TIDMHFG
RNS Number : 2907A
Hilton Food Group PLC
29 March 2012
Hilton Food Group plc
Preliminary results for 2011
Good progress despite difficult economic conditions
Hilton Food Group plc, Europe's leading specialist retail meat
packing business supplying major international food retailers in
twelve countries, is today announcing its results for 2011.
2011 FINANCIAL HIGHLIGHTS
2011 2010 %
52 weeks 52 weeks to Change
to
1 January 2 January
2012 2011
Revenue GBP981.3m GBP864.2m +13.6
Operating profit GBP25.9m GBP23.3m +11.0
Profit before tax GBP24.5m GBP22.2m +10.4
Basic earnings per share 24.7p 22.6p +9.3
Closing net debt GBP18.7m GBP18.0m +3.7
Dividends paid and proposed
in respect of 2011 11.1p 10.2 p +8.8
2011 BUSINESS HIGHLIGHTS
-- Revenue growth of 13.6%, driven by the new facility in
Denmark and the recovery of higher raw material meat prices,
despite economic conditions remaining difficult and uncertain
across many regions of Europe.
-- Volume growth of 6.0%, reflecting the new business in
Denmark, with underlying volumes slightly reduced, due to pressure
on consumer spending levels in the face of increased meat
prices.
-- Volume build up in Denmark in line with our expectations,
with investment continuing on the new robotic store order picking
facility, due to start operations in the second quarter of
2012.
-- Continued strong cash generation, enabling the Group to
maintain a high level of investment in equipment and facilities, to
underpin the growth of our businesses over the longer term.
-- Strong balance sheet, with net debt level at GBP18.7m only
marginally increased, despite capital expenditure of GBP25.2m in
2011, which included GBP14.6m on our new Danish facilities.
-- 74% of the Group's revenue now arising outside the United
Kingdom, with 77% of the volume of meat packed outside the UK, in
Northern and Central European countries.
Commenting, Robert Watson OBE, Chief Executive said:
"Once again I am pleased to report that during 2011 Hilton has
delivered a good performance, continuing to demonstrate the
resilience of the Group's business model. Revenue growth was strong
in 2011 and further success was achieved with new product and
packaging initiatives. We have been able to maintain a high level
of investment in our modern meat packing facilities across Europe,
designed to keep them at state of the art levels."
Enquiries
Hilton Food Group Tel: 01480 387214
Robert Watson OBE, Chief Executive
Nigel Majewski, Finance Director
Citigate Dewe Rogerson Tel: 020 7638 9571
Tom Baldock
Claire Simonds
Chairman's statement
DELIVERING AGAINST OUR STRATEGY
Our strategy is designed to improve and grow our business on a
sustainable and consistent basis, to deliver long term value for
both our retail partners and shareholders. The Group now supplies
customers in twelve countries across Europe. It has achieved
continuing progress during 2011, despite the impact of higher raw
material meat prices on consumer spending. The Group has also
continued to generate the levels of cash flow required to maintain
high levels of investment, enabling it to drive efficiencies and
extend capacities to underpin its future growth, whilst being able
both to maintain a strong balance sheet and a dependable
progressive dividend policy for its shareholders.
SUMMARY OF GROUP RESULTS
In 2011 volumes of meat packed for Hilton's customers increased
by 6%, with revenue rising by 14% to GBP981.3m. Revenue growth
reflected the start-up of our new business in Denmark and
comparatively strong economic conditions in Sweden and Central
Europe.
Profit before taxation rose by over 10%, from GBP22.2m to
GBP24.5m. Interest cover was 19 times (2010: 21 times). Basic
earnings per share were 24.7p in 2011 (2010: 22.6p), the increase
of over 9% reflecting the increased operating profit, slightly
higher interest costs and an unchanged effective rate of
taxation.
Cash generated from operating activities in 2011 was GBP41.7m
(2010: GBP34.1m). Net year end borrowings rose by less than 4% to
GBP18.7m, compared with GBP18.0m at the end of 2010, despite
GBP25.2m of capital expenditure, including GBP14.6m on the new
facilities in Denmark. This level of cash generation enables us to
continuously improve and develop our facilities, whilst being able
to finance competitive geographical, service and product range
expansion. Capital expenditure during the year included continued
investment at all our existing sites, designed to drive efficiency
gains, to take advantage of available advances in packing
technology and to facilitate continued volume growth, in line with
our customers' plans.
The Group's results are considered in greater detail in the
Chief Executive's summary and the Financial review sections.
MANAGEMENT AND EMPLOYEES
I would like to pay a particular tribute to our people. Hilton
operates a decentralised business model, with strong, largely
self-sufficient, management teams in place in each country, which
we consider to be important so that we can ensure very close
working relationships with and rapid pro-active support for our
customers. Throughout 2011 our 2,181 full time employees in six
separate country business units displayed a continuing high level
of dedication, conviction and professionalism. The Board fully
understands and appreciates just how much our progress relies on
their effort, personal commitment, enthusiasm, enterprise and
initiative and I would like to take this opportunity, on behalf of
the Board, to personally thank all our employees across Europe both
for their hard work during 2011 and their continuing commitment to
the Group's on-going growth and development.
OUR BOARD
We have a traditional governance structure with a separate
Non-Executive Chairman and Chief Executive, under which the Chief
Executive Robert Watson runs the Group's businesses, whilst I
oversee the functioning of the Board.
After a long and distinguished career with Hilton, Colin Patten
intends to stand down from his Board role in due course and will
not be seeking re-election at the forthcoming Annual General
Meeting. Colin will be available to assist the Group to achieve an
orderly transition and at the end of that period will be leaving to
pursue his family and private business interests. We would like to
thank Colin for his tremendous contribution to the Group over many
years and to wish him all the very best in his retirement.
The Board continues to benefit from a wide range of skills and
depth of practical experience that is made available to closely
support our management teams across Europe. I would like to take
this opportunity to thank my colleagues on the Board for their wise
counsel and continued enthusiasm, dedication and support.
DIVIDEND POLICY
The Board recognises the importance of dividend payments to
shareholders and we aim to maintain a dividend policy that provides
a dividend level that grows broadly in line with the underlying
earnings of the Group. I am pleased to report that the Board has
recommended a final dividend of 8.0p per ordinary share in respect
of 2011. This, together with the interim dividend of 3.1p per
ordinary share paid in December 2011, represents an 8.8% increase
in the full year dividend, as compared with last year. The final
dividend, if approved by shareholders, will be paid on 29 June 2012
to shareholders on the register on 1 June 2012 and the shares will
be ex dividend on 30 May 2012.
OUR STRATEGY
Hilton has a simple, clear and well defined strategy focussing
on the following four key elements:
-- Building volumes with and extending product ranges for
existing customers;
-- Partnering with existing customers in new territories;
-- Gaining new customers in new territories; and
-- Maintaining an uncompromising focus on unit costs, quality
and product development.
We will continue to pursue progressive geographical expansion,
whilst very actively developing, enriching and expanding the scope
of our existing business partnerships. 2011 saw the start-up of
Hilton's new business in Denmark and the Group continued in every
country to drive forward new product initiatives, whilst
maintaining a constant and rigorous focus on reducing unit packing
costs and improving operational efficiencies. This enables us to
play a full and proactive role in strongly supporting our customers
and the development of their brands.
GEOGRAPHICAL REACH
Twelve years ago all our sales were made within the UK, but
today 74% of our revenue now arises outside the United Kingdom,
with 77% of our total volume of meat packed outside the UK, in
Northern and Central European countries. These percentages have
risen continuously over the last decade, reflecting Hilton's
growing international reputation and footprint. The broad spread of
the Group's businesses across Continental Europe serves to reduce
Hilton's dependence on the fortunes of any one European economy,
during these less certain economic times and continued geographical
expansion, as opportunities arise, remains a key element in
Hilton's strategic approach.
The Group also has relationships with suppliers of high quality
meat around the world, sourcing product from over 40 different
suppliers. This gives Hilton a high degree of flexibility and our
customers the knowledge that Hilton can secure supply at
competitive rates.
2012 OUTLOOK
The Group's past growth has been achieved through a combination
of carefully considered geographical expansion together with the
achievement of continuing progress within each country in which it
operates. Currently, short term economic trends across Europe are
very difficult to forecast, but the Group's business model has
proved resilient and we remain well placed to benefit from any
improvements in economic conditions when these eventually come
through.
In 2012 we expect similar trading conditions featuring
comparatively high prices for meat and other commodities and
constrained consumer spending. The Board considers, however, that
Hilton is well placed to deliver continued growth and meet the
Board's expectations for 2012.
Sir David Naish DL
Non-Executive Chairman
28 March 2012
Chief Executive's summary
CONTINUED INVESTMENT IN SUSTAINABLE GROWTH
Good results and especially those achieved in difficult trading
conditions are not achieved by chance. They represent both a credit
to the efforts of our managers and employees and are a direct
reflection both of the continued success of our long term retail
partners, over a difficult and uncertain economic period, and our
continued investment in top class operating facilities.
We aim to be the best specialist meat packing company in Europe
and 2011 has seen another successful year for the Hilton Food
Group, over which it has achieved continuing profitable growth,
building on the solid progress achieved over previous years.
In terms both of sales and profit growth, our performance has
remained robust. We have continued to invest to improve the
operational efficiency of our packing plants, expand and develop
our product ranges and put in place the required capacity for
anticipated future growth. In Denmark our new meat packing facility
commenced production in late March 2011, with volumes subsequently
building up in line with our plans and expectations.
