TIDMHFG
RNS Number : 5808U
Hilton Food Group PLC
07 April 2021
7 April 2021
Hilton Food Group plc
Successful delivery in Australia and continued strategic
growth
Hilton Food Group plc, the leading specialist international food
packing business, today announces its preliminary results for the
53 weeks ended 3 January 2021.
Financial highlights
2020 2019 Change
----------------------
53 weeks 52 weeks 53 weeks 52 weeks
to 3 January to 29 December reported constant
2021 2019 currency
Volume(1) (tonnes) 469,110 371,715 26.2% 23.8%
Revenue GBP2,774.0m GBP1,814.7m 52.9% 50.0%
Adjusted results (2)
Adjusted operating profit GBP67.0m GBP54.7m 22.5% 20.0%
Adjusted profit before tax GBP61.1m GBP49.7m 22.8% 20.2%
Adjusted basic earnings per
share 55.4p 46.0p 20.4% 18.0%
IFRS results
Operating profit GBP66.9m GBP55.8m 19.9%
Profit before tax GBP54.0m GBP43.2m 25.2%
Basic earnings per share 48.6p 40.5p 20.0%
Cash flows from operating
activities GBP91.7m GBP70.3m 30.5%
Net bank debt(3) GBP122.2m GBP86.8m
Dividends paid and proposed
in respect of the year 26.0p 21.4p 21.5%
Notes
1 Volume includes 50% share of the Australian, Portuguese and Dutch joint
venture activities
2 Adjusted results represent the IFRS results before deduction of acquisition
intangibles amortisation and exceptional items and also IFRS 16 lease
adjustments as detailed in the Alternative performance measures note
15. Unless otherwise stated financial metrics in the Chairman's statement,
Chief Executive's summary and Performance and financial review refer
to the Adjusted results
3 Net bank debt represents borrowings less cash and cash equivalents
excluding lease liabilities
Strategic highlights
-- Turnover up 50.0%* with strong growth in Australia arising from:
o Joint venture transition period concluded with purchase of assets
relating to the joint venture
o A full year of the state-of-the art facility in Brisbane, Queensland
-- New facility opened in Belgium for Ahold Delhaize with volume ramp
up under way
-- New Zealand facility scheduled to open in Q3 this year
-- Committed to setting science-based target through the Science Based
Targets initiative and signed the Business Ambition for 1.5degC pledge
to net-zero by 2050
-- Continued growth in protein diversification into plant-based, seafood
and convenience foods
Operating highlights
-- Strong response to Covid-19 ensuring continuous supply to our retailer
partners, keeping our factories open and our colleagues safe
-- Volume growth of 23.8%* within which Australia grew 107.9%* and Europe
grew 8.5%*
-- Adjusted operating profit GBP67.0m up 20.0%* and basic earnings per
share 55.4p up 18.0%*
-- Strong operating cash generation of GBP91.7m up 30.5% supporting a
robust balance sheet
-- Significant GBP95.5m investment in facilities to support future growth
* On a 52 week constant currency basis
Commenting on the results Chairman Robert Watson OBE, said:
"I am extremely proud of the commitment and resilience shown by
the entire Hilton team during 2020 to adapt quickly to the
challenges caused by Covid-19 in order to safeguard our people,
keep our facilities open and support our customers. This response
underpinned a strong performance with both volume and profit growth
and we concluded our joint venture transition period in Australia
and purchase of the related joint venture assets while marking our
one year anniversary of the opening of our Queensland facility. In
Europe we set up a new facility in Belgium during the year to
supply Delhaize and continued to further diversify our product
offering in the plant-based, seafood and convenience categories. As
with all businesses there remain some uncertainties concerning the
full impact of Covid-19, including potential recessionary risks,
but our robust and sustainable business model and wide geographical
spread make us believe we are well placed to meet any future
challenges."
Enquiries
Hilton Food Group Tel: +44 (0) 1480 387214
Philip Heffer, Chief Executive Officer
Nigel Majewski, Chief Financial Officer
Citigate Dewe Rogerson Tel: +44 (0) 207 638 9571
Angharad Couch
Ellen Wilton
This announcement contains inside information.
Chairman's introduction
Feeding the nation during a global pandemic
The Covid-19 outbreak continues to present major challenges
across the globe with ongoing uncertainty over its longevity and
impact. We have therefore continued to partner with grocery
retailers to help ensure the nation is fed. As part of the global
food supply chain we were tasked with protecting our people,
keeping our facilities open and supporting our retailer partners.
All of our facilities remained fully operational and without
interruption throughout the year. Lockdown including travel
restrictions resulted in more cooking at home thereby creating
higher demand for our products. Hilton's performance has therefore
been a continuation of our business growth albeit at an increased
level of activity together with specific measures introduced to
manage our exposure to the virus. There has been continuous
communication with key suppliers to ensure the continued supply of
goods and services as well as alignment with our customers in our
response. We are extremely proud of the commitment and resilience
shown by the entire Hilton team to adapt quickly to the challenges
caused by Covid-19 in order to safeguard our people, keep our
facilities open and support our customers.
The health and wellbeing of our people is paramount. We
established all necessary protocols to protect them and minimise
contact, prioritising those that are most vulnerable to Covid-19.
Travel by our colleagues was strictly managed and visitors
minimised as were all movements within our facilities. Our
office-based staff were able to quickly switch to effective remote
working from home being supported as required including use of
virtual meeting software with minimal business disruption. The
introduction of these measures increased our costs although this
was partly offset by lower travel costs.
We have not sought or received any governmental assistance or
support including no use of furlough in our production facilities.
There have been no redundancies and no Covid-related changes to
employee pay and conditions, save that we have continued to support
our employees during self-isolation. In addition, there have been
no commercial changes in trading with our suppliers and customers.
We are dependent on our key suppliers to maintain a continued
supply of raw material and packaging materials and we are in daily
contact with them to manage availability and identify key critical
product lines which must be delivered and those that could be
postponed.
Strategic progress
We have continued to make good progress with our strategic
growth initiatives expanding both geographically and across the
proteins . Our working relationship with Woolworths in Australia
has evolved further with the end of the joint venture transition
period and purchase of the assets relating to the joint venture. We
reached agreement with Delhaize, a leading retailer in Belgium, to
pack all its red meat requirements and operations started from an
existing site in October 2020. This project represents a further
extension of our working relationship with Ahold Delhaize.
Development of our new facility in New Zealand is scheduled to open
in Q3 this year. Our joint ventures continue to perform well with
Dalco adding new customers and extending product ranges into new
categories such as convenience foods and ready meals. Foods
Connected continues to innovate and improve its software solutions
offering with supply chain mapping a major focus area to help build
greater transparency and developing a traceability tool for use in
multiple supply chains.
We continue to successfully execute our strategy to grow and
diversify and 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 2020 volumes grew strongly in Australia as well as
benefitting from the shift to home consumption arising from the
pandemic maintaining a trend of continuous growth achieved in every
year since Hilton's flotation in 2007. There was strong growth in
operating profit and earnings per share despite Covid related
costs. We continued to invest in people and infrastructure to
support future growth across the Group.
Hilton generated strong operating cash flows during 2020 with,
as expected, further significant investment in our facilities to
increase capacity, improve operational efficiency and offer
innovative solutions to our retailer partners. Hilton remains
financially strong with significant cash balances and undrawn
committed bank facilities operating well within our banking
covenants.
Dividend policy
The Group has maintained a progressive dividend policy since
flotation. The Board is satisfied that the Group has adequate
headroom under its existing facilities and that it is appropriate
to continue to operate this dividend policy. With the proposed
final dividend of 19.0p per ordinary share , total dividends in
respect of 2020 will be 26.0p per ordinary share, an increase of
21.5% 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 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.
I was delighted to welcome Rebecca Shelley to the Hilton Board
as an Independent Non-Executive Director on 1 April 2020. Her
market-facing investor relations and communications skills and
experience in food and retail sectors further strengthens our
capabilities. I would like to thank my colleagues on the Board for
their support, counsel and expertise during the year.
We remain committed to achieving good governance balanced
against our desire to preserve an agile and entrepreneurial
approach.
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
Sustainability is at the heart of how we do business. We are
actively engaging in dialogue with internal and external
stakeholders, including NGOs, in order to ensure that our strategy
is delivering and our reporting is clear and transparent. Globally
the demands required by society in order to deliver a balanced,
healthy and sustainable food supply chain are continuing to focus
our attention. As a business we are committed to rising to these
challenges and delivering for our customers. Our commitments
include reducing the weight, and creating circular recycling of our
packaging, achieving verified zero net deforestation for our raw
materials, setting science-based targets to achieve net zero carbon
across all of the food types we produce, and delivery of the UN
Sustainable Development Goals relating to food produced on land and
from the oceans.
Outlook and current trading
Hilton's operating performance since the beginning of 2021 has
been in line with the Board's expectations. We continue to explore
opportunities for further expansion in our domestic and overseas
markets.
The Covid-19 outbreak continues to present major challenges
across the globe and represents an ongoing risk for all our
businesses. We can be confident that, with the roll-out of a
vaccination programme, it should be possible during 2021 to start
to ease the necessary measures we have introduced to manage our
exposure to, and mitigate the impact of, this pandemic.
Hilton was not significantly impacted by the UK's departure from
the EU.
Our short and medium term growth prospects are underpinned by
previously announced new facilities in Belgium and New Zealand 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.
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 24 May 2021 at noon. Please refer to our website
at
www.hiltonfoodgroupplc.com/en/investors/shareholder-meeting-documents/
for further guidance which will be regularly updated as the AGM
date approaches. Once again I would strongly encourage all
shareholders to submit their proxy votes.
Robert Watson OBE
Chairman
6 April 2021
Chief Executive's summary
Managing through the pandemic
I would like to thank our employees for their extraordinary
dedication and resilience during these most challenging and
unprecedented times. I continue to be amazed and proud of the
energy our teams always deliver and there can be no doubt that
every one of our employees has gone the extra mile throughout the
Covid-19 pandemic.
It is with much sadness that I announce the loss of two
colleagues earlier this year in Hilton Seafood. Our thoughts are
very much with their families who we continue to support at this
most difficult of times. We also pass on our heartfelt condolences
to all of our colleagues who have lost loved ones during this
dreadful pandemic.
Strategic objectives
Our strategy continues to be to support our customers' brands
and their development in local markets thereby achieving long-term
sustainable customer and shareholder value through:
-- Growing volumes and extending product ranges supplied and services
provided to its existing customers;
-- Optimising use of assets and investing in new technology to deliver
competitive advantage to our customers;
-- Maintaining a vigilant focus on food safety and integrity and
reducing unit costs, while improving product quality and service
provision; and
-- Entering new territories and markets either with new customers
or in partnership with our existing customers.
This approach combined with a strong reputation, well-invested
modern facilities and a robust balance sheet has generated growth
over many years. We will continue to pursue both geographical
expansion and range extension, whilst at the same time actively
developing, enriching, deepening and expanding the scope of our
existing business partnerships, playing a full and proactive role
in supporting our customers and the successful development of their
brands. We have successfully expanded our product range into new
proteins and categories such as seafood, vegetarian, sous vide,
food service and fresh convenience foods. We are responding to the
Covid-19 challenge of protecting our people, feeding the nation and
supporting the demands of our customers.
Business model
The Hilton business model is well proven and sustainable, whilst
being relatively simple and straightforward. We build and operate
large scale, extensively automated and robotised food processing,
packing and logistics facilities for major international retailers
largely on a dedicated basis. Through economies of scale we are
able to secure significant efficiency savings for our customers
whilst retaining a competitive margin. Our business is based on a
total partnership approach with customers and suppliers forged over
many years. The wide geographical spread of the Group's operations
is a significant strength of our business model. Hilton is well
placed in the current Covid climate as we almost exclusively serve
the retail sector.
We operate facilities in eight European countries and three
facilities in Australia, each run by a local management team
enhanced by specialist central leadership, expertise, advice and
support. Our businesses operate under the terms of long-term supply
agreements with our retailer partners, either on a cost plus,
packing rate or volume-based reward basis. These contractual
arrangements, combined with our customer dedication, serve to
maximise achievable volume throughput whilst minimising unit
packing costs thereby delivering value to our customers. In
Portugal and the Netherlands, facilities are operated under joint
venture companies in which we share the profits. Products from our
facilities are sold in fourteen European countries and
Australia.
