TIDMHFG
RNS Number : 5932T
Hilton Food Group PLC
31 March 2016
31(st) March 2016
Hilton Food Group plc
Strong progress
Highlights
Hilton Food Group plc, the specialist retail meat packing
business supplying major international food retailers in thirteen
European countries and Australia, today announces its preliminary
results for the 53 weeks ended 3 January 2016.
Financial highlights
2015 2014 Change
53 weeks 52 weeks
to to
3 January 28 December
2014
2016
Volume (tonnes) 244,140 231,504 +5.5%
Revenue GBP1,094.8m GBP1,099.0m -0.4%
Operating profit GBP29.0m GBP26.1m +11.3%
Profit before tax GBP28.0m GBP25.2m +11.0%
Basic earnings per share 27.5p 25.0p +10.0%
Investment expenditure GBP13.7m GBP43.3m
Closing net cash / (debt) GBP12.7m GBP(7.7)m
Dividends paid and proposed
in respect of the year 14.6 p 13.3 p +9.8%
Strategic highlights
-- Investment to modernise and expand capacity of UK
site in Huntingdon, to service increased volumes
for Tesco, completed during 2015. New production
facilities are fully bedded in, working well and
delivering planned operational efficiencies.
-- Encouraging progress from the Australian joint venture
with Woolworths. New dedicated retail packed meat
facility, near Melbourne, operated by the joint venture
company, commenced production on schedule in September
2015. Store roll out plan covering Victoria and South
Australia now completed.
Operating highlights
-- Volume growth of 5.5%, with growth in the UK, Ireland
and Holland for Tesco and Albert Heijn with particularly
strong Christmas trading partly offset by continuing
pressure on consumer spending in Denmark.
-- Revenue reduced by 0.4% despite the volume gains,
reflecting strengthening of Sterling, which decreased
revenue by 7.4%.
-- Operating profit at GBP29.0m 11.3% ahead of last
year (2014: GBP26.1m) and 20.9% higher on a constant
currency basis.
-- Investment expenditure returning to maintenance levels
at GBP13.7m (2014: GBP43.3m), following completion
of the major re-investment programmes undertaken
in the UK and Sweden.
-- Free cash inflow of GBP31.7m (compared to an outflow
of GBP2.1m in 2014) generating net cash balances
of GBP12.7m at year end, as compared with net debt
of GBP7.7m at end of 2014.
-- Strong ungeared balance sheet providing a firm platform
for future expansion.
Commenting on the results Chief Executive Robert Watson OBE
said:
"I am pleased to report that during 2015 Hilton made strong
progress in pursuing its growth strategy, including the expansion
of the Australian joint venture and the completion of the major UK
capacity expansion project. We will continue to look for available
opportunities to progressively and profitably expand the scale and
scope of our operations as they arise using a business model that
has over time proved to be successful, resilient, relevant and
internationally transferable."
Enquiries
Hilton Food Group Tel: 01480 387214
Robert Watson OBE, Chief
Executive
Nigel Majewski, Chief
Financial Officer
Citigate Dewe Rogerson Tel: 020 7638 7591
Angharad Couch
Chairman's introduction
Strategic delivery
I am pleased to report that continued strong strategic progress
was achieved during 2015. A new meat processing facility for
Woolworths near Melbourne in Victoria, operated by the joint
venture company, commenced production on time in September 2015,
with the store roll out plan across Victoria and South Australia
now completed.
The major investment program undertaken at the Group's UK
facilities in Huntingdon, involving a significant extension of the
site's processing and packing capacity, the addition of a further
production unit and the streamlining and modernisation of the
complete facility has been successfully completed, with the new
facilities now bedded in and generating improved operational
performances more rapidly than previously expected.
Group performance and shareholder returns
Further volume growth was achieved during 2015, notwithstanding
relatively challenging market conditions in some countries. Strong
underlying profit progress was achieved despite a material impact
on our profitability reported in Sterling from adverse exchange
translation movements.
The Group's net income in 2015 at GBP20.0m was 10.8% ahead of
2014 (GBP18.1m) and 20.7% higher in constant currency terms. Basic
earnings per share at 27.5p were 10% ahead of last year. Hilton
continued to generate significant free cash flow during 2015, which
enabled the Group to move into a positive GBP12.7m net cash
position by the year end (as compared with net debt of GBP7.7m at
the end of 2014).
Over the last two years we have made major new investments to
secure the Group's future growth potential. The principal items of
expenditure involved the redevelopment of the Group's facilities in
Huntingdon to enable the planned UK volume increases for Tesco and
a re-investment programme at Vasteras in Sweden. Both projects were
successfully completed in early 2015, providing additional capacity
and delivering considerable improvements in operational
efficiency.
The Board considers that the Group's progressive dividend policy
maintained since flotation remains appropriate, given both the
further strategic progress achieved in 2015 and Hilton's continuing
strong level of cash generation. With the proposed final dividend
of 1.3p per ordinary share for 2015, total dividends paid in
respect of 2015 will have increased by 9.8%, as compared to last
year.
Our Board
The Board is responsible for the long term success of the Group
and to achieve this it contains an appropriate mix of skills and
depth and a range of practical business experience, which is
available to support and guide our management teams across a wide
range of countries.
After nine years valuable service Chris Marsh has stepped down
as a Non-Executive Director and I will be stepping down as
Non-Executive Chairman following the forthcoming Annual General
Meeting, with Colin Smith assuming this role. We are delighted to
welcome Christine Cross and John Worby as new Non-Executive
Directors, both of whom will bring a wide range of skills and
expertise to our business.
I have been privileged to serve on the Board since just before
our Company's flotation in 2007, for the last six years as
Non-Executive Chairman. I am pleased to confirm that there is well
planned succession in the Group. I will continue to assist the
Group on agricultural matters and would like to take this
opportunity to thank my colleagues on the Board for their support,
counsel and expertise over the six years of my chairmanship. I am
confident that under the leadership of Colin Smith and Robert
Watson the Group will continue to make excellent progress.
Annual General Meeting
This year's AGM will be held at the Old Bridge Hotel, 1 High
Street, Huntingdon, Cambridgeshire PE29 3TQ on 25 May 2016 at noon
and my colleagues and I very much look forward to seeing those of
you who are able to attend.
Sir David Naish DL
Non-Executive Chairman
30 March 2016
Chief Executive's summary
Strategic objectives
Our strategy is focussed on supporting our customers' brands and
their development in their local markets, whilst achieving
attractive and sustainable rates of growth in value for our
shareholders. This straightforward approach has generated growth
over an extended period of time and, with a strong reputation, well
invested modern facilities and a robust balance sheet, the Group
remains well positioned to achieve continuing progress.
Hilton seeks to build long term customer and shareholder value
by focusing on:
-- Growing volumes and extending product ranges supplied and services provided
to its existing customers;
-- Optimising the use of its assets and investing in new technology and capacity
expansion as required;
-- Maintaining a vigilant focus on food safety and integrity and reducing unit
costs, while improving product quality and service provision; and
-- Entering new territories either with new customers or in partnership with
our existing customers.
We will continue to pursue disciplined geographical expansion,
whilst at the same time actively developing, enriching, deepening
and expanding the scope of our existing business partnerships,
playing a full and proactive role in strongly supporting our
customers and the successful development of their brands.
Business model
Our business model is the means by which we deliver on our
strategic objectives. The Hilton business model is proven and
sustainable, whilst being relatively simple and straightforward. We
operate large scale, extensively automated and robotised meat
processing and packing facilities for major international multiple
retailers on a dedicated basis. The one exception is in Central
Europe, where our facility in Poland supplies more multiple
retailers in order to achieve critical mass in terms of volumes
supplied and the consequent ability to achieve competitive unit
packing costs.
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Raw material meat is sourced, in close co-operation with our
retail partners, from local sources and a wide international base
of proven suppliers. It is then processed, packed and delivered to
the retailers' distribution centres or stores. Our plants are
highly automated and use advanced robotics for the storage of raw
materials and finished products. Developing robotics technology has
been extended in recent years both in the production environment
and to the sorting of finished products by retailer store order,
achieving material supply chain efficiencies for our customers.
To ensure our continued competitiveness, we seek to keep
ourselves at the forefront of the meat packing industry. We
constantly seek to drive further efficiencies, always maintaining a
pipeline of clear identifiable cost reduction initiatives and an
open minded approach designed to continually challenge the status
quo. We consider our modern, very well invested facilities to be a
key factor in keeping unit packing costs as low as possible. Over
the past twelve years we have invested continuously across all
areas of our business, including the sourcing of raw materials, the
design of packaging materials, increased efficiency in processing
and storage solutions and updating our IT infrastructure. Capital
expenditure over this period has totalled over GBP210m.
In Europe we have facilities in six countries each run by a
local management team enhanced by specialist central leadership,
expertise, advice and support. These businesses operate under the
terms of five to ten year Long Term Supply Agreements with our
retail partners, either on a cost plus or agreed packing rate
basis. These contractual arrangements, combined with our customer
dedication, serve to maximise achievable volume throughput whilst
minimising unit packing costs. In Australia our joint venture
company receives a volume related management fee in respect of the
facilities it operates on behalf of Woolworths.
