the shares will
be ex dividend on 29 May 2013.
THE OUTLOOK
Hilton's growth prospects are encouraging. The short term
economic outlook in our European markets, however, remains
relatively challenging, continuing to feature both comparatively
high prices for meat and other key basic foodstuffs and maintained
pressure on consumer spending.
In the early months of 2013 Hilton's performance has been in
line with the Board's expectations, with weaker demand in some
countries largely offset by the impact of favourable exchange rate
movements. The Group's business model has proved resilient in
difficult trading conditions and, although in its initial year
income from the joint venture in Australia will be offset by
start-up costs, Hilton remains well placed to make further
progress.
Sir David Naish DL
Non-Executive Chairman
27 March 2013
Chief Executive's summary
CONTINUED INVESTMENT ON BEHALF OF OUR CUSTOMERS
Our ambition is to be the most professional specialist meat
packing company in Europe and in 2012 further progress was achieved
in this regard. Throughout last year we continued to invest in our
facilities whilst also broadening the scope of the services we
offer to our retail customers, with, for example, the successful
commissioning and build-up of the robotic store order picking
facility in Denmark. Our entry into the Asia Pacific region marks a
new phase in our development and we feel there is clear potential
for our business model, which combines centralised meat sourcing,
processing and packing with associated logistical support where
required, beyond Europe.
FINANCIAL OVERVIEW
Our European businesses comprise two distinct operating
segments:
Western Europe
Operating profit of GBP23.7m (2011: GBP23.2m) on turnover of
GBP935.4m (2011: GBP888.7m)
This operating segment covers the Group's businesses in the UK,
Ireland, Holland, Sweden and Denmark. Volume growth achieved was
4.7%, with turnover growth of 5.3%. This reflected further growth
in Denmark and the recovery of higher raw material prices, partly
offset by the effect of adverse movements in exchange rates and
consumer downtrading to less expensive meat cuts. Following their
progressive expansion into Belgium, we now supply a number of
Albert Heijn's stores in this country.
The new robotic store order picking facility for Coop Danmark
commenced production in May 2012. Volumes handled, including a
range of third party products such as poultry, have built up in
line with our expectations. Services such as this, which enable us
to manage the meat supply chain more efficiently from raw material
procurement to store delivery, represent an important addition to
our supply chain optimisation capability.
Central Europe
Operating profit of GBP2.3m (2011: GBP2.7m) on turnover of
GBP95.6m (2011: GBP92.6m)
In Central Europe the Group's meat packing business, based at
Tychy in Poland, supplies three customer groups across Central
Europe, from Hungary to the Baltics. This multi-customer business
supplies Ahold stores in Czech Republic and Slovakia, Tesco stores
in Hungary, Czech Republic, Poland and Slovakia and Rimi stores in
Latvia, Lithuania and Estonia. Volume growth of 5.6% was achieved
in 2012, with turnover growth of 3.2%, the recovery of higher raw
material meat prices again being offset by adverse movements in
exchange rates.
Continued growth and a rigorous focus on cost control remain the
key to achieving the very low levels of unit packing costs required
for our customers to be able to compete strongly and grow in these
increasingly competitive developing markets.
OUR FOCUS ON QUALITY, INNOVATION, EFFICIENCY AND FOOD SAFETY
To ensure our competitiveness, we seek to keep ourselves at the
forefront of the meat packing industry. We are a committed partner
with a continuing record of delivering value through quality
products with the highest levels of food safety and integrity,
whilst providing a range of services which enable our customers to
evolve and improve their supply chain management. We constantly
seek to drive further efficiencies and our modern, well invested
facilities are considered a key factor in keeping unit packing
costs as low as possible.
Over the nine years to December 2012, we have invested
continuously, across all areas of our business, from the sourcing
of raw materials, the design of packaging materials, increased
efficiency in processing and storage solutions and updating our IT
infrastructure, with capital expenditure over this period totalling
over GBP150m. This investment, combined with continuing volume
growth, has allowed us to partly offset inflationary pressures,
including the progressive rise seen over recent years in raw
material meat prices.
OUR SUPPLY CHAIN PARTNERSHIPS
Our customer base comprises high quality multiple retailers and
our understanding of our customers' needs together with those of
their consumers enables us to play an active role in managing their
meat supply chains providing agile responses to supply chain
challenges as they arise. As our customers' markets change and
competition increases, we need to focus on the challenges they face
and be able to advance flexible solutions, together with continuing
increases in efficiency and cost competitiveness.
The Group's growth has been generated historically by its strong
long term relationships with its retail partners, with whom the
Group continues to work very closely to deliver high service
levels, consistent and dependable product quality, on-going product
innovation and dependable levels of food safety and product
integrity assurance. The strength of these long term partnerships
has been a key driver of our growth since the Group was formed and
will continue to underpin the Group's strategy.
OUR PEOPLE AND CULTURE
During 2012 we completed a detailed review of all our management
structures, taking steps to ensure very clear accountability,
whilst both putting in place appropriate and readily accessible
centres of excellence in technical and specialist areas and
preserving the dedicated customer focus of our local management
teams. We believe that successful businesses are about having the
right people in the right positions working as "one team", with
local management teams empowered and encouraged to enable them to
support their local customers. I would like to personally thank all
our employees for their hard work, loyalty, dedication and
professionalism over the last year and to welcome all of the new
employees who joined the Hilton team in 2012.
DIVERSITY
We are committed to providing an inclusive working environment
where everyone feels valued and respected and where people from
different backgrounds, experiences and abilities can bring benefits
to our business. Our workforces are in many cases ethnically
diverse and we fully recognise the benefits of gender
diversity.
FUTURE GROWTH
Hilton's business model has been successful across a range of
European countries, appropriately adapted by working in close
collaboration with its local customers to meet their specific
requirements. We believe it can be transferred over time to a
number of new countries and aim to achieve similar levels of
benefit delivery with Woolworths in Australia. Our strategy is very
straightforward and at its core is focused on strongly supporting
our customers' brands and their development in their local markets,
whilst achieving attractive and sustainable rates of growth and
returns for our shareholders. This single minded and uncomplicated
approach has generated continuous growth over an extended period
and, with well invested facilities and a strong balance sheet, the
Group remains well placed to achieve further progress.
Robert Watson OBE
Chief Executive
27 March 2013
Financial review
A STRONG FINANCIAL BASE
Hilton's financial performance remained resilient in 2012, in
what continued to be a very challenging economic environment across
Europe. We maintained a high level of investment to support our
customers, whilst strengthening our balance sheet, in order to
leave us well placed to deliver future growth. This Financial
review covers the main highlights of the Group's financial
performance and position in 2012, together with the key features of
the Group's treasury risk management policies, as well as certain
required cautionary statements.
BASIS OF PREPARATION
The Group is presenting its results for the 52 week period ended
30 December 2012, with comparative information for the 52 week
period ended 1 January 2012. The financial statements of the Group
are prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
2012 FINANCIAL PERFORMANCE
Revenue
Volumes grew overall by 4.8% and further details of volume
growth by business segment are set out in the Chief Executive's
summary. Revenue rose by 5.1% to GBP1,031.0m, as compared to
GBP981.3m in 2011, with volume increases in Denmark and Central
Europe together with the recovery of higher raw material meat
prices being partially offset by adverse exchange rates movements
and consumer downtrading to less expensive meat cuts.
Operating profit and margin
Operating profit, at GBP26.0m was marginally ahead of 2011. The
operating profit margin in 2012 was 2.5%, as compared with 2.6% in
2011, reflecting the impact of higher raw material meat prices,
which were recovered in selling prices, but do not under all
Hilton's pricing arrangements give rise to a corresponding margin
increase. Operating profit per kilogram of packed meat sold was
11.8p (11.8p in 2010 and 12.4p in 2011).
Net finance costs
Net finance costs, at GBP1.3m were 8% below the previous year's
level (2011: GBP1.4m). Interest costs have remained at historically
low levels, reflecting continuing low LIBOR and EURIBOR rates which
determine the interest rates on the Group's principal borrowings
and reducing levels of net debt. Interest cover in 2012 increased
to 21 times, as compared with 19 times in 2011.
Profit before taxation
Profit before taxation, at GBP24.7m, (2011: GBP24.5m) was higher
than last year reflecting the increased operating profit and
reduced net finance costs.
Taxation
The taxation charge for the period was GBP5.8m (2011: GBP5.9m).
