TIDMHFG
RNS Number : 1282R
Hilton Food Group PLC
09 September 2014
Tuesday 9 September 2014
Hilton Food Group plc
Interim results for the 28 weeks to 13 July 2014
Building for the future
Hilton Food Group plc, the specialist retail meat packing
business supplying major international food retailers in Europe and
Australia, is pleased to announce its interim results for the 28
weeks to 13 July 2014.
28 weeks 28 weeks Percentage 52 weeks
to to growth to
13 July 14 July 29 December
2014 2013 2013
Volume (tonnes) 121,832 116,942 4.2% 223,568
========== ========== =========== =============
Turnover GBP592.3m GBP593.8m (0.3)% GBP1,124.8m
========== ========== =========== =============
Operating profit GBP13.6m GBP13.4m 1.1% GBP25.8m
========== ========== =========== =============
Profit after tax GBP10.2m GBP10.0m 1.8% GBP19.4m
========== ========== =========== =============
Free cash (outflow)/inflow GBP(2.8)m GBP8.7m GBP17.0m
before dividends
and financing
========== ========== =========== =============
Net debt/(cash) GBP5.6m GBP1.6m GBP(4.9)m
========== ========== =========== =============
Basic earnings per
share 13.1p 13.0p 0.8% 25.0p
========== ========== =========== =============
Interim dividend
to be paid on 28
November 2014 3.8p 3.65p 4.1% 12.75p
========== ========== =========== =============
Highlights:
-- Further volume growth achieved in Western Europe, despite
continuing weakness in consumer spending, with UK volumes building
following the start of the Tesco contract and recently introduced
products performing well in Holland
-- Turnover growth held back by currency movements and lower raw
material prices. Growth in underlying profitability similarly
affected by currency movements, together with start-up costs
incurred in Australia and the UK
-- Continuing progress achieved with our joint venture in Australia
- conversion of Woolworths' Bunbury facility in Western
Australia to expand retail packing completed
- construction of a new purpose built retail packing facility
for Woolworths in Victoria on schedule,
with operations expected to commence in the second half of
2015
-- Strong cash generation has enabled major capital reinvestment
programmes in the UK and Sweden with only a limited increase in net
debt
-- Robust balance sheet with the interim dividend increased from
3.65p to 3.8p, an increase of 4.1%
Commenting, Robert Watson OBE, Chief Executive of Hilton Food
Group plc said:
"There is good underlying momentum in the business. During the
year we are progressing a major expansion of our UK facilities, the
re-equipment of our facilities in Sweden and the development of a
new facility in Victoria, Australia. Our aim is to extend the
geographic reach of the Hilton model and we continue to look for
new opportunities".
Enquiries:
Hilton Food Group - Robert Watson OBE, Nigel Tel: +44 (0) 1480 387 214
Majewski
Citigate Dewe Rogerson - Tom Baldock, Shabnam Tel: +44 (0) 207 638 9571
Bashir
Financial review
The Group is presenting its interim results for the 28 weeks to
13 July 2014, together with comparative information for the 28
weeks to 14 July 2013 and the 52 weeks to 29 December 2013. The
interim results of the Group are prepared in accordance with IAS 34
as adopted by the European Union (EU).
Hilton's underlying trading performance has remained positive,
despite significant currency headwinds and competitive retail
grocery markets, with weak macroeconomic conditions persisting
across most of our European markets. Volumes increased by 4.2%,
reflecting the start of the new contractual arrangements with Tesco
in the UK and the introduction of new product lines in Holland.
Turnover fell by 0.3% to GBP592.3m (2013: GBP593.8m), impacted by
adverse exchange translation movements (reducing turnover by 3.6%)
and lower raw material meat prices. Further details of turnover and
volume growth by segment are detailed in the Review of operations
below.
Operating profit for the first 28 weeks of 2014, at GBP13.6m,
was 1.1% ahead of the corresponding period last year, despite the
impact of start-up costs in Australia and the UK and adverse
exchange translation movements.
The operating profit margin was 2.3%, in line with the
corresponding period last year.
Net finance costs, at GBP0.5m, were in line with last year
(2013: GBP0.5m) with net debt increasing towards the end of the
period and sterling and euro inter-bank offered rates remaining
close to historically low levels. Interest cover was 30 times (29
times in 2013).
