TIDMHFG
RNS Number : 9720I
Hilton Food Group PLC
07 April 2020
7 April 2020
Hilton Food Group plc
Successful strategy execution
Hilton Food Group plc, the leading specialist international food
packing business, today announces its preliminary results for the
52 weeks ended 29 December 2019.
Financial highlights
2019 2018 Change 2019
---------------------
52 weeks 52 weeks Reported Constant 52 weeks
to 29 December to 30 December currency to 29 December
2019 2018 2019
excl IFRS excl IFRS excl IFRS incl IFRS
16 16 16 16
Volume (1) (tonnes) 371,715 344,784 7.8% 371,715
Revenue GBP1,814.7m GBP1,649.6m 10.0% 11.0% GBP1,814.7m
Adjusted results (2)
Adjusted operating profit GBP54.7m GBP48.7m 12.4% 13.8%
Adjusted profit before
tax GBP49.7m GBP45.7m 8.8% 10.2%
Adjusted basic earnings
per share 46.0p 42.3p 8.7% 10.2%
IFRS results
Operating profit GBP52.3m GBP46.3m 12.9% GBP55.8m
Profit before tax GBP47.3m GBP43.3m 9.2% GBP43.2m
Basic earnings per share 43.6p 39.9p 9.3% 40.5p
Cash flows from operating GBP55.9m GBP53.5m 4.5% GBP70.3m
activities
Net debt (3) GBP88.2m GBP26.8m GBP271.5m
Dividends paid and proposed
in respect of the year 21.4p 21.4p 0.0% 21.4p
Notes
1. Volume includes 50% share of the Australian, Portuguese and Dutch joint
venture activities
2. Adjusted results represent the IFRS results before deduction of acquisition
intangibles amortisation of GBP2.4m (2018: GBP2.4m) and IFRS 16 lease
adjustments as detailed in the Alternative performance measures note
14. Unless otherwise stated financial metrics in the Chairman's statement,
Chief Executive's summary and Performance and financial review refer
to the Adjusted results
3. Net debt excluding the impact of IFRS 16 represents cash, financial
assets less borrowings and IAS 17 finance lease liabilities GBP1.4m
(2018: GBP1.8m). Net debt including the impact of IFRS 16 also includes
lease liabilities of GBP183.2m now recognised on the balance sheet
Strategic highlights
-- New facility opened in Brisbane, Australia with volume ramp up under
way
-- Investment in vegetarian product manufacturer, Dalco and acquisition
of sous vide manufacturer, SV Cuisine expands the products range
-- Increase in Tesco UK retail packed red meat to 100%
-- New fresh convenience foods facility opened in Poland
-- Agreement to pack red meat for Ahold Delhaize in Belgium with facility
due to open in September 2020
Operating highlights
-- Volume growth of 7.8% driven primarily by strong performances in
Australia and UK
-- Turnover up 10.0% and 11.0% on a constant currency basis
-- Adjusted operating profit growth of 12.4% and 13.8% on a constant
currency basis with IFRS operating profit growth excluding IFRS 16
of 12.9%
-- Strong operating cash generation up 4.5% with a robust balance sheet
-- Significant GBP99m investment in facilities to support future growth
Commenting on the results Executive Chairman Robert Watson OBE
said:
"In 2019, we successfully executed our strategy of continuing to
grow and diversify our offering with the opening of our biggest
factory yet in Brisbane, Australia, a move into other high growth
proteins including vegetarian and sous vide, building on our
existing retailer partner relationships and investing in our
facilities. We continue to grow volumes and profit and explore
opportunities to develop our cross-category business in both our
domestic and overseas markets. Whilst the Covid-19 outbreak will
test our established business continuity programmes, to date thanks
to the dedication and resilience of our teams who have responded
superbly, we have risen to the challenge."
Enquiries
Hilton Food Group Tel: +44 (0) 1480
387214
Robert Watson OBE , Executive Chairman
Philip Heffer, Chief Executive Officer
Nigel Majewski, Chief Financial Officer
Citigate Dewe Rogerson Tel: +44 (0) 207
638 9571
Angharad Couch
Ellen Wilton
This announcement contains inside information.
Chairman's introduction
Global pandemic
The current evolving Covid-19 outbreak is a fast moving virus
which presents major challenges for people and economies across the
globe. There is significant uncertainty over the extent of the
impact and longevity of the outbreak. Food production is a key
industry so our challenge is to keep our facilities open, as part
of an integrated supply chain, to ensure that our retailer partners
are able to adapt to the currently increasing consumer demand for
protein-based products. All of our facilities remain fully
operational, and in addition we have established business
continuity and flexible buy models and supply options, which may be
tested during this period as we continue to play our part in
feeding the nation and supporting ongoing demand. The dedication
and resilience of our teams will be tested as we respond to this
challenge. To date they have responded superbly and have risen to
the challenge.
The health and wellbeing of our people is paramount and we have
established a number of protocols to protect our people and to
minimise contact. We are prioritising those that are most
susceptible to Covid-19 including those with underlying health
conditions. Travel by our colleagues, in line with government
restrictions, is strictly managed as are visitors to, and movements
within, our facilities together with extensive cleaning regimes and
hand-sanitising stations. We have plans in place to respond to any
virus spread within our facilities and to mitigate any resourcing
shortfall through additional use of temporary labour.
We are dependent on our key suppliers to maintain a continued
supply of raw material and packaging materials and we are in daily
contact with them to manage availability and identify key critical
product lines which must be delivered and those that could be
postponed. There have not been any significant issues experienced
to date.
We have a strong balance sheet including significant cash
balances of GBP110m at the year end plus current committed but
undrawn loan facilities of GBP116m. The resilience of the Group in
the face of the uncertain challenges presented by Covid-19 has been
assessed by applying significant downside sensitivities to the
Group's cash flow projections. Allowing for these sensitivities and
potential mitigating actions the Board is satisfied that the Group
is able to continue to operate well within its banking covenants
and has adequate headroom under its existing committed
facilities.
So far we have coped well with the challenges and are confident
that through our local operating model and financial strength we
are well placed.
Strategic progress
I am pleased to report that 2019 was another busy year for
Hilton with continued progress against our strategic objectives and
the further expansion of our global footprint as we celebrated our
25(th) anniversary.
In January we completed a 50% investment in Dalco with options
to acquire the remaining 50% in 2024. This enables Hilton to
diversify into a further protein and significantly expand its
product offering in the fast-growing vegetarian market. In February
we acquired SV Cuisine Ltd (formerly HFR Food Solutions Ltd) adding
slow cooked products to our range. The fresh convenience foods
facility in Poland opened in May with further products successfully
launched. In June we increased our participation with Tesco UK to
supply 100% of their retail packed red meat requirements. In July
we opened our largest facility yet in Brisbane, Australia where we
are progressively ramping up volumes. The joint venture transition
arrangements in Australia are on track with the transfer of assets
to Hilton due to take place at the end of June 2020. Finally we
started to expand our seafood and vegetarian offering with our
existing retail partners.
We are pleased to announce that we have reached agreement with
Delhaize on a collaboration to pack all their red meat requirements
starting 1(st) of September 2020 from a site in Belgium, covering
beef, pork and lamb. Delhaize operates approximately 800 stores in
Belgium and Luxembourg. We are also pleased that this represents a
further extension of our working relationship with Ahold
Delhaize.
We successfully executed our strategy to grow and diversify and
continue to explore opportunities to develop our cross category
business in both domestic and overseas markets as well as applying
our state of the art skills and experience to deliver value to our
customers.
Group performance
We grew our volume again in 2019 maintaining a trend of
continuous growth achieved in every year since Hilton's flotation
in 2007. There was strong operating profit growth of over 12%
driven by the opening of our new Australian facility, growth of our
UK seafood business and a good performance by the new Dalco joint
venture. We continued to invest in people and infrastructure to
support future growth across the Group. Basic earnings per share
were over 8% higher compared to last year.
Hilton continued to generate strong operating cash flows during
2019 with, as expected, significant capacity investment resulting
in year end net debt before adjusting for IFRS 16 of GBP88.2m
compared with net debt of GBP26.8m at the end of last year. The
continued investment in our facilities includes new technology to
increase capacity, improve operational efficiency and offer
innovative solutions to our retailer partners.
Dividend policy
The Board considers that maintaining the Group's dividend policy
since flotation remains appropriate, given the continuing strategic
progress achieved in 2019 and Hilton's strong cash generation. With
the proposed final dividend of 15.4p per ordinary share , total
dividends in respect of 2019 will be 21.4p per ordinary share,
unchanged compared to last year.
Our Board and governance
The Hilton Board is responsible for the long term success of the
Group and promoting the desired culture. To achieve this, it
contains an appropriate mix of skills, depth and diversity and a
range of practical business experience, which is available to
support and guide our management teams across a wide range of
countries. I would like to thank my colleagues on the Board for
their support, counsel and expertise during the year.
I am delighted to welcome Rebecca Shelley who joined the Hilton
Board as an Independent Non-Executive Director on 1 April 2020. Her
market-facing investor relations and communications skills and
experience in food and retail sectors further strengthens our
capabilities.
We remain committed to achieving good governance and compliance
with the UK Corporate Governance Code including succession planning
and maintaining a talent pipeline balanced against our desire to
preserve an agile and entrepreneurial approach.
The Board is fully aware of its responsibilities to promote the
success of the Company for the benefit of its members as a whole
under Section 172 of the Companies Act 2006. We take the interests
of our workforce and stakeholders fully into account in Board
discussions and decision making. Details of the Group's policies
and procedures that have been implemented to enhance stakeholder
and workforce engagement, which explain how these interests have
influenced our decisions are set out in the Governance section of
the Annual report.
Sustainability
Hilton recognises its environmental and sustainability
responsibilities. Globally, society is demanding increased
transparency from food operations, together with measurable
progress against ambitious commitments. Many countries are
declaring climate emergencies and setting a net zero carbon target.
We are committed to continuing to foster the culture of
sustainability across all levels of our business. One of our core
values is a commitment to working in an ethical, open and honest
way to produce products of the highest quality. We use our
influence and expertise at a global level to make real change
through our partnerships with market leading retailers, driving
innovation and supply chain collaboration to deliver sustainable
food to our consumers. This ensures that our business is resilient
to the ever increasing major environmental, social and economic
issues that affect us all. Our strategy demonstrates commitment to
transparent science based action in our factories and in our supply
chains and ensuring that our products meet the needs of future
customers.
Outlook and current trading
Hilton's operating performance since the beginning of 2020 has
been in line with the Board's expectations. We reached agreement to
expand into Belgium and our facility there is due to open in
September 2020. We continue to explore opportunities for further
geographical expansion in both our domestic and overseas
markets.
While there is significant uncertainty over the extent of the
impact and longevity of the Covid-19 outbreak, we have so far coped
well with the challenges and are confident that through our local
operating model and financial strength we are well placed. Although
there is continuing uncertainty concerning post Brexit negotiations
on a trade deal and future co-operation with the EU we believe our
predominantly local sourcing and operating model is sufficiently
resilient to withstand these uncertainties whilst minimising
disruption. Further details are in the Risk management section.
Short and medium term growth is underpinned by new facilities in
Belgium and also in New Zealand which is due to open in 2021
together with expanding the seafood, vegetarian and fresh
convenience food categories.
Annual General Meeting
This year's AGM will be held at Hilton's offices at 2-8 The
Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE on 21
May 2020 at 1pm. Please refer to our website at
www.hiltonfoodgroupplc.com/agm-2020 for further guidance which will
be regularly updated as the AGM date approaches. I would strongly
encourage all shareholders to submit their proxy votes.
Robert Watson OBE
Executive Chairman
6 April 2020
Chief Executive's summary
Strategic objectives
Our strategy continues to be to support our customers' brands
and their development in local markets, whilst achieving attractive
and sustainable growth in shareholder value. This clear and
straightforward approach combined with a strong reputation,
well-invested modern facilities and a robust balance sheet has
generated growth over an extended period of time.