Raw materials are sourced, in conjunction with our retail
partners, from a combination of local sources and a wide
international base of proven suppliers. It is then processed,
packed and delivered to the retailers' distribution centres or
stores. Our plants are highly automated and use advanced robotics
for the storage of raw materials and finished products. Robotics
technology has been extended in recent years both in the production
environment and to the sorting of finished products by retailer
store order, achieving material supply chain efficiencies for our
customers.
We seek to keep ourselves at the forefront of the food packing
industry, including becoming more sustainable and environmentally
friendly, which helps ensure our continued competitiveness. We
constantly look to drive efficiencies, always maintaining a
pipeline of clear identifiable cost reduction initiatives and an
open minded approach designed to continually challenge the status
quo. We consider our modern, very well-invested facilities to be a
key factor in keeping unit packing costs as low as possible. We
invest continuously across all areas of our business, including raw
materials sourcing, packaging materials design, increased
processing efficiency and storage solutions and updating our IT
infrastructure. Group capital expenditure over the last 5 years
totalled GBP316m.
Under the long-term supply agreements we have in place with our
customers, the parameters of our revenue are clearly defined. As
well as income derived from the supply of retail packed food
products, there are also provisions whereby our income can be
increased or decreased subject to achievement of certain pre-agreed
and pre-defined key performance measures and targets designed to
align our objectives with those of our customers.
We are a committed and loyal partner with a continuing record of
delivering value through quality products with the highest levels
of food safety, traceability and integrity, whilst providing a
range of services which enable our customers to evolve and improve
their food supply chain management. Our customer base comprises
high quality retailers and our in-depth understanding of our
customers' needs, together with those of their consumers, enables
us to play an active role in managing their food supply chains
whilst providing agile solutions to supply chain challenges as they
arise. As our customers' markets change and competition increases,
we need to keep a constant focus on the challenges they face so we
can put forward flexible solutions, together with continuing
increases in efficiency and cost competitiveness. This flexible
approach and understanding of our local markets remains one of our
core strengths.
As well as our ability to provide excellent execution locally,
we also have at our disposal a wide and deep expertise on a number
of areas of specialism, such as engineering, new product
development, food related IT applications, category management
support, logistics and market intelligence. We are able to apply
these skills to a number of markets to support our customers in a
cost-effective way.
Business development
The Group's expansion is based on its established and proven
track record, international reputation and experience and the
recognised success of the close partnerships we have forged and
maintained with successful retail partners over many years.
Hilton's business model has proved successful in Europe and
Australia supplemented by targeted acquisitions. We have
demonstrated that this business model is capable of being
successfully transferred into new countries, adapted with our local
customers to meet their specific requirements.
2020 Performance overview
2020 saw a continuation of strong year-on-year sales and volume
growth driven by both expansion as well as the shift to home
consumption arising from the Covid pandemic.
Good progress was made in Europe across all our red meat, fish,
vegetarian/vegan and fresh food categories benefitting from
consumers eating out less often due to the ongoing impact of Covid.
There was a positive performance in the UK. We have started to pack
chicken in Sweden and Denmark. A facility in Belgium opened in
October and is proceeding in line with our expectations.
Performance improved at our SV Cuisine business and the Dalco joint
venture continues to perform strongly.
In Australia we successfully rolled out the Queensland facility
increasing volumes to targeted levels leading to strong revenue
growth. The joint venture was successfully transitioned with the
consequence that sales in the second half of the year from the two
relevant facilities were recognised on a fully consolidated basis
including attributable turnover. The development of the New Zealand
facility is scheduled to open in the third quarter of 2021.
Overall volume which includes the 50% share of the Australian,
Portuguese and Dutch joint venture activities increased by 26.2% to
469,110 tonnes (2019: 371,715 tonnes). In 2020 72% of the Group's
volumes were produced in countries outside the UK. Adjusted
operating profit increased by 22.5% although the overall operating
margin decreased to 2.4% (2019: 3.0%) which is mainly attributable
to the recognition of revenue from the two Australian joint venture
facilities following their transition to Hilton ownership and
higher Australian raw material prices. The margin per kg was
slightly lower at 14.3p (2019: 14.7p). Our customer service level
remained best in class at 95.4% (2019: 96.8%) reflecting an
outstanding performance during the challenging Covid period.
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
2020 the impact of average exchange rates on our results compared
with 2019 was marginal.
Sustainability
We demonstrated significant progress towards our targets during
2020. On our journey to sustainable and circular recycling of our
packaging materials we have overachieved our target for recycled
content and 98% of our beef mince is now packed in recyclable mono
plastic trays. We have committed to set a science-based target
through the Science Based Targets initiative and signed the
Business Ambition for 1.5degC pledge, directing our efforts towards
a net zero carbon footprint before 2050. We helped negotiate a 2020
cut-off for all forms of deforestation within the Brazilian supply
chain for salmon feed, and for it to be verified by robust third
party verification processes.
Segment performance
Europe
Adjusted operating profit of GBP62.6m (2019: GBP 55.2 m) on
turnover of GBP 1,989.6 m (2019: GBP1,724.9m)
This operating segment covers the Group's businesses in the UK,
Ireland, Holland, Belgium, Sweden, Denmark and Central Europe
together with joint ventures in the UK, Holland and Portugal.
Volume growth was 8.5% on a 52 week basis driven primarily by a
full year of increased UK meat participation and higher demand due
to increased consumption at home due to Covid. Sales on a 52 week
constant currency basis grew by 12.6% and operating profit by 10.6%
reflecting the higher volumes. Operating margins eased slightly to
3.1% (2019: 3.2%) although operating profit margin per kg increased
to 18.0p (2019: 17.6p).
Australasia
Adjusted operating profit of GBP17.2m (2019: GBP9.6m) on
turnover of GBP784.4m (2019: GBP89.8m)
In Australia the Group operated a joint venture with Woolworths
in the first half of 2020 under which it earned a 50% share of the
agreed service fees based on the volume of retail packed meat
delivered to Woolworths' stores produced by its plants in Bunbury,
Western Australia and Melbourne, Victoria. In 2018 we took full
operational control of these plants and, from July 2020,
transitioned to Hilton's ownership through the purchase of the
assets relating to the joint venture.
Performance was driven by volume growth of 107.9% on a 52 week
basis attributable to a full year of our new Brisbane facility.
Constant currency sales on a 52 week basis increased by 769% which
is attributable to the additional Brisbane volume and also the
recognition of revenue from the two Australian joint venture
facilities following their transition to Hilton ownership.
Operating profit increased to GBP17.2m (2019: GBP9.6m) although the
operating profit margin per kg decreased to 14.2p (2019: 16.7p)
reflecting the transition from the joint venture to full
ownership.
Resourcing for growth: culture and people
Our people are at the heart of our success and they have risen
exceptionally to the challenges of 2020. Against the backdrop of
the Covid-19 pandemic our teams have dedicated themselves to
feeding our nations families. In partnership with our customers we
have ensured that supermarket shelves were stocked and record
volumes delivered.
Our teams across the countries we operate in, have worked
tirelessly to keep our people safe. We have continually reviewed
our policies and procedures through the pandemic. We have invested
in our facilities, systems and equipment and we have ensured that
our people are fully engaged as we have implemented new ways of
working. I am proud of how we have worked as one team in sharing
best practice across our international operating companies and
quickly introduced innovative approaches in these most challenging
times.
I am delighted that this year's engagement survey results have
improved against what was a strong level of engagement in 2019. Our
surveys provide invaluable feedback on which our operating
companies base plans that continuously improve employee
satisfaction and our employee value proposition.
We have also continued to invest in our people's development
through our leadership development programmes and provide all our
teams with the training they need to perform their roles safely and
effectively.
We are committed to providing an inclusive working environment
where everyone feels valued, respected and able to fulfil their
potential. We recognise that people from different backgrounds,
countries and experiences bring tremendous benefits to our business
and each other. During 2020 in collaboration with leaders and
colleagues across our business we developed our inclusion and
diversity strategy. As part of that strategy I am pleased to
announce that in 2021 we will become a strategic sponsor of Meat
Business Women the global professional networking movement for
progressive women working in the meat sector. The Group currently
employs over 5,300 colleagues across Europe and Asia Pacific.
We work as "one team" with local empowered leadership teams
dedicated to the needs of our customers and equipped with excellent
local consumer and market insight. These teams provide flexible and
rapid support which has been a key strength in these pandemic
conditions. Our local teams are supported by our Group capability
which provides specialist expertise and support, enables the
sharing of best practice and business growth.
The Board fully understands and appreciates just how much our
progress relies on the effort, personal commitment, enthusiasm,
enterprise and initiative of our employees. I would like to take
this opportunity, on behalf of the Board, to personally thank them
all for both for their dedicated efforts during 2020 and their
continuing commitment to the Group's ongoing growth and
development.
Past and future trends
Over recent decades major retailers have progressively
rationalised their supply base through large scale, centralised
packing solutions capable of producing private label packed fresh
food products. This achieves lower costs with 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.
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
6 April 2021
Performance and financial review
Summary of Group performance
This performance and financial review covers the main highlights
of the Group's financial performance and position in 2020. Hilton's
overall financial performance saw continued strong growth in
volumes, sales, profitability and basic earnings per share. Cash
flow generation was strong supporting our ongoing significant
investment in facilities.
Basis of preparation
The Group is presenting its results for the 53 week period ended
3 January 2021, with comparative information for the 52 week period
ended 29 December 2019. 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
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
The Board uses adjusted profit before IFRS 16, acquired
intangibles amortisation and exceptional items to measure
performance as detailed in the Alternative performance measures
note 15 and considers this metric better reflects the underlying
performance of the business. The adjustment for acquisition
intangibles amortisation of GBP2.4m (2019: GBP2.4m) is in
connection with the 2017 Seachill acquisition. Unless otherwise
stated financial metrics in the Financial highlights, Chairman's
introduction, Chief Executive's summary and this Performance and
financial review refer to the adjusted results.
2020 Financial performance
Volume and revenue
Volumes, which include 50% share of the Australian, Portuguese
and Dutch joint ventures activities, grew by 26.2% (23.8% on a 52
week basis) in the year driven by strategic growth in Australia
with higher UK volumes and higher demand due to increased
consumption at home due to Covid also contributing. Additional
details of volume growth by business segment are set out in the
Chief Executive's summary. Revenue increased 52.9% and by 50.0% on
a 52 week constant currency basis representing the volume growth
and also the recognition of revenue from the two Australian joint
venture facilities following their transition to Hilton
ownership.
Australia was a significant driver of top line growth where
volume grew by 107.9% with 61.7% of this from a full year of our
new Brisbane facility. Constant currency sales on a 52 week basis
increased by 769% of which 408% is attributable to the additional
Brisbane volume and 361% from the recognition of revenue from the
two joint venture facilities following their transition to Hilton
ownership.
Operating profit and margin
Operating profit of GBP67.0m (2019: GBP54.7m) was 22.5% higher
than last year and 20.0% higher on a 52 week constant currency
basis driven by both expansion as well as the shift to home
consumption arising from the Covid pandemic. IFRS operating profit
was 19.9% higher at GBP66.9m (2019: GBP55.8m). The operating profit
margin in 2020 declined to 2.4% (2019: 3.0%) mainly due to the
recognition of revenue from the two Australian joint venture
facilities following their transition to Hilton ownership and
higher Australian raw material prices. The operating profit per
kilogram of packed food sold was little changed at 14.3p (2019:
14.7p).
Net finance costs
Net finance costs increased to GBP5.9m (2019: GBP5.0m)
reflecting higher borrowings that financed our expansion programme.
Interest cover in 2020 was unchanged at 11 times (2019: 11 times).
IFRS net finance costs were GBP12.8m (2019: GBP12.6m).
Taxation
The taxation charge for the period was GBP13.5m (2019:
GBP10.1m). The effective tax rate was 22.0% (2019: 20.2%)
reflecting a change in the mix of profits taxed at different rates
in overseas countries, particularly Australia. The IFRS taxation
charge was GBP12.0m (2019: GBP8.0m) with an effective tax rate of
22.2% (2019: 18.5%).
Net income
Net income, representing profit for the year attributable to
owners of the parent of GBP45.3m (2019: GBP37.6m) was 20.7% higher
than last year and 18.2% higher on a 52 week constant currency.
IFRS net income was GBP39.7m (2019: GBP33.1m).
