TIDMHFG
RNS Number : 3854H
Hilton Food Group PLC
06 April 2022
6 April 2022
Hilton Food Group plc
The International Protein Partner of Choice
Hilton Food Group plc, a leading international protein producer,
today announces its preliminary results for the 52 weeks ended 2
January 2022.
Financial highlights:
-- Group revenue up 21.6%* to GBP3.3bn (2020: GBP2.77bn), driven
by growth across proteins and geographies
-- Volume growth of 7.0%* to 492,588 tonnes (2020: 469,110 tonnes)
-- Adjusted profit before tax higher by 13.0%* to GBP67.2m (2020: GBP61.1m)
-- IFRS profit before tax lower by 12.3% to GBP47.4m (2020:
GBP54.0) after exceptional items of GBP8.2m
-- Adjusted basic earnings per share up 13.8%* at 61.3p (2020: 55.4p)
-- IFRS basic earnings per share down 7.4% at 45.0p (2020: 48.6p)
-- Strong cash flows from operating activities GBP121.3m (2020:
GBP120.8m) with GBP57.4m capex investment and a strong balance
sheet following refinancing
-- Proposed final dividend of 21.5p, taking total dividend for 2021 to 29.7p (2020: 26.0p)
* On a 52 week constant currency basis
Strategic highlights:
1. Delivering sustained growth across all protein categories
o Meat and seafood 14.3% volume growth 2019-2021
o Vegan & vegetarian 26.4% volume growth 2019-2021
o Added value easier meals 36.0% volume growth 2019-2021
2. Growing across international markets
o Over 75% of Group's 2021 volumes produced in countries outside
the UK
o Entered new markets across Europe, including acquisition of
vegetarian producer Dalco
o Significant growth in Australasia with seafood launch in New
Zealand
o Moving into North American market for first time with the
acquisition of leading smoked salmon producer, Foppen with GBP75m
equity raise
o Launched in UK food service market through acquisition of
Fairfax Meadow
3. Becoming best-in-class FMCG for technology
o Ongoing transformation of Hilton Seafood with industry leading
automation and palletisation
o Growing engineering and technology solutions offer through
2022 JV with Agito Group
o Continued growth of Foods Connected supply chain management
services, with contracts in new sectors and geographies
4. Supporting our Partners to become First Choice for Sustainable Protein
o Launching new ESG strategy, The Sustainable Protein Plan,
focused on 3 pillars of People, Planet and Product, with each
pillar underpinned by three strategic drivers and new targets and
goals
o Planet: Science Based Targets approved for Scopes 1, 2, and 3
during 2021
o Product: 76% average recycled content across entire tray range
during 2021
Commenting on the results Chief Executive Philip Heffer
said:
"This has been a year of delivery and diversification. We have
delivered another strong financial performance with volumes and
revenue both growing, maintaining a trend of continuous volume
growth every year since Hilton's flotation in 2007. We grew
adjusted operating profit by 12.7%*, in line with the 11% compound
annual growth rate we have delivered in our fourteen years as a
listed business. These results reflect an outstanding team effort
as well as the power of our business model, which is rooted in the
partnerships we have built with customers across Europe and
Asia-Pacific.
"We have also made strategic progress in diversifying the
business. Last year, we set ourselves the goal of becoming the
protein partner of choice. Put simply, we want to offer all the
proteins people want to put on their plates, in home and out of
home, not just in Europe and Asia, but in North America too. To
reach that goal, we have been transforming our business to expand
into new protein products and categories, to enter new
international markets, to deepen our technology and engineering
capabilities, and to expand our sustainability commitments across
all protein categories.
"The acquisitions we have made over the past year will
accelerate this. Following the completion of the purchase of
Foppen, we are well set to grow further and enter the high growth
smoked salmon market. We already now generate more than two-thirds
of our revenue, and three-quarters of our volume, outside the UK,
and are therefore well placed to create long-term sustainable
value, in spite of short-term challenges or market headwinds. While
those headwinds persist, our model positions us well to provide
nutritious, affordable, and increasingly sustainable protein at
scale, fulfilling changing consumer demands."