Under the long term agreements we have in place with our
customers the parameters of our revenue are clearly defined. As
well as income derived from the supply of retail packed meat
products there are also provisions whereby our income can be
increased or decreased subject to achievement of certain pre-agreed
and pre-defined key performance measures and targets.
We are a committed and loyal partner with a continuing record of
delivering value through quality products with the highest levels
of food safety, traceability and integrity, whilst providing a
range of services which enable our customers to evolve and improve
their meat supply chain management. Our customer base comprises
high quality multiple retailers and our in-depth understanding of
our customers' needs, together with those of their consumers,
enables us to play an active role in managing their meat supply
chains whilst providing agile solutions to supply chain challenges
as they arise. As our customers' markets change and competition
increases, we need to keep a constant focus on the challenges they
face so as to be able to put forward flexible solutions, together
with continuing increases in efficiency and cost
competitiveness.
The strength of our long term partnerships with our retail
customers has been a key driver of our growth since the Group was
formed and will continue to underpin the Group's strategy. Hilton's
business model has proved successful across a range of European
countries, appropriately adapted in each case by working in close
collaboration with its local customers to meet their specific
requirements. Our experience to date continues to indicate that our
business model, appropriately adapted, can be successfully
transferred to a number of new countries.
Geographical spread
The Group's rapid past expansion has been based on its
established track record, together with its growing international
reputation and experience and the recognised success of the close
partnerships it has forged and maintained with successful retail
partners. We are an international business and the seven countries
in which the Group currently has production facilities, with the
dates operations commenced in each country, are set out below:
Year Country Location Customers
1994 UK Huntingdon Tesco UK
2000 Holland Zaandam Albert Heijn
2004 Ireland Drogheda Tesco Ireland
2004 Sweden Vasteras ICA
2006 Central Tychy, Poland Ahold (2006)
Europe Tesco (2007)
Rimi (2009)
--------------
2011 Denmark Aarhus Coop Danmark
2013 Australia Bunbury Woolworths
and Brisbane
(2013),
Melbourne
(2015)
----- ---------- -------------- --------------
The facility in Tychy 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. The
facility at Zaandam also supplies Albert Heijn stores in
Belgium.
The joint venture with Woolworths in Australia involves our
joint venture company managing Woolworths' meat processing and
packing facilities at Bunbury in Western Australia, Brisbane in
Queensland and, from September 2015, a new state of the art meat
packing facility near Melbourne, in Victoria.
Currency translation
In 2015 62% of the Group's turnover was earned in countries
outside the United Kingdom, together with 73% of the volumes of
meat delivered. Although these percentages remain significant they
have declined since last year reflecting the increase achieved in
sales and volumes in the UK during 2015 and the decline in the
Sterling value of overseas sales.
This wide geographical spread increases the Group's resilience
by minimising its reliance on the fortunes of any one individual
economy, but makes its results reported in Sterling sensitive to
changes in the value of Sterling as compared to the range of
overseas currencies in which the Group trades. During 2015 the
average exchange rates for the various overseas currencies in which
the Group trades have all depreciated significantly against
Sterling, compared with the corresponding period in 2014, the Euro
by 10.0%, the Danish Krone by 10.0%, the Polish Zloty by 10.0%, the
Swedish Krona by 12.4% and the Australian Dollar by 10.2%.
Culture and people
To our mind successful businesses are principally about having
the right people in the right positions at the right time working
together as "one team", with local management teams empowered,
encouraged and advised in specialist areas to enable them to
support their local customers. The Group benefits from each of its
businesses being part of a larger organisation, which enables them
to share best practice solutions, including equipment selection, IT
solutions and ways of working along with the collaborative sharing
of new learnings, ideas and techniques.
We are committed to providing an inclusive working environment
where everyone feels valued, respected and able to fulfil their
potential. We recognise that people from different backgrounds,
countries and experiences can bring benefits to our business. We
fully recognise the benefits of gender diversity and details of the
gender composition of our staff are set out in our Corporate and
social responsibility report.
The Group currently employs 2,833 employees in six European
countries. Our business model is largely decentralised, with
capable, largely self-sufficient management teams running our
businesses in each local country. We consider this devolved
structure to be a critical success factor, as it achieves very
close working relationships with our customers, who benefit from
personal, dedicated, flexible and rapid local support.
The Board fully understands and appreciates just how much our
progress relies on the effort, personal commitment, enthusiasm,
enterprise and initiative of our employees. I would like to take
this opportunity, on behalf of the Board, to personally thank all
of them both for their dedicated efforts during 2015 and their
continuing commitment to the Group's on-going growth and
development.
Performance overview
Our business comprises three separate operating segments:
Western Europe
Operating profit of GBP32.1m (2014: GBP27.1m) on turnover of
GBP1,020.7m (2014: GBP1,016.8m)
This operating segment covers the Group's businesses in the UK,
Ireland, Holland, Sweden and Denmark. Volume growth of 5.1% was
achieved in 2015, principally reflecting volume growth in the UK,
Ireland and Holland, driven mainly by gaining an increased share of
our customers' business in the UK, with the recently expanded meat
processing capacity, and the introduction of new product lines in
each country. Volumes in Denmark were reduced with consumer
spending remaining under continuing pressure and in Sweden volumes
remained relatively steady. Turnover grew by only 0.4%, but by 7.7%
in constant currency terms. The redevelopment of the Huntingdon
site was completed in 2015. This was a complex project involving
the re-equipping and re-alignment of the site and the addition of a
further production area whilst working around a live production
environment with the highest customer service levels needing to be
maintained throughout the process. The re-equipment of the Vasteras
site in Sweden faced similar challenges. Both projects were
executed successfully, with improved operational efficiencies being
realised in addition to the capacity expansion. In the UK the
operational efficiencies were realised somewhat earlier than
predicted and with a lower level of start-up costs.
Central Europe
Operating profit of GBP2.3m (2014: GBP2.4m) on turnover of
GBP74.1m (2014: GBP82.2m)
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In Central Europe the Group's meat packing business, based at
Tychy in Poland, supplies customers across Central Europe, from
Hungary to the Baltics. This multi-customer business supplies Ahold
stores in Czech Republic and Slovakia, Tesco stores in Hungary,
Czech Republic, Poland and Slovakia and Rimi stores in Latvia,
Lithuania and Estonia. Volumes increased by 7.8%, but in very
competitive market conditions with consumer down-trading,
unfavourable exchange rate movements of 10.0% and lower raw
material prices, turnover decreased by 9.7%.
Central costs and other
Net operating cost GBP5.4m (2014: GBP3.4m)
This segment includes our share of the management fee earned by
our joint venture with Woolworths of GBP1.2m (2014: GBP1.3m),
start-up and support costs in connection with the joint venture of
GBP1.2m (2014: GBP0.9m) and central costs of GBP5.4m (2014:
GBP3.8m).
In Australia the Group is involved in a joint venture with
Woolworths, under which it earns a fifty per cent share of the
agreed management fees charged by the joint venture company to
Woolworths for operating certain Woolworths' meat processing and
packing plants, based on the volume of retail packed meat delivered
to Woolworths' stores. The joint venture company is currently
responsible for the operation of Woolworths' Western Australian
meat processing centre in Bunbury, its Queensland meat processing
centre in Brisbane and the new purpose built retail packing
facility near Melbourne in Victoria which started production in
September 2015. Start-up costs inevitably peak in the period
immediately before a new production facility such as that in
Melbourne comes on stream and then subsequently fall away.
Past and future trends
Over recent decades as major retail chains have progressively
gained a greater share of the grocery markets in most countries,
they have increasingly turned to large scale, centralised meat
packing solutions capable of producing private label packed meat
products more safely and cost effectively. In doing so, they have
rationalised their supply base, achieving lower costs with higher
food safety, food integrity, traceability and quality standards.
This has allowed supermarket groups to focus on their core business
and maximise their return on available retail space whilst
addressing consumers' continuing requirement for quality and
value.
Grocery retail markets are expected to remain extremely
competitive, with continuing pressure on consumer expenditure. The
trend towards increased use of centralised meat packing solutions
is still continuing, however, albeit at different speeds across the
world. This gives rise to a wide range of potential future
geographical expansion opportunities for Hilton, but inevitably in
a range of different timescales as markets develop and change over
time.
Within retail markets patterns are continuing to change fairly
rapidly, with increased internet based ordering and a growth in the
number of "click and collect" facilities. Following pressures on
consumer expenditure over a number of years there has been
increased use by cost conscious consumers of local convenience
stores and discount outlets, to shop more frequently for a reduced
overall basket cost per visit and at a wider range of retail
outlets. These developments which appear to be structural rather
than cyclical will all tend to reinforce the overall trend towards
retail packed meat, as this is the meat offering in all these
growth areas.
Outlook and current trading
Hilton's medium term growth outlook remains encouraging
following the successful completion of the UK capacity expansion
and site redevelopment project in Huntingdon and the start of
production with our Australian joint venture partner at
Melbourne.
Notwithstanding competitive market conditions, overseas currency
fluctuations and pressure on consumer expenditure Hilton is
therefore confident of growing its business with continued focus on
new product development and range extension.