Hilton seeks to build long term customer and shareholder value
by focusing on:
-- Growing volumes and extending product ranges supplied and
services provided to its existing customers;
-- Optimising the use of its assets and investing in new technology
and capacity expansion as required;
-- Maintaining a vigilant focus on food safety and integrity
and reducing unit costs, while improving product quality
and service provision; and
-- Entering new territories and markets either with new customers
or in partnership with our existing customers.
We will continue to pursue both geographical expansion and range
extension, whilst at the same time actively developing, enriching,
deepening and expanding the scope of our existing business
partnerships, playing a full and proactive role in supporting our
customers and the successful development of their brands. We have
successfully expanded our product range into new proteins and
categories such as seafood, vegetarian, sous vide, food service and
fresh convenience foods. We are responding to the Covid-19
challenge of protecting our people, feeding the nation and
supporting the demands of our customers.
Business model
The Hilton business model is well proven and sustainable, whilst
being relatively simple and straightforward. We operate large
scale, extensively automated and robotised food processing, packing
and logistics facilities for major international retailers on a
largely dedicated basis.
Raw materials are sourced, in conjunction with our retail
partners, from a combination of local sources and a wide
international base of proven suppliers. It is then processed,
packed and delivered to the retailers' distribution centres or
stores. Our plants are highly automated and use advanced robotics
for the storage of raw materials and finished products. Developing
robotics technology has been extended in recent years both in the
production environment and to the sorting of finished products by
retailer store order, achieving material supply chain efficiencies
for our customers.
We seek to keep ourselves at the forefront of the food packing
industry, which helps ensure our continued competitiveness. We
constantly look to drive efficiencies, always maintaining a
pipeline of clear identifiable cost reduction initiatives and an
open minded approach designed to continually challenge the status
quo. We consider our modern, very well-invested facilities to be a
key factor in keeping unit packing costs as low as possible. Over
the past fifteen years we have invested continuously across all
areas of our business, including the sourcing of raw materials, the
design of packaging materials, increased efficiency in processing
and storage solutions and updating our IT infrastructure. Group
capital expenditure over the period 2003-2019 has totalled
GBP435m.
We operate facilities in seven European countries and three
facilities in Australia, each run by a local management team
enhanced by specialist central leadership, expertise, advice and
support. These businesses operate under the terms of multi-year
long term supply agreements with our retailer partners, either on a
cost plus, packing rate or volume based reward basis. These
contractual arrangements, combined with our customer dedication,
serve to maximise achievable volume throughput whilst minimising
unit packing costs thereby delivering value to our customers. In
Australia, Portugal and the Netherlands, facilities are operated
under joint venture companies in which we share the profits.
Products from our facilities are sold in fourteen European
countries and Australia.
Under the long term supply agreements we have in place with our
customers, the parameters of our revenue are clearly defined. As
well as income derived from the supply of retail packed food
products, there are also provisions whereby our income can be
increased or decreased subject to achievement of certain pre-agreed
and pre-defined key performance measures and targets designed to
align our objectives with those of our customers.
We are a committed and loyal partner with a continuing record of
delivering value through quality products with the highest levels
of food safety, traceability and integrity, whilst providing a
range of services which enable our customers to evolve and improve
their food supply chain management. Our customer base comprises
high quality retailers and our in-depth understanding of our
customers' needs, together with those of their consumers, enables
us to play an active role in managing their food supply chains
whilst providing agile solutions to supply chain challenges as they
arise. As our customers' markets change and competition increases,
we need to keep a constant focus on the challenges they face so we
can put forward flexible solutions, together with continuing
increases in efficiency and cost competitiveness. This flexible
approach and understanding of our local markets remains one of our
core strengths.
As well as our ability to provide excellent execution locally,
we also have at our disposal a wide and deep expertise on a number
of areas of specialism, such as engineering, new product
development, food related IT applications, category management
support, logistics and market intelligence. We are able to apply
these skills to a number of markets to support our customers in a
cost-effective way.
Business development
The Group's expansion is based on its established and proven
track record, international reputation and experience and the
recognised success of the close partnerships we have forged and
maintained with successful retail partners over many years.
Hilton's business model has proved successful in Europe and
Australia supplemented by targeted acquisitions. We have
demonstrated that this business model is capable of being
successfully transferred into new countries adapted with our local
customers to meet their specific requirements.
Progress in 2019
There was further success in our UK meat category where we
increased our participation with Tesco UK to supply 100% of its
retail packed red meat requirements and our Huntingdon facility has
been extended accordingly. Our relationship with Tesco was further
strengthened through the acquisition of SV Cuisine adding slow
cooked products to the range that we offer.
Seachill, now rebranded as Hilton Seafood UK, saw a strong
performance in 2019 including a full year in the supply of
shellfish and the launch of a new coated fish range together with
supply into Australia. Investments in our Grimsby facilities
included further automation and a new production line.
In Continental Europe trading has remained generally good. We
are delighted to announce our further expansion into Belgium where
a facility will open during 2020. Our fresh convenience food
facility in Poland was completed during the year together with the
launch of further products including ready meals, soups, hummus and
meal kits and adding a further customer.
Our new facility in Brisbane, Australia opened significantly
ahead of schedule on 29 July 2019 with production transferring
across from the satellite facility and volume continues to ramp up.
Work continued during the year with Woolworths on the transition of
the joint venture which is on track. Construction of our new
facility in New Zealand is ongoing and is scheduled to open in
early 2021.
Following our investment, the Dalco joint venture has progressed
well and listings have been secured with some of our existing
retailer customers in Europe and Australia. The Foods Connected
joint venture has signed up additional customers and further
services are being developed.
On sustainability we made significant progress during 2019 under
our strategy "Quality Naturally" including work to increase the
recycled content of our plastic trays to 90%. We are involved in
promoting sustainable beef and soy and the reduction on the use of
fish oils in salmon feed. Our efforts are reflected in improved
ratings given by the Business Benchmark on Farm Animal Welfare and
a sector-leading 'B' rating from the Carbon Disclosure Project.
Currency translation
The wide geographical spread of the Group increases its
resilience by minimising its reliance on any one individual
economy. Hilton's results are reported in Sterling and are
therefore sensitive to changes in the value of Sterling compared to
the range of overseas currencies in which the Group trades. During
2019 the average exchange rates for these overseas currencies have
generally weakened against Sterling compared with 2018 which had
the effect of reducing revenues by 1.0%.
Performance overview
2019 saw a significant expansion of Hilton's operations thereby
building a significantly bigger and more diversified business.
Overall volume which includes the 50% share of the Australian,
Portuguese and Dutch joint venture activities increased by 7.8% to
371,715 tonnes (2018: 344,784 tonnes). In 2019 some 69% of the
Group's volumes were produced in countries outside the UK.
The performance of our three operating segments is outlined
below.
Western Europe
Adjusted operating profit of GBP53.1m (2018: GBP 51.5 m) on
turnover of GBP 1,633.7 m (2018: GBP1,550.4m)
This operating segment covers the Group's businesses in the UK,
Ireland, Holland, Sweden, Denmark and Portugal. Volume growth was
6.1% driven primarily by UK meat and seafood and the contribution
by the new vegetarian and sous vide investments. Trading in other
markets was generally good although Dutch volumes were lower. Sales
on a constant currency basis grew by 6.2% reflecting the higher
volumes. Operating margins eased slightly to 3.2% (2018: 3.3%).
Central Europe
Adjusted operating profit of GBP 2.1 m (2018: GBP2.3m) on
turnover of GBP 91.2 m (2018: GBP89.6m)
In Central Europe the Group's meat packing business, based at
Tychy in Poland, supplies customers across Central Europe, from
Hungary to the Baltics. Volumes decreased by 16.8% amid challenging
market conditions partially offset by new fresh convenience food
volume. Constant currency sales increased 3.7% primarily due to
high pork prices. Operating margins declined slightly to 2.5%
(2018: 2.6%).
Australasia
Adjusted operating profit of GBP9.6m (2018: GBP5.5m) on turnover
of GBP89.8m (2018: GBP9.6m)
In Australia the Group operates a joint venture with Woolworths,
under which it earns a 50% share of the agreed service fees charged
by the joint venture company based on the volume of retail packed
meat delivered to Woolworths' stores produced by its plants in
Bunbury, Western Australia and Melbourne, Victoria. We took full
operational control of these plants from July 2018.
Performance was driven by volume growth of 36.6% from the new
Brisbane facility and our share of the joint venture. Constant
currency sales, which excludes the JV activities, increased by
856%. Operating profit increased to GBP9.6m (2018: GBP5.5m).
Resourcing for growth: culture and people
Successful businesses are principally about having the right
people in the right positions at the right time working together as
"one team", with local management teams empowered, encouraged and
advised in specialist areas enabling them to support their local
customers. The Group benefits from each of its businesses being
part of a larger organisation, which enables them to share best
practice solutions, including equipment selection, IT solutions and
ways of working along with the collaborative sharing of new
learnings, ideas and techniques.
We are committed to providing an inclusive working environment
where everyone feels valued, respected and able to fulfil their
potential. We recognise that people from different backgrounds,
countries and experiences can bring benefits to our business. We
fully recognise the benefits of gender diversity and details of the
gender composition of our staff are set out in our Corporate and
social responsibility report.
The Group currently employs over 4,900 colleagues across Europe
and Australia. Our business model is largely decentralised, with
capable, largely self-sufficient management teams running our
businesses in each local country. We consider this devolved
structure to be a critical success factor, achieving close working
relationships with our customers, who benefit from personal,
dedicated, flexible and rapid local support.
The Board fully understands and appreciates just how much our
progress relies on the effort, personal commitment, enthusiasm,
enterprise and initiative of our employees. I would like to take
this opportunity, on behalf of the Board, to personally thank all
of them both for their dedicated efforts during 2019 and their
continuing commitment to the Group's ongoing growth and
development.
Past and future trends
Over recent decades major retailers have progressively
rationalised their supply base through large scale, centralised
packing solutions capable of producing private label packed fresh
food products. This achieves lower costs with higher consistent
food safety, food integrity, traceability and quality standards
allowing supermarket groups to focus on their core retail business
whilst addressing consumers' continuing requirement for quality and
value. This trend towards increased use of centralised packing
solutions is likely to continue, albeit at different speeds across
the world, representing potential future geographical expansion
opportunities for Hilton.
Consumer buying patterns are evolving with more seafood and
vegetarian proteins being eaten. Through Hilton's acquisition of
Seachill and investment in Dalco we are well placed to grow our
business across these proteins.
Philip Heffer
Chief Executive Officer
6 April 2020
Performance and financial review
Summary of Group performance
This performance and financial review covers the main highlights
of the Group's financial performance and position in 2019. Hilton's
overall financial performance saw strong growth in volumes, sales,
profitability and basic earnings per share. Cash flow generation
was strong supporting our continuing significant investment in
facilities.
Basis of preparation
The Group is presenting its results for the 52 week period ended
29 December 2019, with comparative information for the 52 week
period ended 30 December 2018. The financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union
(EU).
The Group has adopted IFRS 16, applying the modified
retrospective approach, and has not restated comparatives for the
year ended 30 December 2018, as permitted under the specific
transitional provisions in the standard. As a result, with the
exception of revenue, the statutory results for 2019 are not
directly comparable with those of 2018. However, in order to
provide a meaningful comparison between the two reporting periods,
financial results for 2019 excluding the impact IFRS 16 are also
presented.
The Board uses adjusted profit before IFRS 16, acquired
intangibles amortisation and exceptional items to measure
performance and considers this metric better reflects the
underlying performance of the business. The adjustment for
acquisition intangibles amortisation of GBP2.4m (2018: GBP2.4m) is
in connection with the 2017 Seachill acquisition. Unless otherwise
stated financial metrics in the Financial highlights, Chairman's
introduction, Chief Executive's summary and this Performance and
financial review refer to the adjusted results.
2019 Financial performance
Volume and revenue
Volumes, which include 50% share of the Australian, Portuguese
and Dutch joint ventures activities, grew by 7.8% in the year
driven by higher Tesco UK participation to 100%, new vegetarian and
sous vide investments and the Brisbane facility in Australia.