Financial performance - overview:
2021 2020 Change
52 weeks 53 weeks Reported One-year Two-year
to to 52 week 52 week
2 January 3 January constant constant
2022 2021 currency currency
Volume (1) (tonnes) 492,588 469,110 5.0% 7.0% 15.1%
Revenue GBP3,302.0m GBP2,774.0m 19.0% 21.6% 34.4%
Adjusted results
(2)
Adjusted operating
profit GBP73.6m GBP67.0m 9.8% 12.7% 15.7%
Adjusted profit before
tax GBP67.2m GBP61.1m 10.0% 13.0% 15.8%
Adjusted basic earnings
per share 61.3p 55.4p 10.6% 13.8%
Adjusted EBITDA GBP119.5m GBP106.0m 12.7% 15.3% 21.8%
IFRS results Pre-exceptional
Operating profit GBP63.4m GBP66.9m -5.1% 5.4% (3)
Profit before tax GBP47.4m GBP54.0m -12.3% 2.9% (3)
Basic earnings per
share 45.0p 48.6p -7.4% 5.3% (3)
Cash flows from operating
activities GBP121.3m GBP120.8m 0.4%
Other measures
EBITDA GBP139.0m GBP126.5m 9.9%
Net bank debt (4) GBP84.6m GBP122.2m
Dividends paid and
proposed in respect
of the year 29.7p 26.0p 14.2%
Notes
1 Volume includes 50% share of the Australian (2020 H1 only),
Dutch (until date of acquisition) and Portuguese joint venture
activities
2 Adjusted results represent the IFRS results before deduction
of acquisition intangibles amortisation, depreciation of fair value
adjustments to property, plant & equipment, exceptional items
and also IFRS 16 lease adjustments as detailed in the Alternative
performance measures note 18. 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 Exceptional items include acquisition costs, costs of Belgium
assets destroyed by fire offset by a gain on the acquisition of
100% of Dalco as detailed in note 4
4 Net bank debt represents borrowings less cash and cash equivalents excluding lease liabilities
Enquiries
Hilton Food Group Tel: +44 (0) 1480 387214
Philip Heffer, Chief Executive Officer
Nigel Majewski, Chief Financial Officer
Headland Consultancy Limited Tel: +44 (0) 20 3805 4822
Edward Young Email: hiltonfood@headlandconsultancy.com
Will Smith
Joanna Clark
This announcement contains inside information.
About Hilton
Hilton Food Group plc is a leading international multi-protein
producer, serving customers and retail partners across the world
with high quality meat, seafood, vegan and vegetarian foods and
meals. We are a business of over 6,000 employees, operating from 24
technologically advanced food processing, packing and logistics
facilities across 19 markets in Europe, Asia Pacific and North
America. For almost thirty years, our business has been built on
dedicated partnerships with our customers and suppliers, many
forged over several decades, and together we target long-term,
sustainable growth and shared value. We supply our customers with
high quality, traceable, and assured food products, with high
standards of technical excellence and expertise.
Chairman's introduction
Strategic progress
We have continued to make good progress growing across
international markets. We successfully opened our multi-protein
facility in New Zealand and there has been continued growth in
protein diversification into plant-based, seafood and convenience
foods.
The acquisition of Fairfax Meadow further diversifies the
business into the UK food service market. We were also able to
welcome Dalco fully into the Hilton Group through the purchase of
the remaining shares, thereby strengthening our vegan and
vegetarian proposition. Our automation, engineering and services
arm has developed through the agreement for a joint venture with
Agito Group, an Australian automation and technology solutions
business, which brings together excellence in automation and food
supply chain expertise. We acquired Foppen, a specialist smoked
salmon business, with facilities in the Netherlands and Greece,
which enhances our existing fish portfolio and is an entry point
for us into the North American retail market. We financed the
acquisition via an equity raise, and completed post the year
end.
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 2021 we again increased our volumes maintaining a trend of
continuous growth achieved in every year since Hilton's flotation
in 2007. There was strong growth in adjusted profit and earnings
per share despite Covid related costs although IFRS metrics were
lower due to exceptional items. We also continued to invest in
people and infrastructure to support future growth across the
Group. There was an extensive fire at our Belgium facility but we
ensured continued supply to our customer and plan to restore our
production capability. Our response during the year demonstrates
our ability to thrive in the face of these tough challenges.
Hilton generated strong operating cash flows during 2021 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, undrawn
committed bank facilities and operating well within our banking
covenants. In January 2022 we successfully renewed our bank
facilities for a further five years.
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 21.5p per ordinary share , total dividends in
respect of 2021 will be 29.7p per ordinary share, an increase of
14.2% compared to last year.
Our Board, purpose and governance
The Hilton Board is responsible for the long-term success of the
Group and establishing its purpose, values and strategy aligned
with its desired culture. Our purpose is to create efficiency and
flexibility in the food supply chain whilst maintaining high
quality through innovative and sustainable food manufacturing and
supply chain solutions with the ambition to be the first choice
partner for food retailers seeking excellence, insight and
growth.