The taxation charge for the period was GBP2.9m (2013: GBP2.9m),
representing an effective underlying rate of tax of 22.2%, as
compared with 22.6% last year. Profit after taxation, at GBP10.2m,
was GBP0.2m (1.8%) above last year (2013: GBP10.0m) with higher
operating profit and a slightly lower effective rate of
taxation.
The share of profit in our joint venture of GBP0.2m (2013:
GBP0.1m) comprises the Group's 50% share of the post-tax profits of
our Australian joint venture company (GBP0.6m after tax in the
first 28 weeks), less start-up costs recharged to the joint venture
company of GBP0.4m. Start-up costs are always incurred in advance
of the start-up of new facilities, such as the new build underway
in Victoria.
Basic earnings per share in the first 28 weeks of 2014, at
13.1p, were 0.8% ahead of those for the first half of last year
with a 2.1% increase in net income being offset by an increased
number of shares in issue, following executive and sharesave scheme
share option exercises.
The Directors will declare an interim dividend of 3.8 pence per
share, amounting to GBP2.8m (compared with an interim dividend of
3.65 pence per share in 2013) to be paid on 28 November 2014, to
shareholders on the register at close of business on 31 October
2014.
In the first 28 weeks of 2014 the Group experienced a GBP2.8m
free cash outflow, before dividends and financing (after incurring
GBP21.3m of capital expenditure), as compared to an inflow of
GBP8.7m last year (after capital expenditure of GBP7.2m). Group
borrowings, net of cash balances of GBP19.6m, were GBP5.6m at 13
July 2014 (GBP4.9m net cash at 29 December 2013), reflecting the
start of the major capital investment programmes in the UK and
Sweden
At 13 July 2014 the Group had undrawn overdraft and loan
borrowing facilities of GBP64.4m (GBP18.3m at 29 December
2013).
The principal risks and uncertainties facing the Group's
businesses
Hilton has well developed processes and structures for
identifying and then mitigating the key risks which the Group
faces. The most significant risks and uncertainties faced by the
Group, together with the Group's risk management processes are
detailed in the review of Risk Management and principal risks on
pages 22 to 24 of the Hilton Food Group plc annual report and
financial statements 2013. The principal risks and uncertainties
identified in that report, which remain unchanged, were:
-- The Group is dependent on a small number of customers who exercise
significant buying power and influence;
-- The Group's growth potential is dependent on the success of its
customers and the future growth of their packed meat sales;
-- The Group's business is dependent on the macroeconomic environment
and levels of consumer spending in the countries in which it operates;
-- The Group's business is reliant on a number of key personnel and
its ability to manage growth and change successfully;
-- The Group's business is dependent on maintaining a wide and flexible
global meat supply base; and
-- Outbreaks of disease and feed contamination affecting livestock
and media concerns can impact the Group's sales.
These risks and uncertainties are expected to remain unchanged
with respect to the last 24 weeks of the 2014 financial year, over
which the economic environment across Europe is expected to
improve, but potentially only gradually.
The risks and uncertainties outlined above had no material
adverse impact on the results for the 28 weeks to 13 July 2014,
beyond the continuing effects of the difficult macroeconomic
environment across Europe on consumer spending levels, as
identified in this interim management report.
Forward looking information
This interim management report contains forward looking
statements. Such statements are unavoidably 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 by their nature
predictive, speculative and involve risk and uncertainty, quite
simply because they relate to events and depend on circumstances
that will occur in the future.
Going concern
The Group's bank borrowings are detailed in note 9 to the
condensed consolidated interim financial information and the
principal banking facilities which support the Group's existing and
contracted new business are committed until 2019. The Group is in
compliance with all its banking covenants. Future expansion which
is not yet contracted for, and which is not built into internal
budgets and forecasts, may require additional or extended banking
facilities and such future expansion will depend on our ability to
negotiate appropriate additional or extended facilities as and when
required.
The financial position of the Group including its cash flows,
liquidity position and borrowings are described above, with its
business activities and the factors likely to affect its future
development, performance and position being covered in the Review
of operations, below. As at the date of this report, the Directors
have a reasonable expectation that the Group has adequate resources
to continue in business for the foreseeable future. Accordingly,
the condensed consolidated interim financial information has been
prepared on a going concern basis.