Earnings per share
Basic earnings per share 55.4p (2019: 46.0) was 20.4% higher
than last year and 18.0% on a 52 week constant currency basis. IFRS
basic earnings per share were 48.6p (2019: 40.5p). Diluted earnings
per share were 47.9p (2019: 40.1p).
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
EBITDA, which is used by the Group as an indicator of cash
generation, increased by 32.3% to GBP106.0m (2019: GBP80.1m)
reflecting the growth in profitability following significant
investment and by 29.8% on a 52 week constant currency basis. IFRS
EBITDA was GBP126.5m (2019: GBP102.4m).
Free cash flow and net debt position
Operating cash flow was strong in 2020 with cash flows from
operating activities of GBP91.7m (2019: GBP70.3m). IFRS free cash
inflow after capital expenditure of GBP95.5m and before dividends
and financing was GBP0.6m (2019: outflow GBP28.5m).
The Group closing net bank debt was GBP122.2m (2019: GBP86.8m)
reflecting bank borrowings of GBP246.0m net of cash balances of
GBP123.8m. Net debt including lease liabilities was GBP367.4m
(2019: GBP271.5m).
At the end of 2020 the Group had undrawn committed bank
facilities under its syndicated banking facilities of GBP51.5m
(2019: GBP71.1m). These banking facilities are subject to covenants
comprising minimum tangible net worth, net bank debt to EBITDA and
interest cover. Headroom under these covenants at the end of 2020
was at least 50% for all these metrics.
The resilience of the Group in the face of the uncertain
challenges presented by Covid-19 has been assessed by applying
significant downside sensitivities to the Group's cash flow
projections. Allowing for these sensitivities and potential
mitigating actions the Board is satisfied that the Group 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. The Board is satisfied that the Group has adequate
headroom under its existing facilities that it is appropriate to
continue to operate this dividend policy and has recommended a
final dividend of 19.0p per ordinary share in respect of 2020.
This, together with the interim dividend of 7.0p per ordinary share
paid in November 2020, represents a 21.5% increase in the full year
dividend, as compared with last year. The final dividend, if
approved by shareholders, will be paid on 2 July 2021 to
shareholders on the register on 4 June 2021 and the shares will be
ex dividend on 3 June 2021.
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:
2020 2019 Definition, method of calculation
and analysis
(53 weeks) (52 weeks)
Financial KPIs
------------ ------------ ----------------------------------------------
Year on year revenue growth expressed
as a percentage. The 2020 increase
mainly reflected volume growth and
the recognition of revenue following
the transition of the two Australian
Revenue growth (%) 52.9% 10.0% JV facilities to Hilton ownership.
------------ ------------ ----------------------------------------------
Adjusted operating 2.4% 3.0% Adjusted operating profit expressed
profit margin (%) as a percentage of turnover. The operating
profit margin % in 2020 was lower
mainly due to the recognition of revenue
following the transition of the two
Australian JV facilities to Hilton
ownership and higher Australian raw
material prices.
------------ ------------ ----------------------------------------------
Adjusted operating profit per kilogram
Adjusted operating processed and sold in pence. There
profit margin (pence is little change in 2020 compared
per kg) 14.3 14.7 with 2019.
------------ ------------ ----------------------------------------------
Adjusted earnings 106.0 80.1 Adjusted operating profit before depreciation
before interest, and amortisation. The increase reflected
taxation, depreciation the growth in profitability following
and amortisation significant investments.
(EBITDA) (GBPm)
------------ ------------ ----------------------------------------------
Free cash flow (GBPm) 0.6 (28.5) IFRS cash in/(out)flow before minorities,
dividends and financing. Operating
cash flow generation in 2020 increased
in line with EBITDA with facilities
capex spend at similar levels to 2019.
------------ ------------ ----------------------------------------------
Year end net bank debt as a percentage
of adjusted EBITDA. The increase is
Net debt / EBITDA due to higher bank borrowings used
ratio (%) 115.3% 108.4% to finance our expansion programme.
------------ ------------ ----------------------------------------------
Non-financial KPIs
------------ ------------ ----------------------------------------------
Growth in sales volumes 26.2% 7.8% Year on year volume growth. Volume
(%) growth was seen due to strategic growth
in Australia, higher UK volumes and
higher demand through increased consumption
at home due to Covid.
------------ ------------ ----------------------------------------------
Employee and labour 57.2 51.8 Labour cost of producing food products
agency costs (pence as a proportion of volume. The increase
per kg) reflects additional Covid related
costs, start-up costs in Belgium and
the Australia JV transition.
------------ ------------ ----------------------------------------------
Packs of product delivered as a %
of the orders placed. The customer
service level remained best in class
Customer service reflecting an outstanding performance
level (%) 95.4% 96.8% during the challenging Covid period.
------------ ------------ ----------------------------------------------
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 2021 financial year and its
longer term plans, including consideration of the principal risks
faced by the Group. The evolving Covid-19 outbreak has led to
increased demand for protein-based products produced by the Group.
We established business continuity plans and flexible supply models
in order to continue to meet this increased demand. The resilience
of the Group in the face of the uncertain challenges presented by
Covid-19 has been assessed by applying significant downside
sensitivities to the Group's cash flow projections. Allowing for
these sensitivities and potential mitigating actions the Board is
satisfied that the Group is able to continue to operate well within
its banking covenants and has adequate headroom under its existing
committed facilities which do not expire until October 2022. The
Directors are satisfied that the Company and the Group have
adequate resources to continue to operate and meet its liabilities
as they fall due for the foreseeable future, a period considered to
be at least 12 months from the date of signing these financial
statements. For this reason they continue to adopt the going
concern basis for preparing the financial statements.
The Group's bank borrowings as detailed in the financial
statements and the principal banking facilities, which support the
Group's existing and contracted new business, are committed. The
Group is in full compliance with all its banking covenants and
based on forecasts and sensitised projections is expected to remain
in compliance. Future geographical expansion which is not yet
contracted, and which is not built into our internal budgets and
forecasts, may require additional or extended banking facilities
and such future geographical expansion will depend on our ability
to negotiate appropriate additional or extended facilities, as and
when they are required.
The Group's internal budgets and forward forecasts, which
incorporate all reasonably foreseeable changes in trading
performance, are regularly reviewed 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 2023. A period of three years has been chosen for the
purpose of this viability statement as it is aligned with the
Group's three year plan, which is based on the Group's current
customers and does not incorporate the benefits from any potential
new contract gains over this period.
The Directors' assessment has been made with reference to the
Group's current position and strategy taking into account the
Group's principal risks, including those in relation to Covid-19,
and how these are managed. The strategy and associated principal
risks, which the Directors review at least annually, are
incorporated in the three year plan and such related scenario
testing as is required. The three year plan makes reasoned
assumptions in relation to volume growth based on the position of
our customers and expected changes in the macroeconomic environment
and retail market conditions, expected changes in food raw
material, packaging and other costs, together with the anticipated
level of capital investment required to maintain our facilities at
state-of-the-art levels. The three year plan assumes that bank
facilities are refinanced on comparable terms to existing
arrangements and the Board expects facilities to be renegotiated
prior to their expiry in October 2022.
Cautionary statement
This Strategic report contains forward-looking statements. Such
statements are based on current expectations and assumptions and
are subject to risk factors and uncertainties which we believe are
reasonable. Accordingly Hilton's actual future results may differ
materially from the results expressed or implied in these
forward-looking statements. We do not undertake to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Nigel Majewski
Chief Financial Officer
6 April 2021
Risk management and principal risks
Risks and risk management
In accordance with provision 28 of the 2018 UK Corporate
Governance Code the Directors confirm that they have carried out a
robust assessment of the emerging and principal risks facing the
Group that might impede the achievement of its strategic and
operational objectives as well as affect performance or cash
position. As a leading food processor in a fast moving environment
it is critical that the Group identifies, assesses and prioritises
its risks. The result of this assessment is a statement of the
principal risks facing the Group together with a description of the
main controls and mitigations that reduce the effect of those risks
were they to crystallise. This, together with the adoption of
appropriate mitigation actions, enables us to monitor, minimise and
control both the probability and potential impact of these
risks.
How we manage risk
Responsibility for risk management across the Group, including
the appropriate identification of risks and the effective
application of actions designed to mitigate those risks, resides
with the Board which believes that a successful risk management
framework carefully balances risk and reward, and applies reasoned
judgement and consideration of potential likelihood and impact in
determining its principal risks. The Group takes a proactive
approach to risk management with well-developed structures and a
range of processes for identifying, assessing, prioritising and
mitigating its key risks, as the delivery of our strategy depends
on our ability to make sound risk informed decisions.
Risk management process and risk appetite
The Board believes that in carrying out the Group's businesses
it is vital to strike the right balance between an appropriate and
comprehensive control environment and encouraging the level of
entrepreneurial freedom of action required to seek out and develop
new business opportunities; but, however skilfully this balance
between risk and reward is struck, the business will always be
subject to a number of risks and uncertainties, as outlined
below.
All types of risk applicable to the business are regularly
reviewed and a formal risk assessment is carried out to highlight
key risks to the business and to determine actions that can
reasonably and cost effectively be taken to mitigate them. The
Group's risk register is compiled through combining the set of
business unit risk registers supplemented by formal interviews with
senior executives and Directors of the Group. The Group has a Risk
Management Committee which reports regularly to the Audit Committee
and Board on the substance of the risk assessment and any changes
to the nature of those risks or changes to the likelihood or
materiality of the risk in question. The Risk Management Committee
also reviews progress in control development and implementation of
those key controls related to principal risks listed in this
section of the report. 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.
The Risk Management Committee also oversees the scenario based
business continuity management exercises.
Not all the risks listed are within the Group's control and
others may be unknown or currently considered immaterial, but could
turn out to be material in the future. These risks, together with
our risk mitigation strategies, should be considered in the context
of the Group's risk management and internal control framework,
details of which are set out in the Corporate governance statement.
It must be recognised that systems of internal control are designed
to manage rather than completely eliminate any identified
risks.
Risk management during 2020
Global pandemic
The current Covid-19 pandemic continues to present major
challenges for people and economies across the globe. Food
production is a key industry so our challenge was to keep our
facilities open, as part of an integrated supply chain, to ensure
that our retailer partners are able to adapt to consumer demand for
protein-based products whilst at the same time keeping our people
safe. We established business continuity and flexible buy models
and supply options, which means that we continued to play our part
in feeding the nation and supporting ongoing demand. The dedication
and resilience of our teams was tested as we responded to these
challenges.
The health and wellbeing of our people is paramount and we have
established a number of protocols to protect our people and to
minimise contact. We are prioritising those that are most
susceptible to Covid-19 including those with underlying health
conditions. Travel by our colleagues, in line with government
restrictions, is strictly managed as are visitors to, and movements
within, our facilities together with extensive cleaning regimes and
hand-sanitising stations. We have plans in place to respond to any
virus spread within our facilities and to mitigate any resourcing
shortfall through additional use of temporary labour including
those available from other sectors.
We are dependent on our key suppliers to maintain a continued
supply of raw material and packaging materials and we are in daily
contact with them to manage availability and identify key critical
product lines which must be delivered and those that could be
postponed. There have not been any significant issues experienced
to date.
We have managed the challenges well and are confident that
through our local operating model and financial strength we are
well placed.
Brexit
Hilton Food Group planned for the potential impact of Brexit
since the outcome of the vote in 2016. Our exposure was mitigated
through our predominantly local sourcing and operating model.
Through the transition period, and as various challenges have
arisen, our risk assessments and mitigation plans have evolved as
necessary. Since the confirmation of the EU-UK Trade &
Cooperation Agreement at the end of December 2020, our dedicated
Brexit team has been focused on implementing the required changes
to minimise disruption to our operations.
Impacts will continue to develop through 2021 as various
deferments and grace periods expire, and the full conditions of the
new UK-EU relationship are implemented. It is expected that these
changes will have a greater impact on the food sector, due to the
nature of just in time supply chains and sanitary &
phytosanitary requirements specific to food products. The ending of
freedom of movement could cause disruption in the future by
depleting the availability of our workforce which could be further
compounded by any potential requirement for electronic health
passports.
As a business we continue to prioritise the status of our EU
employees in the UK, and vice versa in the EU, secure supply chains
to ensure ongoing service to customers and ensure ongoing
regulatory compliance as EU & UK standards may diverge. We
continue to work with industry bodies and government forums on
developing mitigations for Brexit-related risks as they arise.