In the early months of 2016 Hilton's operating performance has
been in line with the Board's expectations. The Group will continue
to explore further opportunities for geographical expansion in both
domestic and overseas markets and is well placed to capture those
opportunities as they arise.
Robert Watson OBE
Chief Executive
30 March 2016
Performance and financial review
Group performance
Hilton's financial performance was robust in 2015, despite
material headwinds from adverse currency movements, with underlying
operating profit 20.9% ahead of last year in constant currency
terms. With investment expenditure returning to lower levels,
continued strong cash flow generation resulted in a net cash
position at the end of the year, compared with a net debt position
at the end of 2014.This performance and financial review covers the
main highlights of the Group's financial performance and position
in 2015.
Basis of preparation
The Group is presenting its results for the 53 week period ended
3 January 2016, with comparative information for the 52 week period
ended 28 December 2014. The financial statements of the Group are
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
2015 Financial performance
Revenue
Volumes grew overall by 5.5% (4.0% on a 52-week basis) with
volume increases in the UK, Ireland, Holland and Central Europe,
but lower volumes in Denmark. Further details of volume growth by
business segment are set out in the Chief Executive's summary.
Revenue fell by 0.4% (1.9% fall on a 52-week basis) to GBP1,094.8m,
as compared to GBP1,099.0m in 2014, with unfavourable exchange rate
movements more than offsetting the volume gains.
Operating profit and margin
Operating profit, at GBP29.0m was 11.3% (9.0% on a 52-week
basis) above the previous year's level (2014: GBP26.1m) and 20.9%
higher on a constant currency basis. The operating profit margin in
2015 was 2.6%, as compared with 2.4% in 2014, reflecting the higher
operating profit level and the operating profit per kilogram of
packed meat sold was 11.9p (11.3p in 2014).
Net finance costs
Net finance costs, at GBP1.1m, were slightly above the previous
year's level (2014: GBP0.9m) with higher borrowings. Interest rates
paid have remained at historically low levels, reflecting
continuing low LIBOR and other interbank rates, which determine the
interest rates on the Group's principal borrowings. Interest cover
in 2015 remained high, but decreased marginally to 28 times, as
compared with 30 times in 2014.
Taxation
The taxation charge for the period was GBP6.5m (2014: GBP5.6m).
This represented an effective taxation rate of 23.2% compared with
22.4% last year, with a reduced proportion of profits being earned
in the lower taxed regimes in which the Group operates.
Net income
Net income, representing profit for the year attributable to
owners of the parent, at GBP20.0m (2014: GBP18.1m) was 10.8% (8.4%
on a 52-week basis) higher than last year reflecting the increase
in operating profit and 20.7% higher in constant currency
terms.
Earnings per share
Basic earnings per share at 27.5p (2014: 25.0p) were 10.0%
higher than last year (7.7% on a 52-week basis). Diluted earnings
per share were 27.2p (2014: 24.7p).
Earnings before interest, taxation, depreciation and
amortisation
EBITDA increased by 16.2% to GBP48.4m (2014: GBP41.7m)
reflecting the increase in operating profit together with higher
depreciation and amortisation charges.
Free cash flow
Cash flow remained strong in 2015, with the Group generating a
GBP31.7m free cash inflow before dividends and financing (2014:
free cash outflow GBP2.1m), after incurring capital expenditure of
GBP13.7m. Group borrowings were GBP40.1m at the end of 2015 and,
with net cash balances of GBP52.8m, this resulted in a closing net
cash position of GBP12.7m, as compared with a net debt level of
GBP7.7m at the end of 2014. At the end of 2015 the Group had
undrawn overdraft and loan facilities of GBP28.3m (2014:
GBP46.5m).
A strong ungeared balance sheet gives the Group considerable
flexibility for potential future expansion.
Dividends
The Board aims to maintain a dividend policy that provides a
dividend level that grows broadly in line with the underlying
earnings of the Group and has recommended a final dividend of 1.3p
per ordinary share in respect of 2015. This, together with the
first interim dividend of 4.1p per ordinary share paid in November
2015 and the second interim dividend of 9.2p per ordinary share
payable in April 2016, represents a 9.8% increase in the full year
dividend, as compared with last year. The final dividend, if
approved by shareholders, will be paid on 1 July 2016 to
shareholders on the register on 3 June 2016 and the shares will be
ex dividend on 2 June 2016.
Key performance indicators
How we measure our performance against our strategic
objectives
The Board monitors a range of financial and non-financial key
performance indicators "KPIs" to measure the Group's performance
over time in building shareholder value and achieving the Group's
strategic priorities. The nine headline "KPI" metrics used by the
Board for this purpose, together with our performance over the past
two years, is set out below:
Financial KPIs 2015 2014 Definition, method of calculation
and analysis
(53 weeks) (52 weeks)
---------------------- ------------ ------------ -------------------------------------
Year on year revenue growth
expressed as a percentage.
The 2015 decrease reflected
volume growth of 5.5%, which
was more than offset by the
Revenue growth impact of unfavourable exchange
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(%) (0.4%) (2.3%) translation rate movements.
---------------------- ------------ ------------ -------------------------------------
Operating profit expressed
as a percentage of turnover.
Operating profit The increase in 2015 reflected
margin the increased operating profit
(% turnover) 2.6% 2.4% level.
---------------------- ------------ ------------ -------------------------------------
Operating profit
margin Operating profit per kilogram
(pence per kg) 11.9 11.3 sold
---------------------- ------------ ------------ -------------------------------------
Operating profit before depreciation
and amortisation. The increase
reflected higher underlying
operating profits, together
Earnings before with higher depreciation
interest, taxation, and amortisation charges
depreciation following the high level
and amortisation of capital expenditure in
(EBITDA) (GBPm) 48.4 41.7 2014.
---------------------- ------------ ------------ -------------------------------------
Cash inflow before minorities,
dividends and financing.
The improvement reflected
growth in operating cash
Free cash flow flows together with the reduction
(GBPm) 31.7 (2.1) in capital expenditure.
---------------------- ------------ ------------ -------------------------------------
Gearing ratio n/a 18% Year end net debt as a percentage
(%) of EBITDA. The Group was
ungeared at the end of 2015,
with a net cash position.
---------------------- ------------ ------------ -------------------------------------
Non-financial 2015 2014 Definition, method of calculation
KPIs and analysis
(53 weeks) (52 weeks)
---------------------- ------------ ------------ -------------------------------------
Growth in volume
of packed meat Year on year volume growth,
sales (%) 5.5% 3.5% expressed as a percentage.
---------------------- ------------ ------------ -------------------------------------
Employee and The decrease reflects efficiency
labour agency gains, continuing low levels
costs (pence of wage inflation and exchange
per kg) 36.2 39.3 translation rate movements.
---------------------- ------------ ------------ -------------------------------------
Packs of meat delivered as
a % of the orders placed.
Little year on year change,
with high service levels
Customer service being maintained throughout
level (%) 99.2% 99.0% the year.
---------------------- ------------ ------------ -------------------------------------
In addition, a much wider range of financial and operating KPIs
are continuously tracked at business unit level.
Treasury management
Hilton does not engage in any speculative trading in financial
instruments and transacts only in relation to its underlying
business requirements. The Group's policy is designed to ensure
adequate financial resources are made available as required for the
continuing development and growth of its businesses, whilst taking
practical steps to reduce exposures to foreign exchange, interest
rate fluctuation, credit, pricing and liquidity risks, as described
below:
Foreign exchange rate movements and country specific risks
Whilst the presentational currency of the Group is Sterling,
most of its revenues are earned in other currencies, principally
the Euro, Swedish Krona, Danish Krone and Australian Dollar. The
earnings of the Group's overseas subsidiaries are translated into
Sterling at the average exchange rates for the year and their
assets and liabilities at the year end closing rates. Changes in
relevant currency parities are monitored on a continuing basis,
with the timing of the repatriation of overseas profits by dividend
payments and the repayment of any intra-group loans to UK holding
companies paying due regard to actual and forecast exchange rate
movements.
The Group has to date decided not to hedge its foreign exchange
rate exposures, but this policy is kept under continuing review and
may be reappraised over time as the Group's geographic spread
continues to widen. 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 in the main limited to its equity investment in each
overseas subsidiary and its joint venture.
The level of country specific risk currently remains material
for many businesses, in terms of the impact of macroeconomic
developments, including the impact of austerity programmes and
commodity price movements in some countries. The Group sells high
quality basic food products, for which there will always be
continuing demand, to successful blue chip multiple retailers in
developed countries. Hilton has not to date been materially
adversely affected by the lengthy recessionary environments seen in
some countries, but will keep any future identified country
specific risks under continuing review.
Interest rate fluctuation risk
This risk stems from the fact that the interest rates on the
Group's borrowings are variable, being at set margins over LIBOR
and other interbank rates which fluctuate over time. The Board's
policy is to have an interest rate cap on a proportion of this
borrowing. The Board will review hedging costs and options should
the current low interest rate environment change materially.
Customer credit and pricing risks
As Hilton's customers comprise a small number of 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 has for many businesses represented an area of concern over
recent years, given the continuing difficult and uncertain economic
environment in some countries. 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.