Review of operations
The broad spread of the Group's operations across Europe and the
Asia Pacific region represents a clear strength, in terms of
reducing Hilton's dependence on the state of any one national
economy, particularly during less certain economic times.
With 67% of Group's sales in the first half of 2014 made in
currencies other than its reporting currency, its results reported
in Sterling have, however, inevitably been influenced by the
relative strength of Sterling against these currencies. Over the 28
weeks to 13 July 2014 the various overseas currencies in which the
Group trades have all depreciated against Sterling, compared with
the corresponding period in 2013, the Euro by 3.5%, the Danish
Krone by 3.6%, the Polish Zloty by 3.4%, the Swedish Krona by 8.1%
and the Australian dollar by 16.5%.
Western Europe
Operating profit of GBP14.8m (2013: GBP14.6m) on turnover of
GBP545.8m (2013: GBP543.5m)
Volume growth of 5.4% was achieved in Western Europe, driven by
the start of the new Tesco contract in the UK, product innovation
and range extension. Turnover growth was, however, only 0.4%,
reflecting both the effect of lower raw material meat costs on our
cost plus contracts and the impact of unfavourable exchange rate
movements. Major capital expenditure programmes are currently
underway in the UK, to modernise the Group's Huntingdon site and
extend its capacity to service the new Tesco contract, and at
Vasteras in Sweden, to modernise the site and improve operational
efficiency.
Consumer spending has remained weak and to offset the impact of
this we have continued to work diligently with our customers on
product and packaging development, extending the range of products
supplied and maintaining our unremitting focus on product quality,
integrity and traceability.
Central Europe
Operating profit of GBP1.2m (2013: GBP1.3m) on turnover of
GBP46.5m (2013: GBP50.3m)
Our facility at Tychy, in Southern Poland supplies Ahold stores
in the Czech Republic and Slovakia, Tesco stores in the Czech
Republic, Hungary, Poland and Slovakia and Rimi stores in Latvia,
Lithuania and Estonia.
In the first 28 weeks of 2014 the business faced extremely
competitive markets characterised by a high degree of consumer
price sensitivity. Volumes were consequently 2.6% lower than in the
corresponding period last year and turnover reported in sterling
fell by 7.4%, reflecting unfavourable exchange rate movements and
lower raw material prices.
Central costs and other (including Australia)
Net operating cost of GBP2.4m (2013: GBP2.5m).
This segment includes the profit net of start-up costs from
Australia of GBP0.2m (2013: net loss GBP0.5m) and central costs of
GBP2.6m (2013: GBP2.0m and GBP2.8m in 2012).
In Australia the Group is involved in a joint venture with
Woolworths, under which it earns a fifty per cent share of the fees
charged by the joint venture company for operating certain meat
processing and packing plants for Woolworths, based on the volume
of retail packed meat delivered to Woolworths' stores.
In May 2013 the joint venture company took over responsibility
for the operation of Woolworths' Western Australian meat processing
centre in Bunbury, near Perth. The conversion of this facility to
enable a substantial increase in retail packed meat production is
now completed with subsequent sales of retail packed meat reaching
targeted levels.
In August 2013 the building of a purpose built retail packing
facility near Melbourne in Victoria was announced which will be
operated by the joint venture company. Construction is now in
progress and the facility is expected to commence production in the
second half of 2015.
Investment in our existing facilities
Hilton continues to invest in all its European facilities to
maintain the state of the art levels required to service its
customers' growth, extend the range of products supplied to those
customers and deliver both first class service levels and further
increases in production efficiency. This investment ensures that we
can achieve low unit costs and competitive selling prices at
increasingly high levels of production throughput. Capital
expenditure in the period was GBP21.3m (2013: GBP7.2m) reflecting
the start of the major capital expenditure programmes at Huntingdon
and Vasteras referred to above.
Our Staff
The progress made by the Group in the first half of 2014 against
a retail environment and economic backdrop which remained
challenging is once again attributable to the quality of the
workforces and management teams we have in each country. On behalf
of the Board, we would like to thank them for their continuing
commitment, enthusiasm, professionalism and support.
Outlook
Hilton has continued to deliver year on year volume growth
through difficult and uncertain economic times. It is expected that
consumers' drive for value will continue, but with up to date and
well invested facilities, a broad geographic customer spread,
flexible procurement capabilities and a constant focus on product
quality, integrity and traceability, the Group remains well
equipped to meet such challenges and deliver growth.
