REG - Hilton Food Grp Plc - Preliminary Results
05/04/2023 07:15
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RNS Number : 3829V Hilton Food Group PLC 05 April 2023
5 April 2023
Hilton Food Group plc
International Food and Supply Chain Services Partner of Choice
Volume and revenue growth against volatile backdrop during 2022; well
positioned for year ahead
Hilton Foods today announces its preliminary results for the 52 weeks ended 1
January 2023. The business has also published a separate announcement this
morning regarding a change of leadership.
Strategic overview:
1. Outstanding Protein Products
o Strength and resilience in core meat category, underpinned by strong
commercial partnerships
o Challenging seafood performance, with robust recovery plans in place to
restore profitability
o Further vegan and vegetarian growth through branded partnerships and private
label expansion
o Double digit growth in easier meals, with launch of award-winning new
products
2. Growing across international markets
o Strong performance in APAC including first full year of trading in New
Zealand
o New partnership formed in Singapore with Country Foods, a wholly owned
subsidiary of SATS, Asia's leading provider of food solutions and gateway
services
o Growth through geographical diversification with Foppen acquisition
3. Industry-leading technology
o Increased ownership of Foods Connected supply chain management platform to
65%
o Agito joint venture reinforcing automation and engineering capabilities
4. Delivered through The Sustainable Protein Plan
o Introduction of stretching ESG performance metrics into our LTIP Scheme
including targets for Scope 1 & 2 energy efficiency, packaging recycled
content and food waste
o Progress across people, planet and product pillars, including exceeding 2025
target for women in leadership positions and A- rating from CDP on Climate
Change
Financial overview:
· Group revenue up 16.5% to £3.8bn (2021: £3.3bn), underpinned by
contribution from newly acquired businesses, first full year of trading in New
Zealand and inflationary impact
· Volume growth of 4.3% to 513,816 tonnes (2021: 492,588 tonnes)
· Adjusted operating profit down 3.3% to £71.1m (2021: £73.6m)
· IFRS operating profit down 14.8% to £54.0m (2021: £63.4m) after
exceptional items of £11.9m, relating predominantly to 2021 fire at Belgium
site
· Adjusted basic earnings per share down 26.4% at 45.1p (2021: 61.3p)
· IFRS basic earnings per share down 56.0% at 19.8p (2021: 45.0p)
· Strong cash flows from operating activities of £98.3m (2021:
£121.3m)
· Net bank debt £211.6m (2021: £84.6m) following £83.6m investments
in acquisitions/JVs and £56.8m capex investment with a strong balance sheet
following refinancing
· Proposed final dividend of 22.6p, taking total dividend for 2022 to
29.7p (2021: 29.7p)
Outlook and current trading
Against the backdrop of a challenging environment, with global uncertainties
impacting supply chains and inflation, Hilton's trading performance since the
beginning of 2023 has been in line with the Board's expectations and the
business is well positioned for the year ahead. We continue to explore
opportunities with existing and new customers for further expansion in our
domestic and overseas markets.
Our short and medium term growth prospects are underpinned by the acquisitions
of Foppen, Dalco and Fairfax Meadow, the new partnership in Singapore and
recovery in our UK Seafood business as well as further opportunities arising
across our markets by the development of our cross-category business and the
application of our supply chain management expertise.
Commenting on the results Chief Executive Philip Heffer said:
"After the challenges we faced last year in our seafood business, we took a
series of steps to rebuild profitability and we are now well placed for the
year ahead. Meanwhile we have continued to deliver on our strategic priorities
and to set the business up for long-term, sustainable growth.
"Our meat category has performed well and we have continued to innovate with
new and award winning products. We have continued to grow in new and emerging
markets following the acquisitions of Foppen and Fairfax Meadow with both
these businesses performing well, while also expanding in Asia with Country
Foods. Despite the significant macro-economic challenges, we have continued
our record of growing our volumes every year since Hilton Foods became a
publicly listed company in 2007.
"Hilton Foods today is a completely different business from the company we
started in 1994. Over 75% of our sales volumes are now outside the UK; we
offer a wide range of protein products and categories; and we have built a
technology services offer which is best-in-class in the industry. The global
economy today is more uncertain than at any time in the past thirty years, but
Hilton Foods is well set for long-term success."
Financial performance - overview:
2022 2021 Change
52 weeks to 1 January 2023 52 weeks to 2 January 2022 Reported Constant currency
Volume (tonnes) 513,816 492,588 4.3% 4.3%
Revenue £3,847.6m £3,302.0m 16.5% 16.0%
Adjusted results (1)
Adjusted operating profit £71.1m £73.6m -3.3% -3.2%
Adjusted profit before tax £55.5m £67.2m -17.4% -17.2%
Adjusted basic earnings per share 45.1p 61.3p -26.4%
Adjusted EBITDA £119.9m £119.5m 0.3% 0.1%
IFRS results
Operating profit £54.0m £63.4m -14.8%
Profit before tax £29.6m £47.4m -37.5%
Basic earnings per share 19.8.p 45.0p -56.0%
Cash flows from operating activities £98.3m £121.3m -18.9%
Other measures
EBITDA £131.8m £139.0m -5.3%
Net bank debt (2) £211.6m £84.6m
Dividends paid and proposed in respect of the year 29.7p 29.7p 0.0%
Notes
1 Adjusted results represent the IFRS results before deduction of
acquisition intangibles amortisation, depreciation of fair value adjustments
to property, plant & equipment, exceptional items and also IFRS 16 lease
adjustments as detailed in the Alternative performance measures note 17.
Unless otherwise stated financial metrics in the Chairman's statement, Chief
Executive's summary and Performance and financial review refer to the Adjusted
results
2 Net bank debt represents borrowings less cash and cash equivalents
excluding lease liabilities
Enquiries
Hilton Foods
Tel: +44 (0) 1480 387214
Philip Heffer, Chief Executive Officer
Matt Osborne, Chief Financial Officer
Headland Consultancy
Limited Tel: +44
(0) 20 3805 4822
Edward
Young
Email: hiltonfood@headlandconsultancy.com
Will Smith
Joanna Clark
This announcement contains inside information.
About Hilton Foods
Hilton Foods is a leading international multi-protein producer, serving
customers and retail partners across the world with high quality meat,
seafood, vegan and vegetarian foods and meals. We are a business of over 7,000
employees, operating from 24 technologically advanced food processing, packing
and logistics facilities across 19 markets in Europe, Asia Pacific and North
America. For almost thirty years, our business has been built on dedicated
partnerships with our customers and suppliers, many forged over several
decades, and together we target long-term, sustainable growth and shared
value. We supply our customers with high quality, traceable, and assured food
products, with high standards of technical excellence and expertise.
Chairman's introduction
Strategic progress
This has been a year of unprecedented global and economic challenges, but
Hilton Foods has continued to make strategic progress. We manufacture high
quality multi-protein products utilising industry leading technology in our
highly automated facilities, including advanced robotics. Together with
leveraging our expertise we can offer improved supply chain efficiencies to
our customers whilst committed to our sustainable protein plan. The depth of
our partnerships is illustrated through physical air bridges installed in
facilities in Australia and New Zealand that link our processing facilities
directly to our customers' distribution centres. Use of these fully automated
conveyor air bridges further optimises the supply chain process bringing
significant logistics efficiency savings with lower carbon emissions.
During the year we acquired Foppen, a specialist smoked salmon business, with
facilities in the Netherlands and Greece, which enhances our existing fish
portfolio and is an entry point into the North American retail market. We also
agreed a joint venture with Agito, an Australian automation and technology
solutions business with ambitions for European expansion, which brings
together excellence in automation and food supply chain expertise. This JV,
together with an increased stake in Foods Connected, fits neatly into a newly
created Hilton Food Services division to leverage supply chain solutions to
meet our customers' needs. Additionally we invested in Cellular Agriculture, a
leading cultivated protein tech business and formed a new partnership with
Country Foods in Singapore.
We continue to explore opportunities to develop our cross-category business in
both domestic and overseas markets as well as applying our state-of-the-art
skills and experience to deliver value to our customers.
Group performance
In 2022 we increased our overall volumes maintaining a trend of continuous
growth achieved in every year since Hilton's flotation in 2007. However this
was overshadowed by significant challenges in our UK Seafood business
including the impact of unprecedented inflation levels with price recovery
taking longer than anticipated. There was also further disruption through
automation investments which will deliver longer term efficiency benefits.
We have taken steps to rebuild sustainable profitability in this business and
we remain confident in the opportunities which the seafood category will
present for Hilton Foods over the coming years, serving a range of domestic
and international customers with market-leading salmon, white fish, shellfish,
coated fish, prawn cocktails and other added value fish products
Hilton Foods generated strong operating cash flows during 2022 enabling
further significant investment in our facilities to increase capacity, improve
operational efficiency and offer innovative solutions to our retailer
partners. Hilton Foods remains financially strong with significant cash
balances, undrawn committed bank facilities and operating well within our
banking covenants.
Dividend policy
The Group has maintained a progressive dividend policy since flotation and
despite the impact of the challenges faced in 2022 remain confident that this
approach continues to be appropriate. With the proposed final dividend of
22.6p per ordinary share, total dividends in respect of 2022 will be 29.7p per
ordinary share, maintaining the dividend compared to last year.
Our Board, purpose and governance
The Hilton Board is responsible for the long-term success of the Group and
establishing its purpose, values and strategy aligned with its desired
culture. Our purpose is to create efficiency and flexibility in the food
supply chain whilst maintaining high quality through innovative and
sustainable food manufacturing and supply chain solutions with the ambition to
be the first choice partner for food retailers seeking excellence, insight and
growth.
To achieve this the Board has an appropriate mix of skills, depth and
diversity and a range of practical business experience, which is available to
support and guide our management teams across a wide range of countries as
well as having in place succession planning and maintaining a talent pipeline.
We remain committed to achieving good governance balanced against our desire
to preserve an agile and entrepreneurial approach. I would like to thank my
colleagues on the Board for their support, counsel and expertise during the
year. During the year Patricia Dimond joined the Board as an independent
Non-Executive Director and subsequently became Audit Committee chair when John
Worby stepped down. Angus Porter then became the Senior Independent Director.
Nigel Majewski also stepped down as CFO and was replaced by Matt Osborne,
formerly the Group Financial Controller, who has made a strong start in the
role.
Philip Heffer advised the Board that he wished to step down from his role as
CEO in 2023. I am delighted that Steve Murrells, CBE has accepted our
invitation to join Hilton as its next CEO and that Philip will remain in the
business in a new role of Co-Founder and Board Advisor. Steve has an
outstanding record as a leader within the food industry working in senior
positions with Tesco plc and more recently at Tulip Ltd 2009 - 2012 as CEO and
Co-operative Group Ltd 2012 - 2022 as CEO Retail and from 2017 as Group CEO.
Steve was appointed Commander of the Order of the British Empire (CBE) in the
2022 New Year Honours for services to the food supply chain. Steve will join
the Board in July 2023. Philip has spent almost 30 years with Hilton Foods,
including the last five years as Group CEO and will support Steve ensuring a
smooth transition. I would like to thank Philip for everything he has
contributed to Hilton Foods. He has been instrumental to the growth of the
business we founded together in 1994 and I am extremely pleased that we will
continue to benefit from his experience and expertise in his new advisory
role.
The Board takes its responsibilities very seriously to promote the success of
the Company for the benefit of its stakeholders as a whole. We take the
interests of our workforce and other stakeholders fully into account in Board
discussions and decision making. Details of the Group's policies and
procedures that have been implemented to enhance stakeholder and workforce
engagement, which explain how these interests have influenced our decisions,
are set out in the governance section of our Annual report.
Sustainability
2022 marks the first full year of our new Sustainable Protein Plan strategy.
This gives added focus and energy to the work we are doing to make our
business more sustainable and become a core part of the wider growth strategy
for the business. This Plan includes a range of stretching targets aligned
closely with the UN Sustainable Development Goals including setting Science
Based Targets on the way to achieving net zero emissions before 2050 and net
negative thereafter.