To achieve this the Board has an appropriate mix of skills,
depth and diversity and a range of practical business experience,
which is available to support and guide our management teams across
a wide range of countries as well as having in place succession
planning and maintaining a talent pipeline. We remain committed to
achieving good governance balanced against our desire to preserve
an agile and entrepreneurial approach. I would like to thank my
colleagues on the Board for their support, counsel and expertise
during the year. There are some Board changes for 2022. Patricia
Dimond joined the Board and John Worby will step down at the AGM
after six years following which Patricia will become Audit
Committee chair and Angus Porter will become the Senior Independent
Director. We wish John well and thank him for his service. Nigel
Majewski also indicated his desire to step down from the Board at
the AGM but will continue in a reduced capacity as director of
investor relations and strategic development. It is planned that
the current Group Financial Controller, Matt Osborne, will be
appointed to succeed him as Chief Financial Officer. I am delighted
that Matt will become Hilton's new CFO. He has impressed the Board
and the wider management team during his time as Group Financial
Controller, and he represents the ideal candidate to take over from
Nigel Majewski. I would like to thank Nigel for his significant
contribution to Hilton's successful journey over the past 15 years.
He was a key part of the Group's successful flotation and he has
helped oversee Hilton's sustained growth since then.
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
The vulnerabilities of our food system are becoming ever more
apparent highlighting the interdependencies between business,
climate and society. We are at a critical juncture in the future of
our planet with last year's IPCC report warning of increasingly
extreme heatwaves, droughts and flooding, and a key temperature
limit being broken in just over a decade. Continuing to perform as
a prosperous and resilient business means we must also drive
meaningful change for our planet. We recognise that business has a
crucial role in translating the COP26 Glasgow Climate Pact
commitments into rapid action. That's why we are strengthening our
commitment to the Science Based Targets Initiative to achieve a
1.5C trajectory, marking our ambition towards a net negative
future.
Outlook and current trading
Against the backdrop of a more challenging environment, with
global uncertainties impacting supply chains and inflation, the
Hilton Board is confident of making further progress in 2022. We
continue to explore opportunities with existing and new customers
for further expansion in our domestic and overseas markets.
Our short and medium term growth prospects are underpinned by
the Foppen, Dalco and Fairfax Meadow acquisitions 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 2022 at noon. Please refer to our website
at
www.hiltonfoodgroupplc.com/en/investors/shareholder-meeting-documents/
for further guidance.
Robert Watson OBE
Chairman
5 April 2022
Chief Executive's summary
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 towards our goal of becoming the
protein partner of choice, 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.
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.
In 2021 we operated facilities in eight European countries and
four facilities in Australasia, each run by a local management team
enhanced by specialist central leadership, expertise, advice and
support. A Portuguese facility is operated by a joint venture
company in which we share the profits. Products from our facilities
are sold in fourteen European countries, Australia and New
Zealand.
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.
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.
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 consider that our application of technology delivers
competitive advantage to our customers, and with ongoing focus will
continue to do so in the future.
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 five years
totalled GBP364m.
We are a committed and trusted 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
Australasia supplemented by targeted acquisitions. We have
demonstrated that this business model is capable of being
successfully applied to both new proteins and transferred to new
countries, adapted with our local customers to meet their specific
requirements.
2021 Performance overview
2021 saw continued year-on-year sales and volume growth driven
primarily by expansion including from a new facility in New Zealand
which opened during the year as well as continued growth in
Australia. We delivered growth in our core meat business,
innovation, and new ventures despite continuing Covid challenges
demonstrating our resilience and flexibility to changing customer
demands through the pandemic. There was expansion in added value
poultry and innovation in seasonal range development and we saw
double digit growth in fresh convenience foods. There was a strong
performance in the seafood category despite challenging market
conditions and we grew our vegan and vegetarian business through
innovation and partnerships with global brands and retailers. Our
consumer-led innovation resulted in over 700 new product launches
during the year. The Foods Connected joint venture business
continues to grow, providing end-to-end supply chain management
services and further opportunities for category diversification.
During the year we experienced an extensive fire at our Belgium
facility and it was pleasing to see a rapid response to ensure
continued supply to our customer with plans to restore our
production capability under way.
Overall volume increased by 7.0% on a comparable 52 week basis
to 492,588 tonnes (2020: 469,110 tonnes) delivering sustained
volume growth across all protein categories with 2-year compound
annual growth in meat & seafood of 14.3%, vegan &
vegetarian 26.4% and added value easier meals 36.0%. In 2021 over
75% of the Group's volumes were produced in countries outside the
UK. Adjusted operating profit increased by 12.7% on a comparable 52
week constant currency basis although the overall operating margin
decreased to 2.2% (2020: 2.4%) reflecting the Australia post-JV
transition arrangements and higher raw material prices. The margin
per kg increased to 14.9p (2020: 14.3p) with progress made in added
value and convenience foods and from reduced central costs. Our
customer service level remains best in class at 96.4% (2020: 95.4%)
reflecting an outstanding performance during the challenging period
as the economy emerges from Covid.