Looking ahead to the remainder of 2014, currency headwinds could
well continue along with pressure from constrained consumer
expenditure in Europe. With higher start-up costs the Group is
likely in 2014 to deliver levels of profitability similar to those
achieved in 2013.
Hilton continues to explore further opportunities for
geographical expansion and growth in its existing businesses
through new product development and range extension.
Sir David Naish DL Robert Watson OBE
Non-Executive Chairman Chief Executive
8 September 2014
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge:
(a) the attached condensed consolidated interim financial
information has been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union;
(b) the Financial review and Review of operations which
constitute the 'interim management report' include a fair review of
the information required by DTR 4.2.7R (indication of important
events during the first 28 weeks and description of principal risks
and uncertainties for the remaining 24 weeks of the year); and
(c) the attached condensed consolidated interim financial
information includes a fair review of the information required by
DTR 4.2.8R (disclosure of related party transactions and any
changes therein).
The Directors of Hilton Food Group plc were listed in the Hilton
Food Group plc annual report and financial statements 2013 on pages
32 and 33 and there have been no changes in Directors since 29
December 2013, a list of which is maintained on the Hilton Food
Group plc website at www.hiltonfoodgroupplc.com.
On behalf of the Board
Robert Watson OBE
Chief Executive
Nigel Majewski
Finance Director
Income statement
28 weeks ended 28 weeks
13 July 2014 ended
14 July 2013
Continuing operations Note GBP'000 GBP'000
---------------
Revenue 4 592,305 593,821
Cost of sales (521,526) (522,797)
---------------
Gross profit 70,779 71,024
Distribution costs (5,881) (5,188)
Administrative expenses (51,488) (52,495)
Share of profit in joint venture 160 80
---------------
Operating profit 4 13,570 13,421
-------------------------------------------- ----- --------------- --------------
Finance income 49 74
Finance costs (499) (542)
-------------------------------------------- ----- --------------- --------------
Finance costs - net (450) (468)
-------------------------------------------- ----- --------------- --------------
Profit before income tax 13,120 12,953
Income tax expense 5 (2,909) (2,927)
-------------------------------------------- ----- --------------- --------------
Profit for the period 10,211 10,026
-------------------------------------------- ----- --------------- --------------
Profit attributable to:
Owners of the parent 9,463 9,270
Non-controlling interests 748 756
-------------------------------------------- ----- --------------- --------------
10,211 10,026
-------------------------------------------- ----- --------------- --------------
Earnings per share for profit attributable
to owners of the parent
- Basic (pence) 7 13.1 13.0
- Diluted (pence) 7 13.0 12.9
-------------------------------------------- ----- --------------- --------------
Statement of comprehensive income
28 weeks 28 weeks
ended ended
13 July 2014 14 July 2013
GBP'000 GBP'000
------------------------------------------- -------------- --------------
Profit for the period 10,211 10,026
------------------------------------------- -------------- --------------
Other comprehensive income
Currency translation differences (3,006) 2,063
--------------
Other comprehensive income for the period
net of tax (3,006) 2,063
------------------------------------------- -------------- --------------
Total comprehensive income for the period 7,205 12,089
------------------------------------------- -------------- --------------
Total comprehensive income attributable
to:
Owners of the parent 6,675 11,118
Non-controlling interests 530 971
------------------------------------------- -------------- --------------
7,205 12,089
------------------------------------------- -------------- --------------
The notes form an integral part of this condensed consolidated
interim financial information.