Engagement with key internal and external stakeholders remains a
vital process in managing the potential financial and operational
impacts from border delays, and increased friction to trade. As the
post-Brexit landscape develops, the Group remains proactive in
reviewing raw material sourcing regions and transport routes.
Overall we still believe that the Hilton business is
sufficiently resilient to withstand these uncertainties whilst
minimising disruption.
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 The Group strategy focuses on a small number of customers
of risk who can exercise significant buying power and influence
when it comes to contractual renewal terms at 5 to 15
year intervals.
-------------------------------------------------------------------
Its potential The Group has a relatively narrow, but expanding, customer
impact base, with sales to subsidiary or associated companies
of the Tesco, Ahold and Woolworths groups still comprising
the larger part of Hilton's revenue. The larger retail
chains have over many years increased their market share
of meat products in many countries, as customers continue
to move away from high street butchers towards one stop
convenience shopping in supermarkets. This has increased
the buying power of the Group's customers which in turn
increases their negotiating power with the Group, which
could enable them to seek better terms over time.
-------------------------------------------------------------------
Risk mitigation The Group is progressively widening its customer base
measures and has maintained a high level of investment in state-of-the-art
and strategies facilities, which together with management's continuous
adopted focus on reducing costs, allow it to operate very efficiently
at very high throughputs and price its products competitively.
Hilton operates a decentralised, entrepreneurial business
structure, which enables it to work very closely and flexibly
with its retail partners in each country, in order to
achieve high service levels in terms of orders delivered,
delivery times, compliance with product specifications
and accuracy of documentation, all backed by an uncompromising
focus on food safety, product integrity and traceability
assurance. Hilton has long term supply agreements in place
with its major customers, with pricing either on a cost
plus or agreed packing rate basis.
-------------------------------------------------------------------
Description The Group's growth potential may be affected by the success
of risk of its customers and the
growth of their packed food sales.
Its potential The Group's products predominantly carry the brand labels
impact of the customer to whom packed food is supplied and it
is accordingly dependent on its customers' success in
maintaining or improving consumer perception of their
own brand names and packed food offerings.
----------------------------------------------------------------
Risk mitigation The Group plays a very proactive role in enhancing its
measures customers' brand values, through providing high quality,
and strategies competitively priced products, high service levels, continuing
adopted product and packaging innovation and category management
support. It recognises that quality and traceability
assurance are integral to its customers' brands and works
closely with its customers to ensure rigorous quality
assurance standards are met. It is continuously measured
by its customers across a very wide range of parameters,
including delivery time, product specification, product
traceability and accuracy of documentation and targets
demanding service levels across all these parameters.
The Group works closely with its customers to identify
continuing improvement opportunities across the supply
chain, including enhancing product presentation, extending
shelf life and reducing wastage at every stage in the
supply chain.
----------------------------------------------------------------
Description The progress of the Group's business is affected by the
of risk macroeconomic environment and levels of consumer spending
which is influenced by publicity including reports concerning
the risks of consuming certain foods and the decline
in the consumption of meat in the countries in which
it operates.
Its potential Consumer demand may drop due to food scares and economic
impact conditions. No business is immune to difficult economic
climates and the consequent pressure on levels of consumer
spending.
-----------------------------------------------------------------
Risk mitigation With a sound business model including successful diversification
measures within the vegetarian market, strong retail partners
and strategies and a single minded focus on minimising unit packing
adopted costs, whilst maintaining high levels of product quality
and integrity, the Group has made continued progress
over recent difficult economic periods. It expects to
be able to continue to make progress.
-----------------------------------------------------------------
Description As Hilton continues to grow there is more reliance on
of risk key personnel and their ability to manage growth, change,
integration and compliance across new legislative and
regulatory environments. This risk increases as the Group
continues to expand with new customers and into new territories
with potentially greater reliance on stretched skilled
resource and execution of simultaneous growth projects.
Its potential The Group may struggle to meet key project objectives
impact and fail to adhere to regulatory and legislative requirements,
which in turn detracts from our performance delivery
for our customers.
-----------------------------------------------------------------
Risk mitigation The Group carefully manages its skilled resources including
measures succession planning and maintaining a talent pipeline.
and strategies The Group is evolving its people capability balanced
adopted with an appropriate management structure within the overall
organisation. Hilton continues to invest in on-the-job
training and career development, whilst recruiting high
quality new employees, as required, to facilitate the
Group's ongoing growth and in deploying resource to support
the growth projects appropriately. 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
managed. To underscore our efforts we have active relationships
with strong industry experts across all areas of business
growth.
-----------------------------------------------------------------
Description The Group's business strength is affected by its ability
of risk to maintain a wide and flexible global food supply base
operating at standards that can continuously achieve
the specifications set by Hilton and its customers.
Its potential The Group is reliant on its suppliers to provide sufficient
impact volume of products, to the agreed specifications, in
the very short lead times required by its customers,
with efficient supply chain management being a key business
attribute. The Group sources certain of its food requirements
globally. Tariffs, quotas or trade barriers imposed by
countries where the Group procures meat, or which they
may impose in the future, together with the progress
of World Trade Organisation talks and other global trade
developments, could materially affect the Group's international
procurement ability and therefore potentially impact
our ability to meet agreed customer service levels.
-----------------------------------------------------------------
Risk mitigation The Group maintains a flexible global food supply base,
measures which is progressively widening as it expands and is
and strategies continuously audited to ensure standards are maintained,
adopted so as to have in place a wide range of options should
supply disruptions occur.
-----------------------------------------------------------------
Description Contamination within the supply chain including outbreaks
of risk of disease and feed contaminants affecting livestock
and fish.
Its potential This will potentially affect the Group's ability to procure
impact sufficient quantities of safe raw material.
----------------------------------------------------------------
Risk mitigation The Group sources its food from a trusted raw material
measures supply base, all components of which meet stringent national,
and strategies international and customer standards. The Group is subject
adopted to demanding standards which are independently monitored
in every country and reliable product traceability and
high welfare standards from the farm to the consumer
are integral to the Group's business model. The Group
ensures full traceability from source to packed product
across all suppliers. Within our factories, Global Food
Safety Initiative (GFSI) benchmarked food safety standards
and our own factory standard assessments drive the enhancement
of the processes and controls that are necessary to ensure
that the risks of contaminants throughout the processing,
packing and distribution stages are mitigated and traceable
should a risk ever materialise.
----------------------------------------------------------------
Description Significant incidents such as fire, flood, pandemic or
of risk interruption of supply of key utilities could impact
the Group's business continuity.
Its potential Such incidents could result in systems or manufacturing
impact process stoppages with consequent disruption and loss
of efficiency which could impact the Group's sales.
---------------------------------------------------------------
Risk mitigation The Group has robust business continuity plans in place
measures including sister site support protocols enabling other
and strategies sites to step in with manufacturing and distribution
adopted of key product lines where necessary. Continuity management
systems and plans are suitably maintained and adequately
tested including building risk assessments and emergency
power solutions. There are appropriate insurance arrangements
in place to mitigate against any associated financial
loss.
---------------------------------------------------------------
Description The Group's IT systems could be subject to cyber attacks,
of risk including ransomware and fraudulent external email activity.
These kinds of attacks are generally increasing in frequency
and sophistication.
Its potential The Group's operations are underpinned by a variety of
impact IT systems. Loss or disruption to those IT systems or
extended times to recover data or functionality could
impact the Group's ability to effectively operate its
facilities and affect its sales and reputation.
-----------------------------------------------------------------
Risk mitigation The Group has a robust IT control framework, minimum
measures operating standards, including working towards National
and strategies Institute of Technology requirements, all of which are
adopted tested frequently by internal staff and by specialist
external 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 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.
-----------------------------------------------------------------
Description A significant breach of health & safety legislation as
of risk complexity increases in managing sites across different
product groups and geographies.
Its potential Such breach in health & safety legislation could lead
impact to reputational damage and regulatory penalties, including
restrictions on operations, fines or personal litigation
claims.
--------------------------------------------------------------
Risk mitigation The Group has established robust health & safety processes
measures and procedures across its operations, including a Group
and strategies oversight function which provides key guidance and support
adopted necessary to strengthen monitoring, best practice and
compliance. The Group has also rolled out an enhanced
standardised safety framework. Health and safety performance
is reviewed regularly by the Board.
--------------------------------------------------------------
Description The Group's business is affected by climate change risks
of risk comprising both physical and transition risks. Physical
risks include long-term rises in temperature and sea
levels as well as changes to the frequency and severity
of extreme weather events. Transition risks include policy
changes, reputational impacts, and shifts in market preferences
and technology.
Its potential Potential physical impacts from climate change could
impact include a higher incidence of extreme weather events
such as flooding, drought, and forest fires that could
disrupt our supply chains and potentially impact production
capabilities, increase costs and add complexity. Action
taken by societies could reduce the severity of these
impacts.
Governmental efforts to mitigate climate change may lead
to policy and regulatory changes as well as shifts in
consumer demand. The potential transitional impacts include
additional costs of low greenhouse gas emission farming
systems, and the potential of carbon pricing aimed at
shifting consumers to lower carbon foods, which may reduce
the profitability of some of our products. Additionally
our reputation could be impacted if we are not active
in reducing the climate impacts of our operations and
supply chains, resulting in lower demand for our products.
Additionally our reputation could be impacted if we are
not active in reducing the climate impacts of our operations
and supply chains, resulting in lower demand for our
products.
-----------------------------------------------------------------
Risk mitigation The Group has raised the risk profile of climate change
measures to a principal risk and we continue to develop our approach
and strategies to climate change risk mitigation. We are committed to
adopted setting Science Based Targets to decarbonise our own
operations and supply chains. We have set energy and
water efficiency targets for our sites and continue to
engage in global collaborative action for decarbonisation
of our key raw materials.
Shifts in consumer demand are an opportunity for growth
in our portfolio of plant based and seafood products.
Additionally we have the flexibility to adapt our supply
chains over time to mitigate physical disruption.
We have committed to set a science-based target through
the Science Based Targets initiative and signed the Business
Ambition for 1.5degC pledge, directing our efforts towards
a net-zero carbon footprint before 2050.
We are conducting an assessment of the key physical and
transition risks impacting our business in line with
the Task Force on Climate-related Financial Disclosures
(TCFD) recommendations. We are also, for the first time
this year, reporting on our initial assessment of climate
risks and opportunities in line with the TCFD framework.
-----------------------------------------------------------------
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 international accounting standards in conformity
with the requirements of the Companies Act 2006, give a true and
fair view of the assets, liabilities, financial position and profit
of the Group and profit of the Company; and
-- the management reports, which comprise the Strategic report and
the Directors' report, include a fair review of the development
and performance of the business and the position of the Group
and the Company, together with a description of the principal
risks and uncertainties that it faces.