Going concern statement
The Directors have performed a detailed assessment, including a
review of the Group's budget for the 2016 financial year and its
longer term plans, including consideration of the principal risks
faced by the Company. Following this review, the Directors are
satisfied that the Company and the Group have adequate resources to
continue to operate and meet its liabilities as they fall due for
the foreseeable future, a period considered to be at least 12
months from the date of signing these financial statements. For
this reason they continue to adopt the going concern basis for
preparing the financial statements.
The Group's bank borrowings 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
our internal budgets and forecasts, may require additional or
extended banking facilities and such future geographical expansion
will depend on our ability to negotiate appropriate additional or
extended facilities, as and when they are required.
The Group's internal budgets and forward forecasts, which
incorporate all reasonably foreseeable changes in trading
performance, are regularly reviewed in detail by the Board and show
that it will be able to operate within its current banking
facilities, taking into account available cash balances, for the
foreseeable future.
Viability statement
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March 31, 2016 02:00 ET (06:00 GMT)
In accordance with provision C.2.2 of the 2014 revision of the
UK Corporate Governance Code, the Directors confirm that they have
a reasonable expectation that the Group will continue to operate
and meet its liabilities, as they fall due, for the three years
ending in December 2018. A period of three years has been chosen
for the purpose of this viability statement as it is aligned with
the Group's three year plan, which is based on the Group's current
customers and does not incorporate the benefits from any potential
new contract gains over this period.
The Directors' assessment has been made with reference to the
Group's current position and strategy taking into account the
Group's principal risks and how these are managed. The strategy and
associated principal risks, which the Directors review at least
annually, are incorporated in the three year plan and such related
scenario testing as is required. The three year plan makes reasoned
assumptions in relation to volume growth based on the position of
our customers and expected changes in the macroeconomic environment
and retail market conditions, expected changes in raw material
meat, packaging and other costs, together with the anticipated
level of capital investment required to maintain our facilities at
state of the art levels. The achievement of the three year plan is
not dependant on any new or expanded financing facilities.
Forward looking statements
This Strategic report contains 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 based on current knowledge, 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.
Nigel Majewski
Chief Financial Officer
30 March 2016
Risk management and principal risks
Risks and risk management
In accordance with provision C.2.1 of the 2014 revision of the
UK Corporate Governance Code the Directors confirm that they have
carried out a robust assessment of the principal risks facing the
Group, including those which could threaten its business model,
future performance, solvency or liquidity. As a leading food
processor in a fast moving environment it is critical that the
Group identifies, assesses and prioritises its risks. This,
together with the adoption of appropriate mitigation actions,
enables us to monitor, minimise and control both the probability
and potential impact of these risks.
How we manage risk
Responsibility for risk management across the Group, including
the appropriate identification of risks and the effective
application of actions designed to mitigate those risks, resides
with the Board which believes that a successful risk management
framework carefully balances risk and reward, and applies reasoned
judgement and consideration of potential likelihood and impact in
determining its principal risks. The Group takes a proactive
approach to risk management with well-developed structures and
range of processes for identifying, assessing, prioritising and
mitigating its key risks, as the delivery of our strategy depends
on our ability to make sound risk informed decisions.
Risk management process and risk appetite
All types of risk applicable to the business are regularly
reviewed and a formal risk assessment is carried out to highlight
key risks to the business and to determine actions that can
reasonably and cost effectively be taken to mitigate them. The
Group's Risk Register is compiled through a combination of business
unit risk registers and Board input. The Board believes that in
carrying out the Group's businesses it is vital to strike the right
balance between an appropriate and comprehensive control
environment and encouraging the level of entrepreneurial freedom of
action required to seek out and develop new business opportunities,
but, however skilfully this balance between risk and reward is
struck, the business will always be subject to a number of risks
and uncertainties, as illustrated below.
Not all the risks listed below 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 following 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. It must be recognised that systems
of internal control are designed to manage rather than completely
eliminate any identified risks.
The most significant risks the Group faces
The six most significant business risks that the Group faces,
are, as might be expected with an unchanged and relatively
straightforward business model, the same as in previous years.
These risks, which will continue to affect the Group's businesses,
together with the measures we have adopted to mitigate these risks,
are outlined in the table below. This is not intended to constitute
an exhaustive analysis of all risks faced by the Group, but rather
to highlight those which are the most significant, as viewed from
the standpoint of the Group as a whole.
Description The Group is dependent on a small number of
of risk customers who can exercise significant buying
power and influence when it comes to contractual
renewal terms at 5 to 10 year intervals.
---------------- -------------------------------------------------------
Its potential The Group has a relatively narrow, but expanding,
impact customer base, with sales to subsidiary or
associated companies of the Tesco and Ahold
groups still comprising the larger part of
Hilton's revenue in 2015. The larger retail
chains have over many years increased their
market share of meat products in many countries,
as customers continue to move away from high
street butchers towards one stop convenience
shopping in supermarkets. This has increased
the buying power of the Group's customers which
in turn increases their negotiating power with
the Group, which could enable them to seek
better terms over time.
---------------- -------------------------------------------------------
Risk mitigation The Group is progressively widening its customer
measures base and its maintained high level of investment
and strategies in state of the art facilities, which together
adopted with management's continuous focus on reducing
costs, allow it to operate very efficiently
at very high throughputs and price its products
competitively. Hilton operates a decentralised,
entrepreneurial business structure, which enables
it to work very closely and flexibly with its
retail partners in each country, in order to
achieve high service levels in terms of orders
delivered, delivery times, compliance with
product specifications and accuracy of documentation,
all backed by an uncompromising focus on food
safety, product integrity and traceability
assurance. Hilton has long term supply agreements
in place with its major customers, with pricing
either on a cost plus or agreed packing rate
basis.
---------------- -------------------------------------------------------
Description The Group's growth potential is dependent on
of risk the success of its customers and the growth
of their packed meat sales.
---------------- -------------------------------------------------------
Its potential The Group's products carry the brand labels
impact of the customer to whom packed meat is supplied
and it is accordingly dependent on its customers'
success in maintaining or improving consumer
perception of their own brand names and packed
meat offerings.
---------------- -------------------------------------------------------
Risk mitigation The Group plays a very pro-active role in enhancing
measures its customers' brand values, through providing
and strategies high quality, competitively priced products,
adopted high service levels, continuing product and
packaging innovation and category management
support. It recognises that quality and traceability
assurance are integral to its customers' brands
and works closely with its customers to ensure
rigorous quality assurance standards are met.
It is continuously measured by its customers
across a very wide range of parameters, including
delivery time, product specification, product
traceability and accuracy of documentation
and targets demanding service levels across
all these parameters. The Group works closely
with its customers to identify continuing improvement
opportunities across the supply chain, including
enhancing product presentation, extending shelf
life and reducing wastage at every stage in
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March 31, 2016 02:00 ET (06:00 GMT)
the supply chain.
---------------- -------------------------------------------------------
Description The progress of the Group's business is dependent
of risk on the macroeconomic environment and levels
of consumer spending in the countries in which
it operates.
---------------- --------------------------------------------------
Its potential No business is immune to difficult economic
impact climates and the consequent pressure on levels
of consumer spending, such as those seen over
recent years across Europe.
---------------- --------------------------------------------------
Risk mitigation With a sound business model, strong retail
measures partners and a single minded focus on minimising
and strategies unit packing costs, whilst maintaining high
adopted levels of product quality and integrity, the
Group has made continued progress over recent
difficult economic periods. It expects to be
able to continue to make progress, even if
the current pressures on consumer spending,
as expected, persist in some countries.
---------------- --------------------------------------------------
Description The Group's business is reliant on a small
of risk number of key personnel and its ability to
manage growth and change successfully.
---------------- -----------------------------------------------------
Its potential The Group is critically dependent on the skills
impact and experience of a small number of senior
managers and specialists and as the business
develops and expands, the Group's success will
inevitably depend on its ability to attract
and retain the necessary calibre of personnel
for key positions, both for managing and growing
its existing businesses and setting up new
ones.
---------------- -----------------------------------------------------
Risk mitigation To continue to manage growth successfully,
measures the Group will carefully manage its skill resources
and strategies and continue to invest in on-the-job training
adopted and career development, together with the cost
effective management of quality information
and control systems, whilst recruiting high
quality new employees, as required, to facilitate
the Group's ongoing growth. The continuing
growth of Hilton's business, together with
its growing reputation, is facilitating the
recruitment of more top class specialists with
the key skill sets required both to support
our existing individual country business units
and manage the Group's future geographical
expansion.
---------------- -----------------------------------------------------
Description The Group's business is dependent on maintaining
of risk a wide and flexible global meat supply base
operating at standards that can continuously
achieve the specifications set by Hilton and
its customers.
---------------- --------------------------------------------------------
Its potential The Group is reliant on its suppliers to provide
impact sufficient volume of products, to the agreed
specifications, in the very short lead times
required by its customers, with efficient supply
chain management being a key business attribute.
The Group sources certain of its meat requirements
globally. Tariffs, quotas or trade barriers
imposed by countries where the Group procures
meat, or which they may impose in the future,
together with the progress of World Trade Organisation
talks and other global trade developments,
could materially affect the Group's international
procurement ability but has not done so in
recent years.