Our position in the food supply chain means that we have opportunities working
with partners from farm to fork to make a positive difference and innovate
across the value chain. We recognise the commercial benefits of highly
traceable, sustainably sourced proteins. For us, growing our business and
supporting the planet go hand in hand. During the year we introduced ESG
performance metrics into our long term incentive plan including emissions,
packaging recycling and food waste targets to align our senior leaders with
supporting the delivery of the Sustainable Protein Plan.
Annual General Meeting
This year's AGM will be held at Hilton's offices at 2-8 The Interchange,
Latham Road, Huntingdon, Cambridgeshire PE29 6YE in a hybrid format on Tuesday
23 May 2023 at noon. Please refer to our website at
www.hiltonfoods.com/investors/agm/ (http://www.hiltonfoods.com/investors/agm/)
for further guidance.
Robert Watson OBE
Chairman
4 April 2023
Chief Executive's summary
Business development
The Group's expansion is based on its established and proven track record,
international reputation and experience and the recognised success of the
close partnerships we have forged and maintained with successful retail
partners over many years. Hilton's business model has proved successful in
Europe and APAC supplemented by targeted acquisitions. We have demonstrated
that this business model is capable of being successfully applied to both new
proteins and transferred to new countries, adapted with our local customers to
meet their specific requirements.
2022 Performance overview
2022 saw continued year-on-year sales growth driven by higher raw material
prices and volume growth including through the acquisition of Foppen, full
year volumes from Fairfax Meadow and Dalco acquired in 2021 and the New
Zealand facility which opened in 2021 where there was strong trading. We have
demonstrated strength and resilience in our core meat category with award
winning products across the categories in which we operate. We continue to
remain focused on responding to consumer needs in our development of new
products and leveraging our industry leading technology to support our core
protein business.
Overall volume increased by 4.3% to 513,816 tonnes (2021: 492,588 tonnes). In
2022 over 75% of the Group's volumes were produced in countries outside the
UK. Adjusted operating profit fell by 3.3% and the overall operating margin
decreased to 1.8% (2021: 2.2%) due to challenges in our UK Seafood business
including the impact of unprecedented inflation levels with price recovery
taking longer than anticipated. There was also further disruption through
automation investments which will deliver longer term efficiency benefits.
A new leadership team is in place in our UK Seafood business which is
performing well to implement a series of steps to rebuild profitability in
this category. We are working in partnership with our customers to recover
inflation, reduce costs and optimize the ranges we produce as well as
leveraging the benefits which will come through our investment in
industry-leading automation and other initiatives. The margin per kg decreased
to 13.8p (2021: 14.9p). Our customer service level remains best in class at
95.9% (2021: 96.4%).
The wide geographical spread of the Group increases its resilience by
minimising its reliance on any one individual economy. Hilton's results are
reported in Sterling and are therefore sensitive to changes in the value of
Sterling compared to the range of overseas currencies in which the Group
trades. During 2022 the impact of average exchange rates on our results
compared with 2021 was marginal.
Sustainability
Despite the current global instability we have maintained our focus on
sustainability. Our strategy is to build a platform to create sustainable
value over the long-term part of which is our Sustainable Protein Plan which
is a blueprint for social and environmental progress across three pillars
being product, planet and people. Through partnerships, we can help to create
a more circular and sustainable food system that provides healthy and
affordable proteins for consumers who have seen the cost of cooking double,
and who worry about the health of their families and the future of our planet.
Through product innovation, we are working to decarbonise cattle, deliver zero
emission factories and eliminate deforestation. We are committed to achieving
fully recyclable retail plastic packaging and have achieved 70% recycled
content plastic packaging across the Group. The investment in the meat
technology business Cellular Agriculture can help Hilton become a leader in
the emerging market for cultured meat. I am pleased with our progress on our
planet targets. Hilton Foods was awarded a score of A- in this year's climate
assessment by the Carbon Disclosure Project achieving recognition as a
Supplier Engagement Leader. However we need to go further. We will, during
2023, submit even more ambitious targets to the Science Based Targets
initiative. These will be consistent with achieving 1.5°C and see us commit
to reach net zero well before our current 2050 target. The third part of our
plan is about our people. Our commitment is to protect human rights, employee
wellbeing and support career development and we are participants in the UN
Global Compact.
Segment performance
Europe
Adjusted operating profit of £49.7m (2021: £61.8m) on turnover of £2,254.7m
(2021: £1,987.4m)
This operating segment covers the Group's businesses and joint ventures in the
UK, Ireland, Holland, Belgium, Sweden, Denmark, Portugal and Central Europe.
Our products are sold in 14 countries across Europe. Our food service business
Fairfax Meadow and our vegan/vegetarian business Dalco were acquired in 2021.
During 2022 we acquired Foppen which completed in March as well as increasing
our stake in Foods Connected from 50% to 65% and in Hilton Food Solutions from
55% to 65%.
Volumes increased by 4.1% attributable to the newly acquired businesses and
there was good growth in convenience volumes in Central Europe and at Dalco.
Sales grew by 13.4% due to raw material price inflation and the higher
volumes. However adjusted operating profit fell by 19.6% due to the impact of
the performance in our UK Seafood business. Operating margins decreased to
2.2% (2021: 3.1%) and operating profit margin per kg decreased to 13.4p (2021:
18.5p).
APAC
Adjusted operating profit of £26.7m (2021: £22.4m) on turnover of £1,592.9m
(2021: £1,314.6m)
In Australia the Group operates facilities in Bunbury, Western Australia,
Melbourne, Victoria and Brisbane, Queensland. A new food park facility in New
Zealand opened in July 2021 to supply beef, lamb, pork, chicken, seafood and
added-value products.
Volumes for the year increased by 4.7% through the full year of trading at the
New Zealand facility. Sales increased by 21.2% driven by inflation in
Australia and the new facility in New Zealand. Adjusted operating profit
increased by 19.4% given the higher volumes as well as benefitting from
recovery of increased interest costs. Operating margins were steady at 1.7%
(2021: 1.7%) and the operating profit margin per kg increased to 16.1p (2021:
14.1p).
Past and future trends
Over recent decades major retailers have progressively rationalised their
supply base through large scale, centralised packing solutions capable of
producing private label packed fresh food products. This achieves lower costs
with consistent high food safety, food integrity, traceability and quality
standards allowing supermarket groups to focus on their core retail business
whilst addressing consumers' continuing requirement for quality and value.
This trend towards increased use of centralised packing solutions is likely to
continue, albeit at different speeds across the world, representing potential
future geographical expansion opportunities for Hilton. In addition consumer
buying patterns are evolving with more seafood and vegetarian proteins being
eaten. Through Hilton's diversification into these proteins we are well placed
to grow our business.
Philip Heffer
Chief Executive Officer
4 April 2023
Performance and financial review
Summary of Group performance
This performance and financial review covers the Group's financial performance
and position in 2022. Hilton's overall financial performance saw continued
strong growth in volumes and sales although profitability and basic earnings
per share on an adjusted basis were adversely impacted by the challenges faced
in our UK Seafood business. Cash flow generation was strong, supporting our
ongoing significant investment in facilities.
Basis of preparation
The Group is presenting its results for the 52 week period ended 1 January
2023, with comparative information for the 52 week period ended 2 January
2022. The financial statements of the Group are prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006 and UK adopted International Accounting Standards.
Hilton uses Alternative Performance Measures (APMs) to monitor the underlying
performance of the Group. Management use these APMs to monitor and manage the
business's performance day-to-day and therefore believe they provide useful
additional information to shareholders and wider users of the financial
statements.
2022 Financial performance
Volume and revenue
Volumes grew by 4.3% in the year reflecting the acquisition of Foppen, full
year volumes from Fairfax Meadow and Dalco which were acquired in 2021 and the
New Zealand facility which opened in 2021. Additional details of volume growth
by business segment are set out in the Chief Executive's summary. Revenue
increased 16.5% and by 16.0% on a constant currency basis reflecting higher
raw material prices and volume growth.
Operating profit and margin
Adjusted operating profit of £71.1m (2021: £73.6m) was 3.3% lower than last
year and 3.2% lower on a constant currency basis due to challenges in our
Seafood business. IFRS operating profit was £54.0m (2021: £63.4m) after
charging £11.9m in exceptional costs (2021: £7.1m) reflecting costs relating
to the Belgium fire, acquisition and reorganisation costs offset by a gain on
the acquisition of 100% of Foods Connected. The operating profit margin in
2022 declined to 1.8% (2021: 2.2%) and the operating profit per kilogram of
packed food sold fell to 13.8p (2021: 14.9p) attributable to the Seafood
business challenges.
Net finance costs
Adjusted net finance costs excluding exceptional items and lease interest
increased to £15.7m (2021: £6.4m) reflecting higher borrowings that financed
our acquisition and expansion programme and the impact of higher market
interest rates. Interest cover as a proportion of adjusted operating profit in
2022 reduced to 4.5 times (2021: 11 times). IFRS net finance costs were
£24.4m (2021: £16.0m).
Taxation
The adjusted taxation charge for the period was £13.5m (2021: £14.5m). The
effective tax rate was 24.3.% (2021: 21.6%). The IFRS taxation charge was
£10.1m (2021: £8.1m) with an effective tax rate of 34.2% (2021: 17.1%).
Net income
Adjusted net income, representing profit for the year attributable to owners
of the parent, of £40.2m (2021: £50.5m) was 20.4% lower than last year and
20.0% lower on a constant currency basis. IFRS net income was £17.7m (2021:
£37.1m).
Earnings per share
Adjusted basic earnings per share 45.1p (2021: 61.3p) was 26.4% lower than
last year and 26.3% on a constant currency basis. IFRS basic earnings per
share were 19.8p (2021: 45.0p). Diluted earnings per share were 19.7p (2021:
44.5p).
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Adjusted EBITDA, which is used by the Group as an indicator of cash
generation, increased marginally to £119.9m (2021: £119.5m). IFRS EBITDA was
£131.8m (2021: £139.0m).
Free cash flow and net debt position
Operating cash flow was strong in 2022 with cash flows from operating
activities of £98.3m (2021: £121.3m) reflecting planned inventory increases.
IFRS free cash outflow, after capital expenditure of £56.8m and investments
in acquisitions and joint ventures £83.6m but before dividends and financing,
was £79.4m (2021: outflow £8.1m restated).
The Group closing net bank debt comprising borrowings less cash and cash
equivalents excluding lease liabilities, was £211.6m (2021: £84.6m)
reflecting bank borrowings of £298.8m net of cash balances of £87.2m. Net
bank debt increased following investments in acquisitions/JVs £83.6m and
capex investment £56.8m. Net debt including lease liabilities was £457.7m
(2021: £328.0m).
At the end of 2022 the Group had undrawn committed bank facilities under its
syndicated banking facilities of £106.4m (2021: £96.8m). These banking
facilities are subject to covenants comprising net bank debt to EBITDA and
EBITDA interest cover. Headroom under these covenants at the end of the year
was at least 66% for these metrics. During the year the Group renewed its
banking facilities with a £424m five year revolving credit and term loan
facility agreed with a syndicate of lenders which is due to expire in January
2027.
The resilience of the Group has been assessed by applying significant downside
sensitivities to the Group's cash flow projections. Allowing for these
sensitivities and potential mitigating actions the Board is satisfied that the
Group has adequate headroom under its existing committed facilities and will
be able to continue to operate well within its banking covenants.
Dividends
The Group has maintained a progressive dividend policy since flotation and has
recommended a final dividend of 22.6p per ordinary share in respect of 2022.
This, together with the interim dividend of 7.1p per ordinary share paid in
December 2022, maintains the full year dividend, as compared with last year at
29.7p per ordinary share. The final dividend, if approved by shareholders,
will be paid on 30 June 2023 to shareholders on the register on 2 June 2023
and the shares will be ex dividend on 1 June 2023.
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:
2022 2021 Definition, method of calculation and analysis
(52 weeks) (52 weeks)
Financial KPIs
Revenue growth (%) 16.5% 19.0% Year on year revenue growth expressed as a percentage. The 2022 increase
reflected higher raw material prices and volume growth.
Adjusted operating profit margin (%) 1.8% 2.2% Adjusted operating profit expressed as a percentage of turnover. The operating
profit margin % in 2022 was lower due to challenges in our Seafood business.