This responsibility statement was approved by the Board of
Directors on 6 April 2021 and is signed on its behalf by:
Directors
R Watson OBE Chairman
N Majewski Chief Financial
Officer
Consolidated income statement
2020 2019
53 weeks 52 weeks
Notes GBP'000 GBP'000
------------------------------------------------- ----- ----------- -----------
Continuing operations
------------------------------------------------- ----- ----------- -----------
Revenue 3 2,774,036 1,814,667
------------------------------------------------- ----- ----------- -----------
Cost of sales (2,452,093) (1,566,715)
------------------------------------------------- ----- ----------- -----------
Gross profit 321,943 247,952
------------------------------------------------- ----- ----------- -----------
Distribution costs (23,246) (22,778)
------------------------------------------------- ----- ----------- -----------
Administrative expenses (236,859) (175,811)
------------------------------------------------- ----- ----------- -----------
Share of profit in joint ventures 5,029 6,406
------------------------------------------------- ----- ----------- -----------
Operating profit 66,867 55,769
------------------------------------------------- ----- ----------- -----------
Finance income 4 22 96
------------------------------------------------- ----- ----------- -----------
Finance costs 4 (12,861) (12,709)
------------------------------------------------- ----- ----------- -----------
Finance costs - net 4 (12,839) (12,613)
------------------------------------------------- ----- ----------- -----------
Profit before income tax 54,028 43,156
================================================= ===== =========== ===========
Income tax expense 5 (11,988) (7,996)
------------------------------------------------- ----- ----------- -----------
Profit for the year 42,040 35,160
------------------------------------------------- ----- ----------- -----------
Attributable to:
------------------------------------------------- ----- ----------- -----------
Owners of the parent 39,736 33,065
------------------------------------------------- ----- ----------- -----------
Non-controlling interests 2,304 2,095
------------------------------------------------- ----- ----------- -----------
42,040 35,160
------------------------------------------------- ----- ----------- -----------
Earnings per share attributable to owners of the
parent during the year
------------------------------------------------- ----- ----------- -----------
Basic (pence) 6 48.6 40.5
------------------------------------------------- ----- ----------- -----------
Diluted (pence) 6 47.9 40.1
------------------------------------------------- ----- ----------- -----------
Consolidated statement of comprehensive income
2020 2019
53 weeks 52 weeks
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Profit for the year 42,040 35,160
----------------------------------------------------------- -------- --------
Other comprehensive income/(expense)
----------------------------------------------------------- -------- --------
Currency translation differences 4,682 (4,175)
----------------------------------------------------------- -------- --------
Other comprehensive income/(expense) for the year net of
tax 4,682 (4,175)
----------------------------------------------------------- -------- --------
Total comprehensive income for the year 46,722 30,985
----------------------------------------------------------- -------- --------
Total comprehensive income attributable to:
----------------------------------------------------------- -------- --------
Owners of the parent 44,101 29,186
----------------------------------------------------------- -------- --------
Non-controlling interests 2,621 1,799
----------------------------------------------------------- -------- --------
46,722 30,985
----------------------------------------------------------- -------- --------
The notes are an integral part of these consolidated financial statements.
Consolidated and Company Balance sheet
Group Company
2020 2019 2020 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- --------- -------- ------- -------
Assets
--------------------------------------- ----- --------- -------- ------- -------
Non-current assets
--------------------------------------- ----- --------- -------- ------- -------
Property, plant and equipment 8 290,846 226,562 - -
--------------------------------------- ----- --------- -------- ------- -------
Intangible assets 9 70,071 69,539 - -
--------------------------------------- ----- --------- -------- ------- -------
Lease: right of use assets 10 235,135 178,293 - -
--------------------------------------- ----- --------- -------- ------- -------
Investments 12,622 11,758 157,221 157,221
--------------------------------------- ----- --------- -------- ------- -------
Trade and other receivables - 662 - -
--------------------------------------- ----- --------- -------- ------- -------
Deferred income tax assets 6,219 2,270 - -
--------------------------------------- ----- --------- -------- ------- -------
614,893 489,084 157,221 157,221
--------------------------------------- ----- --------- -------- ------- -------
Current assets
--------------------------------------- ----- --------- -------- ------- -------
Inventories 116,941 91,337 - -
--------------------------------------- ----- --------- -------- ------- -------
Trade and other receivables 199,642 214,611 14,272 10,272
--------------------------------------- ----- --------- -------- ------- -------
Cash and cash equivalents 123,816 110,514 190 122
--------------------------------------- ----- --------- -------- ------- -------
440,399 416,462 14,462 10,394
--------------------------------------- ----- --------- -------- ------- -------
Total assets 1,055,292 905,546 171,683 167,615
--------------------------------------- ----- --------- -------- ------- -------
Equity
--------------------------------------- ----- --------- -------- ------- -------
Equity attributable to owners of the parent
---------------------------------------------- --------- -------- ------- -------
Ordinary shares 8,194 8,173 8,194 8,173
--------------------------------------- ----- --------- -------- ------- -------
Share premium 65,619 64,251 65,619 64,251
--------------------------------------- ----- --------- -------- ------- -------
Employee share schemes reserve 6,123 4,139 - -
--------------------------------------- ----- --------- -------- ------- -------
Foreign currency translation reserve 4,620 255 - -
--------------------------------------- ----- --------- -------- ------- -------
Retained earnings 161,607 140,192 26,851 24,172
--------------------------------------- ----- --------- -------- ------- -------
Reverse acquisition reserve (31,700) (31,700) - -
--------------------------------------- ----- --------- -------- ------- -------
Merger reserve 919 919 71,019 71,019
--------------------------------------- ----- --------- -------- ------- -------
215,382 186,229 171,683 167,615
--------------------------------------- ----- --------- -------- ------- -------
Non-controlling interests 6,556 5,711 - -
--------------------------------------- ----- --------- -------- ------- -------
Total equity 221,938 191,940 171,683 167,615
--------------------------------------- ----- --------- -------- ------- -------
Liabilities
--------------------------------------- ----- --------- -------- ------- -------
Non-current liabilities
--------------------------------------- ----- --------- -------- ------- -------
Borrowings 11 206,228 175,370 - -
--------------------------------------- ----- --------- -------- ------- -------
Lease liabilities 10 238,995 132,790 - -
--------------------------------------- ----- --------- -------- ------- -------
Deferred consideration 3,318 3,318 - -
--------------------------------------- ----- --------- -------- ------- -------
Deferred income tax liabilities 2,384 4,116 - -
--------------------------------------- ----- --------- -------- ------- -------
450,925 315,594 - -
--------------------------------------- ----- --------- -------- ------- -------
Current liabilities
--------------------------------------- ----- --------- -------- ------- -------
Borrowings 11 39,759 21,969 - -
--------------------------------------- ----- --------- -------- ------- -------
Lease liabilities 10 6,250 51,843 - -
--------------------------------------- ----- --------- -------- ------- -------
Trade and other payables 332,354 321,771 - -
--------------------------------------- ----- --------- -------- ------- -------
Current tax liabilities 4,066 2,429 - -
--------------------------------------- ----- --------- -------- ------- -------
382,429 398,012 - -
--------------------------------------- ----- --------- -------- ------- -------
Total liabilities 833,354 713,606 - -
--------------------------------------- ----- --------- -------- ------- -------
Total equity and liabilities 1,055,292 905,546 171,683 167,615
--------------------------------------- ----- --------- -------- ------- -------
The notes are an integral part of these consolidated financial statements.
The financial statements were approved by the Board on 6 April 2021 and
were signed on its behalf by:
R. Watson N. Majewski
Director Director
Hilton Food Group plc - Registered number: 06165540
The Company has taken advantage of the exemption in Section 408
Companies Act 2006 not to publish its individual income statement,
statement of comprehensive income and related notes. Profit for the
year dealt with in the income statement of Hilton Food Group plc
amounted to GBP21,000,000 (2019: GBP27,200,000).
Statement of changes in equity
Attributable to owners of the parent
=================================================================================
Employee Foreign
share currency Reverse
Share Share schemes translation Retained acquisition Merger Non-controlling Total
capital premium reserve reserve earnings reserve reserve Total interests equity
Group Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 31
December
2018 8,160 63,628 5,505 4,134 124,923 (31,700) 919 175,569 5,677 181,246
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 33,065 - - 33,065 2,095 35,160
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Other
comprehensive
income
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Currency
translation
differences - - - (3,879) - - - (3,879) (296) (4,175)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - (3,879) 33,065 - - 29,186 1,799 30,985
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 13 623 - - - - - 636 - 636
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Adjustment in
respect
of employee
share
schemes - - (1,445) - - - - (1,445) - (1,445)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Tax on employee share
schemes - - 79 - - - - 79 - 79
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (17,796) - - (17,796) (1,765) (19,561)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
transactions
with owners 13 623 (1,366) - (17,796) - - (18,526) (1,765) (20,291)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 29
December
2019 8,173 64,251 4,139 255 140,192 (31,700) 919 186,229 5,711 191,940
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 39,736 - - 39,736 2,304 42,040
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Other
comprehensive
income
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Currency translation
differences - - - 4,365 - - - 4,365 317 4,682
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - 4,365 39,736 - - 44,101 2,621 46,722
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 21 1,368 - - - - - 1,389 - 1,389
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Adjustment in
respect
of employee
share
schemes - - 2,120 - - - - 2,120 - 2,120
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Tax on employee share
schemes - - (136) - - - - (136) - (136)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (18,321) - - (18,321) (1,776) (20,097)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total transactions
with owners 21 1,368 1,984 - (18,321) - - (14,948) (1,776) (16,724)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 3
January
2021 8,194 65,619 6,123 4,620 161,607 (31,700) 919 215,382 6,556 221,938
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Company
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 31
December
2018 8,160 63,628 - - 14,768 - 71,019 157,575
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 27,200 - - 27,200
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - - 27,200 - - 27,200
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 13 623 - - - - - 636
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (17,796) - - (17,796)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
transactions
with owners 13 623 - - (17,796) - - (17,160)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 29
December
2019 8,173 64,251 - - 24,172 - 71,019 167,615
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - 21,000 - - 21,000
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - - 21,000 - - 21,000
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 21 1,368 - - - - - 1,389
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 7 - - - - (18,321) - - (18,321)
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total transactions
with owners 21 1,368 - - (18,321) - - (16,932)
--------------------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 3
January
2021 8,194 65,619 - - 26,851 - 71,019 171,683
-------------- ----- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
The notes are an integral part of these consolidated financial
statements.
Consolidated and Company Cash flow statement
Group Company
2020 2019 2020 2019
53 weeks 52 weeks 53 weeks 52 weeks
Restated
(see note
2)
------------------------------------------ ----- -------- -------- -------- ----------
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ----- -------- -------- -------- ----------
Cash flows from operating activities
------------------------------------------ ----- -------- -------- -------- ----------
Cash generated from operations 12 120,771 90,376 - -
------------------------------------------ ----- -------- -------- -------- ----------
Interest paid (12,861) (12,709) - -
------------------------------------------ ----- -------- -------- -------- ----------
Income tax paid (16,254) (7,410) - -
------------------------------------------ ----- -------- -------- -------- ----------
Net cash generated from operating
activities 91,656 70,257 - -
------------------------------------------ ----- -------- -------- -------- ----------
Cash flows from investing activities
------------------------------------------ ----- -------- -------- -------- ----------
Acquisition of subsidiary, net of
cash acquired - 591 - -
------------------------------------------ ----- -------- -------- -------- ----------
Investment in joint ventures - (5,246) - -
------------------------------------------ ----- -------- -------- -------- ----------
Issue of inter-company loan - - (4,000) (10,000)
------------------------------------------ ----- -------- -------- -------- ----------
Purchases of property, plant and
equipment (92,803) (98,555) - -
------------------------------------------ ----- -------- -------- -------- ----------
Proceeds from sale of property, plant
and equipment 134 198 - -
------------------------------------------ ----- -------- -------- -------- ----------
Purchases of intangible assets (2,703) (830) - -
------------------------------------------ ----- -------- -------- -------- ----------
Interest received 22 96 - -
------------------------------------------ ----- -------- -------- -------- ----------
Dividends received - - 21,000 27,200
------------------------------------------ ----- -------- -------- -------- ----------
Dividends received from joint venture 4,271 4,995 - -
------------------------------------------ ----- -------- -------- -------- ----------
Net cash (used in)/generated from
investing activities (91,079) (98,751) 17,000 17,200
------------------------------------------ ----- -------- -------- -------- ----------
Cash flows from financing activities
------------------------------------------ ----- -------- -------- -------- ----------
Proceeds from borrowings 92,563 95,596 - -
------------------------------------------ ----- -------- -------- -------- ----------
Repayments of borrowings (48,908) (8,311) - -
------------------------------------------ ----- -------- -------- -------- ----------
Payment of lease liability (15,044) (14,776) - -
------------------------------------------ ----- -------- -------- -------- ----------
Issue of ordinary shares 1,389 636 1,389 636
------------------------------------------ ----- -------- -------- -------- ----------
Other financial asset - 7,513 - -
------------------------------------------ ----- -------- -------- -------- ----------
Dividends paid to owners of the parent (18,321) (17,796) (18,321) (17,796)
------------------------------------------ ----- -------- -------- -------- ----------
Dividends paid to non-controlling
interests (1,776) (1,765) - -
------------------------------------------ ----- -------- -------- -------- ----------
Net cash generated from/(used in)
financing activities 9,903 61,097 (16,932) (17,160)
------------------------------------------ ----- -------- -------- -------- ----------
Net increase in cash and cash equivalents 10,480 32,603 68 40
------------------------------------------ ----- -------- -------- -------- ----------
Cash and cash equivalents at beginning
of the year 110,514 80,234 122 82
------------------------------------------ ----- -------- -------- -------- ----------
Exchange gains/(losses) on cash and
cash equivalents 2,822 (2,323) - -
------------------------------------------ ----- -------- -------- -------- ----------
Cash and cash equivalents at end
of the year 123,816 110,514 190 122
------------------------------------------ ----- -------- -------- -------- ----------
The notes are an integral part of these consolidated financial statements.