PERFORMANCE BY BUSINESS SEGMENT
Our business comprises two distinct business segments:
Western Europe
Operating profit of GBP23.2m (2010: GBP20.8m) on turnover of
GBP888.7m (2010: GBP776.6m)
Western Europe covers the Group's businesses in the UK, Ireland,
Holland, Sweden and Demark. Volume growth was 6.5%, with turnover
growth of 14.4% representing significant progress in this segment.
This reflected the new business start-up in Denmark and the
recovery of higher raw material prices, partly offset by the effect
of reduced consumer demand in the face of those higher raw material
meat prices.
The new facility for Denmark commenced production in late March
2011 with volumes building up in line with our expectations. The
investment in the robotic store order picking facility for Coop
Danmark A/S is well advanced, with the start-up of operations
scheduled for the second quarter of 2012.
Central Europe
Operating profit of GBP2.7m (2010: GBP2.5m) on turnover of
GBP92.6m (2010: GBP87.6m)
Central Europe comprises the Group's meat packing business
supplying three customers across Central Europe from its meat
packing plant at Tychy in southern Poland. Volume growth of 4.0%
was achieved in 2011, with turnover growth of 5.7%. This business
supplies Ahold stores in Czech Republic and Slovakia, Tesco stores
in Hungary, Czech Republic, Poland and Slovakia and Rimi stores in
Latvia, Lithuania and Estonia.
Volume growth in this multi-customer business remains the key to
achieving the very low levels of unit packing costs, which are an
essential requirement for our customers to be able to compete
strongly and grow in these very competitive developing markets.
CONTINUED INVESTMENT TO DRIVE EFFICIENCY
For us to succeed our customers need to view us as being at the
forefront of the meat packing industry and as a committed partner
with an established record of delivering value through innovative
products and services, whilst relentlessly driving further
efficiencies. Hilton aims to be "State of the Art" in every area of
its business and its modern, well invested, facilities are
considered a key factor in keeping unit packing costs as low as
possible.
We constantly look for new and better ways of doing things and
harnessing continuing advances in packing technology and robotic
storage solutions enables us to increase volumes of meat which can
be packed within a given factory footprint, thereby increasing
asset utilisation. Hilton looks to build a business with strong
longer-term prospects by being able to operate its packing plants
at highest achievable levels of volumetric utilisation, whilst
continuously improving product quality, presentation and yields.
Over the eight years to December 2011, we have invested
continuously, with capital expenditure on the Group's packing and
storage facilities totalling over GBP140m.
OUR RETAIL PARTNERS
Our customer base comprises only successful blue chip multiple
retailers and understanding our customers' needs and those of their
consumers drives all that we do. The Group's growth has been
generated historically by its strong long term relationships with
its retail partners, with whom the Group continues to work very
closely to deliver high service levels, consistent and dependable
product quality, product innovation and reliable levels of food
safety and product integrity assurance. These partnerships,
combined with our customers' success have enabled the Group to
continue to increase volumes whilst maintaining an unrelenting
focus on reducing unit packing costs, which is essential for our
customers who need competitive prices. The strength of these long
term partnerships has been a key driver of our growth since the
Group was formed and will continue to underpin the Group's
strategy.
OUR PEOPLE
I have always been impressed by the passion and commitment of
our people and our dedicated and hard-working employees have once
again made a major contribution to Hilton's continued progress,
against a difficult and uncertain economic backdrop. I would like
to personally thank them for their hard work, loyalty, dedication
and professionalism.
Hilton is very much a people oriented business and we are
committed to attracting, retaining and developing the best
available talent pool to drive our future growth, whilst providing
staff with an inclusive working culture in which everyone feels
valued and respected and works together across the businesses and
functions as one team. The Group's businesses operate on the basis
of providing very high customer service levels, with the individual
performance of our employees on an every-day basis being vital to
their delivery. The quality and depth of our management teams and
workforces is a key driver of our successful growth and
development, and we continue to increase the extent to which they
routinely share best practice on a structured basis across the
Group, in order to learn from each other, so as to be able to
deliver the best achievable outcomes for all our customers.
I would also like to welcome all of the new employees that
became part of the Hilton Food Group in 2011.
DIVERSITY
We recognise the benefits of diversity throughout the business,
including gender diversity, and we employ a number of female senior
managers across the group, importantly, in some key operational
areas.
PRODUCT AND PACKAGING INNOVATION
Developing new products will always be one of the keys to
success in any business and driving continuing innovation remains
core to Hilton's strategic approach, both in terms of new product
development and the range of services we offer to our customers.
The broadening of our product ranges, together with continued
innovation, is required both to ensure we can meet changing
consumer needs and to adapt our businesses to reduce costs and
increase efficiencies and capacities. Our product teams at each
site are continuously involved in a wide range of new product and
packaging developments, which, together with extending and adapting
the ranges of products packed for our customers, can serve to
further increase the volumetric utilisation of these packing
facilities, thus achieving lower unit packing costs for our
customers.
OUR STRATEGY
Hilton has a clear, simple and well defined strategy, with its
principal objectives being to strongly support its customers'
brands and their development in their local markets, whilst
achieving attractive and sustainable rates of growth and returns
for its shareholders.
This approach which we have pursued rigorously since the Group's
inception has generated both continuing strong sales and profit
growth over an extended period and laid sound foundations for our
future growth. We have a proven business model which will enable us
to take advantage of any new growth opportunities which may
emerge.
Robert Watson OBE
Chief Executive
28 March 2012
Financial review
SOUNDLY BASED FINANCES
Hilton Food Group delivered another strong trading performance
in the 52 weeks ending 1 January 2012, despite the difficult
economic conditions prevailing in some of the countries in which it
operates. This Financial review covers the main highlights of the
Group's financial performance and position in 2011, together with
the key features of the Group's treasury risk management policies,
as well as certain required cautionary statements.
BASIS OF PREPARATION
The Group is presenting its results for the 52 week period ended
1 January 2012, with comparative information for the 52 week period
ended 2 January 2011. The financial statements of the Group are
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
2011 FINANCIAL PERFORMANCE
Revenue
Volumes grew overall by 6.0% and further details of volume
growth by business segment are set out in the Chief Executive's
summary. Turnover rose by 13.6% to GBP981.3m, as compared to
GBP864.2m in 2010, with 8.0% of the increase being attributable to
new business start-up in Denmark. The volume increase is below the
level of revenue gains, reflecting continuing pressure on consumer
spending, in the face of the higher raw material meat prices.
Operating profit and margin
Operating profit, at GBP25.9m was 11.0% above the operating
profit of GBP23.3m made in 2010. The operating profit margin in
2011 was 2.6%, as compared with 2.7% in 2010, reflecting the impact
of higher raw material meat prices, which were recovered in selling
prices, but do not under all our pricing arrangements give rise to
a corresponding margin gain. Operating profit per kilogram of
packed meat sold improved from 11.8p in 2010 to 12.4p in 2011.
Finance Costs
Net finance costs increased from GBP1.1m to GBP1.4m, reflecting
the borrowings made to finance the investment in Denmark. Overall
interest costs have, however, remained low, reflecting the
continuing low United Kingdom LIBOR rate levels seen over 2011,
which determine the interest rates on the Group's main sterling
borrowings.
Profit before taxation
Profit before taxation, at GBP24.5m, was GBP2.3m (10.4%) higher
than in 2010 (GBP22.2m), reflecting the operating profit
improvement of GBP2.6m less the increase in finance costs of
GBP0.3m detailed above.
Taxation
The taxation charge for the period was GBP5.9m (2010: GBP5.3m).
This represented an effective taxation rate of 24%, in line with
that of the previous year.
Earnings per share
Basic earnings per share were 24.7p (2010: 22.6p) an increase of
9.3%, reflecting the increased level of profit before taxation, an
increased minority interest and an unchanged effective taxation
rate. Diluted earnings per share increased by 8.5%, from 22.4p to
24.3p.
Free Cash Flow and Net Borrowing Levels
Cash flow continued to be strong in 2011, with the Group
generating GBP6.8m of free cash flow before dividends and
financing, despite capital expenditure of GBP25.2m of which
GBP14.6m was incurred on our new Danish facilities. The underlying
free cash flow, excluding the new Danish investment, was GBP21.4m
(2010: GBP19.3m). This has enabled the Group to keep its borrowings
close to last year's level, despite the continued investment in
geographical expansion. Group borrowings, net of cash balances of
GBP27.3m, stood at GBP18.7m at the end of 2011. Interest cover in
2011 was 19 times, as compared with 21 times in 2010. Our gearing
ratio, represented by net debt divided by earnings before interest,
tax, depreciation and amortisation, reduced to 0.4 times EBITDA (as
compared to 0.5 times in 2010), with increased profitability and
only a slightly higher year end net debt level. At the end of 2011
the Group had undrawn overdraft and loan facilities of GBP19.8m
(2010: GBP21.7m).
BUSINESS PERFORMANCE MEASUREMENT
We have a strong vision and robust values for the business. We
support these with a wide range of financial and non-financial Key
Performance Indicators "KPI's", chosen by and reported to the Board
each month, to measure progress we have made in building
shareholder value and achieving the Group's strategic objectives.
Our performance against the ten "KPI's" used by the Board for this
purpose over the last two years is set out below:
Financial KPI's 2011 2010 Definition, method of calculation
and analysis
---------------------------- ------ ------ ---------------------------------------------
Year on year revenue growth expressed
as a percentage. The increase was
well above the level of volume growth
in 2011, reflecting the recovery of
higher raw material meat prices over
the year and the new business start
Revenue growth (%) 13.6% 4.6% up in Denmark.
---------------------------- ------ ------ ---------------------------------------------
Operating profit margin 2.6% 2.7% Operating profit expressed as a percentage
(% turnover) of turnover.