This represented an effective taxation rate of 23.5% (2011: 24.1%)
reflecting a lower corporate tax rate in the UK.
Earnings per share
Basic earnings per share at 24.9p (2011: 24.7p) were marginally
higher than last year, reflecting the lower level of net finance
and taxation charges and a decreased minority interest, offset by
an increased number of shares in issue, following the exercise of
executive and all employee share options. Diluted earnings per
share were 24.7p (2011: 24.3p).
Free cash flow and net borrowing levels
Cash flow remained strong in 2012, with the Group generating
GBP20.5m of free cash flow before dividends and financing, after
capital expenditure of GBP12.4m, of which GBP3.4m was incurred on
completing our new Danish facilities. The underlying free cash
flow, excluding the new Danish investment, was GBP23.9m (2011:
GBP21.4m), enabling the Group to materially reduce its level of net
debt. Group borrowings, net of cash balances of GBP31.4m, stood at
GBP5.2m at the end of 2012, as compared with GBP18.7m at the end of
2011.
Our gearing ratio, as represented by net debt divided by
earnings before interest, tax, depreciation and amortisation,
reduced to 0.1 times EBITDA (as compared to 0.4 times in 2011). At
the end of 2012 the Group had undrawn overdraft facilities of
GBP18.2m (2011: GBP19.8m). This strong financial position gives us
considerable flexibility viewed in terms of potential future
expansion.
TREASURY RISK MANAGEMENT POLICIES
Hilton does not engage in speculative trading in financial
instruments and transacts only in relation to its underlying
business requirements. The Group's policy is designed to ensure
adequate financial resources are made available as required for the
continuing development and growth of its business whilst taking
practical steps to reduce exposures to foreign exchange, interest
rate fluctuation, credit, pricing and liquidity risks, as described
below:
Foreign exchange rate movements and country specific risks
Whilst the presentational currency of the Group is sterling, the
majority of its revenues are earned in other currencies, currently
principally the Euro, Swedish Krona and Danish Krone. The earnings
of the Group's overseas subsidiaries are translated into sterling
at the average exchange rates for the year and their assets and
liabilities at the year-end closing rates. Changes in relevant
currency parities are monitored on a continuing basis, with the
timing of the repatriation of overseas profits and the repayment of
any intra group loans to UK holding companies paying due regard to
actual and forecast exchange rate movements.
The Group has to date decided not to hedge its foreign exchange
rate exposures, the impact of which has been broadly favourable
overall over recent years taken as a whole, but this policy is kept
under continuing review and will be reappraised as the Group's
geographic spread widens. The Group's overseas subsidiaries all
have natural hedges in place as they, for the most part, buy raw
materials, employ people, source services, sell products and
arrange funding in their local currencies. As a result the Group's
exposure is principally limited to its equity investment in each
overseas subsidiary.
The level of country specific risk currently remains material
for many businesses, in terms of the impact of macroeconomic
developments, including the impact of austerity programmes in
countries currently facing difficulties with their levels of
national debt. The Group sells high quality basic food products,
for which there will always be continuing demand, to successful
blue chip multiple retailers in developed countries. Hilton has not
to date been materially adversely affected by the extended
recessionary environments seen in some countries, but will keep any
future identified country specific risks under continuing
review.
Interest rate fluctuation risk
This risk stems from the fact that the interest rates on the
Group's borrowings are variable, being at set margins over LIBOR
for sterling borrowings or EURIBOR for euro borrowings, which both
fluctuate over time. The Group's principal borrowing is in
sterling, with interest at an agreed margin over LIBOR. The Board's
policy is to have an interest rate cap on a proportion of this
borrowing and the Group currently has in place a 2 year cap at 4.5%
on 91% of its sterling term loan from Ulster Bank. The Board will
review hedging costs and options should the current low interest
rate environment change materially.
Customer credit and pricing risks
As Hilton's customers comprise a small number of very successful
and patently credit worthy major multiple retailers, the level of
credit risk is considered to be insignificant. Historically the
incidence of bad debts has been immaterial. Hilton's pricing is
based predominately either on cost plus agreements or agreed
packing rates with its customers.
Liquidity risk
Over recent years this has for many businesses represented a
significant area of concern, given the continuing difficult and
uncertain economic environment and liquidity constraints across
banking systems in Europe. The Hilton Food Group remains strongly
cash generative, has a robust balance sheet and has committed
banking facilities for the medium term, sufficient to support its
existing business. All bank positions are monitored on a daily
basis and capital expenditure above set levels, together with
decisions on intra group dividends, are all approved at Board
meetings. All long term debt is arranged centrally and is subject
to Board approval.
FORWARD LOOKING STATEMENTS
The Chairman's statement, Chief Executive's summary, Financial
review, Business review and other reports which together comprise
the Enhanced Business Review, contain forward looking statements
that are inevitably subject to risk factors associated with,
amongst other things, economic, political and business developments
which may occur from time to time across the countries in which the
Group operates. It is believed that the expectations reflected in
these statements are reasonable, but all forward looking statements
and forecasts are inherently predictive, speculative and involve
risk and uncertainty, simply because they relate to events and
depend on circumstances that will occur in the future.
GOING CONCERN BASIS
The Group's bank borrowings are detailed in the financial
statements and the principal banking facilities, which support the
Group's existing and contracted new business, are committed, with
no renewal required for four years. The Group is in full compliance
with all its banking covenants. Future geographical expansion which
is not yet contracted, and which is not built into internal budgets
and forecasts, may require additional or extended banking
facilities and such future geographical expansion will depend on
our ability to negotiate appropriate additional or extended
facilities, as and when required.
The Group's internal budgets and forecasts, which incorporate
all reasonably foreseeable changes in trading performance, are
regularly reviewed in detail by the Board and show that it will be
able to operate within its current banking facilities, taking into
account available cash balances, for the foreseeable future. The
going concern basis is, accordingly, adopted by the Board in
preparing the financial statements.
On behalf of the Board
Nigel Majewski
Finance Director
27 March 2013
Business review
A strong base for future growth
Hilton's past growth has been accentuated by the consumer trend
in most countries towards convenience and one stop shopping which
has led to the continuing growth of the large food retailers,
together with these retailers' increasing focus on private label,
which the Group supplies exclusively.
As the larger retail chains have gained a greater share of the
grocery markets, these retail chains have increasingly turned to
large scale, centralised meat packing plants capable of producing
packed meat products more hygienically and cost effectively. By
moving to larger suppliers of pre-packed meat from the optimum
logistical locations the retailers concerned have effectively
decided to rationalise their supply base, in order to deliver lower
costs and higher food safety, food integrity, traceability and
quality standards. This has allowed the retailers to focus on their
core business and maximise their return on available retail space
whilst addressing consumers drive for value and their requirement
for total assurance on food integrity, traceability, quality and
safety.
This trend is continuing across the world, although individual
countries are at different stages of market development, resulting
in a wide range of potential future geographical expansion
opportunities, albeit in different timescales.
The Group's past expansion has been based on its growing track
record, together with its growing international reputation and
experience and the recognised success of the close partnerships it
has established and maintained with its successful retail partners.
The six European countries in which the Group currently operates,
with the dates operations commenced in each country and Hilton's
retail partners are set out below:
Year 1994 2000 2004 2004 2006 2011
---------- ----------- -------- -------------- --------- ------------------ ---------
Country UK Holland Ireland Sweden Poland Denmark
---------- ----------- -------- -------------- --------- ------------------ ---------
Location Huntingdon Zaandam Drogheda Vasteras Tychy Aarhus
---------- ----------- -------- -------------- --------- ------------------ ---------
Customers Tesco UK Albert Tesco Ireland ICA Ahold Central Coop
Heijn Europe, Tesco Danmark
Central Europe
and Rimi Baltics
---------- ----------- -------- -------------- --------- ------------------ ---------
The joint venture with Woolworths in Australia, announced in
January 2013, starts to illustrate the potential breadth of the
future geographical expansion opportunity.