Notes to the financial statements
1 General information
Hilton Food Group plc ('the Company') and its subsidiaries
(together 'the Group') is a leading specialist international food
packing business supplying major international food retailers in
fourteen European countries and Australia. The Company's
subsidiaries are listed in a note to the full financial
statements.
The Company is a public 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 year represents the 53 weeks to 3 January 2021
(prior financial year 52 weeks to 29 December 2019).
This preliminary announcement was approved for issue on 6 April
2021.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 29 December 2019.
Basis of preparation
The consolidated and company financial statements of Hilton Food
Group plc have been prepared under the historical cost convention
as modified by financial liabilities at fair value through profit
or loss and in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
The consolidated and company financial statements have been
prepared on the going concern basis. The reasons why the Directors
consider this basis to be appropriate are set out in the
Performance and financial review.
The financial statements are presented in Sterling and all
values are rounded to the nearest thousand (GBP'000) except when
otherwise indicated.
The financial information included in this preliminary
announcement does not constitute statutory accounts of the Group
for the years ended 3 January 2021 and 29 December 2019 but is
derived from those accounts. Statutory accounts for 2019 have been
delivered to the Registrar of Companies and those for 2020 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.
Restatement of Prior Year Company Cash Flow Statement
Following discussions with the FRC in connection with their
review of the Group's 2019 Annual report, the Company concluded
that a GBP10m cash out flow arising from the issue of intercompany
loans to its subsidiaries, which had previously been classified as
financing activities, should have been classified as investing
activities.
As a result of this the Company has restated the 2019 Company
cash flow statement to classify the issue of this loan within net
cash generated from investing activities, therefore reducing cash
generated from investing activities from GBP27.2m to GBP17.2m with
a corresponding reduction in cash used in financing activities from
GBP27.2 to GBP17.2m. There is no impact of this adjustment on the
net increase in cash and cash equivalents presented for the 2019
financial year.
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) Australasia 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. Australasia and Central costs comprise the
other reportable segments.
In the prior year, Western and Central Europe were presented as
separate segments, however these have now been combined into a
single European segment. 2019 segmental information has been
restated to show the combined segment.
From a product perspective the Executive Directors consider that
the Group has only one identifiable product, wholesaling of food
protein products including meat, fish and vegetarian. The Executive
Directors consider that no further segmentation is appropriate, as
all of the Group's operations are subject to similar risks and
returns and exhibit similar long term financial performance.
The segment information provided to the Executive Directors for the reportable
segments is as follows:
2020 2019
Central Total Central Total
Europe Australasia costs Europe Australasia costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Total revenue 2,044,190 784,455 - 2,828,645 1,765,443 89,772 - 1,855,215
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Inter-co revenue (54,609) - - (54,609) (40,548) - - (40,548)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Third party revenue 1,989,581 784,455 - 2,774,036 1,724,895 89,772 - 1,814,667
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Adjusted operating
profit/(loss) segment
result (see note
15) 62,581 17,209 (12,762) 67,028 55,233 9,589 (10,110) 54,712
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Amortisation of
acquired intangibles (2,449) - - (2,449) (2,438) - - (2,438)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Impact of IFRS 16 406 1,882 - 2,288 244 3,251 - 3,495
============================ --------- ----------- -------- --------- --------- ----------- -------- ---------
Operating profit/(loss)
segment result 60,538 19,091 (12,762) 66,867 53,039 12,840 (10,110) 55,769
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Finance income 22 - - 22 5 91 - 96
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Finance costs (3,243) (8,140) (1,478) (12,861) (3,232) (7,523) (1,954) (12,709)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Income tax (expense)/credit (11,165) (2,568) 1,745 (11,988) (9,864) 393 1,475 (7,996)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Profit/(loss) for
the year 46,152 8,383 (12,495) 42,040 39,948 5,801 (10,589) 35,160
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Depreciation and
amortisation 32,433 25,877 91 58,401 30,014 15,286 122 45,422
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Additions to non-current
assets 24,459 70,733 314 95,506 50,027 48,941 417 99,385
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Segment assets 568,638 453,143 27,292 1,049,073 541,582 348,293 13,401 903,276
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Deferred income
tax assets 6,219 2,270
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Total assets 1,055,292 905,546
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Segment liabilities 324,582 427,050 75,272 826,904 302,351 329,449 75,261 707,061
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Current income tax
liabilities 4,066 2,429
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Deferred income
tax liabilities 2,384 4,116
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Total liabilities 833,354 713,606
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
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 15). 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
Australasia.
Analysis of revenues from external customers and non-current
assets are as follows:
Non-current assets
Revenues from external excluding deferred
customers tax assets
------------------------ ---------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by geographical area
----------------------------------------- ----------- ----------- ---------- ---------
United Kingdom - country of domicile 1,125,955 960,919 165,564 180,418
----------------------------------------- ----------- ----------- ---------- ---------
Netherlands 301,537 281,807 7,545 3,967
----------------------------------------- ----------- ----------- ---------- ---------
Belgium 6,617 - 10,381 -
----------------------------------------- ----------- ----------- ---------- ---------
Sweden 221,886 197,085 18,060 9,322
----------------------------------------- ----------- ----------- ---------- ---------
Republic of Ireland 102,460 88,526 6,025 4,474
----------------------------------------- ----------- ----------- ---------- ---------
Denmark 122,643 105,319 18,444 17,323
----------------------------------------- ----------- ----------- ---------- ---------
Central Europe 108,483 91,239 25,164 26,546
----------------------------------------- ----------- ----------- ---------- ---------
Australasia 784,455 89,772 357,491 244,764
----------------------------------------- ----------- ----------- ---------- ---------
2,774,036 1,814,667 608,674 486,814
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by principal customer
----------------------------------------- ----------- ----------- ---------- ---------
Customer 1 1,168,179 980,224
----------------------------------------- ----------- ----------- ---------- ---------
Customer 2 330,644 301,296
----------------------------------------- ----------- ----------- ---------- ---------
Customer 3 232,022 208,230
----------------------------------------- ----------- ----------- ---------- ---------
Customer 4 117,197 103,233
----------------------------------------- ----------- ----------- ---------- ---------
Customer 5 784,455 89,772
----------------------------------------- ----------- ----------- ---------- ---------
Other 141,539 131,912
----------------------------------------- ----------- ----------- ---------- ---------
2,774,036 1,814,667
----------------------------------------- ----------- ----------- ---------- ---------
4 Finance income and costs
2020 2019
Group GBP'000 GBP'000
-------------------------------------------- -------- --------
Finance income
-------------------------------------------- -------- --------
Interest income on short term bank deposits - 91
-------------------------------------------- -------- --------
Other interest income 22 5
-------------------------------------------- -------- --------
Finance income 22 96
-------------------------------------------- -------- --------
Finance costs
-------------------------------------------- -------- --------
Bank borrowings (4,483) (3,514)
-------------------------------------------- -------- --------
Interest on lease liabilities (6,919) (7,694)
-------------------------------------------- -------- --------
Other interest expense (1,459) (1,501)
-------------------------------------------- -------- --------
Finance costs (12,861) (12,709)
-------------------------------------------- -------- --------
Finance costs - net (12,839) (12,613)
-------------------------------------------- -------- --------
5 Income tax expense
2020 2019
Group GBP'000 GBP'000
-------------------------------------------------- ------- -------
Current income tax
-------------------------------------------------- ------- -------
Current tax on profits for the year 17,878 10,681
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years (273) (87)
-------------------------------------------------- ------- -------
Total current tax 17,605 10,594
-------------------------------------------------- ------- -------
Deferred income tax
-------------------------------------------------- ------- -------
Origination and reversal of temporary differences (5,721) (2,875)
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years 104 277
-------------------------------------------------- ------- -------
Total deferred tax (5,617) (2,598)
-------------------------------------------------- ------- -------
Income tax expense 11,988 7,996
-------------------------------------------------- ------- -------
Deferred tax charged directly to equity during the year in
respect of employee share schemes amounted to GBP135,954 (2019:
credit GBP79,000).
Factors affecting future tax charges
The Group operates in numerous tax jurisdictions around the
world and is subject to factors that may affect future tax charges
including transfer pricing, tax rate changes and tax legislation
changes.
The prevailing UK corporation tax rate of 19% was substantively
enacted as part of the Finance Act 2019 on 12 March 2019. In the
Spring Budget 2020, the UK Government announced that from 1 April
2020 the corporation tax rate would remain at 19% (rather than
reducing to 17%, as previously enacted). This new law was
substantively enacted on 17 March 2020. 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 from the
theoretical amount that would arise using the standard rate of UK
Corporation Tax of 19% (2019: 19%) applied to profits of the
consolidated entities as follows:
2020 2019
GBP'000 GBP'000
========================================================== ======= =======
Profit before income tax 54,028 43,156
---------------------------------------------------------- ------- -------
Tax calculated at the standard rate of UK Corporation Tax
19% (2019: 19%) 10,265 8,200
---------------------------------------------------------- ------- -------
Expenses not deductible for tax purposes 834 367
---------------------------------------------------------- ------- -------
Joint venture received net of tax (1,364) (1,217)
---------------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years (169) 190
---------------------------------------------------------- ------- -------
Profits taxed at rates other than 19% (2019: 19%) 2,501 694
---------------------------------------------------------- ------- -------
Deferred tax on IFRS 16 (87) (280)
---------------------------------------------------------- ------- -------
Other 8 42
---------------------------------------------------------- ------- -------
Income tax expense 11,988 7,996
---------------------------------------------------------- ------- -------
There is no tax impact relating to components of other
comprehensive income.
6 Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to owners of the parent by the weighted average number
of ordinary shares in issue during the year.
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has share options for which a calculation is done to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that
would have been issued assuming the exercise of the share
options.
2020 2019
Group Basic Diluted Basic Diluted
------------------------------------ ------------ ------ ------- ------ -------
Profit attributable to owners of
the parent (GBP'000) 39,736 39,736 33,065 33,065
------------------------------------ ------------ ------ ------- ------ -------
Weighted average number of ordinary
shares in issue (thousands) 81,835 81,835 81,665 81,665
------------------------------------ ------------ ------ ------- ------ -------
Adjustment for share options (thousands) - 1,084 - 836
------------------------------------ ------------ ------ ------- ------ -------
Adjusted weighted average number
of ordinary shares (thousands) 81,835 82,919 81,665 82,501
------------------------------------ ------------ ------ ------- ------ -------
Basic and diluted earnings per
share (pence) 48.6 47.9 40.5 40.1
------------------------------------ ------------ ------ ------- ------ -------
7 Dividends
2020 2019
Group and Company GBP'000 GBP'000
----------------------------------------------------------- ------- -------
Final dividend in respect of 2019 paid 15.4p per ordinary
share (2018: 15.8p) 12,586 12,893
----------------------------------------------------------- ------- -------
Interim dividend in respect of 2020 paid 7.0p per ordinary
share (2019: 6.0p) 5,735 4,903
----------------------------------------------------------- ------- -------
Total dividends paid 18,321 17,796
----------------------------------------------------------- ------- -------
The Directors propose a final dividend of 19.0p per share
payable on 2 July 2021 to shareholders who are on the register at 4
June 2021. This dividend totalling GBP15.6m has not been recognised
as a liability in these consolidated financial statements.