Adjusted operating profit margin (pence per kg) 13.8 14.9 Adjusted operating profit per kilogram processed and sold in pence. The
decrease in 2022 compared with 2021 reflects the challenges in our Seafood
business.
Adjusted earnings before interest, taxation, depreciation and amortisation 119.9 119.5 Adjusted operating profit before depreciation and amortisation which increased
(EBITDA) (£m) marginally year on year.
Free cash flow (£m) (79.4) (8.1) restated IFRS cash (outflow) before minorities, dividends and financing. Operating cash
flow generation in 2022 was higher due to increased investments in
acquisitions and joint ventures, adverse working capital movements and higher
interest payments.
Net debt / EBITDA ratio (times) 1.8 0.7 Year end net bank debt as a percentage of adjusted EBITDA. The increase is due
to the Foppen acquisition which completed during the year and the distorting
impact of the related equity raise £75m in 2021.
Non-financial KPIs
Growth in sales volumes (%) 4.3% 5.0% Year on year volume growth. Volume growth in 2022 comprised Foppen acquired in
the year and full year volumes from Fairfax Meadow and Dalco acquired in 2021
and the New Zealand facility opened in 2021.
Employee and labour agency costs (pence per kg) 65.7 60.9 Labour cost of producing food products as a proportion of volume. The increase
reflects relatively greater labour complexity in the recently acquired
businesses including Foppen, Fairfax Meadow and Dalco.
Customer service level (%) 95.9% 96.4% Packs of product delivered as a % of the orders placed. The customer service
level remains best in class.
In addition, a much wider range of financial and operating KPIs are
continuously tracked at business unit level.
Going concern statement
The Directors have performed a detailed assessment, including a review of the
Group's budget for the 2023 financial year and its longer term plans,
including consideration of the principal risks faced by the Group. The
resilience of the Group has been assessed by applying significant downside
sensitivities to the Group's cash flow projections. Allowing for these
sensitivities and potential mitigating actions the Board is satisfied that the
Group is able to continue to operate well within its banking covenants and has
adequate headroom under its new committed facilities which do not expire until
2027. The Directors are satisfied that the Company and the Group have adequate
resources to continue to operate and meet its liabilities as they fall due for
the foreseeable future, a period considered to be at least 12 months from the
date of signing these financial statements. For this reason they continue to
adopt the going concern basis for preparing the financial statements.
The Group's bank borrowings as detailed in the financial statements and the
principal banking facilities, which support the Group's existing and
contracted new business, are committed. The Group is in full compliance with
all its banking covenants and based on forecasts and sensitised projections is
expected to remain in compliance. Future geographical expansion which is not
yet contracted, and which is not built into our internal budgets and
forecasts, may require additional or extended banking facilities and such
future geographical expansion will depend on our ability to negotiate
appropriate additional or extended facilities, as and when they are required.
During the year the Group renewed its banking facilities with a £424m five
year revolving credit and term loan facility.
The Group's internal budgets and forward forecasts, which incorporate all
reasonably foreseeable changes in trading performance, are regularly reviewed
by the Board and show that it will be able to operate within its current
banking facilities, taking into account available cash balances, for the
foreseeable future.
Viability statement
In accordance with provision 31 of the 2018 UK Corporate Governance Code, the
Directors confirm that they have a reasonable expectation that the Group will
continue to operate and meet its liabilities, as they fall due, for the three
years ending in December 2025. A period of three years has been chosen for the
purpose of this viability statement as it is aligned with the Group's three
year plan, which is based on the Group's current customers and does not
incorporate the benefits from any potential new contract gains over this
period.
The Directors' assessment has been made with reference to the Group's current
position and strategy taking into account the Group's principal risks,
including those in relation to Covid-19, and how these are managed. The
strategy and associated principal risks, which the Directors review at least
annually, are incorporated in the three year plan and such related scenario
testing as is required. The three year plan makes reasoned assumptions in
relation to volume growth based on the position of our customers and expected
changes in the macroeconomic environment and retail market conditions,
expected changes in food raw material, packaging and other costs, together
with the anticipated level of capital investment required to maintain our
facilities at state-of-the-art levels.
Cautionary statement
This Strategic report contains forward-looking statements. Such statements are
based on current expectations and assumptions and are subject to risk factors
and uncertainties which we believe are reasonable. Accordingly Hilton's actual
future results may differ materially from the results expressed or implied in
these forward-looking statements. We do not undertake to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Matt Osborne
Chief Financial Officer
4 April 2023
Risk management and principal risks
Risks and risk management
In accordance with provision 28 of the 2018 UK Corporate Governance Code, the
Directors confirm that they have carried out a robust assessment of the
emerging and principal risks facing the Group that might impede the
achievement of its strategic and operational objectives as well as affect
performance or cash position. As a leading food processor in a fast-moving
environment it is critical that the Group identifies, assesses and prioritises
its risks. The result of this assessment is a statement of the principal risks
facing the Group together with a description of the main controls and
mitigations that reduce the effect of those risks were they to crystallise.
This, together with the adoption of appropriate mitigation actions, enables us
to monitor, minimise and control both the probability and potential impact of
these risks.
How we manage risk
The Group takes a proactive approach to risk management with well-developed
structures and a range of processes for identifying, assessing, prioritising
and mitigating its key risks, as the delivery of our strategy depends on our
ability to make sound risk informed decisions. The Group's internal audit
function derives its risk-based assurance plan on the controls after
considering the risk assessment and reports its findings to the Audit
Committee. For more detail please see Who is responsible for risk at Hilton?
Risk management process and risk appetite
The Board believes that in carrying out the Group's businesses it is vital to
strike the right balance between an appropriate and comprehensive control
environment and encouraging the level of entrepreneurial freedom of action
required to seek out and develop new business opportunities; but, however
skilfully this balance between risk and reward is struck, the business will
always be subject to a number of risks and uncertainties, as outlined below.
All types of risk applicable to the business are regularly reviewed and a
formal risk assessment is carried out to highlight key risks to the business
and to determine actions that can reasonably and cost effectively be taken to
mitigate them.
Not all the risks listed are within the Group's control and others may be
unknown or currently considered immaterial, but could turn out to be material
in the future. These risks, together with our risk mitigation strategies,
should be considered in the context of the Group's risk management and
internal control framework, details of which are set out in the Corporate
governance statement. It must be recognised that systems of internal control
are designed to manage rather than completely eliminate any identified risks.
Risk management during 2022
Cost of living crisis and the Russia-Ukraine War
The macroeconomic and geopolitical landscape, exacerbated by the Ukrainian
War, is having an unprecedented impact on our supply chains, operations,
consumers and customers. Energy price volatility and an acute cost of living
crisis is impacting consumer spending and eating habits. This has resulted in
high-profile food price inflation and extreme cost volatility.
Our continued focus on cost control, innovation and factory efficiency is
enabling us to manage the inflationary pressures the industry is currently
facing. Through our strong customer relationships we are able to support
consumers to navigate through these challenging times.
Brexit
Hilton's exposure is generally mitigated through our predominantly local
sourcing and operating model. Impacts are likely to continue through 2023 as
the UK and EU regulatory and trade environments evolve. The Group is ensuring
compliance through ongoing engagement with the appropriate authorities and
regulatory forums. We continue to monitor policy changes and amend processes
and operations as required. Our labour recruitment and retention strategies
are evolving in line with this changing landscape and our continued focus on
technology and automation further reduce risk exposure in this area.
Principal risks
The most significant business risks that the Group faces, 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 of risk Its potential impact Risk mitigation measures and strategies adopted
Risk 1
The progress of the Group's business is affected by the macroeconomic and No business is immune to difficult economic climates. The current Our strong and diversifying growth model, based on successful diversification
geopolitical environment and levels of consumer spending. macroeconomic environment is placing extraordinary financial pressures on across different proteins, expanding as a technology-led supply chain partner
businesses and consumers. The inflationary pressures resulting from the and built on our strong ESG credentials underpins our business resilience.
Covid-19 pandemic, the Ukrainian conflict and wider economic and political
instability are exacerbating the challenging market conditions.
movement
We continue to broaden product ranges with our strong retail partners,
maintaining a single-minded focus on minimising unit packing costs, whilst
Consumers are changing their shopping and eating habits and our retail continuing to deliver high levels of product quality and integrity.
customers are under immense pressure to deliver value and are therefore
sharing that pressure with supplier partners.
The Group is able to harness its innovative and agile approach with its
class-leading technology and systems to respond quickly and effectively to
macroeconomic challenges and opportunities.
Risk 2
The Group's growth potential may be affected by the success of its customers The Group's products predominantly carry the brand labels of the customer to The Group plays a very proactive role in enhancing its customers' brand
and the growth of their packed food sales. whom packed food is supplied and it is accordingly dependent on its customers' values, through providing high quality, competitively priced products, high
success in maintaining or improving consumer perception of their own brand service levels, continuing product and packaging innovation and category
No movement names and packed food offerings. Consumer perception is increasingly management support. It recognises that quality and traceability assurance are
influenced by environmental, social and governance (ESG) considerations. integral to its customers' brands and works closely with its customers to
ensure rigorous quality assurance standards are met. It is continuously
measured by its customers across a very wide range of parameters, including
delivery time, product specification, product traceability and accuracy of
documentation and targets demanding service levels across all these
parameters. The Group works closely with its customers to identify continuing
improvement opportunities across the supply chain, including enhancing product
presentation, extending shelf life and reducing wastage at every stage in the
supply chain.
Our ESG strategy underpins the growth of our product sectors for our
customers, and supports them to reach their goals. Our ambitious 2025
Sustainable Protein Plan is in partnership with our customers and suppliers as
we engage in the key collaborative initiatives that drive sustainability for
our sectors and raise the bar together.
We have set stretching goals that drive impactful actions that become
integrated into our core business practices. Our data collection platform,
Foods Connected, demonstrates the assurance of standards across our supply
chains, and allows us to measure progress towards our 2025 targets.
The detail of our strategy and its impact are described within the
Sustainability section of this report.
Risk 3
The Group strategy focuses on a small number of customers who can exercise The Group has a relatively narrow, but expanding, customer base, with sales to The Group is progressively widening its customer base and maintaining a high
significant buying power and influence when it comes to contractual renewal subsidiary or associated companies of the Tesco, Ahold and Woolworths groups level of investment in state-of-the-art facilities, which together with
terms at 5 to 15-year intervals. still comprising the larger part of Hilton's revenue. The larger retail chains management's continuous focus on reducing costs, allow it to operate very
continue to focus on strengthening their market share of protein products in efficiently at very high throughputs and price its products competitively.
movement the countries in which we operate, creating an increasingly competitive retail
environment. 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. 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
During periods of unprecedented inflationary pressure, misalignment between documentation, all backed by an uncompromising focus on food safety, product
production costs and agreed operational packing rates may occur, potentially integrity and traceability assurance.
impacting profitability.
Hilton has long-term supply agreements in place with its major customers, with
pricing either on a cost plus or agreed packing rate basis.
The Group maintains an ongoing focus on cost control, innovation and factory
efficiency to manage inflationary pressures. Hilton continues to evolve and
respond to changing market conditions.
The provision of added value services deepens the relationships Hilton has
with its retailer partners and investment in these services means that we are
able to develop and maintain a technology advantage within our industry.
Risk 4
As Hilton continues to grow there is more reliance on key personnel and their The Group may struggle to meet key strategic objectives and projects and fail The Group carefully manages its skilled resources including succession
ability to manage growth, change, integration and compliance across new to adhere to regulatory and legislative requirements, which in turn detracts planning and maintaining a talent pipeline. The Group is evolving its people
legislative and regulatory environments. This risk increases as the Group from our performance delivery for our customers. capability balanced with an appropriate management structure within the
continues to expand with new customers and into new territories either
overall organisation. Hilton continues to invest in on-the-job training and
organically or through acquisition with potentially greater reliance on career development, whilst recruiting high quality new employees, as required
stretched skilled resource and execution of simultaneous growth projects.
to facilitate the Group's ongoing growth. Appointment of additional key
resources and alignment of structures have supported the enhancement of
project management control and oversight. Control systems embedded in project
management enable the risks of growth to be appropriately highlighted and
No movement managed. To underscore our efforts, we have active relationships with strong
industry experts across all areas of business growth.