Balance sheet
13 July 14 July 29 December
2014 2013 2013
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 8 63,283 56,290 58,876
Intangible assets 8 8,916 2,963 2,660
Investments 572 73 405
Deferred income tax assets 1,199 1,110 1,313
---------
73,970 60,436 63,254
-------------------------------------- ----- --------- --------- ------------
Current assets
Inventories 22,461 23,351 23,837
Trade and other receivables 111,228 126,428 124,356
Current income tax assets 2,882 1,247 745
Cash and cash equivalents 19,586 29,764 34,642
-------------------------------------- ----- --------- --------- ------------
156,157 180,790 183,580
-------------------------------------- ----- --------- --------- ------------
Total assets 230,127 241,226 246,834
-------------------------------------- ----- --------- --------- ------------
Equity
Share capital 10 7,244 7,157 7,216
Share premium 6,396 3,849 5,885
Employee share schemes reserve 996 1,321 857
Foreign currency translation reserve (366) 3,947 2,422
Retained earnings 66,862 58,063 63,989
Reverse acquisition reserve (31,700) (31,700) (31,700)
Merger reserve 919 919 919
-------------------------------------- ----- --------- --------- ------------
Capital and reserves attributable to
owners of the parent 50,351 43,556 49,588
Non-controlling interests 4,133 4,040 4,670
-------------------------------------- ----- --------- --------- ------------
Total equity 54,484 47,596 54,258
-------------------------------------- ----- --------- --------- ------------
Liabilities
Non-current liabilities
Borrowings 9 18,035 20,430 18,616
Deferred income tax liabilities 1,371 2,076 1,459
---------
19,406 22,506 20,075
-------------------------------------- ----- --------- --------- ------------
Current liabilities
Borrowings 9 7,168 10,958 11,104
Trade and other payables 147,820 159,700 161,397
Current income tax liabilities 1,249 466 -
-------------------------------------- ----- --------- --------- ------------
156,237 171,124 172,501
-------------------------------------- ----- --------- --------- ------------
Total liabilities 175,643 193,630 192,576
-------------------------------------- ----- --------- --------- ------------
Total equity and liabilities 230,127 241,226 246,834
-------------------------------------- ----- --------- --------- ------------
The notes form an integral part of this condensed consolidated
interim financial information.
Statement of changes in equity
Attributable to owners of the parent
-------------------------------------
Employee Foreign
share currency Reverse Non-controlling
Share Share schemes translation Retained acquisition Merger interests Total
capital premium reserve reserve earnings reserve reserve Total equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Balance at 31
December 2012 7,087 2,562 1,238 2,099 54,932 (31,700) 919 37,137 3,835 40,972
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Comprehensive
income
Profit for the
period - - - - 9,270 - - 9,270 756 10,026
Other
comprehensive
income
Currency
translation
differences - - - 1,848 - - - 1,848 215 2,063
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Total
comprehensive
income - - - 1,848 9,270 - - 11,118 971 12,089
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Transactions
with owners
Issue of new
shares 10 70 1,287 - - - - - 1,357 - 1,357
Adjustment in
respect of
employee
share schemes - - 83 - - - - 83 - 83
Dividends paid 6 - - - - (6,139) - - (6,139) (766) (6,905)
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Total
transactions
with owners 70 1,287 83 - (6,139) - - (4,699) (766) (5,465)
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Balance at 14
July 2013 7,157 3,849 1,321 3,947 58,063 (31,700) 919 43,556 4,040 47,596
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Balance at 30
December 2013 7,216 5,885 857 2,422 63,989 (31,700) 919 49,588 4,670 54,258
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Comprehensive
income
Profit for the
period - - - - 9,463 - - 9,463 748 10,211
Other -
comprehensive
income
Currency
translation
differences - - - (2,788) - - - (2,788) (218) (3,006)
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Total
comprehensive
income - - - (2,788) 9,463 - - 6,675 530 7,205
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Transactions
with owners
Issue of new
shares 10 28 511 - - - - - 539 - 539
Adjustment in
respect of
employee
share schemes - - 139 - - - - 139 - 139
Dividends paid 6 - - - - (6,590) - - (6,590) (1,067) (7,657)
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Total
transactions
with owners 28 511 139 - (6,590) - - (5,912) (1,067) (6,979)
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
Balance at 13
July 2014 7,244 6,396 996 (366) 66,862 (31,700) 919 50,351 4,133 54,484
--------------- ----- --------- --------- --------- ------------ ---------- ------------- --------- -------- ----------------- --------
The notes form an integral part of this condensed consolidated
interim financial information.