Additional details of volume growth by business segment are set out
in the Chief Executive's summary. Revenue increased 10.0% and 11.0%
on a constant currency basis.
Operating profit and margin
Operating profit of GBP54.7m (2018: GBP48.7m) was 12.4% higher
than last year and 13.8% higher on a constant currency basis driven
by the opening of our new facility in Brisbane, Australia, growth
of our UK seafood business and a good performance by the new Dalco
joint venture. IFRS operating profit excluding IFRS 16 was 12.9%
higher at GBP52.3m (2018: GBP46.3m) and GBP55.8m including IFRS 16.
The operating profit margin in 2019 was maintained at 3.0% (2018:
3.0%), and the operating profit per kilogram of packed food sold
increased to 14.7p (2018: 14.1p) attributable to changes in the
Group's product and geographical mix.
Net finance costs
Net finance costs excluding IFRS 16 increased to GBP5.0m (2018:
GBP3.0m) reflecting higher borrowings that financed our expansion
programme. Interest cover in 2019 decreased to 11 times (2018: 16
times) accordingly. Net finance costs including IFRS 16 were
GBP12.6m.
Taxation
The taxation charge excluding IFRS 16 for the period was
GBP10.1m (2018: GBP9.1m). The effective tax rate was 20.2% (2018:
19.9%) reflecting a change in the mix of profits taxed at different
rates in overseas countries, particularly Australia. The taxation
charge including IFRS 16 was GBP8.0m with an effective tax rate of
18.5%.
Net income
Net income, representing profit for the year attributable to
owners of the parent of GBP37.6m (2018: GBP34.5m) was 9.0% higher
than last year. IFRS net income excluding IFRS 16 was GBP35.6m
(2018: GBP32.5m) and including IFRS 16 was GBP33.1m.
Earnings per share
Adjusted basic earnings per share before exceptional items of
46.0p (2018: 42.3p) was 8.7% higher than last year. IFRS basic
earnings per share excluding IFRS 16 were 43.6p (2018: 39.9p) and
including IFRS 16 were 40.5p. Diluted earnings per share were 40.1p
(2018: 39.5p).
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
EBITDA, which is used by the Group as an indicator of cash
generation, excluding IFRS 16 increased by 13.3% to GBP80.1m (2018:
GBP70.7m) reflecting the increase in operating profits together
with higher depreciation charges. EBITDA including IFRS 16 was
GBP102.4m.
Free cash flow and net cash position
Operating cash flow was strong in 2019 with cash flows from
operating activities of GBP70.3m (2018: GBP53.5m). IFRS free cash
outflow after capital expenditure of GBP99.4m and before dividends
and financing was GBP28.5m (2018: GBP35.5m).
Group bank borrowings were GBP198.8m (including GBP1.4m IAS 17
finance liabilities) at the end of 2019 and, with net cash balances
of GBP110.5m, resulted in a closing net bank debt position of
GBP88.2m (2018: GBP26.8m). Net debt including the impact of IFRS 16
was GBP271.5m. At the end of 2019 the Group had undrawn committed
loan facilities under its syndicated banking facilities of GBP71.1m
(2018: GBP201.0m) with a further GBP45.3m added since the end of
the year bringing total committed but undrawn loan facilities to
GBP116.4m.
Dividends
The Board aims to maintain a consistent dividend policy and has
recommended a final dividend of 15.4p per ordinary share in respect
of 2019. This, together with the interim dividend of 6.0p per
ordinary share paid in November 2019, represents a full year
dividend that is unchanged compared with last year. The final
dividend, if approved by shareholders, will be paid on 26 June 2020
to shareholders on the register on 29 May 2020 and the shares will
be ex dividend on 28 May 2020.
Key performance indicators
How we measure our performance against our strategic
objectives
The Board monitors a range of financial and non-financial key
performance indicators (KPIs) to measure the Group's performance
over time in building shareholder value and achieving the Group's
strategic priorities. The nine headline KPI metrics used by the
Board for this purpose, together with our performance over the past
two years, is set out below:
2019 2018 Definition, method of calculation
and analysis
(52 weeks) (52 weeks)
Financial KPIs
------------ ------------ ----------------------------------------------
Year on year revenue growth expressed
as a percentage. The 2019 increase
mainly reflected volume growth and
favourable product and geographical
Revenue growth (%) 10.0% 21.5% mix.
------------ ------------ ----------------------------------------------
Adjusted operating 3.0% 3.0% Adjusted operating profit expressed
profit margin (%) as a percentage of turnover. The operating
profit margin % in 2019 was consistent
with 2018.
------------ ------------ ----------------------------------------------
Adjusted operating 14.7 14.1 Adjusted operating profit per kilogram
profit margin (pence processed and sold in pence. The increase
per kg) in 2019 is attributable to changes
in the Group's product and geographical
mix.
------------ ------------ ----------------------------------------------
Earnings before interest, 80.1 70.7 Adjusted operating profit before depreciation
taxation, depreciation and amortisation. The increase reflected
and amortisation higher operating profits before higher
(EBITDA) (GBPm) depreciation charges.
------------ ------------ ----------------------------------------------
IFRS cash outflow before minorities,
dividends and financing. Cash flow
generation from operating activities
was strong at GBP70m (2018: GBP53m)
before spend on facilities capex spend
Free cash flow (GBPm) (28.5) (35.5) of GBP99m (2018: GBP99m).
------------ ------------ ----------------------------------------------
Gearing ratio (%) 108.4% 37.9% Year end net debt excluding leases
as a percentage of EBITDA. The increase
is due to higher borrowings used to
finance our expansion programme.
------------ ------------ ----------------------------------------------
Non-financial KPIs
------------ ------------ ----------------------------------------------
Growth in sales volumes 7.8% 13.5% Year on year volume growth. Volume
(%) growth was seen principally in the
UK, new vegetarian and sous vide investments
and a new facility in Australia.
------------ ------------ ----------------------------------------------
Employee and labour 51.8 48.1 Labour cost of producing food products
agency costs (pence as a proportion of volume. The increase
per kg) reflects a change in product mix including
a broadening of our product ranges.
------------ ------------ ----------------------------------------------
Customer service 96.8% 98.1% Packs of product delivered as a %
level (%) of the orders placed. The decrease
is due to the start-up of new businesses
and projects during the year.
------------ ------------ ----------------------------------------------
In addition, a much wider range of financial and operating KPIs
are continuously tracked at business unit level.
Going concern statement
The Directors have performed a detailed assessment, including a
review of the Group's budget for the 2020 financial year and its
longer term plans, including consideration of the principal risks
faced by the Group. The evolving Covid-19 outbreak has led to an
increased demand for protein-based products produced by the Group
and the Group's facilities remain fully operational. The Group has
established business continuity plans and flexible supply models in
order to continue to meet this increased demand. The resilience of
the Group in the face of the uncertain challenges presented by
Covid-19 has been assessed by applying significant downside
sensitivities to the Group's cash flow projections. Allowing for
these sensitivities and potential mitigating actions the Board is
satisfied that the Group is able to continue to operate well within
its banking covenants and has adequate headroom under its existing
committed facilities. The Directors are satisfied that the Company
and the Group have adequate resources to continue to operate and
meet its liabilities as they fall due for the foreseeable future, a
period considered to be at least 12 months from the date of signing
these financial statements. For this reason they continue to adopt
the going concern basis for preparing the financial statements.
The Group's bank borrowings as detailed in the financial
statements and the principal banking facilities, which support the
Group's existing and contracted new business, are committed. The
Group is in full compliance with all its banking covenants and
based on forecasts and sensitised projections is expected to remain
in compliance. Future geographical expansion which is not yet
contracted, and which is not built into our 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 they are required.
The Group's internal budgets and forward 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.
Viability statement
In accordance with provision 31 of the 2018 UK Corporate
Governance Code, the Directors confirm that they have a reasonable
expectation that the Group will continue to operate and meet its
liabilities, as they fall due, for the three years ending in
December 2022. A period of three years has been chosen for the
purpose of this viability statement as it is aligned with the
Group's three year plan, which is based on the Group's current
customers and does not incorporate the benefits from any potential
new contract gains over this period.
The Directors' assessment has been made with reference to the
Group's current position and strategy taking into account the
Group's principal risks, including those in relation to Covid-19,
and how these are managed. The strategy and associated principal
risks, which the Directors review at least annually, are
incorporated in the three year plan and such related scenario
testing as is required. The three year plan makes reasoned
assumptions in relation to volume growth based on the position of
our customers and expected changes in the macroeconomic environment
and retail market conditions, expected changes in food raw
material, packaging and other costs, together with the anticipated
level of capital investment required to maintain our facilities at
state of the art levels. The achievement of the three year plan is
not dependent on any new or expanded financing facilities.
Cautionary statement
This Strategic report contains forward-looking statements. Such
statements are based on current expectations and assumptions and
are subject to risk factors and uncertainties which we believe are
reasonable. Accordingly Hilton's actual future results may differ
materially from the results expressed or implied in these
forward-looking statements. We do not undertake to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Nigel Majewski
Chief Financial Officer
6 April 2020
Risk management and principal risks
Risks and risk management
In accordance with provision 28 of the 2018 UK Corporate
Governance Code the Directors confirm that they have carried out a
robust assessment of the emerging and principal risks facing the
Group that might impede the achievement of its strategic and
operational objectives as well as affect performance or cash
position. As a leading food processor in a fast moving environment
it is critical that the Group identifies, assesses and prioritises
its risks. The result of this assessment is a statement of the
principal risks facing the Group together with a description of the
main controls and mitigations that reduce the effect of those risks
were they to crystallise. This, together with the adoption of
appropriate mitigation actions, enables us to monitor, minimise and
control both the probability and potential impact of these
risks.
How we manage risk
Responsibility for risk management across the Group, including
the appropriate identification of risks and the effective
application of actions designed to mitigate those risks, resides
with the Board which believes that a successful risk management
framework carefully balances risk and reward, and applies reasoned
judgement and consideration of potential likelihood and impact in
determining its principal risks. The Group takes a proactive
approach to risk management with well-developed structures and a
range of processes for identifying, assessing, prioritising and
mitigating its key risks, as the delivery of our strategy depends
on our ability to make sound risk informed decisions.
Risk management process and risk appetite
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 outlined
below.
All types of risk applicable to the business are regularly
reviewed and a formal risk assessment 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 combining the set of
business unit risk registers supplemented by formal interviews with
senior executives and Directors of the Group. The Group has a Risk
Management Committee which reports regularly to the Audit Committee
and Board on the substance of the risk assessment and any changes
to the nature of those risks or changes to the likelihood or
materiality of the risk in question. The Risk Management Committee
also reviews progress in control development and implementation of
those key controls related to principal risks listed in this
section of the report. Group Internal Audit derives its risk based
assurance plan on the controls after considering the Risk
Assessment and reports its findings to the Audit Committee. The
Risk Management Committee also oversees the scenario based business
continuity management exercises.
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. These risks, 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.
It must be recognised that systems of internal control are designed
to manage rather than completely eliminate any identified
risks.
Emerging risks
Global pandemic
The current evolving Covid-19 outbreak is a fast moving virus
which presents major challenges for people and economies across the
globe. There is significant uncertainty over the extent of the
impact and longevity of the outbreak. Food production is a key
industry so our challenge is to keep our facilities open, as part
of an integrated supply chain, to ensure that our retailer partners
are able to adapt to the currently increasing consumer demand for
protein-based products. All of our facilities remain fully
operational, and in addition we have established business
continuity and flexible buy models and supply options, which may be
tested during this period as we continue to play our part in
feeding the nation and supporting ongoing demand. The dedication
and resilience of our teams will be tested as we respond to this
challenge.
The health and wellbeing of our people is paramount and we have
established a number of protocols to protect our people and to
minimise contact. We are prioritising those that are most
susceptible to Covid-19 including those with underlying health
conditions. Travel by our colleagues, in line with government
restrictions, is strictly managed as are visitors to, and movements
within, our facilities together with extensive cleaning regimes and
hand-sanitising stations. We have plans in place to respond to any
virus spread within our facilities and to mitigate any resourcing
shortfall through additional use of temporary labour including
those available from other sectors.