In the current climate, strong partnership and proximity to our customers are
fundamental. Hilton's leadership continues to develop its organisational
structures to ensure as close a relationship with our retail partners as
possible.
Risk 5
The Group's business strength is affected by its ability to maintain a wide The Group is reliant on its suppliers to provide sufficient volume of The Group maintains a flexible global and local food supply base, which is
and flexible global food supply base operating at standards that can products, to the agreed specifications, in the very short lead times required progressively widening as it expands and is continuously audited to ensure
continuously achieve the specifications set by Hilton and its customers. by its customers, with efficient supply chain management being a key business standards are maintained, so as to have in place a wide range of options
attribute. The Group has both local and global sourcing models. Current or should supply disruptions occur.
No movement future tariffs, quotas or trade barriers imposed by supplier countries and
other global trade developments, could materially affect the Group's
international procurement ability and therefore potentially impact our ability
to meet agreed customer service levels. Further assurance is provided through the supply chain control and
transparency the Group has enabled by its supplier management platform, Foods
Connected, which facilitates robust supplier relationships.
Risk 6
Contamination within the supply chain including outbreaks of disease and feed This will potentially affect the Group's ability to procure sufficient The Group sources its food from a trusted raw material supply base, all
contaminants affecting livestock and fish. quantities of safe raw material. components of which meet stringent national, international and customer
standards. The Group is subject to demanding standards which are independently
No movement 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, supported by a comprehensive ongoing audit programme.
Within our factories, Global Food Safety Initiative (GFSI) benchmarked food
safety standards and our own factory standard assessments drive the
enhancement of the processes and controls that are necessary to ensure that
the risks of contaminants throughout the processing, packing and distribution
stages are mitigated and traceable should a risk ever materialise.
Risk 7
Significant incidents such as fire, flood, pandemic or interruption of supply Such incidents could result in systems or manufacturing process stoppages with The Group has robust business continuity plans in place including sister site
of key utilities could impact the Group's business continuity. consequent disruption and loss of efficiency which could impact the Group's support protocols enabling other sites to step in with manufacturing and
sales. distribution of key product lines where necessary. Continuity management
The legacy of the Covid-19 pandemic continues to present challenges across the systems and plans are suitably maintained and adequately tested including
globe. building risk assessments and emergency power solutions. There are appropriate
insurance arrangements in place to mitigate against any associated financial
No movement loss.
We continue to mitigate against the legacy impact of the Covid-19 pandemic.
Risk 8
The Group's IT systems could be subject to cyber-attacks, including ransomware The Group's operations are underpinned by a variety of IT systems. Loss or The Group has a robust IT control framework, minimum operating standards,
and fraudulent external email activity. These kinds of attacks are generally disruption to those IT systems or extended times to recover data or including working towards National Institute of Technology requirements, all
increasing in frequency and sophistication. functionality could impact the Group's ability to effectively operate its of which are tested frequently by internal staff and by specialist external
facilities and affect its sales and reputation. bodies. This framework is established as the key control to mitigate cyber
risk and is applied consistently throughout the Group. The increased
prominence of IT risk is mitigated by investments in IT infrastructure and now
No movement forms a regular part of the Group Risk Management Committee agenda and
presentations to the Board. In accordance with Group strategy IT risk is
considered when looking at new ventures and control measures implemented in
new sites follow the Group common standards. There is internal training and
resources available with emphasis on prevention, user awareness and recovery.
Increasingly, IT forms part of site business continuity exercises which test
and help develop the capacity to respond to possible crises or incidents. The
technical infrastructure to prevent attacks, safeguard data and the resilience
to recover are continuously developed including yearly assessments to meet
emerging threats. IT systems including financial and banking systems are
configured to prevent fraudulent payments. There are monthly IT security
reviews to ensure compliance with expected levels of applications updates, and
of server and data centres together with yearly penetration testing.
Risk 9
A significant breach of health and safety legislation as complexity increases Such breach in health and safety legislation could lead to reputational damage The Group has established robust health and safety processes and procedures
in managing sites across different product groups and geographies. and regulatory penalties, including restrictions on operations, fines or across its operations, including a Group oversight function which provides key
personal litigation claims. guidance and support necessary to strengthen monitoring, best practice and
No movement compliance. The Group has also rolled out an enhanced standardised safety
framework. Health and safety performance is reviewed regularly by the Board.
Risk 10
The Group's business and supply chain is affected by climate change risks Potential physical impacts from climate change could include a higher We continue to develop our approach to climate change risk mitigation. We have
comprising both physical and transition risks. Physical risks include incidence of extreme weather events such as flooding, drought, and forest committed to set a science-based target through the Science Based Targets
long-term rises in temperature and sea levels as well as changes to the fires that could disrupt our supply chains and potentially impact production initiative and signed the Business Ambition for 1.5°C pledge to decarbonise
frequency and severity of extreme weather events. Transition risks include capabilities, increase costs and add complexity. Action taken by societies our own operations and supply chains. We have set energy and water efficiency
policy changes, reputational impacts, and shifts in market preferences and could reduce the severity of these impacts. targets for our sites and continue to engage in global collaborative action
technology.
for decarbonisation of our key raw materials. We are directing our efforts
towards a net zero carbon footprint before 2050.
Governmental efforts to mitigate climate change may lead to policy and
No movement regulatory changes as well as shifts in consumer demand. The potential
transitional impacts include additional costs of low greenhouse gas emission Shifts in consumer demand are an opportunity for growth in our portfolio of
farming systems, and the potential of carbon price regulation aimed at plant based and seafood products. Additionally, we are ensuring we have the
shifting consumers to lower carbon foods, which may reduce the profitability flexibility to adapt our supply chains over time to mitigate physical
of some of our products. Additionally there is increased stakeholder focus on disruption.
climate change issues. Our reputation could be impacted if we are not active
in reducing the climate impacts of our operations and supply chains, resulting We continue to review and develop our assessment of the key physical and
in lower demand for our products. transition risks impacting our business in line with the Task Force on
Climate-related Financial Disclosures (TCFD) recommendations. Our full
assessment of climate risks and opportunities in line with the TCFD framework
is described within the Sustainability section of this report.
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 Company financial statements, which have been prepared
in accordance with UK-adopted international accounting standards, give a true
and fair view of the assets, liabilities and financial position of the Group
and Company and profit of the Group; 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 that it faces.
This responsibility statement was approved by the Board of Directors on 4
April 2023 and is signed on its behalf by:
Directors
R Watson OBE Chairman
M Osborne Chief
Financial Officer
Consolidated statement of comprehensive income
2022 2021
52 weeks 52 weeks
Notes £'000 £'000
Restated (note 2)*
Continuing operations
Revenue 3 3,847,600 3,301,970
Cost of sales* (3,464,837) (2,982,155)
Gross profit 382,763 319,815
Distribution costs (42,028) (25,083)
Other administrative expenses* (276,048) (226,175)
Exceptional items 4 (11,896) (7,050)
Total administrative expenses (287,944) (233,225)
Share of profit in joint ventures 1,235 1,925
Operating profit 54,026 63,432
Finance income 5 356 10
Other finance costs (24,768) (14,913)
Exceptional finance costs 4 - (1,131)
Total finance costs 5 (24,768) (16,044)
Finance costs - net (24,412) (16,034)
Profit before income tax 29,614 47,398
Income tax expense (10,267) (11,232)
Exceptional tax income 4 145 3,116
Total income tax expense 6 (10,122) (8,116)
Profit for the period 19,492 39,282
Attributable to:
Owners of the parent 17,706 37,143
Non-controlling interests 1,786 2,139
19,492 39,282
Earnings per share attributable to owners of the parent during the year
Basic (pence) 7 19.8 45.0
Diluted (pence) 7 19.7 44.5
*Restated
2022 2021
52 weeks 52 weeks
£'000 £'000
Profit for the period 19,492 39,282
Other comprehensive (expense)/income
Items that may be reclassified to profit or loss
Currency translation differences 29 (7,090)
Gain on cash flow hedges 786 -
Other comprehensive (expense) for the year net of tax 815 (7,090)
Total comprehensive income for the year 20,307 32,192
Total comprehensive income attributable to:
Owners of the parent 18,219 30,417
Non-controlling interests 2,088 1,775
20,307 32,192
The notes are an integral part of these consolidated financial statements.
Consolidated and Company Balance sheets
Group Company
2022 2021 2022 2021
Notes £'000 £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 9 327,611 291,488 - -
Intangible assets 10 160,480 105,775 - -
Lease: right of use assets 11 216,578 222,004 - -
Investments 6,208 5,539 247,785 247,785
Trade and other receivables - 2,239 - -
Deferred income tax assets 13,801 6,952 - -
724,678 633,997 247,785 247,785
Current assets
Inventories 206,729 156,517 - -
Trade and other receivables 271,160 230,388 5,875 2,874
Current tax assets 5,995 5,212 - -
Other financial asset - 1,140 - -
Cash and cash equivalents 87,224 140,170 186 151
571,108 533,427 6,061 3,025
Total assets 1,295,786 1,167,424 253,846 250,810
Equity
Equity attributable to owners of the parent
Ordinary shares 8,943 8,893 8,943 8,893
Share premium 144,926 142,043 144,926 142,043
Own shares - (87) - -
Employee share schemes reserve 5,004 6,990 - -
Foreign currency translation reserve (2,379) (2,106) - -
Cashflow hedging reserve 786 - - -
Retained earnings 167,862 176,449 28,958 28,850
Reverse acquisition reserve (31,700) (31,700) - -
Merger reserve 919 919 71,019 71,019
294,361 301,401 253,846 250,805
Non-controlling interests 10,956 6,548 - -
Total equity 305,317 307,949 253,846 250,805
Liabilities
Non-current liabilities
Borrowings 13 270,510 - - -
Lease liabilities 11 230,152 228,977 - -
Deferred income tax liabilities 15,921 4,132 - -
516,583 233,109 - -
Current liabilities
Borrowings 13 28,279 224,732 - -
Lease liabilities 11 16,006 14,419 - -
Trade and other payables 426,203 387,215 - 5
Financial liabilities at fair value through OCI 3,398 - - -
473,886 626,366 - 5
Total liabilities 990,469 859,475 - 5
Total equity and liabilities 1,295,786 1,167,424 253,846 250,810
The notes are an integral part of these consolidated financial statements.
R. Watson M.
Osborne
Director
Director
Hilton Food Group plc - Registered number: 06165540
The Company has taken advantage of the exemption in Section 408 Companies Act
2006 not to publish its individual income statement, statement of
comprehensive income and related notes. Profit for the period dealt with in
the income statement of Hilton Food Group plc amounted to £25,600,000 (2021:
£24,300,000).