Cash flow statement
28 weeks ended 28 weeks ended
13 July 2014 14 July 2013
Note GBP'000 GBP'000
----------------------------------------------------------------------- ----- --------------- ---------------
Cash flows from operating activities
Cash generated from operations 22,467 18,949
Interest paid (499) (542)
Income tax paid (3,588) (2,585)
---------------
Net cash generated from operating activities 18,380 15,822
----------------------------------------------------------------------- ----- --------------- ---------------
Cash flows from investing activities
Purchase of property, plant and equipment (14,354) (5,973)
Proceeds from sale of property, plant and equipment 72 64
Purchase of intangible assets (6,974) (1,241)
Interest received 49 74
----------------------------------------------------------------------- ----- --------------- ---------------
Net cash used in investing activities (21,207) (7,076)
----------------------------------------------------------------------- ----- --------------- ---------------
Cash flows from financing activities
Proceeds from borrowings 15,473 -
Repayments of borrowings (20,131) (6,192)
Issue of new shares 539 1,357
Dividends paid to company shareholders (6,590) (6,139)
Dividends paid to non-controlling interests (1,067) (766)
---------------
Net cash used in financing activities (11,776) (11,740)
----------------------------------------------------------------------- ----- --------------- ---------------
Net decrease in cash, cash equivalents and bank overdrafts (14,603) (2,994)
Cash, cash equivalents and bank overdrafts at start of period 34,642 31,428
Exchange (losses)/gains on cash, cash equivalents and bank overdrafts (1,157) 1,330
----------------------------------------------------------------------- ----- --------------- ---------------
Cash, cash equivalents and bank overdrafts at end of period 11 18,882 29,764
----------------------------------------------------------------------- ----- --------------- ---------------
The notes form an integral part of this condensed consolidated
interim financial information.
Notes to the interim financial information
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 Europe and
Australia.
The Company is a public limited liability 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.
This condensed consolidated interim financial information was
approved for issue on 8 September 2014.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the 52 weeks
ended 29 December 2013 were approved by the Board of Directors on
26 March 2014 and delivered to the Registrar of Companies. The
report of the auditors on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under Section 498 of the Companies Act 2006.
This condensed consolidated interim financial information has
been reviewed, not audited.
2 Basis of preparation
This condensed consolidated interim financial information for
the 28 weeks ended 13 July 2014 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim financial reporting' as adopted
by the European Union. The condensed consolidated interim financial
information should be read in conjunction with the annual report
and financial statements for the 52 weeks ended 29 December 2013
which have been prepared in accordance with IFRS as adopted by the
European Union.
Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the 52 weeks ended 29 December 2013, with the
exception of changes in estimates that are required in determining
the provision for income taxes.
3 Accounting policies
Except as described below, the accounting policies applied are
consistent with those of the annual report and financial statements
for the 52 weeks ended 29 December 2013, as described in those
annual financial statements.
Current income tax
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
International Financial Reporting Standards
(a) Standards, amendments and interpretations effective in 2014
but not relevant to the Group's operations
IAS 27 (revised 2011) Separate financial statements
IAS 28 (revised 2011) Associates and joint ventures
IAS 32 (amendment) Financial instruments: Presentation on
offsetting financial assets and financial liabilities
IAS 36 (amendment) Impairment of assets: Recoverable amount
disclosures
IAS 39 (amendment) Financial instruments: Novation of
derivatives and hedge accounting
IFRS 10 Consolidated financial statements
IFRS 10, 12 and IAS 27 (amendments): Consolidation for
investment entities
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interests in other entities
IFRIC 21 Levies
4 Segment information
Management has 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 seven operating segments: i) United Kingdom; ii)
Netherlands; iii) Republic of Ireland; iv) Sweden; v) Denmark, vi)
Central Europe including Poland, Czech Republic, Hungary, Slovakia,
Latvia, Lithuania and Estonia and vii) Central costs and other
including the share of profit from the joint venture in Australia.
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 and Central costs and other comprise the
other reportable segments.
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:
Operating
Total segment revenue profit/(loss)
segment
result
GBP'000 GBP'000
----------------------------- ------------------------ ---------------
28 weeks ended 13 July 2014
Western Europe 545,780 14,825
Central Europe 46,525 1,214
Central costs and other - (2,469)
----------------------------- ------------------------ ---------------
Total 592,305 13,570
----------------------------- ------------------------ ---------------
28 weeks ended 14 July 2013
Western Europe 543,509 14,595
Central Europe 50,312 1,360
Central costs and other - (2,534)
------------------------ ---------------
Total 593,821 13,421
----------------------------- ------------------------ ---------------
13 July 14 July 29 December 2013
2014 2013
GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- -----------------
Total assets
Western Europe 200,746 211,969 223,027
Central Europe 22,216 24,545 18,495
Central costs and other 3,084 2,355 3,254
-------------------------------- -------- -------- -----------------
Total segment assets 226,046 238,869 244,776
Current income tax assets 2,882 1,247 745
Deferred income tax assets 1,199 1,110 1,313
-------------------------------- -------- -------- -----------------
Total assets per balance sheet 230,127 241,226 246,834
-------------------------------- -------- -------- -----------------
There are no significant seasonal fluctuations.