Our key resources and relationships
The resources and relationships which we consider vital to our
successful future development and which we seek to safeguard
comprise:
-- Our long term partnership arrangements with successful retail
customers, involving close liaison, discussion and co-ordination,
designed to ensure that the best possible outcomes are achieved for
both parties on an on-going basis;
-- Our growing international reputation built on achieved levels
of product quality and presentation, food safety and integrity,
product innovation, service levels, health and safety, the way in
which we treat our employees and suppliers and our proven ability
to adapt Hilton's business model to differing customer and country
requirements;
-- Our well invested modern meat packing facilities at which we
have invested over GBP150m over the last nine years to increase
packing capacity in line with our customers growth and maintain
them at a state of the art levels;
-- Our wide and progressively deepening employee skill base;
-- Our broad, diverse and flexible meat supply base, based on
close and long term relationships with our suppliers, which enables
us to provide sufficient volume of quality products in the short
lead times required by our customers;
-- Our continuing focus on the environment, employees and local community issues; and
-- Our increasing financial strength, with low and reducing
levels of net debt and committed banking facilities sufficient to
support our existing business for the foreseeable future.
How we measure our performance
The Board monitors a range of financial and non-financial key
performance indicators "KPI's" to measure the Group's performance
over time in building shareholder value and achieving the Group's
strategic objectives. The ten "KPI's" used by the Board for this
purpose, together with our performance over the last two years, is
set out below:
Financial KPI's 2011 Definition, method of calculation
2012 and analysis
---------------------------- ------- ------ ----------------------------------------------
Revenue growth (%) 5.1% 13.6% Year on year revenue growth expressed
as a percentage. The 2011 increase
reflected the inclusion of the first
year's production from the new facility
in Denmark. Excluding the impact of
adverse exchange rate movements, revenue
growth in 2012 would have been 9.2%.
---------------------------- ------- ------ ----------------------------------------------
Operating profit margin 2.5% 2.6% Operating profit expressed as a percentage
(% turnover) of turnover.
The slight reduction in 2012 reflected
the higher level of raw material meat
prices which, whilst recovered, do
not in all Hilton's contractual arrangements
feed directly through to correspondingly
increased margins.
---------------------------- ------- ------ ----------------------------------------------
Operating profit per kilogram sold.
Operating profit margin The reduction reflects the reduced
(pence per kilogram) 11.8 12.4 operating profit margin.
---------------------------- ------- ------ ----------------------------------------------
Operating profit before depreciation,
amortisation and government capital
grants. The reduction in 2012 reflects
Earnings before interest, reduced depreciation charges, which
taxation, depreciation under Hilton's cost plus arrangements
and amortisation (EBITDA) result in correspondingly reduced
(GBP'm) 40.4 42.9 revenues.
---------------------------- ------- ------ ----------------------------------------------
Free cash flow 20.5 6.8 Cash flow before dividends and financing.
before minorities The sharp increase in 2012 reflected
(GBP'm) the completion of the capital expenditure
on the new facilities in Denmark.
Excluding expenditure on equipment
for Denmark, underlying free cash
flow improved, from GBP21.4m to GBP23.9m,
on a comparable year on year basis.
---------------------------- ------- ------ ----------------------------------------------
Year-end net debt divided by EBITDA.
The gearing ratio improved materially
in 2012, as a result of the net debt
Gearing ratio 0.1 0.4 level being reduced by 72%.
---------------------------- ------- ------ ----------------------------------------------
Non-financial KPI's 2012 2011 Definition, method of calculation
and analysis
---------------------------- ------- ------ ----------------------------------------------
Growth in volume of 4.8% 6.0% Year on year volume growth, expressed
packed meat sales as a percentage. The 2012 growth is
(%) driven by further growth in Denmark
and Central Europe. In other areas,
volumes declined slightly overall,
with weaker consumer demand in the
face of higher raw material meat prices
and overall economic pressure.
---------------------------- ------- ------ ----------------------------------------------
Reduction in 2012 reflects efficiency
Employee and labour gains, both with the completion of
agency costs (pence the Danish start-up phase and more
per kilogram) 36.5 40.0 generally.
---------------------------- ------- ------ ----------------------------------------------
Packs of meat delivered as a % of
the orders placed. Little year on
Customer service level year change, with high service levels
(%) 98.8% 98.4% being maintained.
---------------------------- ------- ------ ----------------------------------------------
Number of product 1,900 1,900 Breadth of product range, in terms
lines of number of stock keeping units supplied
to customers.
---------------------------- ------- ------ ----------------------------------------------
How we manage risk
As with all businesses, the Group is exposed to a range of risks
and uncertainties which could have a significant impact on its
business, reputation, operating results and financial position.
The Board believes a successful risk management framework
balances risk and reward, and applies reasoned judgement and
consideration of potential likelihood and impact in determining its
principal risks. The Group has a well-developed structure and range
of processes for identifying, assessing, prioritising and
mitigating these key risks.
The most significant identified business risks the Group faces,
which are unchanged from previous years and which will continue to
affect the Group's businesses, together with the measures we have
adopted to mitigate these risks, are outlined in the table below.
This is not intended to constitute an exhaustive analysis of all
risks faced by the Group, but rather to highlight those which are
the most significant, when viewed from the standpoint of the Group
as a whole.
Risk description The Group is dependent on a small number of customers who
can exercise significant buying power and influence.
----------------- ------------------------------------------------------------------
Potential The Group has a comparatively narrow, but expanding, customer
impact base, with sales to subsidiary or associated companies of
the Tesco and Ahold groups comprising the larger part of
Hilton's revenue in 2012. The large retail chains are continuing
to increase their market share of meat products in many
countries, as retail customers move away from high street
butchers towards one stop convenience shopping in large
supermarkets. The continuation of this trend increases the
buying power of the Group's customers which in turn increases
their negotiating power with the Group, which could enable
them to seek better terms over time.
----------------- ------------------------------------------------------------------
Risk mitigation The Group is progressively widening its customer base and
strategies its maintained investment in state of the art facilities,
which together with management's continuous focus on reducing
costs, allow it to operate very efficiently at very high
throughputs and price its products competitively, being
particularly important in difficult economic environments.
Hilton operates a decentralised, entrepreneurial business
structure, which enables it to work very closely, nimbly
and flexibly with its retail partner in each country, to
achieve high service levels in terms of orders delivered,
delivery times, compliance with product specifications and
accuracy of documentation, all backed by an uncompromising
focus on food safety, product integrity and traceability
assurance.
----------------- ------------------------------------------------------------------
Risk description The Group's growth potential is dependent on the success
of its customers and the growth of their packed meat sales.
----------------- -------------------------------------------------------------------
Potential The Group's products carry the brand labels of the customer
impact to whom its products are supplied and it is therefore dependent
on its customers' success in maintaining or improving consumer
perception of their own brand names and packed meat offerings.
----------------- -------------------------------------------------------------------
Risk mitigation The Group plays a very pro-active role in enhancing its
strategies customers' brand values, through providing high quality,
competitively priced products, high service levels and
continuing product and packaging innovation. It recognises
that quality assurance is integral to its customers' brands
and works closely with its customers to ensure rigorous
quality assurance standards are met. It is continuously
measured by its customers across a very wide range of parameters,
including delivery time, product specification, product
traceability and accuracy of documentation and targets
demanding service levels across all these parameters. The
Group works closely with its customers to identify continuing
improvement opportunities across the supply chain, including
enhancing product presentation, extending shelf life and
reducing wastage at every stage.
----------------- -------------------------------------------------------------------
Risk description The progress of the Group's business is dependent on the
macroeconomic environment and levels of consumer spending
in the countries in which it operates.
----------------- ------------------------------------------------------------------
Potential No business is immune to difficult economic climates and
impact the consequent pressure on levels of consumer spending,
such as those seen recently across Europe.
----------------- ------------------------------------------------------------------
Risk mitigation With a sound business model, strong retail partners and
strategies a single minded focus on minimising unit packing costs,
whilst maintaining high levels of product quality and integrity,
the Group has made sound progress over the recent difficult
economic period. It expects to be able to continue to make
progress, even if the current difficult economic conditions,
as expected, persist in some developed countries for some
time.
----------------- ------------------------------------------------------------------
Risk description The Group's business is reliant on a small number of key
personnel and its ability to manage growth and change successfully.
----------------- ---------------------------------------------------------------------
Potential The Group is critically dependent on the skills and experience
impact of a small number of senior managers and specialists and
as the business develops and expands, the Group's success
will inevitably depend on its ability to attract and retain
the necessary calibre of personnel for key positions, both
for managing and growing its existing businesses and setting
up new ones.
----------------- ---------------------------------------------------------------------
Risk mitigation To continue to manage growth successfully, the Group will
strategies carefully manage its skill resources and continue to invest
in on-the-job training and career development, together
with the cost effective management of quality information
and control systems, whilst recruiting high quality new
employees, as required, to facilitate the Group's ongoing
growth. The continuing growth of Hilton's business, together
with its growing reputation, is facilitating the recruitment
of more top class specialists with the key skill sets required
both to support our existing individual country business
units and manage the Group's future geographical expansion.