The slight reduction in 2011 reflected
the higher level of raw material meat
prices which, whilst recovered, do
not in all Hilton's contracts feed
directly through to correspondingly
increased margins.
---------------------------- ------ ------ ---------------------------------------------
Operating profit margin
(pence per kilogram) 12.4 11.8 Operating profit per kilogram sold.
---------------------------- ------ ------ ---------------------------------------------
Earnings before interest, 42.9 37.2 Operating profit before depreciation,
taxation, depreciation amortisation and government capital
and amortisation (EBITDA) grants. The improvement in 2011 reflects
(GBP'm) the growth in operating profit and
an increased depreciation charge with
the Danish investment recovered in
revenue.
---------------------------- ------ ------ ---------------------------------------------
Free cash flow 6.8 9.9 Cash flow before dividends and financing.
before minorities The decrease in 2011 reflected the
(GBP'm) capital expenditure of GBP14.6m on
the new facilities in Denmark, as
compared with GBP9.4m in 2010. Excluding
this expenditure on geographical expansion,
underlying free cash flow improved,
from GBP19.3m to GBP21.4m.
---------------------------- ------ ------ ---------------------------------------------
Year-end net debt divided by EBITDA.
The gearing ratio improved in 2011,
with a higher operating profit and
only a small increase in the net debt
Gearing ratio 0.4 0.5 level.
---------------------------- ------ ------ ---------------------------------------------
Non-financial KPI's 2011 2010 Definition, method of calculation
and analysis
---------------------------- ------ ------ ---------------------------------------------
Growth in volume of 6.0% 7.8% Year on year volume growth, expressed
packed meat sales as a percentage. The 2011 growth is
(%) driven by the start-up of the new
business in Denmark. Excluding this
factor, volumes declined slightly,
with weaker consumer demand in the
face of higher raw material meat prices.
---------------------------- ------ ------ ---------------------------------------------
Employee and labour 40.0 39.3 Employment costs per kilogram of packed
agency costs (pence meat products sold. These rose slightly
per kilogram) in 2011 with higher labour levels
in Denmark over the start-up period
and higher than average wage costs
in Denmark.
---------------------------- ------ ------ ---------------------------------------------
Customer service level 98.4% 98.9% Packs of meat delivered as a % of
(%) the orders placed. The slight reduction
reflects lower customer service levels
typical in the early start-up months
of any new business.
---------------------------- ------ ------ ---------------------------------------------
Number of product 1,900 1,600 Breadth of product range, in terms
lines of number of stock keeping units supplied
to customers, the increase reflects
principally the addition of the new
business in Denmark.
---------------------------- ------ ------ ---------------------------------------------
TREASURY RISK MANAGEMENT POLICIES
The Group's policy is structured to ensure adequate financial
resources are made available for the continuing development and
growth of its business, whilst safely managing the areas of
treasury risk below:
Foreign exchange rate movements and country specific risks
The presentational currency of the Group is sterling, but the
majority of its revenues are now earned in other currencies,
principally the Euro, Swedish Krona and Danish Krone. The earnings
of the Group's overseas subsidiaries are translated into sterling
at the average exchange rates for the year and their assets and
liabilities at the year-end closing rates. The timing of the
repatriation of overseas profits to the UK and the repayment of any
intra group loans due to UK holding companies have regard to actual
and forecast exchange rates. Changes in relevant currency parities
are monitored on a day to day basis. The Group has to date decided
not to hedge its foreign exchange rate exposures, the impact of
which has been broadly favourable overall over recent years, but
this policy is kept under continuing review. The Group's overseas
subsidiaries all have natural hedges in place as they, for the most
part, buy raw materials, employ people, source services, sell
products and arrange funding in their local currencies. As a result
the Group's exposure is principally limited to its equity
investment in each overseas subsidiary.
In these more difficult and uncertain times the level of country
specific risk has risen for many businesses, in terms of the impact
of macroeconomic developments, including the impact of austerity
programmes in countries currently facing difficulties with their
levels of debt. The Group sells high quality basic food products,
for which there will always be continuing demand, to blue chip
multiple retailers in developed countries. Hilton has not to date
been materially adversely affected by the recessionary environments
experienced over recent times in some countries, but will keep any
future identified country specific risks under continuing
review.
Interest rate fluctuation risk
This risk arises from the fact that the interest rates on the
Group's borrowings are variable, being at agreed margins over LIBOR
for sterling borrowings or EURIBOR for euro borrowings, which
fluctuate. The Group's principal borrowing is in sterling, with
interest at an agreed margin over LIBOR. The Board's policy is to
have an interest rate cap on a proportion of this borrowing and the
Group currently has in place a 3 year cap at 4.5% on 69% of its
sterling term loan from Ulster Bank. The Board would review hedging
costs and options should the current low interest rate environment
change materially.
Customer credit and pricing risks
As Hilton's customers comprise a small number of very successful
and credit worthy major multiple retailers, the level of credit
risk is considered to be insignificant. Historically the incidence
of bad debts has been immaterial. Hilton's pricing is based
predominately either on cost plus agreements or agreed packing
rates with its customers.
Liquidity risk
This is an area which for many businesses represents a material
concern, given the continuing difficult economic environment and
liquidity constraints across banking systems in Europe which, in
the light of current developments, may not resolve themselves
rapidly. The Hilton Food Group remains strongly cash generative,
has a robust balance sheet and has committed banking facilities for
the medium term, sufficient to support its existing business. All
bank positions are monitored on a daily basis and capital
expenditure above set levels, together with decisions on intra
group dividends, are all approved at Board meetings. All long term
debt is arranged centrally and is subject to Board approval.
KEY JUDGEMENTS AND ASSUMPTIONS
Judgements and assumptions made in the financial statements and
incorporated into the accounting policies are continually reviewed,
but remain in all material respects consistent with those made in
2010.
FORWARD LOOKING STATEMENTS
The Chairman's statement, the Chief Executive's summary, the
Financial review and the Business review together with the other
reports which together comprise the Enhanced Business Review
contain forward looking statements that are inevitably subject to
risk factors associated with, amongst other things, economic,
political and business developments which may occur from time to
time across the countries in which the Group operates. It is
believed that the expectations reflected in these statements are
reasonable, but all forward looking statements and forecasts are
inherently predictive, speculative and involve risk and
uncertainty, simply because they relate to events and depend on
circumstances that will occur in the future.
GOING CONCERN BASIS
The Group's bank borrowings are detailed in the financial
statements and the principal banking facilities which support the
Group's existing and contracted new business are committed, with no
renewal required for three years. The Group is in full compliance
with all its banking covenants. Future geographical expansion which
is not yet contracted, and which is not built into internal budgets
and forecasts, may require additional or extended banking
facilities and such future geographical expansion will depend on
our ability to negotiate appropriate additional or extended
facilities in the timescales required.
The Group's internal budgets and forecasts, which incorporate
all reasonably foreseeable changes in trading performance, are
reviewed in detail by the Board and show that it will be able to
operate within its current banking facilities, taking into account
available cash balances, for the foreseeable future. The going
concern basis is, accordingly, adopted by the Board in preparing
the financial statements.
On behalf of the Board
Nigel Majewski
Finance Director
28 March 2012
Business review
WELL POSITIONED FOR FUTURE GROWTH
We hope this Annual Report and Accounts, which explains who we
are, what services we provide and how we performed in 2011, gives
shareholders and other stakeholders the information they require in
relation to our company and the steps we are taking to cement our
reputation as Europe's leading specialist meat packing company.
This business review covers in turn the key resources and
relationships of the business, the main trends and factors
considered likely to impact the future development of the Group's
businesses and the principal risks and uncertainties which face our
businesses, together with the measures we have adopted to minimise
and contain these risks.
THE KEY RESOURCES AND RELATIONSHIPS OF THE BUSINESS
The Group aims to safeguard the resources and relationships
which are vital to its successful development.
The resources and relationships which we consider are most
critical to our business are detailed below:
Long term Our relationships with our customers are critical to our
partnerships continuing success. Whilst detailed arrangements with customers
with strong vary, Hilton has close long term partnership relationships
retail with its multiple retail customers (all but one of whom
customers are subsidiary or associated companies of the Tesco or
Ahold groups), which involve continuous close liaison,
discussion and co-ordination, designed to ensure that the
best possible outcomes are achieved for both our partners
and their customers.
--------------- -------------------------------------------------------------------
Growing Hilton's growing reputation, which is a key driver of its
reputation growth, has been built on its achieved levels of product
quality and presentation, food safety and integrity, product
innovation, service levels, health and safety, the way
in which it treats its employees and suppliers, the manner
in which it operates its facilities and its proven ability
to adapt its business model to different customer and country
requirements. All of these elements, which are achieved
within a culture of safe working and concern for the environment,
whilst operating within all applicable local and national
regulations, are the responsibility of the operational
management teams in each country, supported by specialist
central expertise and assistance, as and when required.
--------------- -------------------------------------------------------------------
Modern, The Group has well invested modern facilities having invested
well invested over GBP140m over the last eight years to increase packing
meat capacity, so as to be able to service its customers' growth
packing whilst ensuring its packing facilities are kept at a state
plants of the art level.
--------------- -------------------------------------------------------------------
Employee Our relationship with our employees is a key factor behind
skill base our success and the Group continues to invest in developing
its people. In addition to training and mentoring programmes,
where additional skills are required, the strategies for
retaining key staff include the provision of terms and
conditions which are competitive in each locality, together
with employer contributions to defined contribution pension
schemes.