Consolidated and Company Statement of changes in equity
Attributable to owners of the parent
Share capital Share premium Own shares Employee share schemes reserve Foreign currency translation reserve Cashflow hedge reserve Retained earnings Reverse acquisition reserve Merger reserve Total Non-controlling interests Total equity
Group Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 4 January 2021 8,194 65,619 - 6,123 4,620 - 161,607 (31,700) 919 215,382 6,556 221,938
Profit for the period - - - - - - 37,143 - - 37,143 2,139 39,282
Other comprehensive income
Currency translation differences - - - - (6,726) - - - - (6,726) (364) (7,090)
Total comprehensive income for the period - - - - (6,726) - 37,143 - - 30,417 1,775 32,192
Issue of new shares 699 76,424 - - - - - - - 77,123 - 77,123
Purchase of own shares - - (2,278) - - - - - - (2,278) - (2,278)
Adjustment in respect of employee share schemes - - - 2,725 - - - - - 2,725 - 2,725
Settlement of employee share scheme - - 2,191 (2,191) - - - - - - - -
Tax on employee share schemes - - - 333 - - - - - 333 - 333
Dividends paid 8 - - - - - - (22,301) - - (22,301) (1,783) (24,084)
Total transactions with owners 699 76,424 (87) 867 - - (22,301) - - 55,602 (1,783) 53,819
Balance at 2 January 2022 8,893 142,043 (87) 6,990 (2,106) - 176,449 (31,700) 919 301,401 6,548 307,949
Profit for the period - - - - - - 17,706 - - 17,706 1,786 19,492
Other comprehensive expense
Currency translation differences - - - - (273) - - - - (273) 302 29
Gain on cash flow hedging - - - - - 786 - - - 786 - 786
Total comprehensive income for the period - - - - (273) 786 17,706 - - 18,219 2,088 20,307
Transactions with non-controlling interests - - - - - - (801) - - (801) 3,584 2,783
Issue of new shares 50 2,883 - - - - - - - 2,933 - 2,933
Adjustment in respect of employee share schemes - - - (655) - - - - - (655) - (655)
Settlement of employee share scheme - - 87 (300) - - - - - (213) - (213)
Tax on employee share schemes - - (1,031) - - - - - (1,031) - (1,031)
Dividends paid 8 - - - - - - (25,492) - - (25,492) (1,264) (26,756)
Total transactions with owners 50 2,883 87 (1,986) - - (26,293) - - (25,259) 2,320 (22,939)
Balance at 1 January 2023 8,943 144,926 - 5,004 (2,379) 786 167,862 (31,700) 919 294,361 10,956 305,317
Company
Balance at 4 January 2021 8,194 65,619 - - - - 26,851 - 71,019 171,683 - 171,683
Profit for the period - - - - - - 24,300 - - 24,300 - 24,300
Total comprehensive income for the year - - - - - - 24,300 - - 24,300 - 24,300
Issue of new shares 699 76,424 - - - - - - - 77,123 - 77,123
Dividends paid 8 - - - - - - (22,301) - - (22,301) - (22,301)
Total transactions with owners 699 76,424 - - - - (22,301) - - 54,822 - 54,822
Balance at 2 January 2022 8,893 142,043 - - - - 28,850 - 71,019 250,805 - 250,805
Profit for the period - - - - - - 25,600 - - 25,600 - 25,600
Total comprehensive income for the period - - - - - - 25,600 - - 25,600 - 25,600
Issue of new shares 50 2,883 - - - - - - - 2,933 - 2,933
Dividends paid 8 - - - - - - (25,492) - - (25,492) - (25,492)
Total transactions with owners 50 2,883 - - - - (25,492) - - (22,559) - (22,559)
Balance at 1 January 2023 8,943 144,926 - - - - 28,958 - 71,019 253,846 - 253,846
The notes are an integral part of these consolidated financial statements.
Consolidated and Company Cash flow statements
Group Company
2022 2021 2022 2021
52 weeks 52 weeks 52 weeks 52 weeks
Restated
Notes £'000 £'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 14 98,312 121,259 - -
Interest paid (24,768) (16,044) - -
Income tax paid (13,881) (19,210) - -
Net cash generated from operating activities 59,663 86,005 - -
Cash flows from investing activities
Acquisition of subsidiary* (81,822) (35,453) - -
Acquisition investments (1,764) - - -
Other financial asset - restricted cash - (1,140) - -
Settlement of deferred consideration - (2,500) - -
Issue of inter-company loan - - (1,206) (77,377)
Purchases of property, plant and equipment (55,140) (56,251) - -
Proceeds from sale of property, plant and equipment 261 114 - -
Purchases of intangible assets (1,622) (1,115) - -
Interest received 356 10 - -
Dividends received - - 25,600 24,300
Dividends received from joint venture 672 2,273 - -
Net cash (used in)/generated from investing activities (139,059) (94,062) 24,394 (53,077)
Cash flows from financing activities
Purchase of non-controlling interest (1,151) - - -
Proceeds from borrowings* 295,790 65,237 - -
Repayments of borrowings (228,565) (79,819) - -
Payment of lease liability (15,631) (6,588) - -
Issue of ordinary shares* 1,133 75,339 1,133 75,339
Purchase of own shares - (2,278) - -
Dividends paid to owners of the parent (25,492) (22,301) (25,492) (22,301)
Dividends paid to non-controlling interests (1,264) (1,783) - -
Net cash generated from/(used in) financing activities 24,820 27,807 (24,359) 53,038
Net (decrease)/increase in cash and cash equivalents (54,576) 19,750 35 (39)
Cash and cash equivalents at beginning of the year 140,170 123,816 151 190
Exchange gains/(losses) on cash and cash equivalents 1,630 (3,396) - -
Cash and cash equivalents at end of the year 87,224 140,170 186 151
The notes are an integral part of these consolidated financial statements.
Notes to the financial statements
1 General information
Hilton Food Group plc ('the Company') and its subsidiaries (together 'the
Group') is a leading specialist international food packing business supplying
major international food retailers in fourteen European countries, Australia
and New Zealand. The Company's subsidiaries are listed in a note to the full
financial statements.
The Company is a public company limited by shares incorporated and domiciled
in the UK and registered in England. 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 period represents the 52 weeks to 1 January 2023 (prior
financial period 52 weeks to 2 January 2022).
This preliminary announcement was approved for issue on 4 April 2023.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual financial
statements for the year ended 2 January 2022.
Basis of preparation
The consolidated and company financial statements of Hilton Food Group plc
have been prepared under the historical cost convention except for certain
financial assets and liabilities measured at fair value and in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The consolidated and company financial statements have been prepared on the
going concern basis. The reasons why the Directors consider this basis to be
appropriate are set out in the Performance and financial review.
The financial statements are presented in Sterling and all values are rounded
to the nearest thousand (£'000) except when otherwise indicated.
The financial information included in this preliminary announcement does not
constitute statutory accounts of the Group for the years ended 1 January 2023
and 2 January 2022 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the Registrar of Companies and those for 2022 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.
Prior period adjustments
Following discussions with the FRC in connection with their limited scope
review of the 2021 Annual Report, that was focused on disclosures relating to
business combinations, prior period adjustments have been made to restate the
Consolidated cash flow statement, Deferred tax disclosures and the disclosures
of the Analysis and movement in net debt (note 15).
Presentation of cash outflow for the acquisition of subsidiary
The 2021 Consolidated cash flow statement recognised a £39,062,000 cash out
flow within investing activities for the acquisition of subsidiary.
This figure included:
- £8,504,000 of debt acquired as part of the acquisition of
Fairfax Meadow Europe Limited that was immediately repaid as a result of the
requirements of change of control clauses within related bank facility
agreements.
- £1,824,000 of debt acquired as part of the Dalco acquisition.
- £1,785,000 in respect of the fair value of shares transferred
to the vendors as part of the consideration for the acquisition of Dalco. This
amount was offset by a corresponding cash inflow recognised within the total
£77,123,000 cash inflow from the issue of ordinary shares included within
financing activities.
(i) Acquisition of Fairfax Meadow
The repayment of the loans acquired with Fairfax Meadow was triggered by
pre-existing change of control clauses requiring the debt to be repaid and
therefore, in accordance IAS 7, the repayment of the acquired debt was
classified within the cash out flow from the acquisition of a subsidiary.
However, as the cashflows were not between the group and the vendors of
Fairfax Meadow the fair value of the acquired debt has been included within
the fair value of assets and liabilities acquired rather than as part of
consideration.
As a result of this classification the £8,504,000 debt acquired and
subsequently repayment should have been recognised as separate line items with
the movements in net debt note. The movement in net debt detailed in note 15
for the 2021 financial period has therefore been restated to reflect this.
(ii) Acquisition of Dalco
The £1,824,000 of debt acquired as part of the acquisition of Dalco was not
repaid at the point of acquisition and the £1,785,000 consideration paid in
shares to the vendors was a non-cash item and therefore neither item should
have been recognised as part of the cash out flow for the acquisition of a
subsidiary.
To correct for this the 2021 comparative cashflow statement has been restated
as follows:
- the cash outflow for the acquisition of subsidiary has been
reduced by £3,609,000 to £35,453,000 with a corresponding £3,609,000
reduction in the net cash outflow from investing activities to £94,062,000.
- Proceeds from borrowings reduced by £1,824,000 to £65,238,000.
- Issue of ordinary shares reduced by £1,785,000 to £75,339,000.
- With a corresponding overall reduction of £3,609,000 in net
cash generated from financing activities reduced to £27,807,000.
An adjustment has also been made to restate the movement in net debt for 2021
in note 15 to show £1,824,000 of further debt acquired with a corresponding
reduction to £65,238,000 in the proceeds of new borrowings.
Deferred Tax
The provisional fair value assessment of the assets and liabilities acquired
through business combinations recognised in the 2021 Annual Report included
total deferred tax liabilities of £3,266,000.
In the 2021's financial statement disclosures the total deferred tax amount
recognised was included within the movement of deferred tax as a result of
accelerated capital allowances.
However, included within this total figure was £3,001,000 recognised in
respect of acquired brand and customer relationship intangible assets.
The prior period deferred tax note movements have therefore been restated to
correctly classify the movement that related to the valuation of acquired
brand and customer relationship intangible assets.
Depreciation
Following a review of expense classification, the Group has reclassified
depreciation relating to buildings, plant and machinery from administration
expenses to cost of sales as these assets are directly involved in production.
As a result, the Group has restated the comparative figures for this
reclassification. The restatement has no impact on operating profit and
results in cost of sales increasing by £46,263,000 in the prior period with a
corresponding reduction in gross profit. Other Administrative expenses have
also therefore reduced by £46,263,000.
3 Segment information
Management have determined the operating segments based on the reports
reviewed by the Executive Directors that are used to make strategic decisions.
The Executive Directors have considered the business from both a geographic
and product perspective.
From a geographic perspective, the Executive Directors consider that the Group
has nine operating segments: i) United Kingdom; ii) Netherlands; iii) Belgium;
iv) Republic of Ireland; v) Sweden; vi) Denmark; vii) Central Europe including
Poland, Czech Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia;
viii) Portugal; ix) APAC and x) Central costs. The United Kingdom,
Netherlands, Belgium, Republic of Ireland, Sweden, Denmark, Central Europe and
Portugal have been aggregated into one reportable segment 'Europe' as they
have similar economic characteristics as identified in IFRS 8. APAC and
Central costs comprise the other reportable segments.
From a product perspective the Executive Directors consider that the Group has
only one identifiable product, wholesaling of food protein products including
meat, seafood and vegetarian. The Executive Directors consider that no further
segmentation is appropriate, as all of the Group's operations are subject to
similar risks and returns and exhibit similar long term financial performance.
The segment information provided to the Executive Directors for the reportable
segments is as follows:
Europe APAC Central costs Europe APAC Central costs
2022 2021
Total Total
Group £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total revenue 2,348,355 1,592,946 - 3,941,301 2,040,618 1,314,602 - 3,355,220
Inter-co revenue (93,701) - - (93,701) (53,250) - - (53,250)
Third party revenue 2,254,654 1,592,946 - 3,847,600 1,987,368 1,314,602 - 3,301,970
Adjusted operating profit/(loss) segment result (see note 17) 49,672 26,705 (5,233) 71,144 61,788 22,370 (10,591) 73,567
Amortisation of acquired intangibles (8,257) - - (8,257) (2,778) - - (2,778)
Exceptional items (9,014) - (2,882) (11,896) (6,994) - - (6,994)
Impact of IFRS 16 915 2,120 - 3,035 291 (654) - (363)
Operating profit/(loss) segment result 33,316 28,825 (8,115) 54,026 52,307 21,716 (10,591) 63,432
Finance income 356 - - 356 10 - - 10
Finance costs (8,094) (5,336) (11,338) (24,768) (2,881) (10,017) (3,146) (16,044)
Income tax (expense)/credit (3,469) (7,505) 852 (10,122) (7,965) (1,761) 1,610 (8,116)
Profit/(loss) for the period 22,109 15,984 (18,601) 19,492 41,471 9,938 (12,127) 39,282
Depreciation and amortisation 39,776 37,640 353 77,769 33,039 33,604 140 66,783
Additions to non-current assets 46,197 9,643 1,167 57,007 29,587 27,528 662 57,777
Segment assets 769,936 481,229 24,825 1,275,990 643,157 462,556 49,547 1,155,260
Current income tax assets - - - 5,995 - - - 5,212
Deferred income tax assets - - - 13,801 - - - 6,952
Total assets - - - 1,295,786 - - - 1,167,424
Segment liabilities 386,903 466,492 121,153 974,548 346,403 419,611 89,329 855,343
Deferred income tax liabilities - - - 15,921 - - - 4,132
Total liabilities - - - 990,469 - - - 859,475
Sales between segments are carried out at arm's length.