----------------- ---------------------------------------------------------------------
Risk description The Group's business is dependent on maintaining a wide
and flexible global meat supply base.
----------------- ---------------------------------------------------------------------
Potential The Group is reliant on its suppliers to provide sufficient
impact volume of products in the very short lead times required
by its customers. The Group sources certain of its meat
requirements globally. Tariffs, quotas or trade barriers
imposed by countries where the group procures meat, or
which they may impose in the future, together with the
progress of World Trade Organisation talks and other global
trade developments, could materially affect the Group's
international procurement ability.
----------------- ---------------------------------------------------------------------
Risk mitigation The Group maintains a flexible global meat supply base,
strategies which is progressively widening as it expands, so as to
have in place a wide range of options should any such eventualities
occur.
----------------- ---------------------------------------------------------------------
Risk description Outbreaks of disease and feed contamination affecting livestock
and media concerns relating to these and instances of product
adulteration can impact the Group's sales.
----------------- ----------------------------------------------------------------
Potential Reports in the public domain concerning the risks of consuming
impact meat can cause consumer demand for meat to drop significantly
in the short to medium term. A food scare similar to the
Bovine Spongiform Encephalopathy ("BSE") scare that took
place in 1996 or the much more recent concerns with regard
to horse meat substitution can affect public confidence
in red meats.
----------------- ----------------------------------------------------------------
Risk mitigation The Group sources its meat from a trusted raw material
strategies supply base, all components of which meet stringent national,
international and customer standards. The Group is subject
to demanding standards which are independently monitored
in every country and reliable product traceability and
high welfare standards from the farm to the consumer are
integral to the Group's business model. The Group ensures
full traceability from source to packed product across
all suppliers.
----------------- ----------------------------------------------------------------
The Board has overall responsibility for the Group's risk
management processes and also for the appropriate identification of
risks and the effective application of actions to mitigate those
risks.
All types of risk applicable to the business are regularly
reviewed and a formal risk assessment review is carried out to
highlight key risks to the business and to determine actions that
can reasonably and cost effectively be taken to mitigate them. The
Group's Risk Register is compiled through a combination of business
unit risk registers and Board input. The Board believes that in
carrying out the Group's businesses it is vital to strike the right
balance between an appropriate and comprehensive control
environment and encouraging the level of entrepreneurial freedom of
action required to seek out and develop new business opportunities,
but, however skilfully this balance between risk and reward is
struck, the business will always be subject to a number of risks
and uncertainties, as illustrated above.
Not all the risks listed are within the Group's control and
others may be unknown or currently considered immaterial, but could
turn out to be material in the future. The risks set out in the
above table, together with our risk mitigation strategies, should
be considered in the context of the Group's risk management and
internal control framework, details of which are set out in the
Corporate Governance statement and the cautionary statement
regarding forward looking statements in the Financial review.
Note: References in this preliminary announcement to the
Directors' report, the Remuneration report, the Corporate
Governance statement and the Corporate Social Responsibility report
are to reports which will be available in the Company's full
published accounts.
Responsibility statement of the Directors in respect of the
Annual Report and Accounts
Each of the Directors whose names and functions are set out
below confirms that to the best of their knowledge and belief:
-- the Group and parent company financial statements, prepared
in accordance with applicable UK law and in conformity with IFRS,
as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the Group and the
Company; and
-- the management reports (which comprise the Chairman's
statement, the Chief Executive's summary, the Financial review, the
Business review and the Directors' report) include a fair review of
the development and performance of the business and the position of
the Group and the Company, together with a description of the
principal risks and uncertainties they face.
This responsibility statement was approved by the Board of
Directors on 27 March 2013 and is signed on its behalf by:
Directors
R Watson, OBE Chief Executive
N Majewski Finance Director
T Bergman Chief Operating Officer Continental
P Heffer Europe
Sir D Naish, DL Chief Operating Officer UK and Ireland
C Marsh Non-Executive Chairman
C Smith, OBE Non-Executive Director
Non-Executive Director
Consolidated income statement
2012 2011
52 weeks 52 weeks
Notes GBP'000 GBP'000
-------------------------------------------------- ------ ---------- ----------
Continuing operations
-------------------------------------------------- ------ ---------- ----------
Revenue 3 1,031,004 981,345
-------------------------------------------------- ------ ---------- ----------
Cost of sales (904,755) (850,893)
-------------------------------------------------- ------ ---------- ----------
Gross profit 126,249 130,452
-------------------------------------------------- ------ ---------- ----------
Distribution costs (9,149) (9,720)
-------------------------------------------------- ------ ---------- ----------
Administrative expenses (91,133) (94,850)
-------------------------------------------------- ------ ---------- ----------
Operating profit 25,967 25,882
-------------------------------------------------- ------ ---------- ----------
Finance income 4 199 258
-------------------------------------------------- ------ ---------- ----------
Finance costs 4 (1,454) (1,627)
-------------------------------------------------- ------ ---------- ----------
Finance costs - net 4 (1,255) (1,369)
-------------------------------------------------- ------ ---------- ----------
Profit before income tax 24,712 24,513
================================================== ====== ========== ==========
Income tax expense 5 (5,807) (5,915)
-------------------------------------------------- ------ ---------- ----------
Profit for the year 18,905 18,598
-------------------------------------------------- ------ ---------- ----------
Attributable to:
-------------------------------------------------- ------ ---------- ----------
Owners of the parent 17,584 17,199
-------------------------------------------------- ------ ---------- ----------
Non-controlling interests 1,321 1,399
-------------------------------------------------- ------ ---------- ----------
18,905 18,598
-------------------------------------------------- ------ ---------- ----------
Earnings per share attributable to owners of the
parent during the year
-------------------------------------------------- ------ ---------- ----------
Basic (pence) 6 24.9 24.7
-------------------------------------------------- ------ ---------- ----------
Diluted (pence) 6 24.7 24.3
-------------------------------------------------- ------ ---------- ----------
Consolidated statement of comprehensive income
2012 2011
52 weeks 52 weeks
GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------
Profit for the year 18,905 18,598
--------------------------------------------------------- ---------- ---------
Other comprehensive income
--------------------------------------------------------- ---------- ---------
Currency translation differences (275) (1,553)
--------------------------------------------------------- ---------- ---------
Other comprehensive income for the year net of tax (275) (1,553)
--------------------------------------------------------- ---------- ---------
Total comprehensive income for the year 18,630 17,045
--------------------------------------------------------- ---------- ---------
Total comprehensive income attributable to:
--------------------------------------------------------- ---------- ---------
Owners of the parent 17,392 15,732
--------------------------------------------------------- ---------- ---------
Non-controlling interests 1,238 1,313
--------------------------------------------------------- ---------- ---------
18,630 17,045
--------------------------------------------------------- ---------- ---------
The notes are an integral part of these consolidated financial statements.