--------------- -------------------------------------------------------------------
Wide and Hilton has strong long term trading relationships with
flexible its key meat suppliers and is over time steadily widening
meat supply its supply base and increasing its procurement strength.
base Supplier relationships are underpinned by fairness, loyalty
and a partnership approach which pays regard to the interests
of both parties. The Group maintains a wide, diverse and
flexible global meat supply base, so as to be able to provide
sufficient volume of products on short lead times as ordered
by its customers.
--------------- -------------------------------------------------------------------
Committed The Group is cash generative and has committed banking
banking facilities sufficient to support its existing business
facilities for the foreseeable future, taking into account available
cash balances.
--------------- -------------------------------------------------------------------
Focus on We work with the local communities in which our facilities
the are located and fully respect our environmental obligations.
environment, Information in relation to these matters and issues are
employees set out in the Corporate and Social Responsibility report.
and community None of these issues had a material impact on the development,
issues performance or position of the Group's businesses in 2011.
--------------- -------------------------------------------------------------------
THE MAIN TRENDS AND FACTORS LIKELY TO IMPACT THE FUTURE
DEVELOPMENT, PERFORMANCE AND POSITION OF THE GROUP'S BUSINESSES
The key trends and factors which have affected the Group's
growth and development
Hilton's past growth has been accentuated by the consumer trend
in most European markets towards convenience and one stop shopping
which has led to the rapid growth of the large food retailers,
together with these retailers' focus on private label, which the
Group supplies exclusively.
As the larger retail chains have gained a greater share of the
grocery markets, these retail chains are increasingly turning to
large scale, centralised meat packing plants capable of producing
packed meat products more hygienically and cost efficiently. By
moving to larger suppliers of pre-packed meat from the optimum
logistical locations the retailers have effectively chosen to
rationalise their supply base, so as to deliver lower costs and
higher food safety, food integrity and quality standards. This has
allowed the retailers to focus on their core business and maximise
their return on available retail space.
These trends and factors which have underpinned the past growth
of the Group's business are expected to continue, albeit that the
pace of recovery from the recent economic recessions in each of the
twelve markets in which the Group currently operates cannot be
predicted with any certainty.
The Group's historical geographical expansion
Hilton's past expansion has been based on its established track
record, together with its growing international reputation and
experience and the close partnerships for joint benefit it has
established and maintained with successful retail partners. The six
European countries in which the Group currently operates meat
packing plants, its retail partners served from those plants (all
of whom, with the exception of Coop Danmark, are subsidiary or
associated companies of the Tesco or Ahold groups) and the
chronological order in which each facility commenced operations is
set out below:
1994 UK - Huntingdon (Tesco)
2000 Holland - Zaandam (Albert Heijn)
2004 Ireland - Drogheda (Tesco)
2004 Sweden - Vasteras (ICA)
2006 Poland - Tychy (Ahold, Tesco and Rimi)
2011 Denmark - Hasselager (Coop Danmark)
The Group is continuing to achieve growth, driven by its retail
partners' success, new product and packaging development and the
extension of the range of meat products packed for its
customers.
RISK MANAGEMENT
The management of the business and the execution of the Group's
strategy are subject to a number of risks and the Group has a
well-developed structure and range of processes for identifying and
mitigating the key business risks it faces.
As with any business, there are risks and uncertainties inherent
in the Group's operations which could have a significant impact on
its business, reputation, operating results and financial position,
which we manage, in order to help us achieve our strategic
objectives and protect our reputation.
The most significant business risks faced, which are unchanged
from last year and which will continue to affect the group's
businesses, together with the measures we have adopted to mitigate
these risks, are outlined in the table below. This is not intended
to constitute an exhaustive analysis of all risks faced by the
Group, just those which are most significant from the standpoint of
the Group as a whole.
Risk area The Group is dependent on a small number of customers who
can exercise significant buying power and influence.
---------------- -----------------------------------------------------------------------
Potential The Group has a comparatively narrow, but recently extended,
impact customer base, with sales to subsidiary or associated companies
of the Tesco and Ahold groups currently comprising the larger
part of Hilton's revenue. The large retail chains are continuing
to increase their market share of meat products in many
countries, as retail customers move away from high street
butchers towards one stop convenience shopping in large
supermarkets. The continuation of this trend increases the
buying power of the Group's customers which in turn increases
their negotiating power with the Hilton Food Group, which
could enable them to seek better terms over time.
---------------- -----------------------------------------------------------------------
Risk mitigation The Group's investment in state of the art facilities, together
measures with its management's continuous focus on reducing costs,
allow it to operate very efficiently at very high throughputs
and price its products competitively, which is particularly
important in the continuing difficult economic environment.
The Group's customer driven business model is focused solely
on central meat packing and is unencumbered by the issues
and conflicts faced by the majority of the Group's competitors
who are also involved in significant upstream processing,
including rearing, growing, slaughtering and cutting.
Hilton operates a decentralised, entrepreneurial business
structure, which enables it to work very closely and flexibly
with its retail partner in each country, and achieves 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 and
product integrity assurance.
---------------- -----------------------------------------------------------------------
Risk area The Group's growth potential is dependent on the success
of its customers and the future growth of their packed meat
sales.
---------------- -------------------------------------------------------------------
Potential All of the Group's products carry the brand labels of the
impact customer to whom its products are supplied. The Group is
therefore dependent on its customers' success in maintaining
or improving consumer perception of their own brand names
and their packed meat offerings.
---------------- -------------------------------------------------------------------
Risk mitigation The Group plays its full part in enhancing its customer's
measures brand values, through providing high quality, competitively
priced products, high service levels and continuing product
and packaging innovation. It recognises that quality assurance
is integral to its customers' brands and works closely with
its customers to ensure rigorous quality assurance standards
are met. It is continuously measured by its customers across
a very wide range of parameters, including delivery time,
product specification and accuracy of documentation and
targets high 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 of the supply chain.
---------------- -------------------------------------------------------------------
Risk area The Group's business is dependent on the macroeconomic environment
and levels of consumer spending in the countries in which
it operates.
---------------- -------------------------------------------------------------------
Potential No business is immune to difficult economic climates and
impact the consequent pressure on levels of consumer spending seen
recently across Europe. Few people could have foreseen the
extent to which world events would impact even the most
stable economies.
---------------- -------------------------------------------------------------------
Risk mitigation With a sound business model, strong retail partners and
measures a single minded focus on minimising unit packing costs,
whilst maintaining high levels of product quality and integrity,
the Group has made good progress over the recent difficult
economic period. It expects to be able to continue to make
progress going forward, even if the current difficult economic
conditions, as expected, persist for some time.
---------------- -------------------------------------------------------------------
Risk area The Group's business is reliant on a small number of key
personnel and its ability to manage growth successfully.
---------------- -------------------------------------------------------------------
Potential The Group is critically dependent on the skills and experience
impact of a small number of senior managers 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
its existing businesses and setting up new ones.
---------------- -------------------------------------------------------------------
Risk mitigation To continue to manage growth successfully, the Group will
measures carefully manage its skill resources and continue to invest
in on-the-job training and career development, together
with the cost effective management of quality, appropriately
scaleable information and control systems, whilst recruiting
high quality new employees, as required, to facilitate the
Group's ongoing growth. The continuing growth of Hilton's
business, together with its growing reputation, facilitates
the recruitment of more top class specialists with the key
skill sets required both to support our existing individual
country business units and manage the Group's future geographical
expansion.
---------------- -------------------------------------------------------------------
Risk area The Group's business is dependent on maintaining a wide
and flexible global meat supply base.
---------------- -----------------------------------------------------------------
Potential The Group is reliant on its suppliers to provide sufficient
impact volume of products in the very short lead times required
by its customers. The Group sources certain of its meat
requirements from outside the European Union. Tariffs, quotas
or trade barriers imposed by countries where the group procures
meat, or which they may impose in the future, together with
the progress of World Trade Organisation talks and other
global trade developments, could materially affect the Group's
international procurement ability.
---------------- -----------------------------------------------------------------
Risk mitigation The Group maintains a flexible global meat supply base,
measures which is progressively widening as it expands, so as to
have in place a range of options should any such eventualities
occur.
---------------- -----------------------------------------------------------------
Risk area Outbreaks of disease and feed contamination affecting livestock
and media concerns can impact the Group's sales.
---------------- -----------------------------------------------------------------
Potential Reports in the public domain concerning the risks of consuming
impact meat can cause consumer demand for meat to drop significantly
in the short to medium term. A food scare similar to the
Bovine Spongiform Encephalopathy ("BSE") scare that took
place in 1996 can affect public confidence in red meats.
---------------- -----------------------------------------------------------------
Risk mitigation The Group sources its meat from a trusted raw material supply
measures base, all components of which meet stringent European and
customer standards. The Group is subject to demanding standards
which are independently monitored in every country and reliable
product traceability and high welfare standards from the
farm to the consumer are integral to the Group's business
model. The Group ensures full traceability from source to
packed product across all suppliers.
---------------- -----------------------------------------------------------------
The Board is responsible for the oversight of the Group's risk
management processes and also for the appropriate identification of
risks and the effective application of actions to mitigate those
risks.
The Group is dependent on the quality and effectiveness of its
risk management strategy and procedures. All types of risk
applicable to the business are regularly reviewed and a formal risk
assessment review is carried out to highlight key risks to the
business and to consider action that can reasonably and cost
effectively be taken to mitigate them. The Group's Risk Register is
compiled through a combination of business unit risk registers and
Board input. The Board believes that in carrying out the Group's
businesses it is vital to strike the right balance between an
appropriate and comprehensive control environment and encouraging
the level of entrepreneurial freedom of action required to seek out
and develop new opportunities, but, however skilfully this balance
is struck, the business will always be subject to a number of risks
and uncertainties, as illustrated above.