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
2021 the impact of average exchange rates on our results compared
with 2020 was marginal.
Sustainability
We understand the importance of our role in the future of a
sustainable food system that protects and restores our planet's
resources and enhances the lives of the people and animals that
produce it. This year has strengthened our dedication to being a
leader in sustainable business to address the concerns that matter
most to our stakeholders to secure a better future for all.
Sustainability is at the heart of how we do business and this year
we are pleased to introduce our new 2025 sustainable protein plan
with new robust targets, built around improved transparency and
action re-focused to three pillars: people, planet and product. We
are aligning our business to deliver long-term benefits to both
people and planet, using our scale and reach to drive
transformative change.
In 2021 our Science Based Targets were approved and we signed
the business ambition to 1.5degC committing us to net zero before
2050. 100% of the paper and board we use comes from certified
forests and 76% of our meat trays are made from 100% recycled PET.
98% of our UK seafood was sourced from Marine Stewardship Council
certified fisheries and we signed the EU Code of Conduct on
Responsible Food Business and Marketing Practices during the
year.
Segment performance
Europe
Adjusted operating profit of GBP61.8m (2020: GBP 61.4 m*) on
turnover of GBP 1,987.4 m (2020: GBP1,952.1m*)
This operating segment covers the Group's businesses and joint
ventures in the UK, Ireland, Holland, Belgium, Sweden, Denmark,
Portugal and Central Europe. Our products are sold in 14 countries
across Europe. During the year we purchased the remaining shares in
the Dalco business and additionally acquired Fairfax Meadow, a
UK-based business in the UK food service sector. Our Belgium
facility suffered an extensive fire in June 2021. We quickly
implemented our contingency plan to ensure continued local supply
to our customers and we are working hard to restore our production
capability while progressing an insurance claim. At SV Cuisine we
have moved sous vide production to Huntingdon to reduce cost and
provide additional capacity in a growing segment and we agreed
early settlement of the acquisition deferred consideration.
Volumes were 2.0% lower on a 52 week basis following the Covid
lockdown boost in the corresponding 2020 period. Over a two year
period volumes grew at an average 3.1% per year. Sales on a 52 week
constant currency basis grew by 3.1% and operating profit by 2.3%
despite the lower volume. Operating margins were unchanged at 3.1%
(2020: 3.1%) and operating profit margin per kg increased to 18.5p
(2020: 18.0p).
Australasia
Adjusted operating profit of GBP22.4m (2020: GBP16.9m*) on
turnover of GBP1,314.6m (2020: GBP769.6m*)
In Australia the Group previously operated a joint venture with
Woolworth earning service fees based on retail packed meat produced
at plants in Bunbury, Western Australia and Melbourne, Victoria. In
July 2020 these plants transitioned to Hilton's ownership through
the purchase of the assets relating to the joint venture. A new
Hilton facility in Brisbane, Queensland opened in 2019 and a
further new facility in New Zealand opened in July 2021 to supply
beef, lamb, pork, chicken, seafood and added-value products.
Volumes for the year 52 week basis, which in the first half of
2020 included 50% of the JV activities, increased by 32.8% through
the new facility in New Zealand and the annualisation of the higher
volume growth at the Brisbane facility. Constant currency sales on
a 52 week basis, which in the first half of 2020 excluded the JV
activities, increased by 68.0% which is attributable to the new
facility in New Zealand and also the recognition of revenue from
the two Australian joint venture facilities following their
transition to Hilton ownership. Operating profit increased to
GBP22.4m (2020: GBP16.9*m) although the operating profit margin per
kg was steady at 14.1p (2020: 14.2p).
* on a comparable 52 week basis
Resourcing for growth: culture and people
Our people are at the heart of our success and they have risen
tremendously to every opportunity and challenge presented during
2021. In partnership with our customers and against the backdrop of
the Covid-19 pandemic our teams have dedicated themselves to
feeding our nations' families. At the same time, they have ensured
the delivery of our growth agenda through organic growth into new
markets and the acquisition of new businesses that compliment and
broaden our offering.
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 changing pandemic. We have
ensured investment in our facilities, systems and equipment and we
have fully engaged our people as we have adjusted our ways of
working. I am proud of how we always work as one team sharing best
practice across our international operating companies and
introducing innovative approaches.
I am delighted that a record number of colleagues completed our
annual engagement survey. We are committed to work safely and with
regard to the well-being of our colleagues and this year we added a
number of health and safety related questions to our survey. Our
surveys provide invaluable feedback on which our operating
companies can build plans that continuously improve employee
satisfaction.