Consolidated balance sheet
Group Company
2012 2011 2012 2011
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------ --------- --------- -------- --------
Assets
---------------------------------------- ------ --------- --------- -------- --------
Non-current assets
---------------------------------------- ------ --------- --------- -------- --------
Property, plant and equipment 8 56,162 59,179 - -
---------------------------------------- ------ --------- --------- -------- --------
Intangible assets 9 1,857 1,907 - -
---------------------------------------- ------ --------- --------- -------- --------
Investments in subsidiary undertakings - - 102,985 102,985
---------------------------------------- ------ --------- --------- -------- --------
Deferred income tax assets 1,111 1,134 - -
---------------------------------------- ------ --------- --------- -------- --------
59,130 62,220 102,985 102,985
---------------------------------------- ------ --------- --------- -------- --------
Current assets
---------------------------------------- ------ --------- --------- -------- --------
Inventories 21,885 22,466 - -
---------------------------------------- ------ --------- --------- -------- --------
Trade and other receivables 107,811 104,033 115 156
---------------------------------------- ------ --------- --------- -------- --------
Current income tax assets 699 - 87 133
---------------------------------------- ------ --------- --------- -------- --------
Cash and cash equivalents 31,428 27,345 30 14
---------------------------------------- ------ --------- --------- -------- --------
161,823 153,844 232 303
---------------------------------------- ------ --------- --------- -------- --------
Total assets 220,953 216,064 103,217 103,288
---------------------------------------- ------ --------- --------- -------- --------
Equity
---------------------------------------- ------ --------- --------- -------- --------
Equity attributable to owners of the parent
------------------------------------------------ --------- --------- -------- --------
Ordinary shares 7,087 6,985 7,087 6,985
---------------------------------------- ------ --------- --------- -------- --------
Share premium 2,562 372 2,562 372
---------------------------------------- ------ --------- --------- -------- --------
Employee share schemes reserve 1,238 1,558 - -
---------------------------------------- ------ --------- --------- -------- --------
Foreign currency translation reserve 2,099 2,291 - -
---------------------------------------- ------ --------- --------- -------- --------
Retained earnings 54,932 45,392 11,148 9,970
---------------------------------------- ------ --------- --------- -------- --------
67,918 56,598 20,797 17,327
---------------------------------------- ------ --------- --------- -------- --------
Reverse acquisition reserve (31,700) (31,700) - -
---------------------------------------- ------ --------- --------- -------- --------
Merger reserve 919 919 71,019 71,019
---------------------------------------- ------ --------- --------- -------- --------
37,137 25,817 91,816 88,346
---------------------------------------- ------ --------- --------- -------- --------
Non-controlling interests 3,835 3,452 - -
---------------------------------------- ------ --------- --------- -------- --------
Total equity 40,972 29,269 91,816 88,346
---------------------------------------- ------ --------- --------- -------- --------
Liabilities
---------------------------------------- ------ --------- --------- -------- --------
Non-current liabilities
---------------------------------------- ------ --------- --------- -------- --------
Borrowings 10 25,133 35,615 - -
---------------------------------------- ------ --------- --------- -------- --------
Deferred income tax liabilities 1,579 641 - -
---------------------------------------- ------ --------- --------- -------- --------
26,712 36,256 - -
---------------------------------------- ------ --------- --------- -------- --------
Current liabilities
---------------------------------------- ------ --------- --------- -------- --------
Borrowings 10 11,497 10,440 - -
---------------------------------------- ------ --------- --------- -------- --------
Trade and other payables 141,772 138,998 11,401 14,942
---------------------------------------- ------ --------- --------- -------- --------
Current income tax liabilities - 1,101 - -
---------------------------------------- ------ --------- --------- -------- --------
153,269 150,539 11,401 14,942
---------------------------------------- ------ --------- --------- -------- --------
Total liabilities 179,981 186,795 11,401 14,942
---------------------------------------- ------ --------- --------- -------- --------
Total equity and liabilities 220,953 216,064 103,217 103,288
---------------------------------------- ------ --------- --------- -------- --------
The notes are an integral part of these consolidated financial statements.
The financial statements were approved by the Board on 27 March
2013 and were signed on its behalf by:
R Watson N Majewski
Director Director
Hilton Food Group plc - Registered number: 06165540
Consolidated statement of changes in equity
Attributable to owners of the parent
========================================================================================
Employee Foreign
share currency Reverse
Share Share schemes translation Retained acquisition Merger Non-controlling Total
capital premium reserve reserve earnings reserve reserve Total interests equity
Group Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 3
January
2011 6,966 - 1,071 3,758 35,518 (31,700) 919 16,532 2,613 19,145
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 17,199 - - 17,199 1,399 18,598
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Other
comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Currency
translation
differences - - - (1,467) - - - (1,467) (86) (1,553)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income for
the
year - - - (1,467) 17,199 - - 15,732 1,313 17,045
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Issue of new
shares 19 363 - - - - - 382 - 382
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Adjustment in
respect
of employee
share
schemes - - 408 - - - - 408 - 408
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Tax on employee share
schemes - 9 79 - - - - 88 - 88
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (7,325) - - (7,325) (474) (7,799)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
transactions
with owners 19 372 487 - (7,325) - - (6,447) (474) (6,921)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 1
January
2012 6,985 372 1,558 2,291 45,392 (31,700) 919 25,817 3,452 29,269
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 17,584 - - 17,584 1,321 18,905
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Other
comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Currency translation
differences - - - (192) - - - (192) (83) (275)
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income for
the
year - - - (192) 17,584 - - 17,392 1,238 18,630
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Issue of new
shares 102 1,678 - - - - - 1,780 - 1,780
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Adjustment in
respect
of employee
share
schemes - 453 (168) - - - - 285 - 285
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Tax on employee share
schemes - 59 (152) - - - - (93) - (93)
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (8,044) - - (8,044) (855) (8,899)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total transactions
with owners 102 2,190 (320) - (8,044) - - (6,072) (855) (6,927)
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 30
December
2012 7,087 2,562 1,238 2,099 54,932 (31,700) 919 37,137 3,835 40,972
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Company
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 3
January
2011 6,966 - - - 8,104 - 71,019 86,089
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 9,191 - - 9,191
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income for
the
year - - - - 9,191 - - 9,191
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Issue of new
shares 19 363 - - - - - 382
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Tax on employee share
schemes - 9 - - - - - 9
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (7,325) - - (7,325)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
transactions
with owners 19 372 - - (7,325) - - (6,934)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 1
January
2012 6,985 372 - - 9,970 - 71,019 88,346
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 9,222 - - 9,222
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income for
the
year - - - - 9,222 - - 9,222
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Issue of new
shares 102 1,678 - - - - - 1,780
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Adjustment in
respect
of employee
share
schemes - 453 - - - - - 453
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Tax on employee share
schemes - 59 - - - - - 59
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (8,044) - - (8,044)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total transactions
with owners 102 2,190 - - (8,044) - - (5,752)
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 30
December
2012 7,087 2,562 - - 11,148 - 71,019 91,816
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
The notes are an integral part of these consolidated financial
statements.
Consolidated cash flow statement
Group Company
2012 2011 2012 2011
52 weeks 52 weeks 52 weeks 52 weeks
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------ --------- --------- --------- ---------
Cash flows from operating activities
------------------------------------------- ------ --------- --------- --------- ---------
Cash generated from operations 11 40,682 41,688 - -
------------------------------------------- ------ --------- --------- --------- ---------
Interest paid (1,454) (1,627) (366) (435)
------------------------------------------- ------ --------- --------- --------- ---------
Income tax (paid)/received (6,804) (8,341) 156 195
------------------------------------------- ------ --------- --------- --------- ---------
Net cash generated from/(used in)
operating activities 32,424 31,720 (210) (240)
------------------------------------------- ------ --------- --------- --------- ---------
Cash flows from investing activities
------------------------------------------- ------ --------- --------- --------- ---------
Purchases of property, plant and
equipment (12,131) (24,350) - -
------------------------------------------- ------ --------- --------- --------- ---------
Proceeds from sale of property,
plant and equipment 329 21 - -
------------------------------------------- ------ --------- --------- --------- ---------
Purchases of intangible assets (295) (873) - -
------------------------------------------- ------ --------- --------- --------- ---------
Interest received 199 258 - -
------------------------------------------- ------ --------- --------- --------- ---------
Dividends received - - 9,500 9,500
------------------------------------------- ------ --------- --------- --------- ---------
Net cash (used in)/generated from
investing activities (11,898) (24,944) 9,500 9,500
------------------------------------------- ------ --------- --------- --------- ---------
Cash flows from financing activities
------------------------------------------- ------ --------- --------- --------- ---------
Proceeds from borrowings 1,230 9,309 - -
------------------------------------------- ------ --------- --------- --------- ---------
Repayments of borrowings (10,224) (6,935) - -
------------------------------------------- ------ --------- --------- --------- ---------
Repayment of inter-company loan - - (3,010) (2,304)
------------------------------------------- ------ --------- --------- --------- ---------
Issue of ordinary shares 1,780 382 1,780 382
------------------------------------------- ------ --------- --------- --------- ---------
Dividends paid to owners of the
parent (8,044) (7,325) (8,044) (7,325)
------------------------------------------- ------ --------- --------- --------- ---------
Dividends paid to non-controlling
interests (855) (474) - -
------------------------------------------- ------ --------- --------- --------- ---------
Net cash used in financing activities (16,113) (5,043) (9,274) (9,247)
------------------------------------------- ------ --------- --------- --------- ---------
Net increase in cash and cash equivalents 4,413 1,733 16 13
------------------------------------------- ------ --------- --------- --------- ---------
Cash and cash equivalents at beginning
of the year 27,345 26,141 14 1
------------------------------------------- ------ --------- --------- --------- ---------
Exchange losses on cash and cash
equivalents (330) (529) - -
------------------------------------------- ------ --------- --------- --------- ---------
Cash and cash equivalents at end
of the year 31,428 27,345 30 14
------------------------------------------- ------ --------- --------- --------- ---------
The notes are an integral part of these consolidated financial statements.