The Executive Directors assess the performance of each operating segment based
on its operating profit before exceptional items and amortisation of acquired
intangibles and also before the impact of IFRS 16 (see note 17). Operating
profit is measured in a manner consistent with that in the income statement.
The amounts provided to the Executive Directors with respect to total assets
and liabilities are measured in a manner consistent with that of the financial
statements. The assets are allocated based on the operations of the segment
and their physical location. The liabilities are allocated based on the
operations of the segment.
The Group has five principal customers (comprising groups of entities known to
be under common control), Tesco, Ahold Delhaize, Coop Danmark, ICA Gruppen and
Woolworths. These customers are located in the United Kingdom, Netherlands,
Belgium, Republic of Ireland, Sweden, Denmark and Central Europe including
Poland, Czech Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia and
APAC.
Analysis of revenues from external customers and non-current assets are as
follows:
Revenues from external customers Non-current assets excluding deferred tax assets
2022 2021 2022 2021
Group £'000 £'000 £'000 £'000
Analysis by geographical area
United Kingdom - country of domicile 1,184,006 1,122,047 257,481 196,857
Netherlands 446,387 298,535 56,671 34,857
Belgium 26,915 25,687 883 1,327
Sweden 237,438 220,065 9,119 12,814
Republic of Ireland 83,686 95,349 3,008 4,711
Denmark 131,845 116,156 16,468 16,046
Central Europe 142,905 109,529 23,717 22,297
APAC 1,594,418 1,314,602 343,530 338,136
3,847,600 3,301,970 710,877 627,045
Analysis by principal customer
Customer 1 1,100,571 1,156,771
Customer 2 341,289 327,293
Customer 3 230,716 231,492
Customer 4 124,506 113,555
Customer 5 1,430,806 1,314,602
Other 619,712 158,257
3,847,600 3,301,970
4 Exceptional items
Operating profit Finance costs Tax Profit
after tax
2022 2022 2022 2022
Group £'000 £'000 £'000 £'000
Fire in Belgium 9,500 - - 9,500
Acquisition of Foods Connected Ltd (2,701) - - (2,701)
Acquisition related costs 1,204 - - 1,204
Reorganisation costs 3,893 - (145) 3,748
Total exceptional costs 11,896 - (145) 11,751
Operating profit Finance costs Tax Profit
after tax
2021 2021 2021 2021
Group £'000 £'000 £'000 £'000
Fire in Belgium 11,661 - (2,901) 8,760
Impact of acquisition of Dalco (6,837) - - (6,837)
Acquisition costs 2,226 1,131 (215) 3,142
Total exceptional costs 7,050 1,131 (3,116) 5,065
Fire in Belgium
In June 2021 the Group's facility in Belgium suffered an extensive fire. The
Group continues to work closely with its insurers to progress related
insurance claims. The results for the period to 1 January 2023 do not include
potential income that may be received in respect of these claims with the
insurance proceeds therefore considered to be contingent assets; at this stage
in the claims process the value of the contingent asset has yet to be
determined. Legal claims have been made against the Group in connection with
the fire, however at this stage the Group considers the likelihood of
incurring financial liabilities as a result of them is remote.
Exceptional costs totalling £9,500,000 have been recognised in the period
relating to additional costs incurred in continuing to operate in Belgium
including the ongoing insurance and legal claim.
In the prior period an exceptional impairment totalling £11,661,000 was
recognised in respect of assets that were destroyed by the fire, alongside
additional costs incurred in continuing to operate in Belgium including
insurance and legal claims.
Acquisition of Foods Connected Ltd
On 7 July 2022 the Group acquired a further 15% interest in Foods Connected
Ltd taking its total holding to 65% (see note 12) and the financial position
and performance of the business was fully consolidated from this date. The
Group's existing joint venture interest was effectively disposed of at this
date with an exceptional gain of £2,701,000, being the difference between the
carrying value and fair value of the joint venture interest, recognised.
In 2021 the Group acquired the remaining 50% interest in Dalco Food BV (see
note 12) and the financial position and performance of the business was fully
consolidated from this date. The Group's joint venture interest was
effectively disposed of at this date with an exceptional gain of £6,837,000,
being the difference between the carrying value and fair value of the joint
venture interest, recognised.
Reorganisation Costs
During the period exceptional reorganisation costs of £3,893,000 have been
recognised by the Group. These costs resulted from on-going efficiency and
restructuring programs resulting in redundancies at a number of facilities
operated by the Group. An exceptional tax credit of £145,000 has been
recognised in respect of these costs.
Acquisition Costs
During the period the Group has recognised exceptional acquisition costs
relating primarily to the acquisition of Foppen in respect legal and
professional fees and other related costs of £1,204,000. In 2021 the business
recognised £2,226,000 of exceptional acquisition costs in respect to legal
and professional fees and £1,131,000 of exceptional finance costs related to
the agreement of short term acquisition bridge finance.
5 Finance income and finance costs
2022 2021
Group £'000 £'000
Finance income
Other interest income 356 10
Finance income 356 10
Finance costs
Bank borrowings (12,241) (5,132)
Interest on lease liabilities (8,758) (8,536)
Exceptional finance costs (note 4) - (1,131)
Other interest expense (3,769) (1,245)
Finance costs (24,768) (16,044)
Finance costs - net (24,412) (16,034)
6 Income tax expense
2022 2021
Group £'000 £'000
Current income tax
Current tax on profits for the period 13,697 12,646
Adjustments to tax in respect of previous periods 195 (2,322)
Total current tax 13,892 10,324
Deferred income tax
Origination and reversal of temporary differences (3,753) (3,342)
Adjustments to tax in respect of previous periods (17) 1,134
Total deferred tax (3,770) (2,208)
Income tax expense 10,122 8,116
Deferred tax charged directly to equity during the period in respect of
employee share schemes amounted to £1,031,409 (2021: charge £333,000).
Factors affecting future tax charges
The Group operates in numerous tax jurisdictions around the world and is
subject to factors that may affect future tax charges including transfer
pricing, tax rate changes and tax legislation changes.
The UK Government made a number of budget announcements on 3 March 2021. These
include confirming that the rate of corporation tax will increase to 25% from
1 April 2023. This new law was substantively enacted on 24 May 2021. Deferred
taxes at the balance sheet date have been measured using these enacted tax
rates and reflected in these financial statements.
The tax on the Group's profit before income tax differs (2021: differs) from
the theoretical amount that would arise using the standard rate of UK
Corporation Tax of 19% (2021: 19%) applied to profits of the consolidated
entities as follows:
2022 2021
£'000 £'000
Profit before income tax 29,614 47,398
Tax calculated at the standard rate of UK Corporation Tax 19% (2021: 19%) 5,627 9,006
Effects of:
Expense/(income) not deductible for tax purposes 1,074 (15)
Joint venture received net of tax (238) (471)
Adjustments to tax in respect of previous periods 178 (1,188)
Profits taxed at rates other than 19% (2021: 19%) 5,867 2,746
Impact of change in tax rates (398) (633)
Non-taxable gain on acquisition of JV (513) (1,299)
Unrelieved losses carried forward (444) -
Deferred tax recognised in reserves (1,031)
Other - (30)
Income tax expense 10,122 8,116
Adjustments to tax in respect of prior periods have resulted from changes in
assumptions in respect of deductible expenses and the application of capital
allowances.
7 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 period.
Diluted earnings per share are calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Group 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 Group'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.
2022 2021
Group Basic Diluted Basic Diluted
Profit attributable to owners of the parent (£'000) 17,706 17,706 37,143 37,143
Weighted average number of ordinary shares in issue (thousands) 89,234 89,234 82,456 82,456
Adjustment for share options (thousands) - 690 - 1,098
Adjusted weighted average number of ordinary shares (thousands) 89,234 89,924 82,456 83,554
Basic and diluted earnings per share (pence) 19.8 19.7 45.0 44.5
8 Dividends
2022 2021
Group and Company £'000 £'000
Final dividend in respect of 2021 paid 21.5p per ordinary share (2020: 19.0p) 19,143 15,561
Interim dividend in respect of 2022 paid 7.1p per ordinary share (2021: 8.2p) 6,349 6,740
Total dividends paid 25,492 22,301
The Directors propose a final dividend of 22.6p (2021: 21.5p) per share
payable on 30 June 2023 to shareholders who are on the register at 2 June
2023. This dividend totalling £20.2m (2021: £19.1m) has not been recognised
as a liability in these consolidated financial statements.
9 Property, plant and equipment
Land and buildings (including leasehold improvements) Plant and machinery Fixtures and fittings Motor vehicles Total
Group £'000 £'000 £'000 £'000 £'000
Cost
At 4 January 2021 97,523 443,243 20,498 172 561,436
Exchange adjustments (3,248) (19,497) (1,136) (8) (23,889)
Acquisition (note 12) 2,315 7,843 548 123 10,829
Additions 15,125 37,487 3,606 33 56,251
Exceptional impairment (note 4) - (7,049) - - (7,049)
Transfer 430 (769) (4,165) 3 (4,501)
Disposals (469) (260) (735) (15) (1,479)
At 2 January 2022 111,676 460,998 18,616 308 591,598
Accumulated depreciation
At 4 January 2021 30,350 224,905 15,333 2 270,590
Exchange adjustments (924) (10,560) (781) (7) (12,272)
Charge for the period 4,440 37,384 2,297 65 44,186
Exceptional impairment (note 4) - (672) - - (672)
Transfer - - (553) - (553)
Disposals (87) (192) (878) (12) (1,169)
At 2 January 2022 33,779 250,865 15,418 48 300,110
Net book amount
At 4 January 2021 67,173 218,338 5,165 170 290,846
At 2 January 2022 77,897 210,133 3,198 260 291,488
Cost
At 3 January 2022 111,676 460,998 18,616 308 591,598
Exchange adjustments 3,313 15,110 654 25 19,102
Acquisition (note 12) 6,040 11,443 1,263 81 18,827
Additions 6,484 44,946 3,591 119 55,140
Transfer - 496 100 - 596
Disposals (7) (1,171) (47) - (1,225)
At 1 January 2023 127,506 531,822 24,177 533 684,038
Accumulated depreciation
At 3 January 2022 33,779 250,865 15,418 48 300,110
Exchange adjustments 1,122 7,960 406 17 9,505
Charge for the period 7,623 36,529 2,712 121 46,985
Transfer - 496 100 - 596
Disposals (7) (717) (45) - (769)
At 1 January 2023 42,517 295,133 18,591 186 356,427
Net book amount
At 1 January 2023 84,989 236,689 5,586 347 327,611
The cost and net book amount of property plant and equipment in the course of
its construction included above comprise plant and machinery £26,877,000
(2021: £13,025,000).
Additions to property, plant and equipment include capitalised interest costs
of £Nil (2021: £725,000).
10 Intangible assets
Computer software Brand and customer relationships Goodwill Total
Group £'000 £'000 £'000 £'000
Cost
At 4 January 2021 10,980 22,560 47,582 81,122
Exchange adjustments (411) - - (411)
Acquisition (note 12) 158 12,519 21,900 34,577
Additions 1,526 - - 1,526
Transfer 4,501 - - 4,501
Disposals (3) - - (3)
At 2 January 2022 16,751 35,079 69,482 121,312
Accumulated amortisation
At 4 January 2021 3,420 7,631 - 11,051
Exchange adjustments (235) - - (235)
Charge for the period 1,468 2,702 - 4,170
Transfer 553 - - 553
Disposals (2) - - (2)
At 2 January 2022 5,204 10,333 - 15,537
Net book amount
At 4 January 2021 7,560 14,929 47,582 70,071
At 2 January 2022 11,547 24,746 69,482 105,775
Cost
At 3 January 2022 16,751 35,079 69,482 121,312
Exchange adjustments 19 - - 19
Acquisition (note 12) 2,849 37,452 21,105 61,406
Impact of finalising fair value of prior year acquisitions (note 12) - 9,440 (8,053) 1,387
Additions 1,867 - - 1,867
Transfer (596) - - (596)
At 1 January 2023 20,890 81,971 82,534 185,395
Accumulated amortisation
At 3 January 2022 5,204 10,333 - 15,537
Charge for the period 2,019 7,955 - 9,974
Transfer (596) - - (596)
At 1 January 2023 6,627 18,288 - 24,915
Net book amount
At 1 January 2023 14,263 63,683 82,534 160,480
Amortisation charges are included within administrative expenses in the income
statement.