---------------- --------------------------------------------------------
Risk mitigation The Group maintains a flexible global meat
measures supply base, which is progressively widening
and strategies as it expands and is continuously audited to
adopted ensure standards are maintained, so as to have
in place a wide range of options should supply
disruptions occur.
---------------- --------------------------------------------------------
Description Outbreaks of disease and feed contamination
of risk affecting livestock and media concerns relating
to these and instances of product adulteration
can impact the Group's sales.
---------------- --------------------------------------------------
Its potential Reports in the public domain concerning the
impact risks of consuming meat can cause consumer
demand for meat to drop significantly in the
short to medium term. A food scare similar
to the Bovine Spongiform Encephalopathy ("BSE")
scare that took place in 1996 or the much more
recent concerns with regard to meat substitution
can affect public confidence in red meats.
---------------- --------------------------------------------------
Risk mitigation The Group sources its meat from a trusted raw
measures material supply base, all components of which
and strategies meet stringent national, international and
adopted 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.
---------------- --------------------------------------------------
Note: References in this preliminary announcement to the
Strategic report, the Corporate and social responsibility report,
the Directors' report and the Corporate Governance statement are to
reports which will be available in the Company's full published
accounts.
Responsibility statement of the Directors in respect of the
Annual report and financial statements
Each of the Directors whose names and functions are set out
below confirms that to the best of their knowledge and belief:
-- the Group and parent company financial statements,
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 Strategic
report and the Directors' report, include a fair
review of the development and performance of the
business and the position of the Group and the
Company, together with a description of the principal
risks and uncertainties they face.
This responsibility statement was approved by the Board of
Directors on 30 March 2016 and is signed on its behalf by:
Directors
R Watson, Chief Executive
OBE
N Majewski Chief Financial
Officer
Consolidated income statement
2015 2014
53 weeks 52 weeks
Notes GBP'000 GBP'000
------------------------------------------ ----- --------- ---------
Continuing operations
------------------------------------------ ----- --------- ---------
Revenue 3 1,094,822 1,098,990
------------------------------------------ ----- --------- ---------
Cost of sales (957,067) (966,809)
------------------------------------------ ----- --------- ---------
Gross profit 137,755 132,181
------------------------------------------ ----- --------- ---------
Distribution costs (10,091) (10,541)
------------------------------------------ ----- --------- ---------
Administrative expenses (99,887) (96,462)
------------------------------------------ ----- --------- ---------
Share of profit in joint venture 1,222 884
------------------------------------------ ----- --------- ---------
Operating profit 28,999 26,062
------------------------------------------ ----- --------- ---------
Finance income 4 97 102
------------------------------------------ ----- --------- ---------
Finance costs 4 (1,148) (976)
------------------------------------------ ----- --------- ---------
Finance costs - net 4 (1,051) (874)
------------------------------------------ ----- --------- ---------
Profit before income tax 27,948 25,188
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========================================== ===== ========= =========
Income tax expense 5 (6,489) (5,638)
------------------------------------------ ----- --------- ---------
Profit for the year 21,459 19,550
------------------------------------------ ----- --------- ---------
Attributable to:
------------------------------------------ ----- --------- ---------
Owners of the parent 20,017 18,071
------------------------------------------ ----- --------- ---------
Non-controlling interests 1,442 1,479
------------------------------------------ ----- --------- ---------
21,459 19,550
------------------------------------------ ----- --------- ---------
Earnings per share attributable to owners
of the parent during the year
------------------------------------------ ----- --------- ---------
Basic (pence) 6 27.5 25.0
------------------------------------------ ----- --------- ---------
Diluted (pence) 6 27.2 24.7
------------------------------------------ ----- --------- ---------
Consolidated statement of comprehensive income
2015 2014
53 weeks 52 weeks
GBP'000 GBP'000
-------------------------------------------- -------- --------
Profit for the year 21,459 19,550
-------------------------------------------- -------- --------
Other comprehensive income
-------------------------------------------- -------- --------
Currency translation differences (2,739) (4,761)
-------------------------------------------- -------- --------
Other comprehensive income for the year net
of tax (2,739) (4,761)
-------------------------------------------- -------- --------
Total comprehensive income for the year 18,720 14,789
-------------------------------------------- -------- --------
Total comprehensive income attributable to:
-------------------------------------------- -------- --------
Owners of the parent 17,552 13,625
-------------------------------------------- -------- --------
Non-controlling interests 1,168 1,164
-------------------------------------------- -------- --------
18,720 14,789
-------------------------------------------- -------- --------
The notes are an integral part of these consolidated
financial statements.
Consolidated balance sheet
Group Company
2015 2014 2015 2014
Notes GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----- -------- -------- ------- -------
Assets
-------------------------------- ----- -------- -------- ------- -------
Non-current assets
-------------------------------- ----- -------- -------- ------- -------
Property, plant and equipment 8 67,230 72,642 - -
-------------------------------- ----- -------- -------- ------- -------
Intangible assets 9 10,073 12,547 - -
-------------------------------- ----- -------- -------- ------- -------
Investments 2,396 1,234 102,985 102,985
-------------------------------- ----- -------- -------- ------- -------
Deferred income tax assets 1,000 771 - -
-------------------------------- ----- -------- -------- ------- -------
80,699 87,194 102,985 102,985
-------------------------------- ----- -------- -------- ------- -------
Current assets
-------------------------------- ----- -------- -------- ------- -------
Inventories 18,272 22,029 - -
-------------------------------- ----- -------- -------- ------- -------
Trade and other receivables 96,095 115,609 470 53
-------------------------------- ----- -------- -------- ------- -------
Current income tax assets - 1,532 11 30
-------------------------------- ----- -------- -------- ------- -------
Cash and cash equivalents 52,806 35,586 150 333
-------------------------------- ----- -------- -------- ------- -------
167,173 174,756 631 416
-------------------------------- ----- -------- -------- ------- -------
Total assets 247,872 261,950 103,616 103,401
-------------------------------- ----- -------- -------- ------- -------
Equity
-------------------------------- ----- -------- -------- ------- -------
Equity attributable to owners
of the parent
--------------------------------------- -------- -------- ------- -------
Ordinary shares 7,286 7,259 7,286 7,259
-------------------------------- ----- -------- -------- ------- -------
Share premium 8,191 7,235 8,191 7,235
-------------------------------- ----- -------- -------- ------- -------
Employee share schemes reserve 901 441 - -
-------------------------------- ----- -------- -------- ------- -------
Foreign currency translation
reserve (4,489) -2,024 - -
-------------------------------- ----- -------- -------- ------- -------
Retained earnings 82,829 72,717 17,120 13,470
-------------------------------- ----- -------- -------- ------- -------
94,718 85,628 32,597 27,964
-------------------------------- ----- -------- -------- ------- -------
Reverse acquisition reserve (31,700) (31,700) - -
-------------------------------- ----- -------- -------- ------- -------
Merger reserve 919 919 71,019 71,019
-------------------------------- ----- -------- -------- ------- -------
63,937 54,847 103,616 98,983
-------------------------------- ----- -------- -------- ------- -------
Non-controlling interests 4,938 4,786 - -
-------------------------------- ----- -------- -------- ------- -------
Total equity 68,875 59,633 103,616 98,983
-------------------------------- ----- -------- -------- ------- -------
Liabilities
-------------------------------- ----- -------- -------- ------- -------
Non-current liabilities
-------------------------------- ----- -------- -------- ------- -------
Borrowings 10 28,405 32,573 - -
-------------------------------- ----- -------- -------- ------- -------
Deferred income tax liabilities 1,654 1,875 - -
-------------------------------- ----- -------- -------- ------- -------
30,059 34,448 - -
-------------------------------- ----- -------- -------- ------- -------
Current liabilities
-------------------------------- ----- -------- -------- ------- -------
Borrowings 10 11,728 10,687 - -
-------------------------------- ----- -------- -------- ------- -------
Trade and other payables 136,537 157,182 - 4,418
-------------------------------- ----- -------- -------- ------- -------
Current income tax liabilities 673 - - -
-------------------------------- ----- -------- -------- ------- -------
148,938 167,869 - 4,418
-------------------------------- ----- -------- -------- ------- -------
Total liabilities 178,997 202,317 - 4,418
-------------------------------- ----- -------- -------- ------- -------
Total equity and liabilities 247,872 261,950 103,616 103,401
-------------------------------- ----- -------- -------- ------- -------
The notes are an integral part of these consolidated
financial statements.