We are dependent on our key suppliers to maintain a continued
supply of raw material and packaging materials and we are in daily
contact with them to manage availability and identify key critical
product lines which must be delivered and those that could be
postponed. There have not been any significant issues experienced
to date.
So far we have coped well with the challenges and are confident
that through our local operating model and financial strength we
are well placed.
Brexit
There is continuing uncertainty concerning post Brexit
negotiations on a trade deal and future co-operation with the EU.
Potential impacts on the Group include our ability to hire
employees from the EU, increased trade tariffs on imported goods,
possible border delays, currency volatility and dis-harmonisation
of UK and EU regulatory standards in a range of areas. Hilton's
exposure is somewhat mitigated through its predominantly local
sourcing and operating model. Additionally we meet regularly with
relevant industry bodies and have put in place a range of
contingency measures including rebalancing supply lines to minimise
border crossings, flexible buy models and ongoing communication
with suppliers to increase stock holding. Overall we believe that
the Hilton business is sufficiently resilient to withstand these
uncertainties whilst minimising disruption.
Climate changes
There is increasing concern over the possible impact of climate
changes across the world. Such changes could see a higher incidence
of extreme weather events such as flooding and long term rises in
average temperatures and sea levels. The impact of climate changes
could disrupt our supply chains resulting in increased costs and
added complexity. Hilton is fully committed to responding to such
outcomes and have this under continuous review.
Principal risks
The most significant business risks that the Group faces have
changed little as might be expected with an unchanged and
relatively straightforward business model. These risks, 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, as viewed from the standpoint
of the Group as a whole.
Description The Group strategy focuses on a small number of customers
of risk who can exercise
significant buying power and influence when it comes to contractual
renewal terms at 5 to 15 year intervals.
Its potential The Group has a relatively narrow, but expanding, customer
impact base, with sales to subsidiary or associated companies of
the Tesco and Ahold groups still comprising the larger part
of Hilton's revenue. The larger retail chains have over many
years increased their market share of meat products in many
countries, as customers continue to move away from high street
butchers towards one stop convenience shopping in supermarkets.
This has increased 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
measures has maintained a high level of investment in state of the
and strategies art facilities, which together with management's continuous
adopted focus on reducing costs, allow it to operate very efficiently
at very high throughputs and price its products competitively.
Hilton operates a decentralised, entrepreneurial business
structure, which enables it to work very closely and flexibly
with its retail partners in each country, in order 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.
Hilton has long term supply agreements in place with its
major customers, with pricing either on a cost plus or agreed
packing rate basis.
---------------------------------------------------------------------
Description The Group's growth potential may be affected by the success
of risk of its customers and the
growth of their packed food sales.
Its potential The Group's products predominantly carry the brand labels
impact of the customer to whom packed food is supplied and it is
accordingly dependent on its customers' success in maintaining
or improving consumer perception of their own brand names
and packed food offerings.
------------------------------------------------------------------
Risk mitigation The Group plays a very proactive role in enhancing its customers'
measures and brand values, through providing high quality, competitively
strategies priced products, high service levels, continuing product
adopted and packaging innovation and category management support.
It recognises that quality and traceability assurance are
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
in the supply chain.
------------------------------------------------------------------
Description The progress of the Group's business is affected by the
of risk macroeconomic environment and levels of consumer spending
which is influenced by publicity and the decline in the
consumption of meat in the countries in which it operates.
Its potential No business is immune to difficult economic climates and
impact the consequent pressure on levels of consumer spending,
such as those seen over recent years across Europe.
------------------------------------------------------------------
Risk mitigation With a sound business model including successful diversification
measures and within the vegetarian market, strong retail partners and
strategies a single minded focus on minimising unit packing costs,
adopted whilst maintaining high levels of product quality and integrity,
the Group has made continued progress over recent difficult
economic periods. It expects to be able to continue to make
progress.
------------------------------------------------------------------
Description Under growth conditions the Group's business is reliant
of risk on a small number of key personnel and its ability to manage
growth and change successfully. This risk has increased
with the Group's continued expansion with new customers
and into new territories with potentially greater reliance
on stretched skilled resource and execution of simultaneous
growth projects.
Its 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 an increased rate of growth successfully,
measures and the Group carefully manages its skilled resources including
strategies succession planning and maintaining a talent pipeline. The
adopted Group is evolving its people capability in line with the
geographical expansion and product range. In particular
it recognises that the span of management responsibility
needs to be balanced with an appropriate management structure
within the overall organisation. Hilton continues 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 and in deploying resource to support the growth projects
appropriately. 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.
-----------------------------------------------------------------
Description The Group's current rate of global growth places significant
of risk demands on the effectiveness of integration and compliance
across new political, legislative and regulatory environments.
This risk is further compounded due to the enormity of the
change and programme management activities.
Its potential The Group's ability to effectively manage simultaneously
impact the requirements of the external and internal environments
ensuring first class compliance, change and global programme
management systems.
-------------------------------------------------------------------
Risk mitigation As a Group we have continued to strengthen our in house
measures and capabilities delivering strong investment strategies, best
strategies in class infrastructure integration and governance and compliance
adopted framework. Resources are being put in place and structures
reviewed to enhance project management control and oversight.
Control systems embedded in project management enable the
risks of growth to be appropriately highlighted and managed.
To underscore our efforts we have active relationships with
strong industry experts across all areas of business growth.
-------------------------------------------------------------------
Description The Group's business strength is affected by its ability
of risk to maintain a wide and flexible global food supply base
operating at standards that can continuously achieve the
specifications set by Hilton and its customers.
Its potential The Group is reliant on its suppliers to provide sufficient
impact volume of products, to the agreed specifications, in the
very short lead times required by its customers, with efficient
supply chain management being a key business attribute.
The Group sources certain of its food 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 but
has not done so in recent years.
-------------------------------------------------------------------
Risk mitigation The Group maintains a flexible global food supply base,
measures and which is progressively widening as it expands and is continuously
strategies audited to ensure standards are maintained, so as to have
adopted in place a wide range of options should supply disruptions
occur.
-------------------------------------------------------------------
Description Contamination within the supply chain including outbreaks
of risk of disease and feed contaminants affecting livestock and
fish and media concerns relating to these and instances
of product adulteration can impact the Group's sales.
Its potential Reports in the public domain concerning the risks of consuming
impact certain foods can cause consumer demand 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 meat substitution can affect public confidence in our
products.
----------------------------------------------------------------------
Risk mitigation The Group sources its food from a trusted raw material supply
measures and base, all components of which meet stringent national, international
strategies and customer standards. The Group is subject to demanding
adopted 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. Within our
factories, Global Food Safety Initiative (GFSI) benchmarked
food safety standards and our own factory standard assessments
drive the enhancement of the processes and controls that
are necessary to ensure that the risks of contaminants throughout
the processing, packing and distribution stages are mitigated
and traceable should a risk ever materialise.
----------------------------------------------------------------------
Description Significant incidents such as fire, flood or interruption
of risk of supply of key utilities could impact the Group's business
continuity.
Its potential Such incidents could result in systems or manufacturing
impact process stoppages with consequent disruption and loss of
efficiency which could impact the Group's sales.
---------------------------------------------------------------
Risk mitigation The Group has robust business continuity plans in place
measures and including sister site support protocols enabling other sites
strategies to step in with manufacturing and distribution of key product
adopted lines where necessary. Continuity management systems and
plans are suitably maintained and adequately tested including
building risk assessments and emergency power solutions.
There are appropriate insurance arrangements in place to
mitigate against any associated financial loss.
---------------------------------------------------------------
Description The Group's IT systems could be subject to cyber attacks,
of risk including ransomware and fraudulent external email activity.
These kinds of attacks are generally increasing in frequency
and sophistication.
Its potential The Group's operations are underpinned by a variety of IT
impact systems. Loss or disruption to those IT systems or extended
times to recover data or functionality could impact the
Group's ability to effectively operate its facilities and
affect its sales and reputation.
----------------------------------------------------------------------
Risk mitigation The Group has a robust IT control framework which is tested
measures and frequently by internal staff and by specialist external
strategies bodies. This framework is established as the key control
adopted to mitigate cyber risk and is applied consistently throughout
the Group. The increased prominence of IT risk is mitigated
by investments in IT infrastructure and now forms a regular
part of the Group Risk Management Committee agenda and presentations
to the Board. In accordance with Group strategy IT risk
is considered when looking at new ventures and control measures
implemented in new sites follow the Group common standards.
There is internal training and resources available with
emphasis on prevention, user awareness and recovery. Increasingly,
IT forms part of site business continuity exercises which
test and help develop the capacity to respond to possible
crises or incidents. The technical infrastructure to prevent
attacks and the resilience to recover are continuously developed
to meet emerging threats. IT systems including financial
and banking systems are configured to prevent fraudulent
payments.
----------------------------------------------------------------------
Note: References in this preliminary announcement to the
Strategic report, the Corporate and social responsibility report,
the Directors' report and the Corporate Governance statement 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 financial statements
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, which
have been prepared in accordance with applicable 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 Strategic report
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 6 April 2020 and is signed on its behalf by:
Directors
R Watson Executive Chairman
OBE
N Majewski Chief Financial
Officer
Consolidated income statement
2019 2018
52 weeks 52 weeks
Notes GBP'000 GBP'000
------------------------------------------------- ----- ----------- -----------
Continuing operations
------------------------------------------------- ----- ----------- -----------
Revenue 3 1,814,667 1,649,591
------------------------------------------------- ----- ----------- -----------
Cost of sales (1,566,715) (1,440,193)
------------------------------------------------- ----- ----------- -----------
Gross profit 247,952 209,398
------------------------------------------------- ----- ----------- -----------
Distribution costs (22,778) (18,283)
------------------------------------------------- ----- ----------- -----------
Administrative expenses (175,811) (150,030)
------------------------------------------------- ----- ----------- -----------
Share of profit in joint ventures 6,406 5,213
------------------------------------------------- ----- ----------- -----------
Operating profit 55,769 46,298
------------------------------------------------- ----- ----------- -----------
Finance income 4 96 49
------------------------------------------------- ----- ----------- -----------
Finance costs 4 (12,709) (3,015)
------------------------------------------------- ----- ----------- -----------
Finance costs - net 4 (12,613) (2,966)
------------------------------------------------- ----- ----------- -----------
Profit before income tax 43,156 43,332
================================================= ===== =========== ===========
Income tax expense 5 (7,996) (8,626)
------------------------------------------------- ----- ----------- -----------
Profit for the year 35,160 34,706
------------------------------------------------- ----- ----------- -----------
Attributable to:
------------------------------------------------- ----- ----------- -----------
Owners of the parent 33,065 32,534
------------------------------------------------- ----- ----------- -----------
Non-controlling interests 2,095 2,172
------------------------------------------------- ----- ----------- -----------
35,160 34,706
------------------------------------------------- ----- ----------- -----------
Earnings per share attributable to owners of the
parent during the year
------------------------------------------------- ----- ----------- -----------
Basic (pence) 6 40.5 39.9
------------------------------------------------- ----- ----------- -----------
Diluted (pence) 6 40.1 39.5
------------------------------------------------- ----- ----------- -----------
Consolidated statement of comprehensive income
2019 2018
52 weeks 52 weeks
GBP'000 GBP'000
---------------------------------------------------------- --------- --------
Profit for the year 35,160 34,706
---------------------------------------------------------- --------- --------
Other comprehensive expense
---------------------------------------------------------- --------- --------
Currency translation differences (4,175) (671)
---------------------------------------------------------- --------- --------
Other comprehensive expense for the year net of tax (4,175) (671)
---------------------------------------------------------- --------- --------
Total comprehensive income for the year 30,985 34,035
---------------------------------------------------------- --------- --------
Total comprehensive income attributable to:
---------------------------------------------------------- --------- --------
Owners of the parent 29,186 31,788
---------------------------------------------------------- --------- --------
Non-controlling interests 1,799 2,247
---------------------------------------------------------- --------- --------
30,985 34,035
---------------------------------------------------------- --------- --------
The notes are an integral part of these consolidated financial statements.