During 2018 the Company declared and paid an interim dividend
totalling GBP4.6m out of distributable reserves. The Companies Act
2006 requires public companies where necessary to prepare and file
relevant accounts with the Registrar of Companies. However it has
come to the attention of the Directors that the Company did not
fully comply with these requirements resulting in a technical
infringement of the Companies Act. In order to address this
situation a special resolution will be proposed at the Company's
2021 Annual General Meeting.
8 Property, plant and equipment
Land and
buildings
(including
leasehold Plant and Fixtures
improvements) machinery and fittings Motor vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------------- ---------- ------------- -------------- --------
Cost
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 31 December 2018 75,309 282,860 14,127 352 372,648
-------------------------------------- -------------- ---------- ------------- -------------- --------
IFRS 16 transfer to Right-of-Use
asset (3,484) - - - (3,484)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (1,940) (11,328) (597) (3) (13,868)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Acquisition 33 817 - - 850
-------------------------------------- -------------- ---------- ------------- -------------- --------
Additions 17,932 72,176 2,712 75 92,895
-------------------------------------- -------------- ---------- ------------- -------------- --------
Additions: Transfer from Right-of-Use
Asset 5,660 - - - 5,660
-------------------------------------- -------------- ---------- ------------- -------------- --------
Transfer to intangible assets - (953) - - (953)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Disposals - (1,031) (199) (150) (1,380)
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 29 December 2019 93,510 342,541 16,043 274 452,368
-------------------------------------- -------------- ---------- ------------- -------------- --------
Accumulated depreciation
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 31 December 2018 25,306 176,896 11,769 128 214,099
-------------------------------------- -------------- ---------- ------------- -------------- --------
IFRS 16 transfer to Right-of-Use
asset (2,600) - - - (2,600)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (608) (7,172) (513) (2) (8,295)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Charge for the year 3,586 18,818 1,321 76 23,801
-------------------------------------- -------------- ---------- ------------- -------------- --------
Disposals - (876) (198) (125) (1,199)
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 29 December 2019 25,684 187,666 12,379 77 225,806
-------------------------------------- -------------- ---------- ------------- -------------- --------
Net book amount
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 31 December 2018 50,003 105,964 2,358 224 158,549
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 29 December 2019 67,826 154,875 3,664 197 226,562
-------------------------------------- -------------- ---------- ------------- -------------- --------
Cost
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 30 December 2019 93,510 342,541 16,043 274 452,368
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments 1,250 15,655 820 (1) 17,724
-------------------------------------- -------------- ---------- ------------- -------------- --------
Additions 2,793 49,040 3,637 110 55,580
-------------------------------------- -------------- ---------- ------------- -------------- --------
Additions: Transfer from Right-of-Use
Asset - 37,223 - - 37,223
-------------------------------------- -------------- ---------- ------------- -------------- --------
Transfer to intangible assets - (566) - - (566)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (30) (650) (2) (211) (893)
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 3 January 2021 97,523 443,243 20,498 172 561,436
-------------------------------------- -------------- ---------- ------------- -------------- --------
Accumulated depreciation
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 30 December 2019 25,684 187,666 12,379 77 225,806
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments 528 7,245 473 (1) 8,245
-------------------------------------- -------------- ---------- ------------- -------------- --------
Charge for the year 4,168 30,609 2,483 38 37,298
-------------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (30) (615) (2) (112) (759)
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 3 January 2021 30,350 224,905 15,333 2 270,590
-------------------------------------- -------------- ---------- ------------- -------------- --------
Net book amount
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 3 January 2021 67,173 218,338 5,165 170 290,846
-------------------------------------- -------------- ---------- ------------- -------------- --------
Depreciation charges are included within administrative expenses
in the income statement.
The cost and net book amount of property plant and equipment in
the course of its construction included above comprise plant and
machinery GBP20,318,102 (2019: GBP37,708,439).
Additions to property, plant and equipment include capitalised
interest costs of GBP409,000 (2019: GBP2,206,000).
9 Intangible assets
Brand and
Computer customer
software relationships Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- -------------- -------- -------
Cost
-------------------------------------------- --------- -------------- -------- -------
At 31 December 2018 6,273 21,907 44,793 72,973
-------------------------------------------- --------- -------------- -------- -------
Exchange adjustments (173) - - (173)
-------------------------------------------- --------- -------------- -------- -------
Acquisition - 653 2,789 3,442
-------------------------------------------- --------- -------------- -------- -------
Additions 830 - - 830
-------------------------------------------- --------- -------------- -------- -------
Transfer from property, plant and equipment 953 - - 953
-------------------------------------------- --------- -------------- -------- -------
Disposals (25) - - (25)
-------------------------------------------- --------- -------------- -------- -------
At 29 December 2019 7,858 22,560 47,582 78,000
-------------------------------------------- --------- -------------- -------- -------
Accumulated amortisation
-------------------------------------------- --------- -------------- -------- -------
At 31 December 2018 3,269 2,744 - 6,013
-------------------------------------------- --------- -------------- -------- -------
Exchange adjustments (148) - - (148)
-------------------------------------------- --------- -------------- -------- -------
Charge for the year 183 2,438 - 2,621
-------------------------------------------- --------- -------------- -------- -------
Disposals (25) - - (25)
-------------------------------------------- --------- -------------- -------- -------
At 29 December 2019 3,279 5,182 - 8,461
-------------------------------------------- --------- -------------- -------- -------
Net book amount
-------------------------------------------- --------- -------------- -------- -------
At 31 December 2018 3,004 19,163 44,793 66,960
-------------------------------------------- --------- -------------- -------- -------
At 29 December 2019 4,579 17,378 47,582 69,539
-------------------------------------------- --------- -------------- -------- -------
Cost
-------------------------------------------- --------- -------------- -------- -------
At 30 December 2019 7,858 22,560 47,582 78,000
-------------------------------------------- --------- -------------- -------- -------
Exchange adjustments 41 - - 41
-------------------------------------------- --------- -------------- -------- -------
Additions 2,703 - - 2,703
-------------------------------------------- --------- -------------- -------- -------
Transfer from property, plant & equipment 566 - - 566
-------------------------------------------- --------- -------------- -------- -------
Disposals (188) - - (188)
-------------------------------------------- --------- -------------- -------- -------
At 3 January 2021 10,980 22,560 47,582 81,122
-------------------------------------------- --------- -------------- -------- -------
Accumulated amortisation
-------------------------------------------- --------- -------------- -------- -------
At 30 December 2019 3,279 5,182 - 8,461
-------------------------------------------- --------- -------------- -------- -------
Exchange adjustments 25 - - 25
-------------------------------------------- --------- -------------- -------- -------
Charge for the year 304 2,449 - 2,753
-------------------------------------------- --------- -------------- -------- -------
Disposals (188) - - (188)
-------------------------------------------- --------- -------------- -------- -------
At 3 January 2021 3,420 7,631 - 11,051
-------------------------------------------- --------- -------------- -------- -------
Net book amount
-------------------------------------------- --------- -------------- -------- -------
At 3 January 2021 7,560 14,929 47,582 70,071
-------------------------------------------- --------- -------------- -------- -------
Amortisation charges are included within administrative expenses
in the income statement.
Goodwill Impairment Testing
Goodwill includes GBP44,793,000 relating to the acquisition of
the Seachill business in 2017 and GBP2,789,000 recognised in 2019
following the acquisition of SV Cuisine Limited. Seachill and SVC
Cuisine are each considered to be separate cash generating units.
The recoverable amount of the Seachill cash generating unit was
determined on a value-in-use basis and the recoverable amount of SV
Cuisine was based on its fair value less costs of disposal after
allowing for the impact of planned investment; in both cases 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 10% (2019: 11%) or a post-tax discount rate of 8%
(2019: 9%) with a growth rate of 2% (2019: 2%) used to extrapolate
cash flows.
Sensitivity to changes in assumptions
The calculation is most sensitive to changes in the assumptions
used for projected cash flow, the pre-tax discount rate and the
growth rate. Management considers that reasonably possible changes
in assumptions would be an increase in discount rate of one
percentage point, a reduction in growth rate of 1 percentage point
or a 10% reduction in budgeted cash flow. As an indication of
sensitivity, when applied to the value-in-use calculation neither a
1% reduction in growth rate, a 10% reduction in budgeted cash flow,
nor a 1% increase in the discount rate would have resulted in an
impairment of goodwill in the year.
No indicators of impairment were identified in respect of other,
amortised, intangible assets and therefore no impairment review has
been undertaken.
10 Leases
(i) Amounts recognised in the balance sheet
The balance sheet includes the following amounts
relating to leases:
Lease: right of use assets Land &
Buildings Equipment Vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- ---------- --------- -------- --------
Opening net book amount as at 31 December
2018 77,748 60,725 2,174 140,647
----------------------------------------------------- ---------- --------- -------- --------
Exchange Adjustments (4,060) (1,828) (77) (5,965)
----------------------------------------------------- ---------- --------- -------- --------
Additions 67,975 108 1,432 69,515
----------------------------------------------------- ---------- --------- -------- --------
Acquisition 232 - - 232
----------------------------------------------------- ---------- --------- -------- --------
Transfer to tangible fixed assets (5,660) - - (5,660)
----------------------------------------------------- ---------- --------- -------- --------
Remeasurements, reclassification and scope
changes 6,547 (8,066) 43 (1,476)
----------------------------------------------------- ---------- --------- -------- --------
Depreciation (9,842) (8,260) (898) (19,000)
----------------------------------------------------- ---------- --------- -------- --------
Closing net book amount at 29 December
2019 132,940 42,679 2,674 178,293
----------------------------------------------------- ---------- --------- -------- --------
Exchange Adjustments 10,469 295 83 10,847
----------------------------------------------------- ---------- --------- -------- --------
Additions 98,427 195 1,303 99,925
----------------------------------------------------- ---------- --------- -------- --------
Transfer to tangible fixed assets - (37,223) - (37,223)
----------------------------------------------------- ---------- --------- -------- --------
Remeasurements, reclassification and scope
changes 2,592 (586) (363) 1,643
----------------------------------------------------- ---------- --------- -------- --------
Depreciation (13,008) (4,254) (1,088) (18,350)
----------------------------------------------------- ---------- --------- -------- --------
Closing net book amount at 3 January 2021 231,420 1,106 2,609 235,135
----------------------------------------------------- ---------- --------- -------- --------
Lease liabilities 2020 2019
Group GBP'000 GBP'000
----------------------------------------------------- ---------- --------- -------- --------
Current 6,250 51,843
----------------------------------------------------- ---------- --------- -------- --------
Non-current 238,995 132,790
----------------------------------------------------- ---------- --------- -------- --------
245,245 184,633
----------------------------------------------------- ---------- --------- -------- --------
Maturity analysis - contractual undiscounted cash
flows 2020 2019
Group GBP'000 GBP'000
----------------------------------------------------------------- --------- -------- --------
Less than one year 15,010 58,130
----------------------------------------------------- ---------- --------- -------- --------
One to five years 77,822 50,625
----------------------------------------------------- ---------- --------- -------- --------
More than five years 255,619 125,049
----------------------------------------------------- ---------- --------- -------- --------
Total lease liabilities 348,451 233,804
----------------------------------------------------- ---------- --------- -------- --------
(ii) Amounts recognised in the consolidated income statement
The income statement shows the following amounts
related to leases:
Depreciation charge on right-of-use assets 2020 2019
Group GBP'000 GBP'000
----------------------------------------------------- ---------- --------- -------- --------
Buildings 13,008 9,842
----------------------------------------------------- ---------- --------- -------- --------
Plant & equipment 4,254 8,260
----------------------------------------------------- ---------- --------- -------- --------
Vehicles 1,088 898
----------------------------------------------------- ---------- --------- -------- --------
18,350 19,000
----------------------------------------------------- ---------- --------- -------- --------
Interest expenses (included in finance costs) 6,919 7,694
----------------------------------------------------------------- --------- -------- --------
Expenses relating to short-term leases
(included in costs of goods sold and administrative
expenses) 278 790
----------------------------------------------------- ---------- --------- -------- --------
Expenses relating to leases of low-value
assets that have not been shown above as
short-term (included in costs of goods
sold and administrative expenses) 24 22
----------------------------------------------------- ---------- --------- -------- --------
The total cash outflow for leases in 2020 was GBP59,488,000
(2019: GBP28,942,000).
Variable Lease Payments
Leases with liabilities recognised of GBP10,163,000 (2019: GBP10,456,000),
accounting for 4.1% (2019 5.6%) 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 3 January
2021, lease liabilities would have increased by 2020: GBP633,000) 2019:
GBP508,000).