We increased the scope of our leadership development programmes
with our first emerging leaders programme and overcame the
challenges of the pandemic in running this successful international
programme virtually. We have also continued to 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 huge benefits to our business and
each other. This year we became a strategic sponsor of Meat
Business Women the global professional networking movement for
progressive women working in the meat sector. We also launched our
own internal women's network, an inclusive group engaging and
enabling those who identify as women in Hilton Food Group and the
food sector through support, development and action.
Our recruitment policies and practices are guided by local
legislation in the countries in which we operate. In the UK we give
full and fair consideration to candidates with disabilities. We
utilise occupational health expertise to assess new recruits' needs
and make any required adjustments to the workplace and to provide
ongoing support. We also adapt training to meet the needs of
disabled employees. In addition, we have established a wellbeing
programme which includes a network of mental health first aiders
and on-site mental health and wellbeing clinics in partnership with
our professional occupational health providers.
The Group currently employs over 6,000 colleagues across Europe
and Australasia. We work as "one team" with local empowered
leadership teams dedicated to the needs of our customers and their
consumers. These teams are equipped with excellent local consumer
and market insight. They also 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 delivers
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 dedication and resilience during 2021 and
their continuing commitment to the Group's ongoing growth and
development. In addition, I would like to take this opportunity to
recognise the significant contribution made by Hilton's CFO Nigel
Majewski over the past 15 years. As he decides to step back from
heading up the finance function, I would like to thank him for his
instrumental role in having helped drive forwards the Group's
continued growth, both financially and operationally. I look
forward to both welcoming Matt Osborne as our new CFO, and working
with Nigel in his new role as director of investor relations and
strategic 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
5 April 2022
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 2021. Hilton's
overall financial performance saw continued strong growth in
volumes, sales, profitability and basic earnings per share on an
adjusted basis. Cash flow generation was strong, supporting our
ongoing significant investment in facilities.
Basis of preparation
The Group is presenting its results for the 52 week period ended
2 January 2022, with comparative information for the 53 week period
ended 3 January 2021. The financial statements of the Group are
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and UK
adopted International Accounting Standards.
Hilton uses Alternative Performance Measures (APMs) to monitor
the underlying performance of the Group. Management considers that
APMs better reflect business performance and provide useful
information in line with how management monitor and manage the
business day-to-day. 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.
2021 Financial performance
Volume and revenue
Volumes grew by 5.0% (7.0% on a 52 week basis) in the year
driven by growth in Australasia including the new facility in New
Zealand. Additional details of volume growth by business segment
are set out in the Chief Executive's summary. Revenue increased
19.0% and by 21.6% 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.
Operating profit and margin
Adjusted operating profit of GBP73.6m (2020: GBP67.0m) was 9.8%
higher than last year and 12.7% higher on a 52 week constant
currency basis driven predominantly by expansion in Australasia.
IFRS operating profit was GBP63.4m (2020: GBP66.9m) after charging
GBP7.1m in exceptional costs (2020: GBPnil). The operating profit
margin in 2021 declined to 2.2% (2020: 2.4%) 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 increased to 14.9p (2020: 14.3p)
reversing the trend of recent years.
Net finance costs
Net finance costs excluding exceptional items and lease interest
increased to GBP6.4m (2020: GBP5.9m) reflecting higher borrowings
that financed our expansion programme. Interest cover in 2021 was
unchanged at 11 times (2020: 11 times). IFRS net finance costs were
GBP16.0m (2020: GBP12.8m).
Taxation
The taxation charge for the period was GBP14.5m (2020:
GBP13.5m). The effective tax rate was 21.6% (2020: 22.0%). The IFRS
taxation charge was GBP8.1m (2020: GBP12.0m) with an effective tax
rate of 17.1% (2020: 22.2%).
Net income
Net income, representing profit for the year attributable to
owners of the parent of GBP50.5m (2020: GBP45.3m) was 11.4% higher
than last year and 14.5% higher on a 52 week constant currency
basis. IFRS net income was GBP37.1m (2020: GBP39.7m).
Earnings per share
Basic earnings per share 61.3p (2020: 55.4p) was 10.6% higher
than last year and 13.8% on a 52 week constant currency basis. IFRS
basic earnings per share were 45.0p (2020: 48.6p). Diluted earnings
per share were 44.5p (2020: 47.9p).
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
Adjusted EBITDA, which is used by the Group as an indicator of
cash generation, increased by 12.7% to GBP119.5m (2020: GBP106.0m)
reflecting the growth in profitability following significant
investment and by 15.8% on a 52 week constant currency basis. IFRS
EBITDA was GBP139.0m (2020: GBP126.5m).
Free cash flow and net debt position
Operating cash flow was strong in 2021 with cash flows from
operating activities of GBP121.3m (2020: GBP120.8m). IFRS free cash
outflow after capital expenditure of GBP57.4m and acquisitions
GBP41.6m but before dividends and financing was GBP11.7m (2020:
inflow GBP0.6m). During the year GBP75m was raised through issuing
equity.