Goodwill Impairment Testing
Goodwill includes Seachill UK Limited £44,000,000 (purchased 2017), SV
Cuisine Limited £2,789,000 (purchased 2021), Dalco £10,168,000 (purchased in
2021), Fairfax Meadow Limited £3,685,000 (purchased in 2021), Dutch Seafood
Company BV (Foppen) £17,805,000 (purchased in 2022) and Foods Connected Ltd
£3,300,000 (controlling interest purchased in 2022). Each business is
considered to be a separate cash generating units. The recoverable amount of
the cash generating units was based on a value-in-use basis using a discounted
cash flow model. For each cash generating unit the recoverable amounts
calculated exceeded their carrying value.
The key assumptions used in the calculations are projected EBITDA, projected
profit after tax, the pre-tax and post-tax discount rates and the growth rates
used to extrapolate cash flows beyond the projected period. EBITDA and profit
after tax are based on one-year budgets approved by the Board and longer term,
three year, projections based on past experience adjusted to take account of
the impact of expected changes to sales prices, volumes, business mix and
margin. Cash flows are discounted at a pre-tax discount rate of 9.6%-10%
(2021: 10%) with a growth rate of 2% (2021: 2%) used to extrapolate cash
flows. Discount rates and growth rates are calculated with reference to
external benchmarks and where relevant past experience.
Sensitivity to changes in assumptions
The calculation is most sensitive to changes in the assumptions used for
projected cash flow, the pre-tax discount rate and the growth rate. Management
considers that reasonably possible changes in assumptions would be an increase
in discount rate of 0.5%, a reduction in growth rate of 0.5% percentage point
or a 5% reduction in budgeted cash flow. The impact in running reasonable
sensitivities did not result in a material impairment in any of the CGU's
subject to impairment testing.
No indicators of impairment were identified in respect of other, amortised,
intangible assets and therefore no impairment review has been undertaken.
Goodwill acquired in the period
Goodwill and other intangible assets totalling £21,105,000 has been
provisionally recognised following the acquisitions of Foods Connected Ltd and
final numbers for Foppen Group with each forming separate cash generating
units in the period (see note 12). The individual cash generating units have
been tested for impairment in the 2022 financial period.
11 Leases
(i) Amounts recognised in the balance sheet
The balance sheet includes the following amounts relating to leases:
Lease: right of use assets Land & Buildings Equipment Vehicles Total
Group £'000 £'000 £'000 £'000
Opening net book amount as at 4 January 2021 231,420 1,106 2,609 235,135
Exchange Adjustments (9,945) (147) (108) (10,200)
Additions 2,739 2,418 420 5,577
Acquisition (note 12) 6,066 5,139 1,289 12,494
Remeasurements, reclassification and scope changes - (336) - (336)
Depreciation (16,339) (927) (1,161) (18,427)
Disposal of leased assets destroyed by fire (note 4) (2,168) (19) (52) (2,239)
Closing net book amount at 2 January 2022 and 3 January 2023 211,773 7,234 2,997 222,004
Exchange Adjustments 5,946 230 80 6,256
Additions 2,462 2,272 1,101 5,835
Acquisition (note 12) 3,106 - 108 3,214
Remeasurements, reclassification and scope changes 120 - (71) 49
Depreciation (17,105) (1,945) (1,730) (20,780)
Closing net book amount at 1 January 2023 206,302 7,791 2,485 216,578
Lease liabilities 2022 2021
Group £'000 £'000
Current 16,006 14,419
Non-current 230,152 228,977
246,158 243,396
Maturity analysis - contractual undiscounted cash flows 2022 2021
Group £'000 £'000
Less than one year 22,645 22,716
One to five years 86,449 79,010
More than five years 220,081 233,673
Total lease liabilities 329,175 335,399
(ii) Amounts recognised in the consolidated income statement
The income statement shows the following amounts related to leases:
Depreciation charge on right-of-use assets 2022 2021
Group £'000 £'000
Buildings 17,105 16,339
Plant & equipment 1,945 927
Vehicles 1,730 1,161
20,780 18,427
Interest expenses (included in finance costs) 8,758 8,536
Expenses relating to short-term leases (included in costs of goods sold and 748 136
administrative expenses)
Expenses relating to leases of low-value assets that have not been shown above - 3
as short-term (included in costs of goods sold and administrative expenses)
The total cash outflow for leases in 2022 was £24,387,000 (2021:
£17,307,000).
Variable Lease Payments
Leases with liabilities recognised of £9,476,000 (2021: £9,824,000),
accounting for 3.8% (2021: 4.0%) of total lease liabilities, are subject to
five yearly RPI linked rent reviews. These rent reviews are subject to a
minimum collar, the impact of which is included in the calculation of lease
liabilities and a maximum cap. If the impact of these variable lease payments
had been recognised, applying index levels as at 1 January 2023, lease
liabilities would have increased by 2022: £4,536,000 (2021: £1,895,000).
In addition, leases with liabilities recognised totalling £5,021,000 (2021:
£6,408,000), accounting for 2.0% (2021: 2.6%) of total lease liabilities, are
subject to annual CPI linked rent increases. If the impact of these variable
lease payments had been recognised, applying index levels as at 1 January
2023, lease liabilities would have increased by £1,054,000 (2021: £278,000).
12 Business combinations
2022
On 16 March 2022 the Group acquired 100% of the share capital of Dutch Seafood
Company BV (Foppen Group BV), a leading international producer of speciality
smoked salmon products.
On 7 July 2022 the Group completed the purchase of an additional 15% of Foods
Connected Ltd taking its interest from 50% to 65%. Foods Connected Ltd
provides Software Solutions for Supply Chain, Procurement, Food Safety,
Quality and CSR.
Dutch Seafood Company BV (Foppen) Foods Connected Ltd
Group £'000 £'000
Property, plant and equipment 16,792 71
Intangibles-Technology - 2,849
Brand and customer relationship intangibles 30,488 6,964
Lease: Right-of-use asset 3,214 -
Inventories 22,580 -
Trade and other receivables 13,556 1,231
Cash and cash equivalents - 230
Trade and other payables (13,334) (1,509)
Borrowings (56,938) -
Lease liabilities (3,214) -
Deferred tax (3,050) (1,882)
Derivative financial instruments (2,785) -
Goodwill 17,805 3,300
Fair value of assets acquired 25,114 11,254
Consideration
Paid on completion 25,114 -
Issue of shares - 1,688
Non-controlling interest - 3,939
Deemed fair value of existing 50% interest - 5,627
25,114 11,254
Dutch Seafood Company BV (Foppen)
The acquisition of Foppen improves the access for Hilton to the specialised
smoked salmon market with a presence in the USA, Canada, Netherlands and
Greece. The additional markets provide an opportunity for the Group to
diversify its geographic presence whilst leveraging best practices and cost
savings with the existing UK Seafood business.
Consideration for the acquisition of Foppen totalled £25,114,000 paid
entirely in cash.
Customer relationship intangibles have been recognised and relate to the
supply agreements and long-standing relationships that Foppen has with its
customers. Brand intangibles have been recognised in respect of the Foppen
trading name and other brands employed by the business. The fair value of
these intangible assets of £30,488,000 has been aggregated as they are
considered to be linked with their value each dependent on the other and will
be amortised over their useful economic lives of 5-10 years.
The value of other assets and liabilities reflect the amounts expected to be
realised or paid respectively.
Goodwill of £17,805,000 has been recognised and mainly relates to the
strategic benefits for Hilton of diversifying its product and geographic
portfolio.
In the period the Group has recognised exceptional acquisition-related costs
of £1,204,000 in respect of legal and professional and other related
activities associated with acquisition activity.
The Consolidated cash flow statement recognises a £82,052,000 for cash out
flow within investing activities for the acquisition of subsidiary. This
figure comprises £56,938,000 of debt repaid immediately on completion of the
acquisition as a result of the requirements of change of control clauses
within related bank facility agreements and the £25,114,000 cash
consideration paid to the vendors.
The acquired business contributed revenues of £86,073,000 and operating
profit of £4,300,000 to the group for the period from 16 March to 1 January
2023.
Foods Connected Ltd
Consideration for the acquisition of the 15% interest in Foods Connected Ltd
totalled £1,688,000 comprised of 170,305 Hilton Food Group plc shares at
Market Value taking the holding of Foods Connected to 65%. The acquisition of
Foods Connected provides an opportunity to deliver growth through new customer
agreements with retailers and manufacturers across Europe and Australia and
provides HFG control over the business.
As a result of the acquisition, and to allow full consolidation of Foods
Connected Ltd as a subsidiary the Group has recognised an exceptional gain of
£2,701,000 being the difference between the carrying value of its joint
venture interest at the date of acquisition and its fair value.
The fair value of the technology acquired was established following a review
undertaken by qualified personnel and reflects their existing use value.
The value of Intangible assets -technology used in the company's operations
have been reviewed and valued at £2,849,000.
The value of customer relationships have also been assessed with the support
of competent professionals. Customer relationships have been assessed to have
a fair value of £6,964,000 and a useful economic life of 22 years. The value
of other assets and liabilities reflect the amounts expected to be realised or
paid respectively.
Goodwill of £3,300,000 has provisionally been recognised in 2022. Residual
goodwill relates to the strategic benefits for Hilton of diversifying its
business and the know-how of Foods Connected Ltd's employees.
The value of other assets and liabilities reflect the amounts expected to be
realised or paid, respectively.
The acquired business contributed revenues of £2,876,000 and operating profit
of £262,000 to the group for the period from 7 July to 1 January 2023.
2021
Dalco Food BV Fairfax Meadow Europe Limited
Group £'000 £'000
Property, plant and equipment 6,047 6,782
Brand and customer relationship intangibles 10,193 11,766
Lease: Right-of-use asset 5,303 7,191
Inventories 8,142 7,982
Trade and other receivables 5,992 13,343
Trade and other payables (8,767) (16,782)
Borrowings (1,825) (8,504)
Lease liabilities (5,303) (7,094)
Deferred tax (3,175) (3,023)
Goodwill 10,168 3,685
Fair value of assets acquired 26,775 15,346
Consideration
Paid on completion 13,388 15,346
Deemed fair value of existing 50% interest 13,387 -
26,775 15,346
During 2021 the Group completed the purchase of the remaining 50% of Dalco
Food BV (Dalco) taking its interest from 50% to 100%. Dalco is a leading
producer of vegetarian and vegan proteins, supplying retail and food service
customers from its facilities in the Netherlands. The Group also acquired 100%
of the share capital of Fairfax Meadow Europe Limited (Fairfax Meadow) a
leading meat supplier to the UK foodservice sector.
Due to the timing of completion of the acquisition and the timing of other
acquisition activity undertaken by the Group in 2021, the assessment of the
fair values of assets and liabilities acquired was ongoing when the Group
reported its 2021 annual results and were therefore provisional.
Dalco Food BV
The acquisition of the remaining 50% of Dalco allowed the Group to take full
control of the business enabling it to diversify further and strengthen its
protein offering in the fast-growing vegan and vegetarian market.
Consideration for the acquisition of the 50% interest in Dalco totalled
£13,388,000 and comprised cash of £11,603,000, and Hilton Food Group plc
shares with a market value at the date of issue of £1,785,000.
Updated fair values are presented above and have now been finalised.
Goodwill of £10,168,000 has been recognised in 2022 compared to £18,967,000
recognised in 2021 and relates to the strategic benefits for Hilton of
diversifying its product portfolio into the vegan and vegetarian protein
market. The adjustment in Goodwill has gone to recognising Customer and Brand
relationship, uplifting the fair value of fixed assets and recognising a
deferred tax liability.