Not all the risks listed are within the Group's control and
others may be unknown or currently considered immaterial, but could
turn out to be material in the future. The risks set out in the
above table, together with our risk mitigation strategies, should
be considered in the context of the Group's risk management and
internal control framework, details of which are set out in the
Corporate Governance statement and the cautionary statement
regarding forward looking statements in the Financial review.
Note: References in this preliminary announcement to the
Directors' report, the Remuneration report, the Corporate
Governance statement and the Corporate Social Responsibility report
are to reports which will be available in the Company's full
published accounts.
Responsibility statement of the Directors in respect of the
Annual Report and Accounts
Each of the Directors whose names and functions are set out
below confirms that to the best of their knowledge and belief:
-- the Group and parent company financial statements, prepared
in accordance with applicable UK law and in conformity with IFRS,
as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the Group and the
Company; and
-- the management reports (which comprise the Chairman's
statement, the Chief Executive's summary, the Financial review, the
Business review and the Directors' report) include a fair review of
the development and performance of the business and the position of
the Group and the Company, together with a description of the
principal risks and uncertainties they face.
-- This responsibility statement was approved by the Board of
Directors on 28 March 2012 and is signed on its behalf by:
Directors
R Watson, OBE Chief Executive
N Majewski Finance Director
C Patten Commercial Director
T Bergman European Business Director
P Heffer UK and Ireland Business Director
Sir D Naish, DL Non-Executive Chairman
C Marsh Non-Executive Director
C Smith, OBE Non-Executive Director
Consolidated income statement
2011 2010
52 weeks 52 weeks
Notes GBP'000 GBP'000
------------------------------------------------------ ------ ---------- ----------
Continuing operations
------------------------------------------------------ ------ ---------- ----------
Revenue 3 981,345 864,223
------------------------------------------------------ ------ ---------- ----------
Cost of sales (850,893) (750,787)
------------------------------------------------------ ------ ---------- ----------
Gross profit 130,452 113,436
------------------------------------------------------ ------ ---------- ----------
Distribution costs (9,720) (11,049)
------------------------------------------------------ ------ ---------- ----------
Administrative expenses (94,850) (79,071)
------------------------------------------------------ ------ ---------- ----------
Operating profit 25,882 23,316
------------------------------------------------------ ------ ---------- ----------
Finance income 4 258 135
------------------------------------------------------ ------ ---------- ----------
Finance costs 4 (1,627) (1,240)
------------------------------------------------------ ------ ---------- ----------
Finance costs - net 4 (1,369) (1,105)
------------------------------------------------------ ------ ---------- ----------
Profit before income tax 24,513 22,211
====================================================== ====== ========== ==========
Income tax expense 5 (5,915) (5,296)
------------------------------------------------------ ------ ---------- ----------
Profit for the year 18,598 16,915
------------------------------------------------------ ------ ---------- ----------
Attributable to:
------------------------------------------------------ ------ ---------- ----------
Owners of the parent 17,199 15,745
------------------------------------------------------ ------ ---------- ----------
Non-controlling interests 1,399 1,170
------------------------------------------------------ ------ ---------- ----------
18,598 16,915
------------------------------------------------------ ------ ---------- ----------
Earnings per share for profit attributable to owners
of the parent during the year
------------------------------------------------------ ------ ---------- ----------
- Basic (pence) 6 24.7 22.6
------------------------------------------------------ ------ ---------- ----------
- Diluted (pence) 6 24.3 22.4
------------------------------------------------------ ------ ---------- ----------
Consolidated statement of comprehensive income
2011 2010
52 weeks 52 weeks
GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------
Profit for the year 18,598 16,915
--------------------------------------------------------- ---------- ---------
Other comprehensive income
--------------------------------------------------------- ---------- ---------
Currency translation differences (1,553) 411
--------------------------------------------------------- ---------- ---------
Other comprehensive income for the year net of tax (1,553) 411
--------------------------------------------------------- ---------- ---------
Total comprehensive income for the year 17,045 17,326
--------------------------------------------------------- ---------- ---------
Total comprehensive income attributable to:
--------------------------------------------------------- ---------- ---------
Owners of the parent 15,732 16,241
--------------------------------------------------------- ---------- ---------
Non-controlling interests 1,313 1,085
--------------------------------------------------------- ---------- ---------
17,045 17,326
--------------------------------------------------------- ---------- ---------
The notes are an integral part of these consolidated financial statements.
Consolidated balance sheet
Group Company
2011 2010 2011 2010
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------ --------- --------- -------- --------
Assets
---------------------------------------- ------ --------- --------- -------- --------
Non-current assets
---------------------------------------- ------ --------- --------- -------- --------
Property, plant and equipment 8 59,179 57,836 - -
---------------------------------------- ------ --------- --------- -------- --------
Intangible assets 9 1,907 2,063 - -
---------------------------------------- ------ --------- --------- -------- --------
Investments in subsidiary undertakings - - 102,985 102,985
---------------------------------------- ------ --------- --------- -------- --------
Deferred income tax assets 1,134 1,021 - -
---------------------------------------- ------ --------- --------- -------- --------
62,220 60,920 102,985 102,985
---------------------------------------- ------ --------- --------- -------- --------
Current assets
---------------------------------------- ------ --------- --------- -------- --------
Inventories 22,466 20,346 - -
---------------------------------------- ------ --------- --------- -------- --------
Trade and other receivables 104,033 85,088 156 195
---------------------------------------- ------ --------- --------- -------- --------
Current income tax assets - - 133 156
---------------------------------------- ------ --------- --------- -------- --------
Cash and cash equivalents 27,345 26,141 14 1
---------------------------------------- ------ --------- --------- -------- --------
153,844 131,575 303 352
---------------------------------------- ------ --------- --------- -------- --------
Total assets 216,064 192,495 103,288 103,337
---------------------------------------- ------ --------- --------- -------- --------
Equity
---------------------------------------- ------ --------- --------- -------- --------
Capital and reserves attributable to owners
of the parent
------------------------------------------------ --------- --------- -------- --------
Share capital 6,985 6,966 6,985 6,966
---------------------------------------- ------ --------- --------- -------- --------
Share premium 372 - 372 -
---------------------------------------- ------ --------- --------- -------- --------
Employee share schemes reserve 1,558 1,071 - -
---------------------------------------- ------ --------- --------- -------- --------
Foreign currency translation reserve 2,291 3,758 - -
---------------------------------------- ------ --------- --------- -------- --------
Retained earnings 45,392 35,518 9,970 8,104
---------------------------------------- ------ --------- --------- -------- --------
56,598 47,313 17,327 15,070
---------------------------------------- ------ --------- --------- -------- --------
Reverse acquisition reserve (31,700) (31,700) - -
---------------------------------------- ------ --------- --------- -------- --------
Merger reserve 919 919 71,019 71,019
---------------------------------------- ------ --------- --------- -------- --------
25,817 16,532 88,346 86,089
---------------------------------------- ------ --------- --------- -------- --------
Non-controlling interests 3,452 2,613 - -
---------------------------------------- ------ --------- --------- -------- --------
Total equity 29,269 19,145 88,346 86,089
---------------------------------------- ------ --------- --------- -------- --------
Liabilities
---------------------------------------- ------ --------- --------- -------- --------
Non-current liabilities
---------------------------------------- ------ --------- --------- -------- --------
Borrowings 10 35,615 35,359 - -
---------------------------------------- ------ --------- --------- -------- --------
Deferred income tax liabilities 641 1,037 - -
---------------------------------------- ------ --------- --------- -------- --------
36,256 36,396 - -
---------------------------------------- ------ --------- --------- -------- --------
Current liabilities
---------------------------------------- ------ --------- --------- -------- --------
Borrowings 10 10,440 8,828 - -
---------------------------------------- ------ --------- --------- -------- --------
Trade and other payables 138,998 124,820 14,942 17,248
---------------------------------------- ------ --------- --------- -------- --------
Current income tax liabilities 1,101 3,306 - -
---------------------------------------- ------ --------- --------- -------- --------
150,539 136,954 14,942 17,248
---------------------------------------- ------ --------- --------- -------- --------
Total liabilities 186,795 173,350 14,942 17,248
---------------------------------------- ------ --------- --------- -------- --------
Total equity and liabilities 216,064 192,495 103,288 103,337
---------------------------------------- ------ --------- --------- -------- --------
The notes are an integral part of these consolidated financial statements.