The financial statements were approved by the Board on
30 March 2016 and were signed on its behalf by:
R. Watson OBE N. Majewski
Director Director
Hilton Food Group plc - Registered number: 06165540
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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 30
December 2013 7,216 5,885 857 2,422 63,989 (31,700) 919 49,588 4,670 54,258
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Profit for the
year - - - - 18,071 - - 18,071 1,479 19,550
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Other
comprehensive
income
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Currency
translation
differences - - - (4,446) - - - (4,446) (315) (4,761)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total
comprehensive
income for
the
year - - - (4,446) 18,071 - - 13,625 1,164 14,789
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Issue of new
shares 43 794 - - - - - 837 - 837
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Adjustment in
respect of
employee
share schemes - 406 (151) - - - - 255 - 255
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Tax on employee
share schemes - 150 (265) - - - - (115) - (115)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Dividends paid 7 - - - - (9,343) - - (9,343) (1,048) (10,391)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total
transactions
with owners 43 1,350 (416) - (9,343) - - (8,366) (1,048) (9,414)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Balance at 28
December 2014 7,259 7,235 441 (2,024) 72,717 (31,700) 919 54,847 4,786 59,633
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Profit for the
year - - - - 20,017 - - 20,017 1,442 21,459
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Other
comprehensive
income
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Currency translation
differences - - - (2,465) - - - (2,465) (274) (2,739)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total
comprehensive
income for
the
year - - - (2,465) 20,017 - - 17,552 1,168 18,720
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Issue of new
shares 27 516 - - - - - 543 - 543
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Adjustment in
respect of
employee
share schemes - 408 342 - - - - 750 - 750
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Tax on employee
share schemes - 32 118 - - - - 150 - 150
--------------------- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Dividends paid 7 - - - - (9,905) - - (9,905) (1,016) (10,921)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total transactions
with owners 27 956 460 - (9,905) - - (8,462) (1,016) (9,478)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Balance at 3
January 2016 7,286 8,191 901 (4,489) 82,829 (31,700) 919 63,937 4,938 68,875
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Company
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Balance at 30
December 2013 7,216 5,885 - - 11,922 - 71,019 96,042
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Profit for the
year - - - - 10,891 - - 10,891
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total
comprehensive
income for
the
year - - - - 10,891 - - 10,891
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Issue of new
shares 43 794 - - - - - 837
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Adjustment in
respect of
employee
share schemes - 406 - - - - - 406
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Tax on employee
share schemes - 150 - - - - - 150
--------------------- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Dividends paid 7 - - - - (9,343) - - (9,343)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total
transactions
with owners 43 1,350 - - (9,343) - - (7,950)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Balance at 28
December 2014 7,259 7,235 - - 13,470 - 71,019 98,983
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Profit for the
year - - - - 13,555 - - 13,555
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total
comprehensive
income for
the
year - - - - 13,555 - - 13,555
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Issue of new
shares 27 516 - - - - - 543
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Adjustment in
respect of
employee
share schemes - 408 - - - - - 408
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-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Tax on employee
share schemes - 32 - - - - - 32
--------------------- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Dividends paid 7 - - - - (9,905) - - (9,905)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Total transactions
with owners 27 956 - - (9,905) - - (8,922)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
Balance at 3
January 2016 7,286 8,191 - - 17,120 - 71,019 103,616
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- ------- --------------- --------
The notes are an integral part of these consolidated financial
statements.
Consolidated cash flow statement
Group Company
2015 2014 2015 2014
53 weeks 52 weeks 53 weeks 52 weeks
Notes GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ----- -------- -------- -------- --------
Cash flows from operating
activities
---------------------------------- ----- -------- -------- -------- --------
Cash generated from operations 11 50,960 47,626 (386) -
---------------------------------- ----- -------- -------- -------- --------
Interest paid (1,148) (976) (72) (171)
---------------------------------- ----- -------- -------- -------- --------
Income tax (paid)/received (4,553) (5,530) - 87
---------------------------------- ----- -------- -------- -------- --------
Net cash generated from/(used
in) operating activities 45,259 41,120 (458) (84)
---------------------------------- ----- -------- -------- -------- --------
Cash flows from investing
activities
---------------------------------- ----- -------- -------- -------- --------
Purchases of property, plant
and equipment (13,676) (31,830) - -
---------------------------------- ----- -------- -------- -------- --------
Proceeds from sale of property,
plant and equipment 77 129 - -
---------------------------------- ----- -------- -------- -------- --------
Purchases of intangible assets (54) (11,599) - -
---------------------------------- ----- -------- -------- -------- --------
Interest received 97 102 - -
---------------------------------- ----- -------- -------- -------- --------
Dividends received - - 13,600 11,000
---------------------------------- ----- -------- -------- -------- --------
Net cash (used in)/generated
from investing activities (13,556) (43,198) 13,600 11,000
---------------------------------- ----- -------- -------- -------- --------
Cash flows from financing
activities
---------------------------------- ----- -------- -------- -------- --------
Proceeds from borrowings 3,336 36,193 - -
---------------------------------- ----- -------- -------- -------- --------
Repayments of borrowings (6,157) (21,923) - -
---------------------------------- ----- -------- -------- -------- --------
Repayment of inter-company
loan - - (3,963) (2,266)
---------------------------------- ----- -------- -------- -------- --------
Issue of ordinary shares 543 837 543 837
---------------------------------- ----- -------- -------- -------- --------
Dividends paid to owners
of the parent (9,905) (9,343) (9,905) (9,343)
---------------------------------- ----- -------- -------- -------- --------
Dividends paid to non-controlling
interests (1,016) (1,048) - -
---------------------------------- ----- -------- -------- -------- --------
Net cash (used in)/ generated
from financing activities (13,199) 4,716 (13,325) (10,772)
---------------------------------- ----- -------- -------- -------- --------
Net increase/(decrease) in
cash and cash equivalents 18,504 2,638 (183) 144
---------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents
at beginning of the year 35,586 34,642 333 189
---------------------------------- ----- -------- -------- -------- --------
Exchange losses on cash and
cash equivalents (1,284) (1,694) - -
---------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents
at end of the year 52,806 35,586 150 333
---------------------------------- ----- -------- -------- -------- --------
The notes are an integral part of these consolidated
financial statements.
Notes to the financial statements
1 General information
Hilton Food Group plc ("the Company") and its subsidiaries
(together "the Group") is a specialist retail meat packing business
supplying major international food retailers in thirteen European
countries and Australia. The Company's subsidiaries are listed in a
note.
The Company is a public limited company incorporated and
domiciled in the UK. The address of the registered office is 2-8
The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE.
The registered number of the Company is 06165540.
The Company maintains a Premium Listing on the London Stock
Exchange.
The financial year represents the 53 weeks to 3 January 2016
(prior financial year 52 weeks to 28 December 2014).
This preliminary announcement was approved for issue on 30 March
2016.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 28 December 2014.
Basis of preparation
The consolidated financial statements of Hilton Food Group plc
have been prepared under the historical cost convention and in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRS), IFRIC interpretations and the
Companies Act 2006 applicable to companies reporting under
IFRS.
The consolidated financial statements have been prepared on the
going concern basis. The reasons why the Directors consider this
basis to be appropriate are set out in the Performance and
financial review.
The financial statements are presented in Sterling and all
values are rounded to the nearest thousand (GBP'000) except when
otherwise indicated.
The 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 3 January 2016 and 28 December 2014 but is
derived from those accounts. Statutory accounts for 2014 have been
delivered to the Registrar of Companies and those for 2015 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 seven operating segments: i) United Kingdom; ii)
Netherlands; iii) Republic of Ireland; iv) Sweden; v) Denmark, vi)
Central Europe including Poland, Czech Republic, Hungary, Slovakia,
Latvia, Lithuania and Estonia and vii) Central costs and other
including the share of profit from the joint venture in Australia.
The United Kingdom, Netherlands, Republic of Ireland, Sweden and
Denmark have been aggregated into one reportable segment 'Western
Europe' as they have similar economic characteristics as identified
in IFRS 8. Central Europe and Central costs and other comprise the
other reportable segments.
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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:
Central Central
Western Central costs 2015 Western Central costs 2014
and and
Europe Europe other Total Europe Europe other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Total segment
revenue 1,020,844 74,165 - 1,095,009 1,018,368 82,156 - 1,100,524
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Inter-segment
revenue (187) - - (187) (1,534) - - (1,534)
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Revenue from
external customers 1,020,657 74,165 - 1,094,822 1,016,834 82,156 - 1,098,990
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Operating profit/(loss)/segment
result 32,107 2,255 (5,363) 28,999 27,115 2,426 (3,479) 26,062
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Finance income 20 76 1 97 20 81 1 102
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Finance costs (1,066) - (82) (1,148) (667) - (309) (976)
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Income tax expense (6,959) (455) 925 (6,489) (5,902) (502) 766 (5,638)
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Profit/(loss)
for the year 24,102 1,876 (4,519) 21,459 20,566 2,005 (3,021) 19,550
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Depreciation
and amortisation 18,205 1,036 122 19,363 14,354 1,186 96 15,636
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Additions to
non-current
assets 12,905 547 278 13,730 42,492 824 113 43,429
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Segment assets 224,739 17,836 4,297 246,872 240,231 15,949 3,467 259,647
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Current income
tax assets - 1,532
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Deferred income
tax assets 1,000 771
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Total assets 247,872 261,950
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Segment liabilities 165,283 9,411 1,976 176,670 190,316 7,521 1,163 199,000
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Borrowings - 1,442
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Current income
tax liabilities 673 -
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Deferred income
tax liabilities 1,654 1,875
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
Total liabilities 178,997 202,317
-------------------------------- --------- ------- ------- --------- --------- ------- ------- ---------
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 four principal customers (comprising groups of
entities known to be under common control), Tesco, Ahold, Coop
Danmark and ICA Gruppen. These customers are located in the United
Kingdom, Netherlands, Republic of Ireland, Sweden, Denmark and
Central Europe including Poland, Czech Republic, Hungary, Slovakia,
Latvia, Lithuania and Estonia.