Balance sheet
Group Company
2019 2018 2019 2018
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ----- -------- -------- ------- -------
Assets
---------------------------------------- ----- -------- -------- ------- -------
Non-current assets
---------------------------------------- ----- -------- -------- ------- -------
Property, plant and equipment 8 226,562 158,549 - -
---------------------------------------- ----- -------- -------- ------- -------
Intangible assets 9 69,539 66,960 - -
---------------------------------------- ----- -------- -------- ------- -------
Lease: Right of Use Asset 10 178,293 - - -
---------------------------------------- ----- -------- -------- ------- -------
Investments 11,758 5,209 157,221 157,221
---------------------------------------- ----- -------- -------- ------- -------
Trade and other receivables 662 1,227 - -
---------------------------------------- ----- -------- -------- ------- -------
Deferred income tax assets 2,270 1,653 - -
---------------------------------------- ----- -------- -------- ------- -------
489,084 233,598 157,221 157,221
---------------------------------------- ----- -------- -------- ------- -------
Current assets
---------------------------------------- ----- -------- -------- ------- -------
Inventories 91,337 82,190 - -
---------------------------------------- ----- -------- -------- ------- -------
Trade and other receivables 214,611 172,465 10,272 272
---------------------------------------- ----- -------- -------- ------- -------
Current tax assets - 769 - -
---------------------------------------- ----- -------- -------- ------- -------
Other financial asset - 7,813 - -
---------------------------------------- ----- -------- -------- ------- -------
Cash and cash equivalents 110,514 80,234 122 82
---------------------------------------- ----- -------- -------- ------- -------
416,462 343,471 10,394 354
---------------------------------------- ----- -------- -------- ------- -------
Total assets 905,546 577,069 167,615 157,575
---------------------------------------- ----- -------- -------- ------- -------
Equity
---------------------------------------- ----- -------- -------- ------- -------
Equity attributable to owners of the parent
----------------------------------------------- -------- -------- ------- -------
Ordinary shares 8,173 8,160 8,173 8,160
---------------------------------------- ----- -------- -------- ------- -------
Share premium 64,251 63,628 64,251 63,628
---------------------------------------- ----- -------- -------- ------- -------
Employee share schemes reserve 4,139 5,505 - -
---------------------------------------- ----- -------- -------- ------- -------
Foreign currency translation reserve 255 4,134 - -
---------------------------------------- ----- -------- -------- ------- -------
Retained earnings 140,192 124,923 24,172 14,768
---------------------------------------- ----- -------- -------- ------- -------
Reverse acquisition reserve (31,700) (31,700) - -
---------------------------------------- ----- -------- -------- ------- -------
Merger reserve 919 919 71,019 71,019
---------------------------------------- ----- -------- -------- ------- -------
186,229 175,569 167,615 157,575
---------------------------------------- ----- -------- -------- ------- -------
Non-controlling interests 5,711 5,677 - -
---------------------------------------- ----- -------- -------- ------- -------
Total equity 191,940 181,246 167,615 157,575
---------------------------------------- ----- -------- -------- ------- -------
Liabilities
---------------------------------------- ----- -------- -------- ------- -------
Non-current liabilities
---------------------------------------- ----- -------- -------- ------- -------
Borrowings 11 175,370 107,923 - -
---------------------------------------- ----- -------- -------- ------- -------
Lease liabilities 10 132,790 1,503 - -
---------------------------------------- ----- -------- -------- ------- -------
Deferred consideration 3,318 - - -
---------------------------------------- ----- -------- -------- ------- -------
Deferred income tax liabilities 4,116 6,104 - -
---------------------------------------- ----- -------- -------- ------- -------
315,594 115,530 - -
---------------------------------------- ----- -------- -------- ------- -------
Current liabilities
---------------------------------------- ----- -------- -------- ------- -------
Borrowings 11 21,969 5,118 - -
---------------------------------------- ----- -------- -------- ------- -------
Lease liabilities 10 51,843 290 - -
---------------------------------------- ----- -------- -------- ------- -------
Trade and other payables 321,771 274,885 - -
---------------------------------------- ----- -------- -------- ------- -------
Current tax liabilities 2,429 - - -
---------------------------------------- ----- -------- -------- ------- -------
398,012 280,293 - -
---------------------------------------- ----- -------- -------- ------- -------
Total liabilities 713,606 395,823 - -
---------------------------------------- ----- -------- -------- ------- -------
Total equity and liabilities 905,546 577,069 167,615 157,575
---------------------------------------- ----- -------- -------- ------- -------
The notes are an integral part of these consolidated financial statements.
The financial statements were approved by the Board on 06 April 2020 and
were signed on its behalf by:
R. Watson N. Majewski
Director Director
Hilton Food Group plc - Registered number: 06165540
The Company has taken advantage of the exemption in Section 408
Companies Act 2006 not to publish its individual income statement,
statement of comprehensive income and related notes. Profit for the
year dealt with in the income statement of Hilton Food Group plc
amounted to GBP27,200,000 (2018: GBP14,800,000).
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 1
January
2018 8,135 62,335 5,723 4,880 108,358 (31,700) 919 158,650 5,094 163,744
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 32,534 - - 32,534 2,172 34,706
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Other
comprehensive
income
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Currency
translation
differences - - - (746) - - - (746) 75 (671)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - (746) 32,534 - - 31,788 2,247 34,035
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 25 1,293 - - - - - 1,318 - 1,318
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Adjustment in
respect
of employee
share
schemes - - (238) - - - - (238) - (238)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Tax on employee share
schemes - - 20 - - - - 20 - 20
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (15,969) - - (15,969) (1,664) (17,633)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
transactions
with owners 25 1,293 (218) - (15,969) - - (14,869) (1,664) (16,533)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 30
December
2018 8,160 63,628 5,505 4,134 124,923 (31,700) 919 175,569 5,677 181,246
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 33,065 - - 33,065 2,095 35,160
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Other
comprehensive
income
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Currency translation
differences - - - (3,879) - - - (3,879) (296) (4,175)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - (3,879) 33,065 - - 29,186 1,799 30,985
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 13 623 - - - - - 636 - 636
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Adjustment in
respect
of employee
share
schemes - - (1,445) - - - - (1,445) - (1,445)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Tax on employee share
schemes - - 79 - - - - 79 - 79
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (17,796) - - (17,796) (1,765) (19,561)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total transactions
with owners 13 623 (1,366) - (17,796) - - (18,526) (1,765) (20,291)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 29
December
2019 8,173 64,251 4,139 255 140,192 (31,700) 919 186,229 5,711 191,940
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Company
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 1
January
2018 8,135 62,335 - - 15,937 - 71,019 157,426
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 14,800 - - 14,800
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - - 14,800 - - 14,800
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 25 1,293 - - - - - 1,318
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (15,969) - - (15,969)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
transactions
with owners 25 1,293 - - (15,969) - - (14,651)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 30
December
2018 8,160 63,628 - - 14,768 - 71,019 157,575
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 27,200 - - 27,200
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - - 27,200 - - 27,200
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 13 623 - - - - - 636
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (17,796) - - (17,796)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total transactions
with owners 13 623 - - (17,796) - - (17,160)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 29
December
2019 8,173 64,251 - - 24,172 - 71,019 167,615
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
The notes are an integral part of these consolidated financial
statements.
Cash flow statements
Group Company
2019 2018 2019 2018
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 12 90,376 66,166 - -
-------------------------------------------- ----- -------- -------- -------- --------
Interest paid (12,709) (3,015) - -
-------------------------------------------- ----- -------- -------- -------- --------
Income tax paid (7,410) (9,666) - -
-------------------------------------------- ----- -------- -------- -------- --------
Net cash generated from operating
activities 70,257 53,485 - -
-------------------------------------------- ----- -------- -------- -------- --------
Cash flows from investing activities
-------------------------------------------- ----- -------- -------- -------- --------
Acquisition of subsidiary, net of
cash acquired 591 - - -
-------------------------------------------- ----- -------- -------- -------- --------
Investment in joint ventures (5,246) - - -
-------------------------------------------- ----- -------- -------- -------- --------
Purchases of property, plant and
equipment (98,555) (98,412) - -
-------------------------------------------- ----- -------- -------- -------- --------
Proceeds from sale of property, plant
and equipment 198 308 - -
-------------------------------------------- ----- -------- -------- -------- --------
Purchases of intangible assets (830) (930) - -
-------------------------------------------- ----- -------- -------- -------- --------
Interest received 96 49 - -
-------------------------------------------- ----- -------- -------- -------- --------
Dividends received - - 27,200 14,800
-------------------------------------------- ----- -------- -------- -------- --------
Dividends received from joint venture 4,995 9,958 - -
-------------------------------------------- ----- -------- -------- -------- --------
Net cash (used in)/generated from
investing activities (98,751) (89,027) 27,200 14,800
-------------------------------------------- ----- -------- -------- -------- --------
Cash flows from financing activities
-------------------------------------------- ----- -------- -------- -------- --------
Proceeds from borrowings 95,596 69,646 - -
-------------------------------------------- ----- -------- -------- -------- --------
Repayments of borrowings (8,311) (8,163) - -
-------------------------------------------- ----- -------- -------- -------- --------
Payment of lease liability (14,776) - - -
-------------------------------------------- ----- -------- -------- -------- --------
Issue of inter-company loan - - (10,000) -
-------------------------------------------- ----- -------- -------- -------- --------
Issue of ordinary shares 636 1,047 636 1,047
-------------------------------------------- ----- -------- -------- -------- --------
Other financial asset 7,513 - - -
-------------------------------------------- ----- -------- -------- -------- --------
Dividends paid to owners of the parent (17,796) (15,969) (17,796) (15,969)
-------------------------------------------- ----- -------- -------- -------- --------
Dividends paid to non-controlling
interests (1,765) (1,664) - -
-------------------------------------------- ----- -------- -------- -------- --------
Net cash generated from/(used in)
financing activities 61,097 44,897 (27,160) (14,922)
-------------------------------------------- ----- -------- -------- -------- --------
Net increase/(decrease) in cash and
cash equivalents 32,603 9,355 40 (122)
-------------------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents at beginning
of the year 80,234 70,853 82 204
-------------------------------------------- ----- -------- -------- -------- --------
Exchange gains on cash and cash equivalents (2,323) 26 - -
-------------------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents at end
of the year 110,514 80,234 122 82
-------------------------------------------- ----- -------- -------- -------- --------
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 leading specialist international food
packing business supplying major international food retailers in
fourteen European countries and Australia. The Company's
subsidiaries are listed in a note to the full financial
statements.
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 29 December 2019
(prior financial year 52 weeks to 30 December 2018).
This preliminary announcement was approved for issue on 6 April
2020.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 30 December 2018, with the
exception of changes to the way the Group accounts for leases
following the adoption of IFRS 16 Leases.
IFRS 16 - Leases
This note explains the impact of the adoption of IFRS 16
"Leases" on the Group's condensed consolidated financial
information and discloses the new accounting policies that have
been applied from 31 December 2018. The Group has adopted IFRS 16
early, applying the modified retrospective approach, and has not
restated comparatives for the reporting period ended 30 December
2018, as permitted under the specific transitional provisions in
the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in the opening
balance sheet on 31 December 2018.
Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 "Leases". These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 31 December 2018. The weighted average lessee's
incremental borrowing rates applied to leases ranged from 1.8% -
5.2% and were dependent on tenor of the property lease liabilities
and the country in which the lease agreement was entered into.
For leases previously classified as finance leases the Group has
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right-of-use asset and the lease liability at the date of
initial application. The measurement principles of IFRS 16 are only
applied after that date.