The fair value of property, plant and equipment acquired was established
following a review undertaken by qualified surveyors and reflects their
existing use value uplifting their fair value by £1,540,000 an increase of
£1,654,000 reported in 2021.
Customer relationship intangibles have been recognised and relate to the
supply agreements and long-standing relationships that Dalco has with its
customers. Brand intangibles have been recognised in respect of the Dalco
trading name. The fair value of these intangible assets of £10,193,000 (£Nil
2021) have been aggregated as they are considered to be linked with their
value each dependent on the other and will be amortised over their useful
economic lives of 5-10 years. As part of the transaction a deferred tax
liability of £2,933,000 has been recognised.
The value of other assets and liabilities reflect the amounts expected to be
realised or paid respectively.
Fairfax Meadow Europe Limited
The acquisition of Fairfax Meadow improves the access for Hilton to the
out-of-home channel, providing an opportunity for the Group to diversify into
the foodservice sector and contribute to the Group's sustainable growth.
Consideration for the acquisition of Fairfax Meadow totalled £15,346,000 paid
entirely in cash. This figure included £8,504,000 of debt acquired as part of
the acquisition of Fairfax Meadow Europe Limited that was immediately repaid
as a result of the requirements of change of control clauses within related
bank facility agreements.
Goodwill has arisen and mainly relates to the strategic benefits for Hilton of
diversifying its product portfolio into the food service sector.
The fair value of property, plant and equipment acquired was established
following a review undertaken by qualified surveyors and reflects their
existing use value.
Customer relationship intangibles have been recognised and relate to the
supply agreements and long-standing relationships that Fairfax Meadow has with
its customers. Brand intangibles have been recognised in respect of the
Fairfax Meadow trading name and other brands employed by the business. The
fair value of these intangible assets of £11,766,000 (£12,519,000 recognised
in FY 2021 accounts) have been aggregated as they are considered to be linked
with their value each dependent on the other and will be amortised over their
useful economic lives of 5-9 years. A corresponding increase in Goodwill has
been recognised.
The value of other assets and liabilities reflect the amounts expected to be
realised or paid respectively.
13 Borrowings
2022 2021
Group £'000 £'000
Current
Bank borrowings 28,279 224,732
Non-current
Bank borrowings 270,510 -
Total borrowings 298,789 224,732
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:
2022 2021
Currency £'000 £'000
UK Pound 79,878 65,198
Euro 88,432 18,277
Danish Kroner 837 1,118
Polish Zloty 9,666 5,384
Australian Dollar 93,162 106,903
New Zealand Dollar 26,814 27,852
298,789 224,732
Bank borrowings are repayable in quarterly instalments from 2022 - 2027 with
interest charged at SONIA (or equivalent benchmark rates) plus 1.95% - 2.10%.
Bank borrowings are subject to joint and several guarantees from each active
Group undertaking.
The Group has undrawn committed loan facilities of £106m (2021: £96.8m).
The undiscounted contractual maturity profile of the Group's borrowings is
described in a note to the full financial statements.
Group net debt is analysed as per note 15.
14 Cash generated from operations
2022 2021
Group £'000 £'000
Profit before income tax 29,614 47,398
Finance costs - net 24,412 16,034
Operating profit 54,026 63,432
Adjustments for non-cash items:
Share of post tax profits of joint venture (1,235) (1,925)
Depreciation of property, plant and equipment 46,985 44,186
Depreciation of leased assets 20,780 18,427
Impairment of property, plant and equipment - 6,377
Disposal of leased assets destroyed by fire - 2,239
Gain on early settlement of Belgium lease liabilities - (2,183)
Amortisation of intangible assets 9,974 4,170
Gain on acquisition of Foods Connected Ltd (2022) / Dalco BV (2021) (2,701) (6,837)
Loss/(gain) on disposal of non-current assets - 195
Adjustment in respect of employee share schemes (655) 2,725
Changes in working capital:
Inventories (23,741) (26,656)
Trade and other receivables (14,443) (23,116)
Trade and other payables 9,322 40,225
Cash generated from operations 98,312 121,259
The parent company has no operating cash flows.
15 Analysis and movement in net debt
This section sets out an analysis of net debt and the movements in net debt
for each of the periods presented.
2022 2021
Group £'000 £'000
Cash and cash equivalents 87,224 140,170
Borrowings (including overdrafts) (298,789) (224,732)
Net bank debt (211,565) (84,562)
Lease liabilities (246,158) (243,396)
Net debt (457,723) (327,958)
Cash/other financial assets Borrowings (including overdrafts) Net bank debt Lease liabilities Net debt
Net debt reconciliation £'000 £'000 £'000 £'000 £'000
At 4 January 2021 123,816 (245,987) (122,171) (245,245) (367,416)
Cash flows 19,750 79,819 99,569 6,588 106,157
Lease additions - - - (5,549) (5,549)
Acquisition * - (10,328) (10,328) (12,397) (22,725)
Repaid on acquisition * 8,504 8,504 - 8,504
New borrowings* - (65,237) (65,237) - (65,237)
Exchange adjustments (3,396) 8,497 5,101 10,652 15,753
Other changes - - - 2,555 2,555
At 2 January 2022 140,170 (224,732) (84,562) (243,396) (327,958)
Cash flows (54,576) 228,565 173,989 15,631 189,620
Lease additions - - - (5,835) (5,835)
Acquisition - (56,938) (56,938) (3,214) (60,152)
Repaid on acquisition - 56,938 56,938 - 56,938
New borrowings - (295,790) (295,790) - (295,790)
Exchange adjustments 1,630 (6,832) (5,202) (9,306) (14,508)
Other changes - - - (38) (38)
At 3 January 2023 87,224 (298,789) (211,565) (246,158) (457,723)
* Restated
16 Related party transactions and ultimate controlling party
The Directors do not consider there to be one ultimate controlling party. The
companies noted below are all deemed to be related parties by way of common
Directors.
Sales and purchases made on an arm's length basis on normal credit terms to
related parties during the period were as follows:
Group 2022 2021
Sales £'000 £'000
Sohi Meat Solutions Distribuicao de Carnes SA - fee for services 3,190 3,175
Sohi Meat Solutions Distribuicao de Carnes SA - recharge of joint venture 409 331
costs
Dalco BV - 438
Agito Holdings Limited 464 -
Group 2022 2021
Purchases £'000 £'000
Agito Holdings Limited 259 -
Foods Connected Ltd - 568
Amounts owing from related parties at the year end were as follows:
Owed from related parties
2022 2021
Group £'000 £'000
Foods Connected Ltd - 4
Agito Holdings Limited 464 -
Sohi Meat Solutions Distribuicao de Carnes SA 374 561
838 565
Amounts owing to related parties at the period end were as follows:
Owed to related parties
2022 2021
Group £'000 £'000
Foods Connected Ltd - 127
Agito Holdings Limited 259 -
Sohi Meat Solutions Distribuicao de Carnes SA 55 9
314 136
Transaction by Directors
On 5 July 2022 the Group acquired a further 10% interest in its subsidiary
Hilton Foods Solutions Limited from Group CEO Philip Heffer, the consideration
for this acquisition was £1,151,000 and takes the Group's interest in Hilton
Foods Solutions Limited to 65%.
In the prior period the group settled the deferred consideration liability
recognised in respect of the acquisition of SV Cuisine Limited, making a
payment of £2.5m. The acquisition of SV Cuisine Limited was considered to be
a related party transaction as prior to acquisition Philip Heffer, The Hilton
Foods Group CEO, Graham Heffer and Robert Heffer, both directors of the
Group's subsidiary Hilton Food Solutions Limited, had each held a 30%
shareholding in SV Cuisine Limited.
17 Alternative Performance Measures
The Group's performance is assessed using a number of alternative performance
measures (APMs).
The Group's alternative profitability measures are presented before
exceptional items, amortisation of certain intangible assets and depreciation
of fair value adjustments made to property plant and equipment acquired
through business combinations and the impact of IFRS 16 - Leases.
The measures are presented on this basis, as management uses these measures to
assess business performance internally and therefore believe they provide
useful additional information about the Group's performance and aids a more
effective comparison of the Group's underlying trading performance from one
period to the next.
Adjusted profitability measures are reconciled to unadjusted IFRS results on
the face of the income statement below.
Reported Add back: IFRS 16 Depreciation and interest Less: IAS 17 Lease accounting costs Reported excluding IFRS 16 Exceptional items Add back: Amort & depn of acquisition fair value adjustments Adjusted
52 weeks ended 1 January 2023 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Operating profit - excluding exceptional items 65,922 20,780 (23,815) 62,887 - 8,257 71,144
Exceptional items (11,896) - - (11,896) 11,896 - -
Operating profit 54,026 20,780 (23,815) 50,991 11,896 8,257 71,144
Net finance costs (24,412) 8,758 - (15,654) - - (15,654)
Profit before income tax 29,614 29,538 (23,815) 35,337 11,896 8,257 55,490
Profit for the period 19,492 28,215 (23,815) 23,892 11,751 6,370 42,013
Less non-controlling interest (1,786) (3) - (1,789) - - (1,789)
Profit attributable to members of the parent 17,706 28,212 (23,815) 22,103 11,751 6,370 40,224
Depreciation and amortisation 77,769 (20,780) - 56,989 - (8,257) 48,732
EBITDA 131,795 - (23,815) 107,980 11,896 - 119,876
Earnings per share pence pence pence
Basic 19.8 24.8 45.1
Diluted 19.7 24.6 44.7
Reported Add back: IFRS 16 Depreciation and interest Less: IAS 17 Lease accounting costs Reported excluding IFRS 16 Exceptional items Add back: Amort & depn of acquisition fair value adjustments Adjusted
52 weeks ended 3 January 2022 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Operating profit - excluding exceptional items 70,482 18,214 (17,907) 70,789 - 2,778 73,567
Exceptional items (7,050) 56 - (6,994) 6,994 - -
Operating profit 63,432 18,270 (17,907) 63,795 6,994 2,778 73,567
Net finance costs (16,034) 8,498 - (7,536) 1,131 - (6,405)
Profit before income tax 47,398 26,768 (17,907) 56,259 8,125 2,778 67,162
Profit for the period 39,282 24,037 (17,907) 45,412 5,009 2,250 52,671
Less non-controlling interest (2,139) (7) - (2,146) - - (2,146)
Profit attributable to members of the parent 37,143 24,030 (17,907) 43,266 5,009 2,250 50,525
Depreciation and amortisation 75,596 (20,489) - 55,107 (6,377) (2,778) 45,952
EBITDA 139,028 (2,219) (17,907) 118,902 617 - 119,519
Earnings per share pence pence pence
Basic 45.0 52.5 61.3
Diluted 44.5 51.8 60.5
The depreciation and amortisation figure includes £nil (2020: £1,197,000)
amortisation of contract assets charged to revenue and adds back a loss on
disposal of £195,000 (2020: gain £40,000).
Segmental operating profit reconciles to adjusted segmental operating profit
as follows:
Reported Add back: IFRS 16 Depreciation and interest Less: IAS 17 Lease accounting costs Reported excluding IFRS 16 Exceptional items Add back: Amort & depn of acquisition fair value adjustments Adjusted
52 weeks ended 1 January 2023 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Europe 33,316 8,669 (9,584) 32,401 9,014 8,257 49,672
APAC 28,825 12,111 (14,231) 26,705 - - 26,705
Central costs (8,115) - - (8,115) 2,882 - (5,233)
Total 54,026 20,780 (23,815) 50,991 11,896 8,257 71,144
Reported Add back: IFRS 16 Depreciation and interest Less: IAS 17 Lease accounting costs Reported excluding IFRS 16 Exceptional items Add back: Amort & depn of acquisition fair value adjustments Adjusted
52 weeks ended 2 January 2022 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Europe 52,307 6,393 (6,684) 52,016 6,994 2,778 61,788
APAC 21,716 11,877 (11,223) 22,370 - - 22,370
Central costs (10,591) - - (10,591) - - (10,591)
Total 63,432 18,270 (17,907) 63,795 6,994 2,778 73,567
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