The financial statements were approved by the Board on 28 March
2012 and were signed on its behalf by:
R Watson N Majewski
Director Director
Hilton Food Group plc - Registered number: 06165540
Consolidated statement of changes in equity
Attributable to owners of the parent
========================================================================================
Employee Foreign
share currency Reverse
Share Share schemes translation Retained acquisition Merger Non-controlling Total
capital premium reserve reserve earnings reserve reserve Total interests equity
Group Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 4
January
2010 6,966 - 377 3,262 26,432 (31,700) 919 6,256 2,300 8,556
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 15,745 - - 15,745 1,170 16,915
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Other
comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Currency
translation
differences - - - 496 - - - 496 (85) 411
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income - - - 496 15,745 - - 16,241 1,085 17,326
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Transactions
with
owners
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Adjustment in
respect
of employee
share
schemes - - 500 - - - - 500 - 500
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Tax on employee share
schemes - - 194 - - - - 194 - 194
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (6,659) - - (6,659) (772) (7,431)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
transactions
with owners - - 694 - (6,659) - - (5,965) (772) (6,737)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 2
January
2011 6,966 - 1,071 3,758 35,518 (31,700) 919 16,532 2,613 19,145
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 17,199 - - 17,199 1,399 18,598
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Other
comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Currency translation
differences - - - (1,467) - - - (1,467) (86) (1,553)
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income - - - (1,467) 17,199 - - 15,732 1,313 17,045
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Transactions
with
owners
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Issue of new
shares 19 363 - - - - - 382 - 382
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Adjustment in
respect
of employee
share
schemes - - 408 - - - - 408 - 408
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Tax on employee share
schemes - 9 79 - - - - 88 - 88
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (7,325) - - (7,325) (474) (7,799)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total transactions
with owners 19 372 487 - (7,325) - - (6,447) (474) (6,921)
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 1
January
2012 6,985 372 1,558 2,291 45,392 (31,700) 919 25,817 3,452 29,269
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Company
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 4
January
2010 6,966 - - - 311 - 71,019 78,296
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 14,452 - - 14,452
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income - - - - 14,452 - - 14,452
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Transactions
with
owners
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (6,659) - - (6,659)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
transactions
with owners - - - - (6,659) - - (6,659)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 2
January
2011 6,966 - - - 8,104 - 71,019 86,089
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Comprehensive
income
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Profit for the
year - - - - 9,191 - - 9,191
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total
comprehensive
income - - - - 9,191 - - 9,191
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Transactions
with
owners
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Issue of new
shares 19 363 - - - - - 382
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Tax on employee share
schemes - 9 - - - - - 9
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Dividends paid 7 - - - - (7,325) - - (7,325)
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Total transactions
with owners 19 372 - - (7,325) - - (6,934)
----------------------- -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
Balance at 1
January
2012 6,985 372 - - 9,970 - 71,019 88,346
--------------- ------ -------- -------- --------- ------------ --------- ------------ -------- -------- ---------------- --------
The notes are an integral part of these consolidated financial
statements.
Consolidated cash flow statement
Group Company
2011 2010 2011 2010
52 weeks 52 weeks 52 weeks 52 weeks
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------ --------- --------- --------- ---------
Cash flows from operating activities
------------------------------------------- ------ --------- --------- --------- ---------
Cash generated from operations 11 41,688 34,139 - -
------------------------------------------- ------ --------- --------- --------- ---------
Interest paid (1,627) (1,240) (435) (557)
------------------------------------------- ------ --------- --------- --------- ---------
Income tax (paid)/received (8,341) (5,335) 195 522
------------------------------------------- ------ --------- --------- --------- ---------
Net cash generated from/(used in)
operating activities 31,720 27,564 (240) (35)
------------------------------------------- ------ --------- --------- --------- ---------
Cash flows from investing activities
------------------------------------------- ------ --------- --------- --------- ---------
Purchases of property, plant and
equipment (24,350) (17,573) - -
------------------------------------------- ------ --------- --------- --------- ---------
Proceeds from sale of property,
plant and equipment 21 83 - -
------------------------------------------- ------ --------- --------- --------- ---------
Purchases of intangible assets (873) (275) - -
------------------------------------------- ------ --------- --------- --------- ---------
Interest received 258 135 - -
------------------------------------------- ------ --------- --------- --------- ---------
Dividends received - - 9,500 14,852
------------------------------------------- ------ --------- --------- --------- ---------
Net cash (used in)/generated from
investing activities (24,944) (17,630) 9,500 14,852
------------------------------------------- ------ --------- --------- --------- ---------
Cash flows from financing activities
------------------------------------------- ------ --------- --------- --------- ---------
Proceeds from borrowings 9,309 7,700 - -
------------------------------------------- ------ --------- --------- --------- ---------
Repayments of borrowings (6,935) (8,063) - -
------------------------------------------- ------ --------- --------- --------- ---------
Repayment of inter-company loan - - (2,304) (8,158)
------------------------------------------- ------ --------- --------- --------- ---------
Issue of shares 382 - 382 -
------------------------------------------- ------ --------- --------- --------- ---------
Dividends paid to Company shareholders (7,325) (6,659) (7,325) (6,659)
------------------------------------------- ------ --------- --------- --------- ---------
Dividends paid to minority interests (474) (772) - -
------------------------------------------- ------ --------- --------- --------- ---------
Net cash used in financing activities (5,043) (7,794) (9,247) (14,817)
------------------------------------------- ------ --------- --------- --------- ---------
Net increase in cash and cash equivalents 1,733 2,140 13 -
------------------------------------------- ------ --------- --------- --------- ---------
Cash and cash equivalents at beginning
of the year 26,141 24,141 1 1
------------------------------------------- ------ --------- --------- --------- ---------
Exchange losses on cash and cash
equivalents (529) (140) - -
------------------------------------------- ------ --------- --------- --------- ---------
Cash and cash equivalents at end
of the year 27,345 26,141 14 1
------------------------------------------- ------ --------- --------- --------- ---------
The notes are an integral part of these consolidated financial statements.
Notes to the financial statements
1 General information
Hilton Food Group plc ("the Company") and its subsidiaries
(together "the Group") is a specialist retail meat packing business
supplying major international food retailers in twelve European
countries. The Company's subsidiaries are listed in a note.
The Company is a public limited company incorporated and
domiciled in the UK. The address of the registered office is 2-8
The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE.
The registered number of the Company is 06165540.
The Company has its primary listing on the London Stock
Exchange.
The financial year represents the 52 weeks to 1 January 2012
(prior financial year 52 weeks to 2 January 2011).
This preliminary announcement was approved for issue on 28 March
2012.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 2 January 2011.
Basis of preparation
The consolidated financial statements of Hilton Food Group plc
have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (IFRS), IFRIC
interpretations and the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial statements have
been prepared on the going concern basis under the historical cost
convention.
The financial statements are presented in Sterling and all
values are rounded to the nearest thousand (GBP'000) except when
otherwise indicated.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in a note.
The financial information included in this preliminary
announcement does not constitute statutory accounts of the Group
for the years ended 1 January 2012 and 2 January 2011 but is
derived from those accounts. Statutory accounts for 2010 have been
delivered to the Registrar of Companies and those for 2011 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
3 Segment information
Management have determined the operating segments based on the
reports reviewed by the Executive Directors that are used to make
strategic decisions.
The Executive Directors have considered the business from both a
geographic and product perspective.
From a geographic perspective, the Executive Directors consider
that the Group has six operating segments: i) United Kingdom; ii)
Netherlands; iii) Republic of Ireland; iv) Sweden; v) Denmark and
vi) Central Europe including Poland, Czech Republic, Hungary,
Slovakia, Latvia, Lithuania and Estonia. The United Kingdom,
Netherlands, Republic of Ireland, Sweden and Denmark have been
aggregated into one reportable segment 'Western Europe' as they
have similar economic characteristics as identified in IFRS 8.
Central Europe comprises the other reportable segment.
From a product perspective the Executive Directors consider that
the Group has only one identifiable product, wholesaling of meat.
The Executive Directors consider that no further segmentation is
appropriate, as all of the Group's operations are subject to
similar risks and returns and exhibit similar long-term financial
performance.
The segment information provided to the Executive Directors for
the reportable segments is as follows:
Western Central 2011 Western Central 2010
Europe Europe Total Europe Europe Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- -------- -------- -------- --------
Total segment revenue 891,453 92,600 984,053 777,717 87,637 865,354
--------------------------------- -------- -------- -------- -------- -------- --------
Inter-segment revenue (2,708) - (2,708) (1,131) - (1,131)
--------------------------------- -------- -------- -------- -------- -------- --------
Revenue from external
customers 888,745 92,600 981,345 776,586 87,637 864,223
--------------------------------- -------- -------- -------- -------- -------- --------
Operating profit/segment
result 23,152 2,730 25,882 20,786 2,530 23,316
--------------------------------- -------- -------- -------- -------- -------- --------
Finance income 204 54 258 83 52 135
--------------------------------- -------- -------- -------- -------- -------- --------
Finance costs (1,432) (195) (1,627) (1,078) (162) (1,240)
--------------------------------- -------- -------- -------- -------- -------- --------
Income tax expense (5,388) (527) (5,915) (4,835) (461) (5,296)
--------------------------------- -------- -------- -------- -------- -------- --------
Profit for the year 16,536 2,062 18,598 14,956 1,959 16,915
--------------------------------- -------- -------- -------- -------- -------- --------
Depreciation and amortisation 15,064 1,839 16,903 12,225 1,729 13,954
--------------------------------- -------- -------- -------- -------- -------- --------
Additions to non-current
assets 19,673 279 19,952 19,603 3,516 23,119
--------------------------------- -------- -------- -------- -------- -------- --------
Segment assets 194,376 20,554 214,930 171,042 20,432 191,474
--------------------------------- -------- -------- -------- -------- -------- --------
Deferred income tax assets 1,134 1,021
--------------------------------- -------- -------- -------- -------- -------- --------
Total assets 216,064 192,495
--------------------------------- -------- -------- -------- -------- -------- --------
Segment liabilities 146,867 13,475 160,342 123,965 14,466 138,431
--------------------------------- -------- -------- -------- -------- -------- --------
Borrowings 24,711 30,576
--------------------------------- -------- -------- -------- -------- -------- --------
Current income tax liabilities 1,101 3,306
--------------------------------- -------- -------- -------- -------- -------- --------
Deferred income tax liabilities 641 1,037
--------------------------------- -------- -------- -------- -------- -------- --------
Total liabilities 186,795 173,350
--------------------------------- -------- -------- -------- -------- -------- --------
Sales between segments are carried out at arm's length. Revenue
from external customers reported to the Executive Directors is
measured in a manner consistent with that in the income
statement.
The Executive Directors assess the performance of each operating
segment based on its operating profit. Operating profit is measured
in a manner consistent with that in the income statement.