GBP'000
================================================= ========
Operating lease commitment disclosed as
at 30 December 2018 100,106
================================================= ========
Less: short term and low value leases recognised
on a straight line basis (1,463)
================================================= ========
Add: Adjustments as a result of changes
to treatment of extension and termination
options 16,765
================================================= ========
Add: Increase in lease liabilities resulting
from changes to assessment of purchase
options 51,518
================================================= ========
Less: Impact of discounting using incremental
borrowing rates (25,771)
------------------------------------------------- --------
Lease liability recognised following adoption
of IFRS 16 141,155
================================================= ========
Add: Existing finance lease liabilities
at 30 December 2018 1,793
------------------------------------------------- --------
Opening lease liability recognised at 31
December 2018 142,948
------------------------------------------------- --------
Of which were:
================================================= ========
Current lease liabilities 22,053
================================================= ========
Non-current lease liabilities 120,895
------------------------------------------------- --------
142,948
------------------------------------------------- --------
Right-of use assets for all leases were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid
or accrued lease payments relating to those leases recognised in
the balance sheet as at 30 December 2018.
The recognised right-of-use assets relates to leases of land and
buildings and other assets classes.
29 December 31 December
2019 2018
GBP'000 GBP'000
==================== =========== ============
Land and buildings 132,940 77,748
==================== =========== ============
Other leased assets 45353 62,899
-------------------- ----------- ------------
Total 178,293 140,647
-------------------- ----------- ------------
The change in accounting policy affected the following items in
the balance sheet on 31 December 2018:
- property, plant and equipment - decrease by GBP930,000
- right-of-use assets - increase by GBP140,647,000
- prepayments and other receivables - decrease by GBP840,000
- lease liabilities - increase by GBP141,155,000
- other liabilities - decrease by GBP2,278,000
There was no deferred tax impact.
The impact was an increase in total assets and total liabilities
of GBP138,877,000.
The Group's 2018 financial statements included the disclosure of
expected opening balances for right of use assets and lease
liabilities of GBP94m-98m, however this has been re-assessed to be
GBP140.6m as summarised above. This re-assessment has resulted
following a further review of how purchase options were reflected
in
expected lease cash flows.
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
- the exclusion of leases with a remaining lease term of less than 12
months as at 31 December 2018, from the calculation of right-of-use
assets and lease liabilities;
- the exclusion of leases of low value assets;
- exclusion of initial direct costs from the measurement of the right-of-use
asset at the date of initial application; and
- the use of hindsight in determining the lease term where the contract
contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying IAS 17 and IFRIC 4
"Determining whether an Arrangement contains a Lease".
Group leasing activities and accounting treatment
The Group's leases relate to property leases for a number of
food processing facilities, leases of plant and equipment and
leases of motor vehicles. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and
conditions
Until the 2018 financial year, leases of property, plant and
equipment were classified as either finance or operating leases in
accordance with IAS 17. Payments made under operating leases were
charged to profit or loss on a straight-line basis over the period
of the lease.
From 31 December 2018, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is
allocated between the repayment of the lease liability and finance
cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The
right-of-use asset is depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. The
depreciation is being charged to administration expenses in the
Group's Income Statement, in-line with where depreciation has
previously been recorded.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- fixed payments (including in-substance fixed payments), less any lease
incentives receivable;
- variable lease payments that are based on an index or a rate;
- the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; and,
- payments of penalties for terminating the lease, if the lease term reflects
the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
- the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date less any
lease incentives received; and
- any initial direct costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
IT-equipment and small items of office equipment.
Extension and termination options
Extension and termination options are included in a number of
property leases across the Group. The majority of extension and
termination options held are exercisable only by the Group and not
by the respective lessor.
Basis of preparation
The consolidated and company financial statements of Hilton Food
Group plc have been prepared under the historical cost convention
and 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 and company financial statements have been
prepared on the going concern basis. The reasons why the Directors
consider this basis to be appropriate are set out in the
Performance and financial review.
The financial statements are presented in Sterling and all
values are rounded to the nearest thousand (GBP'000) except when
otherwise indicated.
The financial information included in this preliminary
announcement does not constitute statutory accounts of the Group
for the years ended 29 December 2019 and 30 December 2018 but is
derived from those accounts. Statutory accounts for 2018 have been
delivered to the Registrar of Companies and those for 2019 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 nine 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; vii) Portugal; viii) Australasia and
ix) Central costs. The United Kingdom, Netherlands, Republic of
Ireland, Sweden, Denmark and Portugal have been aggregated into one
reportable segment 'Western Europe' as they have similar economic
characteristics as identified in IFRS 8. Central Europe,
Australasia and Central costs comprise the other reportable
segments.
In the prior year, Central costs included both the new
Australasian segment and Central costs. 2018 segmental information
has been restated to present these separately.
From a product perspective the Executive Directors consider that
the Group has only one identifiable product, wholesaling of food
protein products including meat, fish and vegetarian. 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 2019 Western Central 2018
Europe Europe Central Total Europe Europe Central Total
Australasia costs Australasia costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Total revenue 1,671,113 94,330 89,772 - 1,855,215 1,584,185 100,102 9,640 - 1,693,927
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Inter-co
revenue (37,457) (3,091) - - (40,548) (33,781) (10,555) - - (44,336)
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Third party
revenue 1,633,656 91,239 89,772 - 1,814,667 1,550,404 89,547 9,640 - 1,649,591
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Operating
profit/(loss)
segment result 53,178 2,299 12,840 (10,110) 58,207 51,456 2,307 5,522 (10,603) 48,682
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Intangibles
amortisation (2,438) - - - (2,438) (2,384) - - - (2,384)
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Operating
profit/(loss)
segment result 50,740 2,299 12,840 (10,110) 55,769 49,072 2,307 5,522 (10,603) 46,298
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Finance income 5 - 91 - 96 4 45 - - 49
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Finance costs (2,931) (301) (7,523) (1,954) (12,709) (1,614) (14) (55) (1,332) (3,015)
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Income tax
(expense)/credit (9,452) (412) 393 1,475 (7,996) (9,796) (461) (350) 1,981 (8,626)
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Profit/(loss)
for the year 38,362 1,586 5,801 (10,589) 35,160 37,666 1,877 5,117 (9,954) 34,706
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Depreciation
and amortisation 28,086 1,928 15,286 122 45,422 21,121 1,035 185 123 22,464
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Additions
to non-current
assets 30,867 19,160 48,941 417 99,385 45,643 6,681 44,432 2,586 99,342
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Segment assets 494,662 46,920 348,293 13,401 903,276 431,896 26,590 102,971 13,190 574,647
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Current income
tax assets - 769
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Deferred
income tax
assets 2,270 1,653
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Total assets 905,546 577,069
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Segment
liabilities 272,609 29,742 329,449 75,261 707,061 248,562 17,239 81,621 42,297 389,719
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Current income
tax liabilities 2,429 -
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Deferred
income tax
liabilities 4,116 6,104
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Total liabilities 713,606 395,823
----------------- --------- ------- ----------- -------- --------- --------- -------- ----------- -------- ---------
Sales between segments are carried out at arm's length.
The Executive Directors assess the performance of each operating
segment based on its operating profit before exceptional items and
amortisation of acquired intangibles. 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 has five principal customers (comprising groups of
entities known to be under common control), Tesco, Ahold, Coop
Danmark, ICA Gruppen and Woolworths. 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 and
Australasia.
Analysis of revenues from external customers and non-current
assets are as follows:
Non-current assets
Revenues from external excluding deferred
customers tax assets
------------------------ ---------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by geographical area
----------------------------------------- ----------- ----------- ---------- ---------
United Kingdom - country of domicile 960,919 856,611 180,418 135,760
----------------------------------------- ----------- ----------- ---------- ---------
Netherlands 281,807 296,621 3,967 5,424
----------------------------------------- ----------- ----------- ---------- ---------
Sweden 197,085 206,610 9,322 11,744
----------------------------------------- ----------- ----------- ---------- ---------
Republic of Ireland 88,526 87,696 4,474 5,294
----------------------------------------- ----------- ----------- ---------- ---------
Denmark 105,319 102,866 17,323 19,589
----------------------------------------- ----------- ----------- ---------- ---------
Central Europe 91,239 89,547 26,546 9,374
----------------------------------------- ----------- ----------- ---------- ---------
Australasia 89,772 9,640 244,764 44,760
----------------------------------------- ----------- ----------- ---------- ---------
1,814,667 1,649,591 486,814 231,945
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by principal customer
----------------------------------------- ----------- ----------- ---------- ---------
Customer 1 980,224 901,585
----------------------------------------- ----------- ----------- ---------- ---------
Customer 2 301,296 316,788
----------------------------------------- ----------- ----------- ---------- ---------
Customer 3 208,230 220,684
----------------------------------------- ----------- ----------- ---------- ---------
Customer 4 103,233 100,792
----------------------------------------- ----------- ----------- ---------- ---------
Customer 5 89,772 9,640
----------------------------------------- ----------- ----------- ---------- ---------
Other 131,912 100,102
----------------------------------------- ----------- ----------- ---------- ---------
1,814,667 1,649,591
----------------------------------------- ----------- ----------- ---------- ---------
4 Finance income and costs
2019 2018
Group GBP'000 GBP'000
-------------------------------------------- -------- -------
Finance income
-------------------------------------------- -------- -------
Interest income on short term bank deposits 91 46
-------------------------------------------- -------- -------
Other interest income 5 3
-------------------------------------------- -------- -------
Finance income 96 49
-------------------------------------------- -------- -------
Finance costs
-------------------------------------------- -------- -------
Bank borrowings (3,514) (1,869)
-------------------------------------------- -------- -------
Interest on lease liabilities (7,694) (60)
-------------------------------------------- -------- -------
Other interest expense (1,501) (1,086)
-------------------------------------------- -------- -------
Finance costs (12,709) (3,015)
-------------------------------------------- -------- -------
Finance costs - net (12,613) (2,966)
-------------------------------------------- -------- -------
5 Income tax expense
2019 2018
Group GBP'000 GBP'000
-------------------------------------------------- ------- -------
Current income tax
-------------------------------------------------- ------- -------
Current tax on profits for the year 10,681 8,926
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years (87) (253)
-------------------------------------------------- ------- -------
Total current tax 10,594 8,673
-------------------------------------------------- ------- -------
Deferred income tax
-------------------------------------------------- ------- -------
Origination and reversal of temporary differences (2,875) (136)
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years 277 89
-------------------------------------------------- ------- -------
Total deferred tax (2,598) (47)
-------------------------------------------------- ------- -------
Income tax expense 7,996 8,626
-------------------------------------------------- ------- -------
Deferred tax credit directly to equity during the year in
respect of employee share schemes amounted to GBP79,000 (2018:
credit GBP20,000).
Factors affecting future tax charges
The Group operates in numerous tax jurisdictions around the
world and is subject to factors that may affect future tax charges
including transfer pricing, tax rate changes and tax legislation
changes.
The prevailing UK corporation tax rate of 19% was substantively
enacted as part of the Finance Act 2019 on 12 March 2019. This rate
was due to reduce to 17% from April 2020, however, in the budget on
12 March 2020 it was announced that the main rate of UK corporation
tax will be held at 19%. The deferred tax assets and liabilities
are calculated reflecting appropriate rates.
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 19% (2018: 19%) applied to profits of the
consolidated entities as follows:
2019 2018
GBP'000 GBP'000
========================================================== ======= =======
Profit before income tax 43,156 43,332
---------------------------------------------------------- ------- -------
Tax calculated at the standard rate of UK Corporation Tax
19% (2018: 19%) 8,200 8,233
---------------------------------------------------------- ------- -------
Expenses not deductible for tax purposes 367 737
---------------------------------------------------------- ------- -------
Joint venture received net of tax (1,217) (990)
---------------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years 190 (164)
---------------------------------------------------------- ------- -------
Profits taxed at rates other than 19% (2018: 19%) 694 804
---------------------------------------------------------- ------- -------
Deferred tax on IFRS 16 (280) -
---------------------------------------------------------- ------- -------
Other 42 6
---------------------------------------------------------- ------- -------
Income tax expense 7,996 8,626
---------------------------------------------------------- ------- -------
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.