The Group closing net bank debt comprising borrowings less cash
and cash equivalents excluding lease liabilities, was GBP84.6m
(2020: GBP122.2m) reflecting bank borrowings of GBP224.7m net of
cash balances of GBP140.1m. Net debt including lease liabilities
was GBP328.0m (2020: GBP367.4m).
At the end of 2021 the Group had undrawn committed bank
facilities under its syndicated banking facilities of GBP96.8m
(2020: GBP51.5m). 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 the
year was at least 65% for all these metrics. Existing bank
facilities were due to expire in October 2022 and consequently all
borrowings at the end of the year were classed as current. Since
the end of the year the Group renewed its banking facilities with a
GBP424m five year revolving credit and term loan facility agreed
with a syndicate of lenders.
The resilience of the Group has been assessed by applying
significant downside sensitivities to the Group's cash flow
projections. Allowing for these sensitivities and potential
mitigating actions the Board is satisfied that the Group has
adequate headroom under its existing committed facilities and will
be able to continue to operate well within its banking
covenants.
Dividends
The Group has maintained a progressive dividend policy since
flotation. The Board is satisfied that, given the Group has
adequate headroom under its existing facilities, it is appropriate
to continue to operate this dividend policy and has therefore
recommended a final dividend of 21.5p per ordinary share in respect
of 2021. This, together with the interim dividend of 8.2p per
ordinary share paid in December 2021, represents a 14.2% increase
in the full year dividend, as compared with last year. The final
dividend, if approved by shareholders, will be paid on 1 July 2022
to shareholders on the register on 3 June 2022 and the shares will
be ex dividend on 2 June 2022.
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:
2021 2020 Definition, method of calculation and analysis
(52 weeks) (53 weeks)
Financial KPIs
------------ ------------ ---------------------------------------------------
Revenue growth (%) 19.0% 52.9% Year on year revenue growth expressed as
a percentage. The 2021 increase mainly reflected
volume growth and the recognition of revenue
following the transition of the two Australian
JV facilities to Hilton ownership and the
new facility in New Zealand.
------------ ------------ ---------------------------------------------------
Adjusted operating 2.2% 2.4% Adjusted operating profit expressed as a
profit margin (%) percentage of turnover. The operating profit
margin % in 2021 was lower due mainly 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 14.9 14.3 Adjusted operating profit per kilogram processed
profit margin (pence and sold in pence. The increase in 2021 compared
per kg) with 2020 reflects progress made in added
value and convenience foods and from reduced
central costs.
------------ ------------ ---------------------------------------------------
Adjusted earnings 119.5 106.0 Adjusted operating profit before depreciation
before interest, and amortisation. The increase reflected
taxation, depreciation the growth in profitability following significant
and amortisation investments.
(EBITDA) (GBPm)
------------ ------------ ---------------------------------------------------
Free cash flow (GBPm) (11.7) 0.6 IFRS cash (out)/inflow before minorities,
dividends and financing. Operating cash flow
generation in 2021 increased in line with
EBITDA with lower capex spend but impacted
by costs of acquisitions of GBP41.6m during
the year.
------------ ------------ ---------------------------------------------------
Net debt / EBITDA 70.9% 115.3% Year end net bank debt as a percentage of
ratio (%) adjusted EBITDA. The decrease is due to the
equity raise of GBP75m and continued strong
operating cash generation.
------------ ------------ ---------------------------------------------------
Non-financial KPIs
------------ ------------ ---------------------------------------------------
Growth in sales volumes 5.0% 26.2% Year on year volume growth. Volume growth
(%) was due primarily to opening the new facility
in New Zealand in addition to continued growth
in Australia.
------------ ------------ ---------------------------------------------------
Employee and labour 60.9 57.2 Labour cost of producing food products as
agency costs (pence a proportion of volume. The increase reflects
per kg) the Australia JV transition.
------------ ------------ ---------------------------------------------------
Customer service 96.4% 95.4% Packs of product delivered as a % of the
level (%) orders placed. The customer service level
remains best in class.
------------ ------------ ---------------------------------------------------
In addition, a much wider range of financial and operating KPIs
are continuously tracked at business unit level.
Going concern statement
The Directors have performed a detailed assessment, including a
review of the Group's budget for the 2022 financial year and its
longer term plans, including consideration of the principal risks
faced by the Group. The resilience of the Group has been assessed
by applying significant downside sensitivities to the Group's cash
flow projections. Allowing for these sensitivities and potential
mitigating actions the Board is satisfied that the Group is able to
continue to operate well within its banking covenants and has
adequate headroom under its new committed facilities which do not
expire until 2027. The Directors are satisfied that the Company and
the Group have adequate resources to continue to operate and meet
its liabilities as they fall due for the foreseeable future, a
period considered to be at least 12 months from the date of signing
these financial statements. For this reason they continue to adopt
the going concern basis for preparing the financial statements.