Analysis of revenues from external customers
and non-current assets are as follows:
Non-current assets
Revenues from excluding deferred
external customers tax assets
--------------------- ----------------------------
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ---------- --------- ------------------- -------
Analysis by geographical area
-------------------------------- ---------- --------- ------------------- -------
United Kingdom - country of
domicile 441,673 391,139 39,784 40,200
-------------------------------- ---------- --------- ------------------- -------
Netherlands 257,398 266,049 9,445 10,645
-------------------------------- ---------- --------- ------------------- -------
Sweden 182,621 197,603 13,752 13,828
-------------------------------- ---------- --------- ------------------- -------
Republic of Ireland 55,880 60,289 3,999 4,351
-------------------------------- ---------- --------- ------------------- -------
Denmark 83,174 101,754 9,757 13,821
-------------------------------- ---------- --------- ------------------- -------
Central Europe 74,076 82,156 2,962 3,578
-------------------------------- ---------- --------- ------------------- -------
1,094,822 1,098,990 79,699 86,423
-------------------------------- ---------- --------- ------------------- -------
Analysis by principal customer
-------------------------------- ---------- --------- ------------------- -------
Customer 1 513,401 472,883
-------------------------------- ---------- --------- ------------------- -------
Customer 2 284,560 299,779
-------------------------------- ---------- --------- ------------------- -------
Customer 3 197,608 212,698
-------------------------------- ---------- --------- ------------------- -------
Customer 4 81,634 99,996
-------------------------------- ---------- --------- ------------------- -------
Other 17,619 13,634
-------------------------------- ---------- --------- ------------------- -------
1,094,822 1,098,990
-------------------------------- ---------- --------- ------------------- -------
4 Finance income and costs
2015 2014
Group GBP'000 GBP'000
------------------------------------------------------- ------------------- ---------
Finance income
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------------------------------------------------------- ------------------- ---------
Interest income on short term bank deposits 90 97
------------------------------------------------------- ------------------- ---------
Interest on income taxes 7 5
------------------------------------------------------- ------------------- ---------
Finance income 97 102
------------------------------------------------------- ------------------- ---------
Finance costs
------------------------------------------------------- ------------------- ---------
Bank borrowings (920) (765)
------------------------------------------------------- ------------------- ---------
Finance leases (161) (189)
------------------------------------------------------- ------------------- ---------
Exchange (losses)/gains on foreign currency
borrowings (3) 22
------------------------------------------------------- ------------------- ---------
Other interest expense (64) (44)
------------------------------------------------------- ------------------- ---------
Finance costs (1,148) (976)
------------------------------------------------------- ------------------- ---------
Finance costs - net (1,051) (874)
------------------------------------------------------- ------------------- ---------
5 Income tax expense
2015 2014
Group GBP'000 GBP'000
-------------------------------------------------- ------- -------
Current income tax
-------------------------------------------------- ------- -------
Current tax on profits for the year 6,787 4,795
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous
years (18) 47
-------------------------------------------------- ------- -------
Total current tax 6,769 4,842
-------------------------------------------------- ------- -------
Deferred income tax
-------------------------------------------------- ------- -------
Origination and reversal of temporary differences (389) 704
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous
years 109 92
-------------------------------------------------- ------- -------
Total deferred tax (280) 796
-------------------------------------------------- ------- -------
Income tax expense 6,489 5,638
-------------------------------------------------- ------- -------
Deferred tax credited directly to equity during the year in
respect of employee share schemes amounted to GBP118,000 (2014:
GBP265,000 charge).
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 20.25% (2014: 21.5%) applied to profits of the
consolidated entities as follows:
2015 2014
GBP'000 GBP'000
============================================== ======= =======
Profit before income tax 27,948 25,188
---------------------------------------------- ------- -------
Tax calculated at the standard rate of UK
Corporation Tax 20.25% (2014: 21.5%) 5,659 5,415
---------------------------------------------- ------- -------
Expenses not deductible/(income not taxable)
for tax purposes 371 (37)
---------------------------------------------- ------- -------
Adjustments to tax in respect of previous
years 91 139
---------------------------------------------- ------- -------
Profits taxed at rates other than 20.25%
(2014: 21.5%) 375 133
---------------------------------------------- ------- -------
Other (7) (12)
---------------------------------------------- ------- -------
Income tax expense 6,489 5,638
---------------------------------------------- ------- -------
There is no tax impact relating to components
of other comprehensive income.
6 Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to owners of the parent by the weighted average number
of ordinary shares in issue during the year.
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has share options for which a calculation is done to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that
would have been issued assuming the exercise of the share
options.
2015 2014
Group Basic Diluted Basic Diluted
----------------------------- ------------ ------ ------- ------ -------
Profit attributable to
owners of the parent (GBP'000) 20,017 20,017 18,071 18,071
----------------------------- ------------ ------ ------- ------ -------
Weighted average number
of ordinary shares in issue (thousands) 72,748 72,748 72,379 72,379
----------------------------- ------------ ------ ------- ------ -------
Adjustment for share options (thousands) - 970 - 714
----------------------------- ------------ ------ ------- ------ -------
Adjusted weighted average
number of ordinary shares (thousands) 72,748 73,718 72,379 73,093
----------------------------- ------------ ------ ------- ------ -------
Basic and diluted earnings
per share (pence) 27.5 27.2 25.0 24.7
----------------------------- ------------ ------ ------- ------ -------
7 Dividends
2015 2014
Group and Company GBP'000 GBP'000
-------------------------------------------- ------- -------
Final dividend in respect of 2014 paid 9.5p
per ordinary share (2014: 9.1p) 6,919 6,590
-------------------------------------------- ------- -------
Interim dividend in respect of 2015 paid
4.1p per ordinary share (2014: 3.8p) 2,986 2,753
-------------------------------------------- ------- -------
Total dividends paid 9,905 9,343
-------------------------------------------- ------- -------
The Directors declared a second interim dividend of 9.2p which
is to be paid on 1 April 2016 and propose a final dividend of 1.3p
per share payable on 1 July 2016 to shareholders who are on the
register at 3 June 2016. These dividends totalling GBP7.7m have 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 30 December 2013 26,162 153,085 11,151 311 190,709
------------------------- -------------- -------------- ------------- --------- --------
Exchange adjustments (909) (9,319) (636) (3) (10,867)
------------------------- -------------- -------------- ------------- --------- --------
Additions 13,176 17,473 1,165 16 31,830
------------------------- -------------- -------------- ------------- --------- --------
Reclassification (754) 3,344 (2,672) 82 -
------------------------- -------------- -------------- ------------- --------- --------
Disposals - (4,368) (454) (109) (4,931)
------------------------- -------------- -------------- ------------- --------- --------
At 28 December 2014 37,675 160,215 8,554 297 206,741
------------------------- -------------- -------------- ------------- --------- --------
Accumulated depreciation
------------------------- -------------- -------------- ------------- --------- --------
At 30 December 2013 16,328 106,567 8,805 133 131,833
------------------------- -------------- -------------- ------------- --------- --------
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Exchange adjustments (535) (6,364) (476) (1) (7,376)
------------------------- -------------- -------------- ------------- --------- --------
Charge for the year 1,966 11,391 1,006 74 14,437
------------------------- -------------- -------------- ------------- --------- --------
Reclassification (492) 2,582 (2,090) - -
------------------------- -------------- -------------- ------------- --------- --------
Disposals - (4,265) (443) (87) (4,795)
------------------------- -------------- -------------- ------------- --------- --------
At 28 December 2014 17,267 109,911 6,802 119 134,099
------------------------- -------------- -------------- ------------- --------- --------
Net book amount
------------------------- -------------- -------------- ------------- --------- --------
At 30 December 2013 9,834 46,518 2,346 178 58,876
------------------------- -------------- -------------- ------------- --------- --------
At 28 December 2014 20,408 50,304 1,752 178 72,642
------------------------- -------------- -------------- ------------- --------- --------
Cost
------------------------- -------------- -------------- ------------- --------- --------
At 29 December 2014 37,675 160,215 8,554 297 206,741
------------------------- -------------- -------------- ------------- --------- --------
Exchange adjustments (724) (5,167) (250) (1) (6,142)
------------------------- -------------- -------------- ------------- --------- --------
Additions 3,521 9,391 755 9 13,676
------------------------- -------------- -------------- ------------- --------- --------
Reclassification - (235) 53 - (182)
------------------------- -------------- -------------- ------------- --------- --------
Disposals (1,464) (561) (88) (7) (2,120)
------------------------- -------------- -------------- ------------- --------- --------
At 3 January 2016 39,008 163,643 9,024 298 211,973
------------------------- -------------- -------------- ------------- --------- --------
Accumulated depreciation
------------------------- -------------- -------------- ------------- --------- --------
At 29 December 2014 17,267 109,911 6,802 119 134,099
------------------------- -------------- -------------- ------------- --------- --------
Exchange adjustments (460) (3,573) (188) - (4,221)
------------------------- -------------- -------------- ------------- --------- --------
Charge for the year 3,737 12,219 860 68 16,884
------------------------- -------------- -------------- ------------- --------- --------
Reclassification - (72) 21 - (51)
------------------------- -------------- -------------- ------------- --------- --------
Disposals (1,464) (406) (91) (7) (1,968)
------------------------- -------------- -------------- ------------- --------- --------
At 3 January 2016 19,080 118,079 7,404 180 144,743
------------------------- -------------- -------------- ------------- --------- --------
Net book amount
------------------------- -------------- -------------- ------------- --------- --------
At 3 January 2016 19,928 45,564 1,620 118 67,230
------------------------- -------------- -------------- ------------- --------- --------
Land and buildings are held under short leaseholds. Details of
bank borrowings secured on assets of the Group are given in note
10. Depreciation charges are included within administrative
expenses in the income statement.