2019 2018
Group Basic Diluted Basic Diluted
------------------------------------ ------------ ------ ------- ------ -------
Profit attributable to owners of
the parent (GBP'000) 33,065 33,065 32,534 32,534
------------------------------------ ------------ ------ ------- ------ -------
Weighted average number of ordinary
shares in issue (thousands) 81,665 81,665 81,482 81,482
------------------------------------ ------------ ------ ------- ------ -------
Adjustment for share options (thousands) - 836 - 981
------------------------------------ ------------ ------ ------- ------ -------
Adjusted weighted average number
of ordinary shares (thousands) 81,665 82,501 81,482 82,463
------------------------------------ ------------ ------ ------- ------ -------
Basic and diluted earnings per
share (pence) 40.5 40.1 39.9 39.5
------------------------------------ ------------ ------ ------- ------ -------
7 Dividends
2019 2018
Group and Company GBP'000 GBP'000
----------------------------------------------------------- ------- -------
Final dividend in respect of 2018 paid 15.8p per ordinary
share (2017: 14.0p) 12,893 11,400
----------------------------------------------------------- ------- -------
Interim dividend in respect of 2019 paid 6.0p per ordinary
share (2018: 5.6p) 4,903 4,569
----------------------------------------------------------- ------- -------
Total dividends paid 17,796 15,969
----------------------------------------------------------- ------- -------
The Directors propose a final dividend of 15.4p per share
payable on 26 June 2020 to shareholders who are on the register at
29 May 2020. This dividend totalling GBP12.6m has not been
recognised as a liability in these consolidated financial
statements.
8 Property, plant and equipment
Land and
buildings
(including
leasehold Plant and Fixtures
improvements) machinery and fittings Motor vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------------- ---------- ------------- -------------- --------
Cost
--------------------------------- -------------- ---------- ------------- -------------- --------
At 1 January 2018 48,435 215,390 13,695 345 277,865
--------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments 421 80 (80) 1 422
--------------------------------- -------------- ---------- ------------- -------------- --------
Additions 29,472 67,853 932 155 98,412
--------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (3,019) (463) (420) (149) (4,051)
--------------------------------- -------------- ---------- ------------- -------------- --------
At 30 December 2018 75,309 282,860 14,127 352 372,648
--------------------------------- -------------- ---------- ------------- -------------- --------
Accumulated depreciation
--------------------------------- -------------- ---------- ------------- -------------- --------
At 1 January 2018 24,944 160,930 11,269 126 197,269
--------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments 135 666 (69) 1 733
--------------------------------- -------------- ---------- ------------- -------------- --------
Charge for the year 3,166 15,682 989 84 19,921
--------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (2,939) (382) (420) (83) (3,824)
--------------------------------- -------------- ---------- ------------- -------------- --------
At 30 December 2018 25,306 176,896 11,769 128 214,099
--------------------------------- -------------- ---------- ------------- -------------- --------
Net book amount
--------------------------------- -------------- ---------- ------------- -------------- --------
At 1 January 2018 23,491 54,460 2,426 219 80,596
--------------------------------- -------------- ---------- ------------- -------------- --------
At 30 December 2018 50,003 105,964 2,358 224 158,549
--------------------------------- -------------- ---------- ------------- -------------- --------
Cost
--------------------------------- -------------- ---------- ------------- -------------- --------
At 31 December 2018 75,309 282,860 14,127 352 372,648
--------------------------------- -------------- ---------- ------------- -------------- --------
IFRS 16 transfer to Right-of-Use
asset (3,484) - - - (3,484)
--------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (1,940) (11,328) (597) (3) (13,868)
--------------------------------- -------------- ---------- ------------- -------------- --------
Acquisition 33 817 - - 850
--------------------------------- -------------- ---------- ------------- -------------- --------
Additions 23,592 72,176 2,712 75 98,555
--------------------------------- -------------- ---------- ------------- -------------- --------
Transfer to intangible assets - (953) - - (953)
--------------------------------- -------------- ---------- ------------- -------------- --------
Disposals - (1,031) (199) (150) (1,380)
--------------------------------- -------------- ---------- ------------- -------------- --------
At 29 December 2019 93,510 342,541 16,043 274 452,368
--------------------------------- -------------- ---------- ------------- -------------- --------
Accumulated depreciation
--------------------------------- -------------- ---------- ------------- -------------- --------
At 31 December 2018 25,306 176,896 11,769 128 214,099
--------------------------------- -------------- ---------- ------------- -------------- --------
IFRS 16 transfer to Right-of-Use
asset (2,600) - - - (2,600)
--------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (608) (7,172) (513) (2) (8,295)
--------------------------------- -------------- ---------- ------------- -------------- --------
Charge for the year 3,586 18,818 1,321 76 23,801
--------------------------------- -------------- ---------- ------------- -------------- --------
Disposals - (876) (198) (125) (1,199)
--------------------------------- -------------- ---------- ------------- -------------- --------
At 29 December 2019 25,684 187,666 12,379 77 225,806
--------------------------------- -------------- ---------- ------------- -------------- --------
Net book amount
--------------------------------- -------------- ---------- ------------- -------------- --------
At 29 December 2019 67,826 154,875 3,664 197 226,562
--------------------------------- -------------- ---------- ------------- -------------- --------
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 GBP37,708,439 (2018: GBP52,923,000).
Additions includes GBP5,600,000 transferred from Right-of-use
assets in the year (note 15).
9 Intangible assets
Brand and
Computer customer
software relationships Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- -------------- -------- -------
Cost
-------------------------------- --------- -------------- -------- -------
At 1 January 2018 5,357 21,907 44,793 72,057
-------------------------------- --------- -------------- -------- -------
Exchange adjustments (14) - - (14)
-------------------------------- --------- -------------- -------- -------
Additions 930 - - 930
-------------------------------- --------- -------------- -------- -------
At 30 December 2018 6,273 21,907 44,793 72,973
-------------------------------- --------- -------------- -------- -------
Accumulated amortisation
-------------------------------- --------- -------------- -------- -------
At 1 January 2018 3,125 360 - 3,485
-------------------------------- --------- -------------- -------- -------
Exchange adjustments (15) - - (15)
-------------------------------- --------- -------------- -------- -------
Charge for the year 159 2,384 - 2,543
-------------------------------- --------- -------------- -------- -------
At 30 December 2018 3,269 2,744 - 6,013
-------------------------------- --------- -------------- -------- -------
Net book amount
-------------------------------- --------- -------------- -------- -------
At 1 January 2018 2,232 21,547 44,793 68,572
-------------------------------- --------- -------------- -------- -------
At 30 December 2018 3,004 19,163 44,793 66,960
-------------------------------- --------- -------------- -------- -------
Cost
-------------------------------- --------- -------------- -------- -------
At 31 December 2018 6,273 21,907 44,793 72,973
-------------------------------- --------- -------------- -------- -------
Exchange adjustments (173) - - (173)
-------------------------------- --------- -------------- -------- -------
Acquisition - 653 2,789 3,442
-------------------------------- --------- -------------- -------- -------
Additions 830 - - 830
-------------------------------- --------- -------------- -------- -------
Transfer from property, plant &
equipment 953 - - 953
-------------------------------- --------- -------------- -------- -------
Disposals (25) - - (25)
-------------------------------- --------- -------------- -------- -------
At 29 December 2019 7,858 22,560 47,582 78,000
-------------------------------- --------- -------------- -------- -------
Accumulated amortisation
-------------------------------- --------- -------------- -------- -------
At 31 December 2018 3,269 2,744 - 6,013
-------------------------------- --------- -------------- -------- -------
Exchange adjustments (148) - - (148)
-------------------------------- --------- -------------- -------- -------
Charge for the year 183 2,438 - 2,621
-------------------------------- --------- -------------- -------- -------
Disposals (25) - - (25)
-------------------------------- --------- -------------- -------- -------
At 29 December 2019 3,279 5,182 - 8,461
-------------------------------- --------- -------------- -------- -------
Net book amount
-------------------------------- --------- -------------- -------- -------
At 29 December 2019 4,579 17,378 47,582 69,539
-------------------------------- --------- -------------- -------- -------
Amortisation charges are included within administrative expenses
in the income statement.
Goodwill Impairment Testing
Goodwill includes GBP44,793,000 relating to the acquisition of
the Seachill business in 2017. The recoverable amount of the
Seachill cash generating unit was determined on a value-in-use
basis, using cash flow projections based on one-year budgets
approved by the board and longer term financial projections, and
exceeded the carrying amount. The key assumptions used in the
value-in-use calculations are projected EBITDA, the pre-tax
discount rate and the growth rate used to extrapolate cash flows
beyond the projected period. EBITDA is based on past experience
adjusted to take account of the impact of expected changes to sales
prices, volumes, business mix and margin. Cash flows are discounted
at 11% and a growth rate of 2% has been used to extrapolate cash
flows.
Goodwill of GBP2,789,000 has been recognised, during the year,
following the acquisition of SV Cuisine Limited (formerly HFR Food
Solutions Limited) in February 2019. SV Cuisine will form a
separate cash generating unit for impairment testing purposes,
which will begin in the following financial year.
Sensitivity to changes in assumptions
The calculation is most sensitive to changes in the assumptions
used for projected cash flow, the pre-tax discount rate and the
growth rate. Management considers that reasonably possible changes
in assumptions would be an increase in discount rate of one
percentage point, a reduction in growth rate of 1 percentage point
or a 10% reduction in budgeted cash flow. As an indication of
sensitivity, when applied to the value-in-use calculation neither a
1% reduction in growth rate, a 10% reduction in budgeted cash flow,
nor a 1% increase in the discount rate would have resulted in an
impairment of goodwill in the year.
No indicators of impairment were identified in respect of other,
amortised, intangible assets and therefore no impairment review has
been undertaken.
10 Leases
(i) Amounts recognised in the balance
sheet
The balance sheet includes the following
amounts relating to leases:
Land & Buildings Equipment Vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ---------------- ---------- ------------ ----------------
Opening net book amount as at 31
December 2018 (1) 77,748 60,725 2,174 140,647
--------------------------------------- ---------------- ---------- ------------ ----------------
Exchange Adjustments (4,060) (1,828) (77) (5,965)
--------------------------------------- ---------------- ---------- ------------ ----------------
Additions 67,975 108 1,432 69,515
--------------------------------------- ---------------- ---------- ------------ ----------------
Acquisition 232 - - 232
--------------------------------------- ---------------- ---------- ------------ ----------------
Transfer to tangible fixed assets (5,660) - - (5,660)
--------------------------------------- ---------------- ---------- ------------ ----------------
Remeasurements, reclassification
and scope changes 6,547 (8,066) 43 (1,476)
--------------------------------------- ---------------- ---------- ------------ ----------------
Depreciation (9,842) (8,260) (898) (19,000)
--------------------------------------- ---------------- ---------- ------------ ----------------
Closing net book amount at 29 December
2019 132,940 42,679 2,674 178,293
--------------------------------------- ---------------- ---------- ------------ ----------------
Lease liabilities 2019 31 Dec 2018(1)
Group GBP'000 GBP'000
--------------------------------------- ---------------- ---------- ------------ ----------------
Current 51,843 22,053
--------------------------------------- ---------------- ---------- ------------ ----------------
Non-current 132,790 120,895
--------------------------------------- ---------------- ---------- ------------ ----------------
184,633 142,948
--------------------------------------- ---------------- ---------- ------------ ----------------
1 - In the previous year the Group only recognised lease assets and lease
liabilities in relation to leases that were classified as finance leases
under IAS 17, 'Leases'. The assets were presented as property, plant and
equipment and the liabilities as part of the group's borrowings. For adjustments
recognised on adoption of IFRS 16 on 31 December 2019, refer to note 2.