The Group's bank borrowings as detailed in the financial
statements and the principal banking facilities, which support the
Group's existing and contracted new business, are committed. The
Group is in full compliance with all its banking covenants and
based on forecasts and sensitised projections is expected to remain
in compliance. Future geographical expansion which is not yet
contracted, and which is not built into our internal budgets and
forecasts, may require additional or extended banking facilities
and such future geographical expansion will depend on our ability
to negotiate appropriate additional or extended facilities, as and
when they are required. Since the end of the year the Group renewed
its banking facilities with a GBP424m five year revolving credit
and term loan facility.
The Group's internal budgets and forward forecasts, which
incorporate all reasonably foreseeable changes in trading
performance, are regularly reviewed by the Board and show that it
will be able to operate within its current banking facilities,
taking into account available cash balances, for the foreseeable
future.
Viability statement
In accordance with provision 31 of the 2018 UK Corporate
Governance Code, the Directors confirm that they have a reasonable
expectation that the Group will continue to operate and meet its
liabilities, as they fall due, for the three years ending in
December 2024. A period of three years has been chosen for the
purpose of this viability statement as it is aligned with the
Group's three year plan, which is based on the Group's current
customers and does not incorporate the benefits from any potential
new contract gains over this period.
The Directors' assessment has been made with reference to the
Group's current position and strategy taking into account the
Group's principal risks, including those in relation to Covid-19,
and how these are managed. The strategy and associated principal
risks, which the Directors review at least annually, are
incorporated in the three year plan and such related scenario
testing as is required. The three year plan makes reasoned
assumptions in relation to volume growth based on the position of
our customers and expected changes in the macroeconomic environment
and retail market conditions, expected changes in food raw
material, packaging and other costs, together with the anticipated
level of capital investment required to maintain our facilities at
state-of-the-art levels.
Cautionary statement
This Strategic report contains forward-looking statements. Such
statements are based on current expectations and assumptions and
are subject to risk factors and uncertainties which we believe are
reasonable. Accordingly Hilton's actual future results may differ
materially from the results expressed or implied in these
forward-looking statements. We do not undertake to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Nigel Majewski
Chief Financial Officer
5 April 2022
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 considers the risk appetite and 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 2021
Brexit
Hilton's exposure is generally mitigated through our
predominantly local sourcing and operating model. Impacts are
likely to continue through 2022 as the UK and EU regulatory and
trade environments evolve. The Group is ensuring compliance through
ongoing engagement with the appropriate authorities and regulatory
forums. Our dedicated Brexit team continues to monitor policy
changes and amend processes and operations as required.
The structure of the UK workforce is changing in response to
both reduced access to EU labour markets and Covid-related
employment trends. Our recruitment and retention strategies are
evolving in line with this changing landscape and our continued
focus on technology and automation further reduce risk exposure in
this area.
Principal risks
The most significant business risks that the Group faces,
together with the measures we have adopted to mitigate these risks,
are outlined in the table below. This is not intended to constitute
an exhaustive analysis of all risks faced by the Group, but rather
to highlight those which are the most significant, as viewed from
the standpoint of the Group as a whole.
Description of Its potential impact Risk mitigation measures and strategies
risk adopted
Risk 1
The Group strategy The Group has a relatively The Group is progressively widening its
focuses on a small narrow, but expanding, customer base and has maintained a high
number of customers customer base, with sales level of investment in state-of-the-art
who can exercise to subsidiary or associated facilities, which together with management's
significant buying companies of the Tesco, continuous focus on reducing costs, allow
power and influence Ahold and Woolworths groups it to operate very efficiently at very high
when it comes still comprising the larger throughputs and price its products
to contractual part of Hilton's revenue. competitively.
renewal terms The larger retail chains Hilton operates a decentralised,
at 5 to 15 year have over many years increased entrepreneurial
intervals. their market share of protein business structure, which enables it to
No movement products in many countries, work very closely and flexibly with its
as customers continue to retail partners in each country, in order
move away from high street to achieve high service levels in terms
butchers towards one stop of orders delivered, delivery times, compliance
convenience shopping in with product specifications and accuracy
supermarkets. This has of documentation, all backed by an
increased the buying power uncompromising
of the Group's customers focus on food safety, product integrity
which in turn increases and traceability assurance. Hilton has long
their negotiating power term supply agreements in place with its
with the Group, which could major customers, with pricing either on
enable them to seek better a cost plus or agreed packing rate basis.
terms over time.