Notes to the financial statements
1 General information
Hilton Food Group plc ("the Company") and its subsidiaries
(together "the Group") is a specialist retail meat packing business
supplying major international food retailers in thirteen countries.
The Company's subsidiaries are listed in a note.
The Company is a public limited company incorporated and
domiciled in the UK. The address of the registered office is 2-8
The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE.
The registered number of the Company is 06165540.
The Company maintains a Premium Listing on the London Stock
Exchange.
The financial year represents the 52 weeks to 30 December 2012
(prior financial year 52 weeks to 1 January 2012).
This preliminary announcement was approved for issue on 27 March
2013.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 1 January 2012.
Basis of preparation
The consolidated financial statements of Hilton Food Group plc
have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (IFRS), IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial statements have
been prepared on the going concern basis under the historical cost
convention.
The financial statements are presented in Sterling and all
values are rounded to the nearest thousand (GBP'000) except when
otherwise indicated.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in a note.
The financial information included in this preliminary
announcement does not constitute statutory accounts of the Group
for the years ended 30 December 2012 and 1 January 2012 but is
derived from those accounts. Statutory accounts for 2011 have been
delivered to the Registrar of Companies and those for 2012 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
3 Segment information
Management have determined the operating segments based on the
reports reviewed by the Executive Directors that are used to make
strategic decisions.
The Executive Directors have considered the business from both a
geographic and product perspective.
From a geographic perspective, the Executive Directors consider
that the Group has six operating segments: i) United Kingdom; ii)
Netherlands; iii) Republic of Ireland; iv) Sweden; v) Denmark and
vi) Central Europe including Poland, Czech Republic, Hungary,
Slovakia, Latvia, Lithuania and Estonia. The United Kingdom,
Netherlands, Republic of Ireland, Sweden and Denmark have been
aggregated into one reportable segment 'Western Europe' as they
have similar economic characteristics as identified in IFRS 8.
Central Europe comprises the other reportable segment.
From a product perspective the Executive Directors consider that
the Group has only one identifiable product, wholesaling of meat.
The Executive Directors consider that no further segmentation is
appropriate, as all of the Group's operations are subject to
similar risks and returns and exhibit similar long-term financial
performance.
The segment information provided to the Executive Directors for
the reportable segments is as follows:
Western Central 2012 Western Central 2011
Europe Europe Total Europe Europe Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- ---------- -------- -------- --------
Total segment revenue 937,405 95,552 1,032,957 891,453 92,600 984,053
--------------------------------- -------- -------- ---------- -------- -------- --------
Inter-segment revenue (1,953) - (1,953) (2,708) - (2,708)
--------------------------------- -------- -------- ---------- -------- -------- --------
Revenue from external
customers 935,452 95,552 1,031,004 888,745 92,600 981,345
--------------------------------- -------- -------- ---------- -------- -------- --------
Operating profit/segment
result 23,649 2,318 25,967 23,152 2,730 25,882
--------------------------------- -------- -------- ---------- -------- -------- --------
Finance income 121 78 199 204 54 258
--------------------------------- -------- -------- ---------- -------- -------- --------
Finance costs (1,434) (20) (1,454) (1,432) (195) (1,627)
--------------------------------- -------- -------- ---------- -------- -------- --------
Income tax expense (5,340) (467) (5,807) (5,388) (527) (5,915)
--------------------------------- -------- -------- ---------- -------- -------- --------
Profit for the year 16,996 1,909 18,905 16,536 2,062 18,598
--------------------------------- -------- -------- ---------- -------- -------- --------
Depreciation and amortisation 13,242 1,135 14,377 15,064 1,839 16,903
--------------------------------- -------- -------- ---------- -------- -------- --------
Additions to non-current
assets 11,572 854 12,426 19,673 279 19,952
--------------------------------- -------- -------- ---------- -------- -------- --------
Segment assets 198,113 21,030 219,143 194,376 20,554 214,930
--------------------------------- -------- -------- ---------- -------- -------- --------
Current income tax assets 699 -
--------------------------------- -------- -------- ---------- -------- -------- --------
Deferred income tax assets 1,111 1,134
--------------------------------- -------- -------- ---------- -------- -------- --------
Total assets 220,953 216,064
--------------------------------- -------- -------- ---------- -------- -------- --------
Segment liabilities 147,056 12,636 159,692 146,867 13,475 160,342
--------------------------------- -------- -------- ---------- -------- -------- --------
Borrowings 18,710 24,711
--------------------------------- -------- -------- ---------- -------- -------- --------
Current income tax liabilities - 1,101
--------------------------------- -------- -------- ---------- -------- -------- --------
Deferred income tax liabilities 1,579 641
--------------------------------- -------- -------- ---------- -------- -------- --------
Total liabilities 179,981 186,795
--------------------------------- -------- -------- ---------- -------- -------- --------
Sales between segments are carried out at arm's length. Revenue
from external customers reported to the Executive Directors is
measured in a manner consistent with that in the income
statement.
The Executive Directors assess the performance of each operating
segment based on its operating profit. Operating profit is measured
in a manner consistent with that in the income statement.
The amounts provided to the Executive Directors with respect to
total assets and liabilities are measured in a manner consistent
with that of the financial statements. The assets are allocated
based on the operations of the segment and their physical location.
The liabilities are allocated based on the operations of the
segment. The Group interest bearing reorganisation loan is not
considered to be a segment liability.
The Group has three principal customers (comprising groups of
entities known to be under common control), Tesco, Ahold and Coop
Danmark. These customers are located in the United Kingdom,
Netherlands, Republic of Ireland, Sweden, Denmark and Central
Europe including Poland, Czech Republic, Hungary, Slovakia, Latvia,
Lithuania and Estonia.
Analysis of revenues from external customers and non-current
assets are as follows:
Non-current assets
Revenues from excluding deferred
external customers tax assets
---------------------- ----------------------
2012 2011 2012 2011
--------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------------ -------- ---------- ----------
Analysis by geographical area
-------------------------------------- ------------ -------- ---------- ----------
United Kingdom - country of domicile 278,945 259,462 9,797 10,201
-------------------------------------- ------------ -------- ---------- ----------
Netherlands 254,476 263,384 11,477 11,874
-------------------------------------- ------------ -------- ---------- ----------
Sweden 211,109 213,363 4,374 4,973
-------------------------------------- ------------ -------- ---------- ----------
Republic of Ireland 78,976 82,574 6,420 7,419
-------------------------------------- ------------ -------- ---------- ----------
Denmark 111,946 69,962 20,681 21,258
-------------------------------------- ------------ -------- ---------- ----------
Central Europe 95,552 92,600 5,270 5,361
-------------------------------------- ------------ -------- ---------- ----------
1,031,004 981,345 58,019 61,086
-------------------------------------- ------------ -------- ---------- ----------
Analysis by principal customer
-------------------------------------- ------------ -------- ---------- ----------
Customer 1 533,302 543,575
-------------------------------------- ------------ -------- ---------- ----------
Customer 2 380,290 361,723
-------------------------------------- ------------ -------- ---------- ----------
Customer 3 111,245 69,743
-------------------------------------- ------------ -------- ---------- ----------
Other 6,167 6,304
-------------------------------------- ------------ -------- ---------- ----------
1,031,004 981,345
-------------------------------------- ------------ -------- ---------- ----------
4 Finance income and costs
2012 2011
Group GBP'000 GBP'000
------------------------------------------------ -------- --------
Finance income
------------------------------------------------ -------- --------
Interest income on short-term bank deposits 198 257
------------------------------------------------ -------- --------
Interest on income taxes 1 1
------------------------------------------------ -------- --------
Finance income 199 258
------------------------------------------------ -------- --------
Finance costs
------------------------------------------------ -------- --------
Bank borrowings (1,035) (1,206)
------------------------------------------------ -------- --------
Finance leases (207) (229)
------------------------------------------------ -------- --------
Exchange losses on foreign currency borrowings (97) (38)
------------------------------------------------ -------- --------
Other interest expense (115) (154)
------------------------------------------------ -------- --------
Finance costs (1,454) (1,627)
------------------------------------------------ -------- --------
Finance costs - net (1,255) (1,369)
------------------------------------------------ -------- --------
5 Income tax expense
2012 2011
Group GBP'000 GBP'000
--------------------------------------------------- -------- --------
Current income tax
--------------------------------------------------- -------- --------
Current tax on profits for the year 5,068 6,437
--------------------------------------------------- -------- --------
Adjustments to tax in respect of previous years (79) (47)
--------------------------------------------------- -------- --------
Total current tax 4,989 6,390
--------------------------------------------------- -------- --------
Deferred income tax
--------------------------------------------------- -------- --------
Origination and reversal of temporary differences 862 (427)
--------------------------------------------------- -------- --------
Adjustments to tax in respect of previous years (44) (48)
--------------------------------------------------- -------- --------
Total deferred tax 818 (475)
--------------------------------------------------- -------- --------
Income tax expense 5,807 5,915
--------------------------------------------------- -------- --------
Deferred tax debited directly to equity during the year in
respect of employee share schemes amounted to GBP152,000 (2011:
credit of GBP79,000).