The cost and net book amount of property plant and equipment in
the course of its construction included above comprise plant and
machinery GBP1,654,000 (2014: GBP1,209,000).
Property, plant and equipment include the following amounts
where the Group is a lessee under a finance lease:
2015 2014
GBP'000 GBP'000
--------------------------------------- -------- -------
Cost - capitalised finance leases 3,011 3,195
--------------------------------------- -------- -------
Accumulated depreciation (1,794) (1,742)
--------------------------------------- -------- -------
Net book amount 1,217 1,453
--------------------------------------- -------- -------
Included in assets held under finance leases are land
and buildings with a net book amount of GBP1,217,000
(2014: GBP1,453,000).
9 Intangible assets
Product Computer
licences software Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- -------- -------
Cost
------------------------- --------- --------- -------- -------
At 30 December 2013 8,833 4,441 836 14,110
------------------------- --------- --------- -------- -------
Exchange adjustments (977) (475) - (1,452)
------------------------- --------- --------- -------- -------
Additions 11,449 150 - 11,599
------------------------- --------- --------- -------- -------
At 28 December 2014 19,305 4,116 836 24,257
------------------------- --------- --------- -------- -------
Accumulated amortisation
------------------------- --------- --------- -------- -------
At 30 December 2013 7,789 3,661 - 11,450
------------------------- --------- --------- -------- -------
Exchange adjustments (525) (414) - (939)
------------------------- --------- --------- -------- -------
Charge for the year 892 307 - 1,199
------------------------- --------- --------- -------- -------
At 28 December 2014 8,156 3,554 - 11,710
------------------------- --------- --------- -------- -------
Net book amount
------------------------- --------- --------- -------- -------
At 30 December 2013 1,044 780 836 2,660
------------------------- --------- --------- -------- -------
At 28 December 2014 11,149 562 836 12,547
------------------------- --------- --------- -------- -------
Cost
------------------------- --------- --------- -------- -------
At 29 December 2014 19,305 4,116 836 24,257
------------------------- --------- --------- -------- -------
Exchange adjustments (560) (137) - (697)
------------------------- --------- --------- -------- -------
Additions - 54 - 54
------------------------- --------- --------- -------- -------
Reclassifications - 182 - 182
------------------------- --------- --------- -------- -------
Disposals - (123) - (123)
------------------------- --------- --------- -------- -------
At 3 January 2016 18,745 4,092 836 23,673
------------------------- --------- --------- -------- -------
Accumulated amortisation
------------------------- --------- --------- -------- -------
At 29 December 2014 8,156 3,554 - 11,710
------------------------- --------- --------- -------- -------
Exchange adjustments (408) (109) - (517)
------------------------- --------- --------- -------- -------
Charge for the year 2,142 337 - 2,479
------------------------- --------- --------- -------- -------
Reclassifications - 51 - 51
------------------------- --------- --------- -------- -------
Disposals - (123) - (123)
------------------------- --------- --------- -------- -------
At 3 January 2016 9,890 3,710 - 13,600
------------------------- --------- --------- -------- -------
Net book amount
------------------------- --------- --------- -------- -------
At 3 January 2016 8,855 382 836 10,073
------------------------- --------- --------- -------- -------
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Amortisation charges are included within administrative expenses
in the income statement.
10 Borrowings
2015 2014
Group GBP'000 GBP'000
----------------------------------------- ----------- -----------
Current
----------------------------------------- ----------- -----------
Bank borrowings 11,562 10,531
----------------------------------------- ----------- -----------
Finance lease liabilities 166 156
----------------------------------------- ----------- -----------
11,728 10,687
----------------------------------------- ----------- -----------
Non-current
----------------------------------------- ----------- -----------
Bank borrowings 26,428 30,304
----------------------------------------- ----------- -----------
Finance lease liabilities 1,977 2,269
----------------------------------------- ----------- -----------
28,405 32,573
----------------------------------------- ----------- -----------
Total borrowings 40,133 43,260
----------------------------------------- ----------- -----------
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:
2015 2014
Currency GBP'000 GBP'000
----------------------------------------- ----------- -----------
UK Pound 25,080 30,737
----------------------------------------- ----------- -----------
Euro 2,144 2,425
----------------------------------------- ----------- -----------
Swedish Krona 12,909 10,098
----------------------------------------- ----------- -----------
40,133 43,260
----------------------------------------- ----------- -----------
Borrowings are repayable in quarterly instalments by 2019.
Interest on borrowings in Sterling is charged at LIBOR plus 1.6%
subject to interest rate caps over GBP12m of borrowings where LIBOR
is capped at 2.5%. Interest on borrowings in Swedish Krona is
charged at STIBOR plus 1.6% subject to interest rate caps over SEK
75m of borrowings where STIBOR is capped at 3%.
Bank borrowings totalling GBP37,989,000 (2014: GBP40,835,000)
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
GBP28.3m (2014: GBP46.5m) which expire after one year.
The undiscounted contractual maturity profile of the Group's
borrowings is described in a note.
The minimum lease payments and present value of finance lease
liabilities is as follows:
Minimum lease Present value
payments
2015 2014 2015 2014
Group GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------- ------- ------- -------
No later than one year 317 329 166 156
---------------------------------- ------- ------- ------- -------
Later than one year and no later
than five years 1,351 1,398 1,977 2,269
---------------------------------- ------- ------- ------- -------
Later than five years 1,282 1,732 - -
---------------------------------- ------- ------- ------- -------
2,950 3,459 2,143 2,425
---------------------------------- ------- ------- ------- -------
Future finance charges on finance
leases (807) (1,034) - -
---------------------------------- ------- ------- ------- -------
Present value of finance lease
liabilities 2,143 2,425 2,143 2,425
---------------------------------- ------- ------- ------- -------
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 GBP2,843,000
(2014: GBP3,315,000). The fair values are based on cash flows
discounted using the European Central Bank benchmark main
refinancing operations fixed interest rate of 0.05% (2014:
0.05%).
11 Cash generated from operations
2015 2014
Group GBP'000 GBP'000
------------------------------------------------ -------- -------
Profit before income tax 27,948 25,188
------------------------------------------------ -------- -------
Finance costs - net 1,051 874
------------------------------------------------ -------- -------
Operating profit 28,999 26,062
------------------------------------------------ -------- -------
Adjustments for non-cash items:
------------------------------------------------ -------- -------
Share of post tax profits of joint venture (1,222) (884)
------------------------------------------------ -------- -------
Depreciation of property, plant and equipment 16,884 14,437
------------------------------------------------ -------- -------
Amortisation of intangible assets 2,479 1,199
------------------------------------------------ -------- -------
Loss on disposal of non-current assets 75 7
------------------------------------------------ -------- -------
Adjustment in respect of employee share schemes 750 255
------------------------------------------------ -------- -------
Changes in working capital:
------------------------------------------------ -------- -------
Inventories 3,126 424
------------------------------------------------ -------- -------
Trade and other receivables 16,283 (112)
------------------------------------------------ -------- -------
Prepaid expenses (744) 592
------------------------------------------------ -------- -------
Trade and other payables (15,150) 3,947
------------------------------------------------ -------- -------
Accrued expenses (520) 1,699
------------------------------------------------ -------- -------
Cash generated from operations 50,960 47,626
------------------------------------------------ -------- -------
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 made on an arm's length basis on normal credit terms to
related parties during the year were as follows:
2015 2014
Group GBP'000 GBP'000
-------------------------------------------- --------- --------
Woolworths Limited and subsidiaries
- recharge of joint venture costs 1,581 1,245
------------------------------------------------- --------- --------
Amounts owing from related parties at the year end were
as follows:
Owed from related
parties
2015 2014
Group GBP'000 GBP'000
-------------------------------------------- --------- --------
Woolworths Limited and subsidiaries 605 33
------------------------------------------------- --------- --------
The Company's related party transactions with other Group
companies during the year were as follows:
2015 2014
Company GBP'000 GBP'000
-------------------------------------------- --------- --------
Hilton Foods Limited - dividend
received 13,600 11,000
------------------------------------------------- --------- --------
Hilton Foods Limited - interest
expense 56 140
------------------------------------------------- --------- --------
Hilton Foods UK Limited - payment
for group relief 30 53
------------------------------------------------- --------- --------
At the year end GBP439,000 was owed by Hilton Foods Limited
(2014: GBP4,403,000 owed to Hilton Foods Limited) and
GBP31,000 (2014: GBP53,000) was owed by Hilton Foods
UK 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 WGURCWUPQGCU
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