Maturity analysis - contractual undiscounted
cashflows 2019
Group GBP'000
--------------------------------------------------------- ---------- ------------ ----------------
Less than one year 58,130
--------------------------------------- ---------------- ---------- ------------ ----------------
One to five years 50,625
--------------------------------------- ---------------- ---------- ------------ ----------------
More than five years 125,049
--------------------------------------- ---------------- ---------- ------------ ----------------
Total lease liabilities 233,804
--------------------------------------- ---------------- ---------- ------------ ----------------
(ii) Amounts recognised in the
consolidated income statement
The income statement shows the following
amounts related to leases:
Depreciation charge on right-of-use
assets 2019 2018(2)
Group GBP'000 GBP'000
--------------------------------------- ---------------- ---------- ------------ ----------------
Buildings 9,842 273
--------------------------------------- ---------------- ---------- ------------ ----------------
Plant & equipment 8,260 -
--------------------------------------- ---------------- ---------- ------------ ----------------
Vehicles 898 -
--------------------------------------- ---------------- ---------- ------------ ----------------
19,000 273
--------------------------------------- ---------------- ---------- ------------ ----------------
Interest expenses (included in finance costs) 7,694 60
--------------------------------------------------------- ---------- ------------ ----------------
Expenses relating to short-term
leases (included in costs of goods
sold and administrative expenses) 790 -
--------------------------------------- ---------------- ---------- ------------ ----------------
Expenses relating to leases of
low-value assets that have not
been shown above as short-term
(included n costs of goods sold
and administrative expenses) 22 -
--------------------------------------- ---------------- ---------- ------------ ----------------
2 - Amounts presented in respect of 2018 are in respect of leases previously
classified as finance leases under IAS 17, 'Leases'
The total cash outflow for leases
in 2019 was GBP28,943,000.
11 Borrowings
2019 2018
Group GBP'000 GBP'000
--------------------------------------------------------------------------- ----------- -----------
Current
--------------------------------------------------------------------------- ----------- -----------
Bank borrowings 21,969 5,118
--------------------------------------------------------------------------- ----------- -----------
Non-current
--------------------------------------------------------------------------- ----------- -----------
Bank borrowings 175,370 107,923
--------------------------------------------------------------------------- ----------- -----------
Total borrowings 197,339 113,041
--------------------------------------------------------------------------- ----------- -----------
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:
2019 2018
Currency GBP'000 GBP'000
--------------------------------------------------------------------------- ----------- -----------
UK Pound 68,244 51,377
--------------------------------------------------------------------------- ----------- -----------
Euro 25,728 23,478
--------------------------------------------------------------------------- ----------- -----------
Polish Zloty 7,502 -
--------------------------------------------------------------------------- ----------- -----------
Australian Dollar 85,614 38,186
=========================================================================== =========== ===========
New Zealand Dollar 10,251 -
--------------------------------------------------------------------------- ----------- -----------
197,339 113,041
--------------------------------------------------------------------------- ----------- -----------
Bank borrowings are repayable in quarterly instalments from 2019
- 2022 with interest charged at LIBOR (or equivalent benchmark
rates) plus 1.3% - 1.6%. Bank borrowings are subject to joint and
several guarantees from each active Group undertaking.
The Group has undrawn committed loan facilities of GBP71.1m
(2018: GBP201.0m) with the loan facilities expiring in 2022.
The undiscounted contractual maturity profile of the Group's
borrowings is described in a note to the full financial
statements.
Group net debt of GBP88,247,000 (2018: net debt of
GBP26,787,000) comprises borrowings, noted above, of GBP197,339,000
(2018: GBP113,041,000) cash and cash equivalents of GBP110,514,000
(2018: GBP80,234,000), other financial assets of GBPnil (2018:
GBP7,813,000), and finance leases previously recognised under IAS
17 of GBP1,422,000 (2018: GBP1,793,000). Including total lease
liabilities Group net debt is GBP271,458,000 (2018:
GBP26,787,000).
12 Cash generated from operations
2019 2018
Group GBP'000 GBP'000
----------------------------------------------------- -------- --------
Profit before income tax 43,156 43,332
----------------------------------------------------- -------- --------
Finance costs - net 12,613 2,966
----------------------------------------------------- -------- --------
Operating profit 55,769 46,298
----------------------------------------------------- -------- --------
Adjustments for non-cash items:
----------------------------------------------------- -------- --------
Share of post tax profits of joint venture (6,406) (5,213)
----------------------------------------------------- -------- --------
Depreciation of property, plant and equipment 42,801 19,921
----------------------------------------------------- -------- --------
Amortisation of intangible assets 2,621 2,543
----------------------------------------------------- -------- --------
Amortisation of contract assets - charged to revenue 1,273 2,068
----------------------------------------------------- -------- --------
Gain on disposal of non-current assets (22) (81)
----------------------------------------------------- -------- --------
Adjustment in respect of employee share schemes (1,445) (238)
----------------------------------------------------- -------- --------
Changes in working capital:
----------------------------------------------------- -------- --------
Inventories (9,494) (30,742)
----------------------------------------------------- -------- --------
Trade and other receivables (49,054) (34,006)
----------------------------------------------------- -------- --------
Prepaid expenses (1,956) 660
----------------------------------------------------- -------- --------
Trade and other payables 51,272 53,362
----------------------------------------------------- -------- --------
Accrued expenses 5,017 11,594
----------------------------------------------------- -------- --------
Cash generated from operations 90,376 66,166
----------------------------------------------------- -------- --------
The parent company has no operating cash flows.
13 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:
Group 2019 2018
Sales GBP'000 GBP'000
------------------------------------------------------------ --------- ---------
Sohi Meat Solutions Distribuicao de Carnes SA
- fee for services 3,246 3,236
------------------------------------------------------------- --------- ---------
Sohi Meat Solutions Distribuicao de Carnes SA
- recharge of joint venture costs 352 790
------------------------------------------------------------- --------- ---------
Dalco B.V. 117 -
------------------------------------------------------------- --------- ---------
Group 2019 2018
Purchases GBP'000 GBP'000
============================================================ --------- ---------
Foods Connected Limited 340 142
------------------------------------------------------------- --------- ---------
Amounts owing from related parties at the year end were as follows:
Owed from related
parties
2019 2018
Group GBP'000 GBP'000
------------------------------------------------------------ --------- ---------
Woolworths Meat Co. Pty Limited - 5
------------------------------------------------------------- --------- ---------
Foods Connected Limited - 170
------------------------------------------------------------- --------- ---------
Sohi Meat Solutions Distribuicao de Carnes SA 348 3,940
------------------------------------------------------------- --------- ---------
Dalco B.V. 117 -
------------------------------------------------------------- --------- ---------
465 4,115
------------------------------------------------------------ --------- ---------
Amounts owing to related parties at the year end were as follows:
Owed to related
parties
Foods Connected Limited 66 -
------------------------------------------------------------- --------- ---------
The acquisition of SV Cuisine Limited (formerly HFR Food Solutions Limited)
is considered to be a related party transaction as prior to acquisition
Philip Heffer, the Hilton Food Group CEO, held a 30% interest in and was
a director of the acquired business. Additionally Graham Heffer and Robert
Heffer, both directors of the Group's subsidiary Hilton Food Solutions
Limited, each held a 30% shareholding in, and were, and still are, directors
of SV Cuisine Limited.
The Company's related party transactions with other Group companies during
the year were as follows:
2019 2018
Company GBP'000 GBP'000
------------------------------------------------------------ --------- ---------
Hilton Foods Limited - dividend received 27,200 14,800
------------------------------------------------------------- --------- ---------
At the year end GBP10,272,000 was owed by Hilton Foods Limited (2018:
GBP272,000) and GBPnil (2018: GBPnil) was owed by Hilton Foods UK Limited.
Details of key management compensation are given in a note to the full
financial statements .
14 Alternative performance measures
The Group's performance is assessed using a number of
alternative performance measures (APMs).
The Group's alternative profitability measures are presented
before exceptional items, amortisation of certain intangible assets
acquired through business combinations and the impact of IFRS 16
(as summarised in note 2).
The measures are presented on this basis, as management believe
they provide useful additional information about the Group's
performance and aids a more effective comparison of the Group's
trading performance from one period to the next.
Adjusted profitability measures are reconciled to unadjusted
IFRS results on the face of the income statement below.
52 weeks ended 29 December
2019
Add back: Less: Add back:
IFRS 16 IAS 17 Amortisation
Depreciation Lease Reported of acquisition
Reported and interest accounting - excl intangibles Adjusted
costs IFRS 16
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================== ========== ============ ============== ========== ================= ==========
Operating profit 55,769 18,820 (22,315) 52,274 2,438 54,712
=================== ========== ============ ============== ========== ================= ==========
Net finance costs (12,613) 7,641 - (4,972) - (4,972)
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
Profit before
income
tax 43,156 26,461 (22,315) 47,302 2,438 49,740
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
Profit for the
period 35,160 24,849 (22,315) 37,694 1,975 39,669
=================== ========== ============ ============== ========== ================= ==========
Less
non-controlling
interests (2,095) (370) 364 (2,101) - (2,101)
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
Profit attributable
to members of the
parent 33,065 24,479 (21,951) 35,593 1,975 37,568
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
Depreciation and
amortisation 46,673* (18,820) - 27,853 (2,438) 25,415
=================== ========== ============ ============== ========== ================= ==========
EBITDA 102,442 - (22,315) 80,127 - 80,127
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
Earnings Per Share pence pence pence
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
Basic 40.5 43.6 46.0
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
Diluted 40.1 43.1 45.5
------------------- ---------- ------------ -------------- ---------- ----------------- ----------
*Includes GBP1,273,000 amortisation of contract assets charged
to revenue.
52 weeks ended 30 December 2018
Add back:
Amortisation
of acquisition
Reported intangibles Adjusted
GBP'000 GBP'000 GBP'000
======================================= ================== =============== ==========
Operating profit 46,298 2,384 48,682
======================================= ================== =============== ==========
Net finance costs (2,966) - (2,966)
--------------------------------------- ------------------ --------------- ----------
Profit before income tax 43,332 2,384 45,716
--------------------------------------- ------------------ --------------- ----------
Profit for the period 34,706 1,931 36,637
======================================= ================== =============== ==========
Less non-controlling interests (2,172) - (2,172)
--------------------------------------- ------------------ --------------- ----------
Profit attributable to members of the
parent 32,534 1,931 34,465
--------------------------------------- ------------------ --------------- ----------
Depreciation and amortisation 24,451 (2,384) 22,067
======================================= ================== =============== ==========
EBITDA 70,749 - 70,749
--------------------------------------- ------------------ --------------- ----------
Earnings Per Share pence Pence
--------------------------------------- ------------------ --------------- ----------
Basic 39.9 42.3
--------------------------------------- ------------------ --------------- ----------
Diluted 39.5 41.8
--------------------------------------- ------------------ --------------- ----------
Segmental operating profit reconciles to adjusted segmental
operating profit as follows:
52 weeks ended 29 December 2019
Add back: Less: Add back:
IFRS 16 IAS 17 Amortisation
Depreciation Lease accounting Reported of acquisition
Reported costs - excl intangibles Adjusted
IFRS
16
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================== ========== ============= =================== =========== ================= ==========
Western Europe 50,740 5,405 (5,488) 50,657 2,438 53,095
================== ========== ============= =================== =========== ================= ==========
Central Europe 2,299 467 (628) 2,138 - 2,138
================== ========== ============= =================== =========== ================= ==========
Australasia 12,840 12,948 (16,199) 9,589 - 9,589
================== ========== ============= =================== =========== ================= ==========
Central costs (10,110) - - (10,110) - (10,110)
------------------ ---------- ------------- ------------------- ----------- ----------------- ----------
Total 55,769 18,820 (22,315) 52,274 2,438 54,712
------------------ ---------- ------------- ------------------- ----------- ----------------- ----------
52 weeks ended 30 December
2018
Add back:
Amortisation
of acquisition
Reported intangibles Adjusted
GBP'000 GBP'000 GBP'000
============================ ======================= =============== ==========
Western Europe 49,072 2,384 51,456
============================ ======================= =============== ==========
Central Europe 2,307 - 2,307
============================ ======================= =============== ==========
Australasia 5,522 - 5,522
============================ ======================= =============== ==========
Central costs (10,603) - (10,603)
---------------------------- ----------------------- --------------- ----------
Total 46,298 2,384 48,682
---------------------------- ----------------------- --------------- ----------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UPUBACUPUGQQ
(END) Dow Jones Newswires
April 07, 2020 02:00 ET (06:00 GMT)
Hilton Food (LSE:HFG)
過去 株価チャート
から 6 2024 まで 7 2024
Hilton Food (LSE:HFG)
過去 株価チャート
から 7 2023 まで 7 2024