In addition, leases with liabilities recognised totalling GBP11,063,000
(2019: GBP3,702,000), accounting for 4.5% (2019: 2.0%) 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
3 January 2021, lease liabilities would have increased by GBP44,000 (2019:
GBP18,000)
11 Borrowings
2020 2019
Group GBP'000 GBP'000
---------------------------------------------- ----------------- -----------------
Current
---------------------------------------------- ----------------- -----------------
Bank borrowings 39,759 21,969
---------------------------------------------- ----------------- -----------------
Non-current
---------------------------------------------- ----------------- -----------------
Bank borrowings 206,228 175,370
---------------------------------------------- ----------------- -----------------
Total borrowings 245,987 197,339
---------------------------------------------- ----------------- -----------------
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:
2020 2019
Currency GBP'000 GBP'000
---------------------------------------------- ----------------- -----------------
UK Pound 66,142 68,244
---------------------------------------------- ----------------- -----------------
Euro 21,217 25,728
---------------------------------------------- ----------------- -----------------
Danish Kroner 851 -
---------------------------------------------- ----------------- -----------------
Polish Zloty 6,560 7,502
---------------------------------------------- ----------------- -----------------
Australian Dollar 120,667 85,614
============================================== ================= =================
New Zealand Dollar 30,550 10,251
---------------------------------------------- ----------------- -----------------
245,987 197,339
---------------------------------------------- ----------------- -----------------
Bank borrowings are repayable in quarterly instalments from 2019
- 2022 with interest charged at LIBOR (or equivalent benchmark
rates) plus 1.3% - 1.6%. Bank borrowings are subject to joint and
several guarantees from each active Group undertaking.
The Group has undrawn committed loan facilities of GBP51.5m
(2019: GBP71.1m) with the loan facilities expiring in 2022.
The undiscounted contractual maturity profile of the Group's
borrowings is described in a note to the full financial
statements.
Group net debt of GBP123,366,000 (2019: net debt of
GBP88,247,000) comprises borrowings, noted above, of GBP245,987,000
(2019: GBP197,339,000) cash and cash equivalents of GBP123,816,000
(2019: GBP110,514,000), and finance leases previously recognised
under IAS 17 of GBP1,195,000 (2019: GBP1,422,000). Including total
lease liabilities Group net debt is GBP367,416,000 (2019:
GBP271,458,000).
12 Cash generated from operations
2020 2019
Group GBP'000 GBP'000
----------------------------------------------------- -------- --------
Profit before income tax 54,028 43,156
----------------------------------------------------- -------- --------
Finance costs - net 12,839 12,613
----------------------------------------------------- -------- --------
Operating profit 66,867 55,769
----------------------------------------------------- -------- --------
Adjustments for non-cash items:
----------------------------------------------------- -------- --------
Share of post tax profits of joint venture (5,029) (6,406)
----------------------------------------------------- -------- --------
Depreciation of property, plant and equipment 37,298 23,801
----------------------------------------------------- -------- --------
Depreciation of leased assets 18,350 19,000
----------------------------------------------------- -------- --------
Amortisation of intangible assets 2,753 2,621
----------------------------------------------------- -------- --------
Amortisation of contract assets - charged to revenue 1,197 1,273
----------------------------------------------------- -------- --------
Gain on disposal of non-current assets (40) (22)
----------------------------------------------------- -------- --------
Adjustment in respect of employee share schemes 2,120 (1,445)
----------------------------------------------------- -------- --------
Changes in working capital:
----------------------------------------------------- -------- --------
Inventories (23,212) (9,494)
----------------------------------------------------- -------- --------
Trade and other receivables 22,995 (51,010)
----------------------------------------------------- -------- --------
Trade and other payables (2,528) 56,289
----------------------------------------------------- -------- --------
Cash generated from operations 120,771 90,376
----------------------------------------------------- -------- --------
The parent company has no operating cash flows.
13 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.
2020 2019
GBP'000 GBP'000
------------------------ ---------- ------------ --------- ----------------- ---------
Cash and cash equivalents 123,816 110,514
------------------------------------ ------------ --------- ----------------- ---------
Borrowings (including overdrafts) (245,987) (197,339)
------------------------------------ ------------ --------- ----------------- ---------
Net bank debt (122,171) (86,825)
==================================== ============ ========= ================= =========
Lease liabilities (245,245) (184,633)
------------------------------------ ------------ --------- ----------------- ---------
Net debt (367,416) (271,458)
------------------------------------ ------------ --------- ----------------- ---------
Cash/other Borrowings
financial (including Net bank
assets overdrafts) debt Lease liabilities Net debt
Net debt reconciliation GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- ------------ --------- ----------------- ---------
At 31 December 2018 88,047 (113,041) (24,994) (142,948) (167,942)
------------------------ ---------- ------------ --------- ----------------- ---------
Cash flows 25,088 8,311 33,399 20,436 53,835
------------------------ ---------- ------------ --------- ----------------- ---------
New borrowings - (95,596) (95,596) (69,689) (165,285)
------------------------ ---------- ------------ --------- ----------------- ---------
Exchange adjustments (2,621) 2,987 366 6,091 6,457
------------------------ ---------- ------------ --------- ----------------- ---------
Other changes - - - 1,477 1,477
------------------------ ---------- ------------ --------- ----------------- ---------
At 29 December 2019 110,514 (197,339) (86,825) (184,633) (271,458)
------------------------ ---------- ------------ --------- ----------------- ---------
Cash flows 10,480 48,908 59,388 52,267 111,655
------------------------ ---------- ------------ --------- ----------------- ---------
New borrowings - (92,563) (92,563) (99,925) (192,488)
------------------------ ---------- ------------ --------- ----------------- ---------
Exchange adjustments 2,822 (4,993) (2,171) (11,309) (13,480)
------------------------ ---------- ------------ --------- ----------------- ---------
Other changes - - - (1,645) (1,645)
------------------------ ---------- ------------ --------- ----------------- ---------
At 3 January 2021 123,816 (245,987) (122,171) (245,245) (367,416)
------------------------ ---------- ------------ --------- ----------------- ---------
Lease cash flows include GBP37,223,000 (2019: GBP5,660,000) paid in respect
of lease purchase obligations in the year.
14 Related party transactions and ultimate controlling party
The Directors do not consider there to be one ultimate
controlling party. The companies noted below are all deemed to be
related parties by way of common Directors.
Sales and purchases made on an arm's length basis on normal
credit terms to related parties during the year were as
follows:
Group 2020 2019
Sales GBP'000 GBP'000
---------------------------------------------------------- --------- --------
Sohi Meat Solutions Distribuicao de Carnes SA
- fee for services 3,351 3,246
----------------------------------------------------------- --------- --------
Sohi Meat Solutions Distribuicao de Carnes SA
- recharge of joint venture costs 368 352
----------------------------------------------------------- --------- --------
Dalco B.V. 313 117
----------------------------------------------------------- --------- --------
Foods Connected Limited 3 -
----------------------------------------------------------- --------- --------
Group 2020 2019
Purchases GBP'000 GBP'000
========================================================== --------- --------
Foods Connected Limited 351 340
----------------------------------------------------------- --------- --------
Amounts owing from related parties at the year end were as follows:
Owed from related
parties
2020 2019
Group GBP'000 GBP'000
---------------------------------------------------------- --------- --------
Foods Connected Limited 15 -
----------------------------------------------------------- --------- --------
Sohi Meat Solutions Distribuicao de Carnes SA 393 348
----------------------------------------------------------- --------- --------
Dalco B.V. 282 117
----------------------------------------------------------- --------- --------
690 465
---------------------------------------------------------- --------- --------
Amounts owing to related parties at the year end were as follows:
Owed to related
parties
2020 2019
Group GBP'000 GBP'000
---------------------------------------------------------- --------- --------
Foods Connected Limited 85 66
----------------------------------------------------------- --------- --------
Dalco B.V. 123 -
----------------------------------------------------------- --------- --------
208 66
---------------------------------------------------------- --------- --------
The Company's related party transactions with other Group companies during
the year were as follows:
2020 2019
Company GBP'000 GBP'000
---------------------------------------------------------- --------- --------
Hilton Foods Limited - dividend received 21,000 27,200
----------------------------------------------------------- --------- --------
At the year end GBP14,272,000 was owed by Hilton Foods Limited (2019:
GBP10,272,000).
Details of key management compensation are given in a note to the full
financial statements.
15 Alternative Performance Measures
The Group's performance is assessed using a number of alternative performance
measures (APM's).
The Group's alternative profitability measures are presented before exceptional
items, amortisation of certain intangible assets acquired through business
combinations and the impact of IFRS 16 - Leases.
The measures are presented on this basis, as management believe they provide
useful additional information about the Group's performance and aids a
more effective comparison of the Group's trading performance from one period
to the next.
Adjusted profitability measures are reconciled to unadjusted IFRS results
on the face of the income statement below.
Add back: Less: IAS Add back:
IFRS 16 17 Lease Reported Amortisation
Depreciation accounting excluding of acquisition
Reported and interest costs IFRS 16 intangibles Adjusted
53 weeks ended 3 January GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2021
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Operating profit 66,867 18,163 (20,451) 64,579 2,449 67,028
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Net finance costs (12,839) 6,874 - (5,965) - (5,965)
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Profit before income tax 54,028 25,037 (20,451) 58,614 2,449 61,063
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Profit for the period 42,040 24,074 (20,451) 45,663 1,984 47,647
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Less non-controlling interest (2,304) (382) 387 (2,299) - (2,299)
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Profit attributable to
members of the parent 39,736 23,692 (20,064) 43,364 1,984 45,348
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Depreciation and amortisation 59,558 (18,163) - 41,395 (2,449) 38,946
============================== ======== ============= =========== ========== =============== ========
EBITDA 126,425 - (20,451) 105,974 - 105,974
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Earnings per share pence pence pence
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Basic 48.6 53.0 55.4
============================== ======== ============= =========== ========== =============== ========
Diluted 47.9 52.3 54.7
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Add back: Less: IAS Add back:
IFRS 16 17 Lease Reported Amortisation
Depreciation accounting excluding of acquisition
Reported and interest costs IFRS 16 intangibles Adjusted
52 weeks ended 29 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2019
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Operating profit 55,769 18,820 (22,315) 52,274 2,438 54,712
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Net finance costs (12,613) 7,641 - (4,972) - (4,972)
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Profit before income tax 43,156 26,461 (22,315) 47,302 2,438 49,740
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Profit for the period 35,160 24,849 (22,315) 37,694 1,975 39,669
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Less non-controlling interest (2,095) (370) 364 (2,101) - (2,101)
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Profit attributable to
members of the parent 33,065 24,479 (21,951) 35,593 1,975 37,568
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Depreciation and amortisation 46,673 (18,820) - 27,853 (2,438) 25,415
============================== ======== ============= =========== ========== =============== ========
EBITDA 102,442 - (22,315) 80,127 - 80,127
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Earnings per share pence pence pence
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Basic 40.5 43.6 46.0
============================== ======== ============= =========== ========== =============== ========
Diluted 40.1 43.1 45.5
------------------------------ -------- ------------- ----------- ---------- --------------- --------
The depreciation and amortisation figure includes GBP1,197,000 (2019: GBP1,273,000)
amortisation of contract assets charged to revenue and adds back a gain
on disposal of GBP40,000 (2019: GBP22,000).
Segmental operating profit reconciles to adjusted segmental operating profit
as follows:
Add back: Less: IAS Add back:
IFRS 16 17 Lease Reported Amortisation
Depreciation accounting excluding of acquisition
Reported and interest costs IFRS 16 intangibles Adjusted
53 weeks ended 3 January GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2021
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Europe 60,538 5,757 (6,163) 60,132 2,449 62,581
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Australasia 19,091 12,406 (14,288) 17,209 - 17,209
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Central costs (12,762) - - (12,762) - (12,762)
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Total 66,867 18,163 (20,451) 64,579 2,449 67,028
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Add back: Less: IAS Add back:
IFRS 16 17 Lease Reported Amortisation
Depreciation accounting excluding of acquisition
Reported and interest costs IFRS 16 intangibles Adjusted
52 weeks ended 29 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2019
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Europe 53,039 5,872 (6,116) 52,795 2,438 55,233
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Australasia 12,840 12,948 (16,199) 9,589 - 9,589
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Central costs (10,110) - - (10,110) - (10,110)
------------------------------ -------- ------------- ----------- ---------- --------------- --------
Total 55,769 18,820 (22,315) 52,274 2,438 54,712
------------------------------ -------- ------------- ----------- ---------- --------------- --------
In the prior year, Western and Central Europe were presented as separate
segments, however these have now been combined into a single European segment.
2019 segmental information has been restated to show the combined segment.
This information is provided by RNS, the news service of the
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END
FR UPUUGCUPGGMQ
(END) Dow Jones Newswires
April 07, 2021 02:00 ET (06:00 GMT)
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