The tax on the Group's profit before income tax differs from the
theoretical amount that would arise using the standard rate of UK
Corporation Tax of 24.5% (2011: 26.5%) applied to profits of the
consolidated entities as follows:
2012 2011
GBP'000 GBP'000
======================================================== ======== ========
Profit before income tax 24,712 24,513
-------------------------------------------------------- -------- --------
Tax calculated at the standard rate of UK Corporation
Tax 24.5% (2011: 26.5%) 6,054 6,496
-------------------------------------------------------- -------- --------
Expenses not deductible for tax purposes 87 67
-------------------------------------------------------- -------- --------
Adjustments to tax in respect of previous years (123) (95)
-------------------------------------------------------- -------- --------
Profits taxed at rates other than 24.5% (2011: 26.5%) (286) (706)
-------------------------------------------------------- -------- --------
Other 75 153
-------------------------------------------------------- -------- --------
Income tax expense 5,807 5,915
-------------------------------------------------------- -------- --------
There is no tax impact relating to components of other
comprehensive income.
6 Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to owners of the parent by the weighted average number
of ordinary shares in issue during the year.
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has share options for which a calculation is done to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that
would have been issued assuming the exercise of the share
options.
2012 2011
Group Basic Diluted Basic Diluted
------------------------------------- ------------- ------- -------- ------- --------
Profit attributable to owners
of the parent (GBP'000) 17,584 17,584 17,199 17,199
------------------------------------- ------------- ------- -------- ------- --------
Weighted average number of ordinary
shares in issue (thousands) 70,538 70,538 69,747 69,747
------------------------------------- ------------- ------- -------- ------- --------
Adjustment for share options (thousands) - 738 - 1,082
------------------------------------- ------------- ------- -------- ------- --------
Adjusted weighted average number
of ordinary shares (thousands) 70,538 71,276 69,747 70,829
------------------------------------- ------------- ------- -------- ------- --------
Basic and diluted earnings per
share (pence) 24.9 24.7 24.7 24.3
------------------------------------- ------------- ------- -------- ------- --------
7 Dividends
2012 2011
Group GBP'000 GBP'000
------------------------------------------------------------ -------- --------
Final dividend in respect of 2011 paid 8.0p per ordinary
share (2011: 7.4p) 5,635 5,160
------------------------------------------------------------ -------- --------
Interim dividend in respect of 2012 paid 3.4p per ordinary
share (2011: 3.1p) 2,409 2,165
------------------------------------------------------------ -------- --------
Total dividends paid 8,044 7,325
------------------------------------------------------------ -------- --------
The Directors propose a final dividend of 8.6 per share payable
on 28 June 2013 to shareholders who are on the register at 31 May
2013. This dividend totalling GBP6.1m has not been recognised as a
liability in these consolidated financial statements.
8 Property, plant and equipment
Land and
buildings
(including
leasehold Plant Fixtures Motor
improvements) and machinery and fittings vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------------- --------------- -------------- ---------- --------
Cost
-------------------------- --------------- --------------- -------------- ---------- --------
At 3 January 2011 24,737 116,170 10,213 379 151,499
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments (330) (3,089) (299) (7) (3,725)
-------------------------- --------------- --------------- -------------- ---------- --------
Additions 342 16,969 1,754 14 19,079
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals (12) (1,739) (605) (35) (2,391)
-------------------------- --------------- --------------- -------------- ---------- --------
At 1 January 2012 24,737 128,311 11,063 351 164,462
-------------------------- --------------- --------------- -------------- ---------- --------
Accumulated depreciation
-------------------------- --------------- --------------- -------------- ---------- --------
At 3 January 2011 10,480 74,536 8,517 130 93,663
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments 44 (1,816) (283) (5) (2,060)
-------------------------- --------------- --------------- -------------- ---------- --------
Charge for the year 2,126 12,642 1,074 81 15,923
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals - (1,624) (591) (28) (2,243)
-------------------------- --------------- --------------- -------------- ---------- --------
At 1 January 2012 12,650 83,738 8,717 178 105,283
-------------------------- --------------- --------------- -------------- ---------- --------
Net book amount
-------------------------- --------------- --------------- -------------- ---------- --------
At 3 January 2011 14,257 41,634 1,696 249 57,836
-------------------------- --------------- --------------- -------------- ---------- --------
At 1 January 2012 12,087 44,573 2,346 173 59,179
-------------------------- --------------- --------------- -------------- ---------- --------
Cost
-------------------------- --------------- --------------- -------------- ---------- --------
At 2 January 2012 24,737 128,311 11,063 351 164,462
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments (281) (940) 81 3 (1,137)
-------------------------- --------------- --------------- -------------- ---------- --------
Additions 449 10,887 679 116 12,131
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals - (451) (1,164) (192) (1,807)
-------------------------- --------------- --------------- -------------- ---------- --------
At 30 December 2012 24,905 137,807 10,659 278 173,649
-------------------------- --------------- --------------- -------------- ---------- --------
Accumulated depreciation
-------------------------- --------------- --------------- -------------- ---------- --------
At 2 January 2012 12,650 83,738 8,717 178 105,283
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments (290) (256) 145 2 (399)
-------------------------- --------------- --------------- -------------- ---------- --------
Charge for the year 1,905 11,355 712 69 14,041
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals - (155) (1,164) (119) (1,438)
-------------------------- --------------- --------------- -------------- ---------- --------
At 30 December 2012 14,265 94,682 8,410 130 117,487
-------------------------- --------------- --------------- -------------- ---------- --------
Net book amount
-------------------------- --------------- --------------- -------------- ---------- --------
At 30 December 2012 10,640 43,125 2,249 148 56,162
-------------------------- --------------- --------------- -------------- ---------- --------
Land and buildings are held under short leaseholds. Details of
bank borrowings secured on assets of the Group are given in note
10. Depreciation charges are included within administrative
expenses in the income statement.
The cost and net book amount of property plant and equipment in
the course of its construction included above comprise plant and
machinery GBP668,000 (2011: GBP3,668,000).
Property, plant and equipment include the following amounts
where the Group is a lessee under a finance lease:
2012 2011
GBP'000 GBP'000
-------------------------------------------------------- ------------- ------------
Cost - capitalised finance leases 3,357 3,517
-------------------------------------------------------- ------------- ------------
Accumulated depreciation (1,492) (1,395)
-------------------------------------------------------- ------------- ------------
Net book amount 1,865 2,122
-------------------------------------------------------- ------------- ------------
Included in assets held under finance leases are land and buildings with
a net book amount of GBP1,858,000 (2011: GBP2,078,000) and plant and machinery
with a net book amount of GBP7,000 (2011: GBP44,000).