The comparative information for the 28 weeks ended 14 July 2013
has been restated in order to separate central costs and other and
be consistent with the current period.
5 Income tax expense
Income tax expense is recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full financial year. The estimated average annual tax rate
used for the 52 weeks to 28 December 2014 is 22.2%. The estimated
average annual tax rate for the 28 weeks ended 14 July 2013 was
22.6%.
6 Dividends
28 weeks ended 28 weeks ended
13 July 2014 14 July 2013
GBP'000 GBP'000
---------------------------------------------------------- --------------- ---------------
Final dividend paid 9.1p (2013: 8.6p) per ordinary share 6,590 6,139
---------------------------------------------------------- --------------- ---------------
Total dividends paid 6,590 6,139
---------------------------------------------------------- --------------- ---------------
The Directors will declare an interim dividend of 3.8 pence per
share payable on 28 November 2014 to shareholders who are on the
register at 31 October 2014. This interim dividend, amounting to
GBP2.8m has not been recognised as a liability in this interim
financial information. It will be recognised in shareholders'
equity in the 52 weeks to 28 December 2014.
7 Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
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.
28 weeks ended 28 weeks ended
13 July 2014 14 July 2013
Basic Diluted Basic Diluted
------------------------------------------------------ ------------- ------- -------- ------- --------
Profit attributable to equity holders of the company (GBP'000) 9,463 9,463 9,270 9,270
------------------------------------------------------ ------------- ------- -------- ------- --------
Weighted average number of ordinary shares in issue (thousands) 72,309 72,309 71,181 71,181
Adjustment for share options (thousands) - 623 - 798
------------------------------------------------------ ------------- ------- -------- ------- --------
Adjusted weighted average number of ordinary shares (thousands) 72,309 72,932 71,181 71,979
------------------------------------------------------ ------------- ------- -------- ------- --------
Basic and diluted earnings per share (pence) 13.1 13.0 13.0 12.9
------------------------------------------------------ ------------- ------- -------- ------- --------
8 Property, plant and equipment and intangible assets
Property,
plant and Intangible
equipment assets
GBP'000 GBP'000
------------------------------------------------ ----------- -------------
28 weeks ended 14 July 2013
Opening net book amount as at 31 December 2012 56,162 1,857
Exchange adjustments 2,254 57
Additions 5,973 1,241
Disposals (62) -
Depreciation and amortisation (8,037) (192)
------------------------------------------------ ----------- -------------
Closing net book amount as at 14 July 2013 56,290 2,963
------------------------------------------------ ----------- -------------
28 weeks ended 13 July 2014
Opening net book amount as at 30 December 2013 58,876 2,660
Exchange adjustments (2,209) (138)
Additions 14,354 6,974
Disposals (146) -
Depreciation and amortisation (7,592) (580)
------------------------------------------------ ----------- -------------
Closing net book amount as at 13 July 2014 63,283 8,916
------------------------------------------------ ----------- -------------
Additions comprise continuing investments in PPE and product
licences to maintain our facilities at state of the art levels,
extend the range of products supplied and continuously deliver
first class service and increases in production efficiency. At 13
July 2014 commitments for the purchase of property, plant and
equipment totalled GBP17,916,000 and GBP4,902,000 for the purchase
of intangible assets.
9 Borrowings
13 July 14 July 29 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
------------------ -------- -------- ------------
Current 7,168 10,958 11,104
Non-Current 18,035 20,430 18,616
------------------ -------- -------- ------------
Total borrowings 25,203 31,388 29,720
------------------ -------- -------- ------------
Current borrowings includes GBP704,000 of bank overdrafts.