The amounts provided to the Executive Directors with respect to
total assets and liabilities are measured in a manner consistent
with that of the financial statements. The assets are allocated
based on the operations of the segment and their physical location.
The liabilities are allocated based on the operations of the
segment. The Group interest bearing reorganisation loan is not
considered to be a segment liability.
The Group has two principal customers (comprising groups of
entities known to be under common control), Tesco and Ahold. These
customers are located in the United Kingdom, Netherlands, Republic
of Ireland, Sweden and Central Europe including Poland, Czech
Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia.
Analysis of revenues from external customers and non-current
assets are as follows:
Non-current assets
Revenues from excluding deferred
external customers tax assets
---------------------- ----------------------
2011 2010 2011 2010
--------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ---------- ---------- ----------
Analysis by geographical area
-------------------------------------- ---------- ---------- ---------- ----------
United Kingdom - country of domicile 259,462 255,125 10,201 11,173
-------------------------------------- ---------- ---------- ---------- ----------
Netherlands 263,384 252,095 11,874 12,820
-------------------------------------- ---------- ---------- ---------- ----------
Sweden 213,363 186,700 4,973 6,921
-------------------------------------- ---------- ---------- ---------- ----------
Republic of Ireland 82,574 81,443 7,419 8,731
-------------------------------------- ---------- ---------- ---------- ----------
Denmark 69,962 1,223 21,258 12,542
-------------------------------------- ---------- ---------- ---------- ----------
Central Europe 92,600 87,637 5,361 7,712
-------------------------------------- ---------- ---------- ---------- ----------
981,345 864,223 61,086 59,899
-------------------------------------- ---------- ---------- ---------- ----------
Analysis by principal customer
-------------------------------------- ---------- ---------- ---------- ----------
Customer 1 543,575 494,390
-------------------------------------- ---------- ---------- ---------- ----------
Customer 2 361,723 361,540
-------------------------------------- ---------- ---------- ---------- ----------
Other 76,047 8,293
-------------------------------------- ---------- ---------- ---------- ----------
981,345 864,223
-------------------------------------- ---------- ---------- ---------- ----------
4 Finance income and costs
2011 2010
Group GBP'000 GBP'000
------------------------------------------------ -------- --------
Finance income
------------------------------------------------ -------- --------
Interest income on short-term bank deposits 257 133
------------------------------------------------ -------- --------
Interest on income taxes 1 2
------------------------------------------------ -------- --------
Finance income 258 135
------------------------------------------------ -------- --------
Finance costs
------------------------------------------------ -------- --------
Bank borrowings (1,206) (896)
------------------------------------------------ -------- --------
Finance leases (229) (232)
------------------------------------------------ -------- --------
Exchange losses on foreign currency borrowings (38) (63)
------------------------------------------------ -------- --------
Other interest expense (154) (49)
------------------------------------------------ -------- --------
Finance costs (1,627) (1,240)
------------------------------------------------ -------- --------
Finance costs - net (1,369) (1,105)
------------------------------------------------ -------- --------
5 Income tax expense
2011 2010
Group GBP'000 GBP'000
--------------------------------------------------- -------- --------
Current income tax
--------------------------------------------------- -------- --------
Current tax on profits for the year 6,437 6,205
--------------------------------------------------- -------- --------
Adjustments to tax in respect of previous years (47) 98
--------------------------------------------------- -------- --------
Total current tax 6,390 6,303
--------------------------------------------------- -------- --------
Deferred income tax
--------------------------------------------------- -------- --------
Origination and reversal of temporary differences (427) (844)
--------------------------------------------------- -------- --------
Adjustments to tax in respect of previous years (48) (163)
--------------------------------------------------- -------- --------
Total deferred tax (475) (1,007)
--------------------------------------------------- -------- --------
Income tax expense 5,915 5,296
--------------------------------------------------- -------- --------
Deferred tax credited directly to equity during the year in
respect of employee share schemes amounted to GBP79,000 (2010:
GBP194,000).
The tax on the Group's profit before income tax differs from the
theoretical amount that would arise using the standard rate of UK
Corporation Tax of 26.5% (2010: 28%) applied to profits of the
consolidated entities as follows:
2011 2010
GBP'000 GBP'000
======================================================== ======== ========
Profit before income tax 24,513 22,211
-------------------------------------------------------- -------- --------
Tax calculated at the standard rate of UK Corporation
Tax 26.5% (2010: 28%) 6,496 6,219
-------------------------------------------------------- -------- --------
Expenses not deductible for tax purposes 67 52
-------------------------------------------------------- -------- --------
Adjustments to tax in respect of previous years (95) (65)
-------------------------------------------------------- -------- --------
Profits taxed at rates other than 26.5% (2010: 28%) (706) (972)
-------------------------------------------------------- -------- --------
Other 153 62
-------------------------------------------------------- -------- --------
Income tax expense 5,915 5,296
-------------------------------------------------------- -------- --------
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 equity holders of the Company 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.
2011 2010
Group Basic Diluted Basic Diluted
------------------------------------- ------------- ------- -------- ------- --------
Profit attributable to owners
of the parent (GBP'000) (GBP'000) 17,199 17,199 15,745 15,745
------------------------------------- ------------- ------- -------- ------- --------
Weighted average number of ordinary
shares in issue (thousands) 69,747 69,747 69,657 69,657
------------------------------------- ------------- ------- -------- ------- --------
Adjustment for share options (thousands) - 1,082 - 702
------------------------------------- ------------- ------- -------- ------- --------
Adjusted weighted average number
of ordinary shares (thousands) 69,747 70,829 69,657 70,359
------------------------------------- ------------- ------- -------- ------- --------
Basic and diluted earnings per
share (pence) (pence) 24.7 24.3 22.6 22.4
------------------------------------- ------------- ------- -------- ------- --------
7 Dividends
2011 2010
Group GBP'000 GBP'000
------------------------------------------------------------ -------- --------
Second interim dividend in respect of 2010 paid nil per
ordinary share (2010: 5.54p) - 3,859
------------------------------------------------------------ -------- --------
Final dividend in respect of 2010 paid 7.4p per ordinary
share (2010: 1.22p) 5,160 850
------------------------------------------------------------ -------- --------
Interim dividend in respect of 2011 paid 3.1p per ordinary
share (2010: 2.8p) 2,165 1,950
------------------------------------------------------------ -------- --------
Total dividends paid 7,325 6,659
------------------------------------------------------------ -------- --------
The Directors propose a final dividend of 8.0 p per share
payable on 29 June 2012 to shareholders who are on the register at
1 June 2012. This dividend totalling GBP5.6m has not been
recognised as a liability in these consolidated financial
statements.
8 Property, plant and equipment
Land and
buildings
(including
leasehold Plant Fixtures Motor
improvements) and machinery and fittings vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------------- --------------- -------------- ---------- --------
Cost
-------------------------- --------------- --------------- -------------- ---------- --------
At 4 January 2010 22,054 97,321 9,589 366 129,330
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments (371) 263 299 - 191
-------------------------- --------------- --------------- -------------- ---------- --------
Additions 3,054 19,171 464 155 22,844
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals - (585) (139) (142) (866)
-------------------------- --------------- --------------- -------------- ---------- --------
At 2 January 2011 24,737 116,170 10,213 379 151,499
-------------------------- --------------- --------------- -------------- ---------- --------
Accumulated depreciation
-------------------------- --------------- --------------- -------------- ---------- --------
At 4 January 2010 9,152 64,562 7,169 195 81,078
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments (123) 205 225 - 307
-------------------------- --------------- --------------- -------------- ---------- --------
Charge for the year 1,451 10,318 1,245 73 13,087
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals - (549) (122) (138) (809)
-------------------------- --------------- --------------- -------------- ---------- --------
At 2 January 2011 10,480 74,536 8,517 130 93,663
-------------------------- --------------- --------------- -------------- ---------- --------
Net book amount
-------------------------- --------------- --------------- -------------- ---------- --------
At 4 January 2010 12,902 32,759 2,420 171 48,252
-------------------------- --------------- --------------- -------------- ---------- --------
At 2 January 2011 14,257 41,634 1,696 249 57,836
-------------------------- --------------- --------------- -------------- ---------- --------
Cost
-------------------------- --------------- --------------- -------------- ---------- --------
At 2 January 2011 24,737 116,170 10,213 379 151,499
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments (330) (3,089) (299) (7) (3,725)
-------------------------- --------------- --------------- -------------- ---------- --------
Additions 342 16,969 1,754 14 19,079
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals (12) (1,739) (605) (35) (2,391)
-------------------------- --------------- --------------- -------------- ---------- --------
At 1 January 2012 24,737 128,311 11,063 351 164,462
-------------------------- --------------- --------------- -------------- ---------- --------
Accumulated depreciation
-------------------------- --------------- --------------- -------------- ---------- --------
At 2 January 2011 10,480 74,536 8,517 130 93,663
-------------------------- --------------- --------------- -------------- ---------- --------
Exchange adjustments 44 (1,816) (283) (5) (2,060)
-------------------------- --------------- --------------- -------------- ---------- --------
Charge for the year 2,126 12,642 1,074 81 15,923
-------------------------- --------------- --------------- -------------- ---------- --------
Disposals - (1,624) (591) (28) (2,243)
-------------------------- --------------- --------------- -------------- ---------- --------
At 1 January 2012 12,650 83,738 8,717 178 105,283
-------------------------- --------------- --------------- -------------- ---------- --------
Net book amount
-------------------------- --------------- --------------- -------------- ---------- --------
At 1 January 2012 12,087 44,573 2,346 173 59,179
-------------------------- --------------- --------------- -------------- ---------- --------
Land and buildings are held under short leaseholds. Details of
bank borrowings secured on assets of the Group are given in note
10. Depreciation charges are included within administrative
expenses in the income statement.