9 Intangible assets
Product Computer
licences software Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- --------- --------
Cost
-------------------------- ---------- ---------- --------- --------
At 3 January 2011 7,866 3,353 836 12,055
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (163) (237) - (400)
-------------------------- ---------- ---------- --------- --------
Additions - 873 - 873
-------------------------- ---------- ---------- --------- --------
At 1 January 2012 7,703 3,989 836 12,528
-------------------------- ---------- ---------- --------- --------
Accumulated amortisation
-------------------------- ---------- ---------- --------- --------
At 3 January 2011 7,445 2,547 - 9,992
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (166) (185) - (351)
-------------------------- ---------- ---------- --------- --------
Charge for the year 386 594 - 980
-------------------------- ---------- ---------- --------- --------
At 1 January 2012 7,665 2,956 - 10,621
-------------------------- ---------- ---------- --------- --------
Net book amount
-------------------------- ---------- ---------- --------- --------
At 3 January 2011 421 806 836 2,063
-------------------------- ---------- ---------- --------- --------
At 1 January 2012 38 1,033 836 1,907
-------------------------- ---------- ---------- --------- --------
Cost
-------------------------- ---------- ---------- --------- --------
At 2 January 2012 7,703 3,989 836 12,528
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (189) 78 - (111)
-------------------------- ---------- ---------- --------- --------
Additions 35 260 - 295
-------------------------- ---------- ---------- --------- --------
At 30 December 2012 7,549 4,327 836 12,712
-------------------------- ---------- ---------- --------- --------
Accumulated amortisation
-------------------------- ---------- ---------- --------- --------
At 2 January 2012 7,665 2,956 - 10,621
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (189) 87 - (102)
-------------------------- ---------- ---------- --------- --------
Charge for the year 12 324 - 336
-------------------------- ---------- ---------- --------- --------
At 30 December 2012 7,488 3,367 - 10,855
-------------------------- ---------- ---------- --------- --------
Net book amount
-------------------------- ---------- ---------- --------- --------
At 30 December 2012 61 960 836 1,857
-------------------------- ---------- ---------- --------- --------
Amortisation charges are included within administrative expenses
in the income statement.
10 Borrowings
2012 2011
Group GBP'000 GBP'000
----------------------------------------------- -------------- --------------
Current
----------------------------------------------- -------------- --------------
Bank borrowings 11,369 10,318
----------------------------------------------- -------------- --------------
Finance lease liabilities 128 122
----------------------------------------------- -------------- --------------
11,497 10,440
----------------------------------------------- -------------- --------------
Non-current
----------------------------------------------- -------------- --------------
Bank borrowings 22,456 32,740
----------------------------------------------- -------------- --------------
Finance lease liabilities 2,677 2,875
----------------------------------------------- -------------- --------------
25,133 35,615
----------------------------------------------- -------------- --------------
Total borrowings 36,630 46,055
----------------------------------------------- -------------- --------------
Due to the frequent re-pricing dates of the Group's loans, the fair value
of current and non-current borrowings is approximate to their carrying
amount.
The carrying amounts of the Group's borrowings are denominated in the
following currencies:
2012 2011
Currency GBP'000 GBP'000
----------------------------------------------- -------------- --------------
UK Pound 18,711 24,720
----------------------------------------------- -------------- --------------
Euro 17,919 21,335
----------------------------------------------- -------------- --------------
36,630 46,055
----------------------------------------------- -------------- --------------
The Group reorganisation loan of GBP18,710,000 (2011:
GBP24,711,000) is repayable in quarterly instalments by 28 February
2017. Interest is charged at LIBOR plus 1.75% subject to interest
rate caps over GBP17m of borrowings where LIBOR is capped at 4.5%.
Other bank borrowings are repayable by 2013 to 2017 with interest
charged at EURIBOR plus 1.75%.
Bank borrowings totalling GBP33,825,000 (2011: GBP43,058,000)
are secured by fixed and floating charges over the assets of the
individual Group borrowers and through joint and several guarantees
from each active Group undertaking.
The Group has undrawn overdraft borrowing facilities of GBP18.2m
(2011: GBP19.8m) which expire after one year.
The undiscounted contractual maturity profile of the Group's
borrowings is described in a note.
The minimum lease payments and present value of finance lease
liabilities is as follows:
Minimum lease Present value
payments
2012 2011 2012 2011
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -------- --------
No later than one year 328 336 128 122
-------------------------------------------- -------- -------- -------- --------
Later than one year and no later than
five years 1,393 1,394 2,677 2,875
-------------------------------------------- -------- -------- -------- --------
Later than five years 2,562 2,997 - -
-------------------------------------------- -------- -------- -------- --------
4,283 4,727 2,805 2,997
-------------------------------------------- -------- -------- -------- --------
Future finance charges on finance leases (1,478) (1,730) - -
-------------------------------------------- -------- -------- -------- --------
Present value of finance lease liabilities 2,805 2,997 2,805 2,997
-------------------------------------------- -------- -------- -------- --------
Lease liabilities are effectively secured as the rights to the
leased asset revert to the lessor in the event of default. The fair
value of the Group's finance lease liabilities is GBP4,028,000
(2011: GBP4,406,000). The fair values are based on cash flows
discounted using the European Central Bank benchmark main
refinancing operations fixed interest rate of 0.75% (2011:
1.0%).
11 Cash generated from operations
2012 2011
Group GBP'000 GBP'000
--------------------------------------------------- -------- ---------
Profit before income tax 24,712 24,513
--------------------------------------------------- -------- ---------
Finance costs - net 1,255 1,369
--------------------------------------------------- -------- ---------
Operating profit 25,967 25,882
--------------------------------------------------- -------- ---------
Adjustments for non-cash items:
--------------------------------------------------- -------- ---------
Depreciation 14,041 15,923
--------------------------------------------------- -------- ---------
Amortisation of intangible assets 336 980
--------------------------------------------------- -------- ---------
Loss on disposal of property, plant and equipment 39 128
--------------------------------------------------- -------- ---------
Adjustment in respect of employee share schemes 285 408
--------------------------------------------------- -------- ---------
Changes in working capital:
--------------------------------------------------- -------- ---------
Inventories 549 (2,670)
--------------------------------------------------- -------- ---------
Trade and other receivables (3,653) (19,762)
--------------------------------------------------- -------- ---------
Prepaid expenses (718) (1,339)
--------------------------------------------------- -------- ---------
Trade and other payables 2,650 22,734
--------------------------------------------------- -------- ---------
Accrued expenses 1,186 (596)
--------------------------------------------------- -------- ---------
Cash generated from operations 40,682 41,688
--------------------------------------------------- -------- ---------
The parent company has no operating cash flows.
12 Related party transactions and ultimate controlling party
The Directors do not consider there to be one ultimate
controlling party. The companies noted below are all deemed to be
related parties by way of common Directors.
Sales and purchases made on an arm's length basis on normal
credit terms to related parties during the year were as
follows:
Sales Purchases
2012 2011 2012 2011
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- -------- --------
Hilton Meats (International) Limited 1,673 2,435 61,724 55,500
-------------------------------------------- --------- --------- -------- --------
Romford Wholesale Meats Limited - - - 47,104
-------------------------------------------- --------- --------- -------- --------
RWM Dorset Limited - - - 15,795
-------------------------------------------- --------- --------- -------- --------
Amounts owing from and to related parties at the year end were as follows:
Owed from related Owed to related
parties parties
2012 2011 2012 2011
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- -------- --------
Hilton Meats (International) Limited 326 133 6 2,911
-------------------------------------------- --------- --------- -------- --------
Romford Wholesale Meats Limited - - - 1,930
-------------------------------------------- --------- --------- -------- --------
RWM Dorset Limited - - - 821
-------------------------------------------- --------- --------- -------- --------
326 133 6 5,662
-------------------------------------------- --------- --------- -------- --------
The ultimate shareholders of all of the above companies have an interest
in the share capital of the Company.
Hilton Meats (International) Limited ceased to be a related party during
the year. Romford Wholesale Meats Limited and RWM Dorset Limited ceased
to be related parties during 2011.
The Company's related party transactions with other Group companies during
the year were as follows:
2012 2011
Company GBP'000 GBP'000
-------------------------------------------- --------- --------- -------- --------
Hilton Foods Limited - dividend received 9,500 9,500
-------------------------------------------- --------- --------- -------- --------
Hilton Foods Limited - interest expense 356 432
-------------------------------------------- --------- --------- -------- --------
Hilton Meats (Retail) Limited - payment
for group relief 115 156
-------------------------------------------- --------- --------- -------- --------
At the year-end GBP11,399,000 (2011: GBP14,940,000) was owed to Hilton
Foods Limited and GBP115,000 (2011: GBP156,000) was owed by Hilton Meats
(Retail) Limited.
Details of key management compensation are given in a note.
13 Events after the reporting period
In January 2013 the Group entered into a joint venture agreement
with Woolworths Limited the largest supermarket retailer in
Australia. Hilton and Woolworths each own 50% in a new joint
venture company which will operate a meat processing plant
supplying beef, lamb and pork products in Western Australia. An
estimate of the financial effect of this collaboration cannot yet
be made.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGZFDNLGFZM
Hilton Food (LSE:HFG)
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Hilton Food (LSE:HFG)
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から 7 2023 まで 7 2024