Movements in borrowings is analysed as follows:
28 weeks ended 28 weeks ended 52 weeks ended
13 July 2014 14 July 2013 29 December
2013
GBP'000 GBP'000 GBP'000
----------------------------- --------------- --------------- ---------------
Opening amount 29,720 36,630 36,630
Exchange adjustments (563) 950 359
New borrowings 15,473 - 3,845
Increase in bank overdrafts 704 - -
Repayment of borrowings (20,131) (6,192) (11,114)
----------------------------- --------------- --------------- ---------------
Closing amount 25,203 31,388 29,720
----------------------------- --------------- --------------- ---------------
10 Share capital
Number of shares Ordinary shares
Total
(thousands) GBP'000 GBP'000
----------------------------------------------------------- ----------------- ---------------- --------
At 31 December 2012 70,866 7,087 7,087
Issue of new shares on exercise of employee share options 707 70 70
----------------------------------------------------------- ----------------- ---------------- --------
At 14 July 2013 71,568 7,157 7,157
----------------------------------------------------------- ----------------- ---------------- --------
At 30 December 2013 72,157 7,216 7,216
Issue of new shares on exercise of employee share options 280 28 28
----------------------------------------------------------- ----------------- ---------------- --------
At 13 July 2014 72,437 7,244 7,244
----------------------------------------------------------- ----------------- ---------------- --------
11 Cash, cash equivalents and bank overdrafts
For the purpose of the interim condensed cash flow statement,
cash, cash equivalents and bank overdrafts comprise of the
following:
28 weeks 28 weeks
ended ended
13 July 14 July
2014 2013
GBP'000 GBP'000
-------------------------------------------- ----------------- ---------
Cash and cash equivalents 19,586 29,764
Bank overdrafts (704) -
-------------------------------------------- ----------------- ---------
Cash, cash equivalents and bank overdrafts 18,882 29,764
-------------------------------------------- ----------------- ---------
12 Related party transactions
The Directors do not consider there to be one ultimate
controlling party. The company noted below is deemed to be a
related party by way of a joint venture agreement.
Sales and purchases made on an arm's length basis on normal
credit terms to related parties were as follows:
28 weeks ended 28 weeks ended 52 weeks
13 July 14 July ended
2014 2013 29 December
2013
GBP'000 GBP'000 GBP'000
--------------------------------------------------------------------- --------------- --------------- -------------
Woolworths Limited and subsidiaries - recharge of joint venture
costs 964 560 1,794
--------------------------------------------------------------------- --------------- --------------- -------------
Amounts owing from related parties were as follows:
13 July 14 July 29 December 2013
2014 2013
GBP'000 GBP'000 GBP'000
------------------------------------- -------- -------- -----------------
Amounts owing from related parties
Woolworths Limited and subsidiaries 942 349 387
------------------------------------- -------- -------- -----------------
13 Financial instruments
The fair value of the financial assets and liabilities
approximate their carrying amounts.
Auditors' review report
Independent review report to Hilton Food Group plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements, defined below, in the interim results of Hilton Food
Group plc for the 28 weeks to 13 July 2014. Based on our review,
nothing has come to our attention that causes us to believe that
the condensed consolidated interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed consolidated interim financial statements, which
are prepared by Hilton Food Group plc, comprise:
-- the Balance sheet as at 13 July 2014
-- the income statement and statement of comprehensive income
for the period then ended;
-- the cash flow statement for the period then ended;
-- the statement of changes in equity for the period then ended;
and
-- the explanatory notes to the condensed consolidated interim
financial statements.
As disclosed in note 2, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The condensed consolidated interim financial statements included
in the interim results have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
What a review of condensed consolidated financial statements
involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed consolidated interim financial statements.
Responsibilities for the condensed consolidated interim
financial statements and the review
Our responsibilities and those of the Directors
The interim results including the condensed consolidated interim
financial statements, is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the interim results in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the
interim results based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure and Transparency Rules of
the Financial Conduct Authority and for no other purpose. We do
not, in giving this conclusion, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated interim financial information in the
interim financial report based on our review. This report,
including the conclusion, has been prepared for and only for the
Company for the purpose of the Disclosure and Transparency Rules of
the Financial Conduct Authority and for no other purpose. We do
not, in producing this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Belfast
8 September 2014
The maintenance and integrity of the Hilton Food Group plc
website is the responsibility of the Directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since it was initially presented on the website. Legislation in the
United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Hilton Food (LSE:HFG)
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