The cost and net book amount of property plant and equipment in
the course of its construction included above comprise land and
buildings GBPnil (2010: GBP2,905,000) and plant and machinery
GBP3,668,000 (2010: GBP11,440,000).
Property, plant and equipment include the following amounts
where the Group is a lessee under a finance lease:
2011 2010
GBP'000 GBP'000
-------------------------------------------------------- ------------- ------------
Cost - capitalised finance leases 3,517 3,576
-------------------------------------------------------- ------------- ------------
Accumulated depreciation (1,395) (1,225)
-------------------------------------------------------- ------------- ------------
Net book amount 2,122 2,351
-------------------------------------------------------- ------------- ------------
Included in assets held under finance leases are land and buildings with
a net book amount of GBP2,078,000 (2010: GBP2,299,000) and plant and machinery
with a net book amount of GBP44,000 (2010:GBP52,000).
9 Intangible assets
Product Computer
licences software Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- --------- --------
Cost
-------------------------- ---------- ---------- --------- --------
At 4 January 2010 8,108 2,984 836 11,928
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (289) 141 - (148)
-------------------------- ---------- ---------- --------- --------
Additions 47 228 - 275
-------------------------- ---------- ---------- --------- --------
At 2 January 2011 7,866 3,353 836 12,055
-------------------------- ---------- ---------- --------- --------
Accumulated amortisation
-------------------------- ---------- ---------- --------- --------
At 4 January 2010 7,353 1,924 - 9,277
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (263) 111 - (152)
-------------------------- ---------- ---------- --------- --------
Charge for the year 355 512 - 867
-------------------------- ---------- ---------- --------- --------
At 2 January 2011 7,445 2,547 - 9,992
-------------------------- ---------- ---------- --------- --------
Net book amount
-------------------------- ---------- ---------- --------- --------
At 4 January 2010 755 1,060 836 2,651
-------------------------- ---------- ---------- --------- --------
At 2 January 2011 421 806 836 2,063
-------------------------- ---------- ---------- --------- --------
Cost
-------------------------- ---------- ---------- --------- --------
At 2 January 2011 7,866 3,353 836 12,055
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (163) (237) - (400)
-------------------------- ---------- ---------- --------- --------
Additions - 873 - 873
-------------------------- ---------- ---------- --------- --------
At 1 January 2012 7,703 3,989 836 12,528
-------------------------- ---------- ---------- --------- --------
Accumulated amortisation
-------------------------- ---------- ---------- --------- --------
At 2 January 2011 7,445 2,547 - 9,992
-------------------------- ---------- ---------- --------- --------
Exchange adjustments (166) (185) - (351)
-------------------------- ---------- ---------- --------- --------
Charge for the year 386 594 - 980
-------------------------- ---------- ---------- --------- --------
At 1 January 2012 7,665 2,956 - 10,621
-------------------------- ---------- ---------- --------- --------
Net book amount
-------------------------- ---------- ---------- --------- --------
At 1 January 2012 38 1,033 836 1,907
-------------------------- ---------- ---------- --------- --------
Amortisation charges are included within administrative expenses
in the income statement.
10 Borrowings
2011 2010
Group GBP'000 GBP'000
----------------------------------------------- -------------- --------------
Current
----------------------------------------------- -------------- --------------
Bank borrowings 10,318 8,711
----------------------------------------------- -------------- --------------
Finance lease liabilities 122 117
----------------------------------------------- -------------- --------------
10,440 8,828
----------------------------------------------- -------------- --------------
Non-current
----------------------------------------------- -------------- --------------
Bank borrowings 32,740 32,306
----------------------------------------------- -------------- --------------
Finance lease liabilities 2,875 3,053
----------------------------------------------- -------------- --------------
35,615 35,359
----------------------------------------------- -------------- --------------
Total borrowings 46,055 44,187
----------------------------------------------- -------------- --------------
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:
2011 2010
Currency GBP'000 GBP'000
----------------------------------------------- -------------- --------------
UK Pound 24,720 30,595
----------------------------------------------- -------------- --------------
Euro 21,335 13,592
----------------------------------------------- -------------- --------------
46,055 44,187
----------------------------------------------- -------------- --------------
The Group reorganisation loan of GBP24,711,000 (2010:
GBP30,576,000) is repayable in quarterly instalments by 28 February
2015. Interest is charged at LIBOR plus 1.75% subject to interest
rate caps over GBP17m of borrowings where LIBOR is capped at 4.5%.
Other bank borrowings are repayable by 2013 to 2017 with interest
charged at EURIBOR plus 1.75%.
Bank borrowings totalling GBP43,058,000 (2010: GBP41,017,000)
are secured by fixed and floating charges over the assets of the
individual Group borrowers and through joint and several guarantees
from each active Group undertaking.
The Group has undrawn overdraft and loan borrowing facilities of
GBP19.8m (2010: GBP21.7m) which expire after one year.
The contractual maturity profile of the Group's borrowings is in
a note.
The minimum lease payments and present value of finance lease
liabilities is as follows:
Minimum lease Present value
payments
2011 2010 2011 2010
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -------- --------
No later than one year 336 343 122 117
-------------------------------------------- -------- -------- -------- --------
Later than one year and no later than
five years 1,394 1,392 2,875 573
-------------------------------------------- -------- -------- -------- --------
Later than five years 2,997 3,430 - 2,480
-------------------------------------------- -------- -------- -------- --------
4,727 5,165 2,997 3,170
-------------------------------------------- -------- -------- -------- --------
Future finance charges on finance leases (1,730) (1,995) - -
-------------------------------------------- -------- -------- -------- --------
Present value of finance lease liabilities 2,997 3,170 2,997 3,170
-------------------------------------------- -------- -------- -------- --------
Lease liabilities are effectively secured as the rights to the
leased asset revert to the lessor in the event of default. The fair
value of the Group's finance lease liabilities is GBP4,406,000
(2010: GBP4,778,000). The fair values are based on cash flows
discounted using the European Central Bank benchmark main
refinancing operations fixed interest rate of 1.0% (2010:
1.0%).
11 Cash generated from operations
2011 2010
Group GBP'000 GBP'000
------------------------------------------------------------ --------- --------
Profit before income tax 24,513 22,211
------------------------------------------------------------ --------- --------
Finance costs - net 1,369 1,105
------------------------------------------------------------ --------- --------
Operating profit 25,882 23,316
------------------------------------------------------------ --------- --------
Adjustments for non-cash items:
------------------------------------------------------------ --------- --------
Depreciation 15,923 13,087
------------------------------------------------------------ --------- --------
Amortisation of intangible assets 980 867
------------------------------------------------------------ --------- --------
Loss/(profit) on disposal of property, plant and equipment 128 (26)
------------------------------------------------------------ --------- --------
Adjustment in respect of employee share schemes 408 500
------------------------------------------------------------ --------- --------
Changes in working capital:
------------------------------------------------------------ --------- --------
Inventories (2,670) (2,822)
------------------------------------------------------------ --------- --------
Trade and other receivables (19,762) (7,186)
------------------------------------------------------------ --------- --------
Prepaid expenses (1,339) 140
------------------------------------------------------------ --------- --------
Trade and other payables 22,734 9,229
------------------------------------------------------------ --------- --------
Accrued expenses (596) (2,966)
------------------------------------------------------------ --------- --------
Cash generated from operations 41,688 34,139
------------------------------------------------------------ --------- --------
The parent company has no operating cash flows.
12 Related party transactions and ultimate controlling party
The Directors do not consider there to be one ultimate
controlling party. The companies noted below are all deemed to be
related parties by way of common Directors.
Sales and purchases made on an arm's length basis on normal
credit terms to related parties during the year were as
follows:
Sales Purchases
2011 2010 2011 2010
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- -------- --------
Hilton Meats (International) Limited 2,435 2,131 55,500 56,706
-------------------------------------------- --------- --------- -------- --------
Romford Wholesale Meats Limited - - 47,104 44,487
-------------------------------------------- --------- --------- -------- --------
RWM Dorset Limited - - 15,795 20,947
-------------------------------------------- --------- --------- -------- --------
Amounts owing from and to related parties at the year end were as follows:
Owed from related Owed to related
parties parties
2011 2010 2011 2010
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- -------- --------
Hilton Meats (International) Limited 133 188 2,911 2,831
-------------------------------------------- --------- --------- -------- --------
Romford Wholesale Meats Limited - - 1,930 2,645
-------------------------------------------- --------- --------- -------- --------
RWM Dorset Limited - - 821 1,467
-------------------------------------------- --------- --------- -------- --------
133 188 5,662 6,943
-------------------------------------------- --------- --------- -------- --------
The ultimate shareholders of all of the above companies have an interest
in the share capital of the Company. Romford Wholesale Meats Limited and
RWM Dorset Limited ceased to be related parties during 2011.
The Company's related party transactions with other Group companies during
the year were as follows:
2011 2010
Company GBP'000 GBP'000
-------------------------------------------- --------- --------- -------- --------
Hilton Foods Limited - dividend received 9,500 14,852
-------------------------------------------- --------- --------- -------- --------
Hilton Foods Limited - interest expense 432 557
-------------------------------------------- --------- --------- -------- --------
Hilton Meats (Retail) Limited - payment
for group relief 156 195
-------------------------------------------- --------- --------- -------- --------
At the year-end GBP14,940,000 (2010: GBP17,244,000) was owed to Hilton
Foods Limited and GBP156,000 (2010: GBP195,000) was owed by Hilton Meats
(Retail) Limited.
Details of key management compensation are given in a note.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGURGWUPPGAR
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