------------------------------------- -------------------------------------------------
Risk 2
The Group's growth The Group's products predominantly The Group plays a very proactive role in
potential may carry the brand labels enhancing its customers' brand values, through
be affected by of the customer to whom providing high quality, competitively priced
the success of packed food is supplied products, high service levels, continuing
its customers and it is accordingly dependent product and packaging innovation and category
and the growth on its customers' success management support. It recognises that quality
of their packed in maintaining or improving and traceability assurance are integral
food sales. consumer perception of to its customers' brands and works closely
No movement their own brand names and with its customers to ensure rigorous quality
packed food offerings. 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.
------------------------------------- -------------------------------------------------
Risk 3
The progress of Changing consumer purchasing With a sound business model including
the Group's business habits may mean little successful
is affected by or no overall growth in diversification across different proteins,
the macroeconomic meat consumption. Consumer broadening product ranges with our strong
environment and demand may drop due to retail partners and a single-minded focus
levels of consumer food scares and economic on minimising unit packing costs, whilst
spending which conditions. No business maintaining high levels of product quality
is influenced is immune to difficult and integrity, the Group has made continued
by publicity including economic climates and the progress over recent difficult economic
reports concerning consequent pressure on periods. It expects to be able to continue
the risks of consuming levels of consumer spending. to make progress.
certain foods.
No movement
------------------------------------- -------------------------------------------------
Risk 4
As Hilton continues The Group may struggle The Group carefully manages its skilled
to grow there to meet key project objectives resources including succession planning
is more reliance and fail to adhere to regulatory and maintaining a talent pipeline. The Group
on key personnel and legislative requirements, is evolving its people capability balanced
and their ability which in turn detracts with an appropriate management structure
to manage growth, from our performance delivery within the overall organisation. Hilton
change, integration for our customers. continues to invest in on-the-job training
and compliance and career development, whilst recruiting
across new legislative high quality new employees, as required,
and regulatory to facilitate the Group's ongoing growth
environments. and in deploying resource to support the
This risk increases growth projects appropriately. Appointment
as the Group continues of additional key resources and alignment
to expand with of structures have supported the enhancement
new customers of project management control and oversight.
and into new territories Control systems embedded in project management
either organically enable the risks of growth to be appropriately
or through acquisition highlighted and managed. To underscore our
with potentially efforts, we have active relationships with
greater reliance strong industry experts across all areas
on stretched skilled of business growth.
resource and execution
of simultaneous
growth projects.
Increased
------------------------------------- -------------------------------------------------
Risk 5
The Group's business The Group is reliant on The Group maintains a flexible global food
strength is affected its suppliers to provide supply base, which is progressively widening
by its ability sufficient volume of products, as it expands and is continuously audited
to maintain a to the agreed specifications, to ensure standards are maintained, so as
wide and flexible in the very short lead to have in place a wide range of options
global food supply times required by its customers, should supply disruptions occur.
base operating with efficient supply chain
at standards that management being a key
can continuously business attribute. The
achieve the specifications Group sources certain of
set by Hilton its food requirements globally.
and its customers. Tariffs, quotas or trade
No movement 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 6
Contamination This will potentially affect The Group sources its food from a trusted
within the supply the Group's ability to raw material supply base, all components
chain including procure sufficient quantities of which meet stringent national, international
outbreaks of disease of safe raw material. and customer standards. The Group is subject
and feed contaminants to demanding standards which are independently
affecting livestock monitored in every country and reliable
and fish. product traceability and high welfare standards
No movement 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.
------------------------------------- -------------------------------------------------
Risk 7
Significant incidents Such incidents could result The Group has robust business continuity
such as fire, in systems or manufacturing plans in place including sister site support
flood, pandemic process stoppages with protocols enabling other sites to step in
or interruption consequent disruption and with manufacturing and distribution of key
of supply of key loss of efficiency which product lines where necessary. Continuity
utilities could could impact the Group's management systems and plans are suitably
impact the Group's sales. maintained and adequately tested including
business continuity. building risk assessments and emergency
The current Covid-19 power solutions. There are appropriate
pandemic continues insurance
to present challenges arrangements in place to mitigate against
across the globe. any associated financial loss.
No movement The new Belgium facility suffered an extensive
fire in June 2021. We quickly implemented
our contingency plan to ensure continued
local supply to our customers and plan to
restore our production capability.
The Covid-19 mitigation measures that we
put in place were effective in navigating
throughout the pandemic and are well placed.
------------------------------------- -------------------------------------------------
Risk 8
The Group's IT The Group's operations The Group has a robust IT control framework,
systems could are underpinned by a variety minimum operating standards, including working
be subject to of IT systems. Loss or towards National Institute of Technology
cyber-attacks, disruption to those IT requirements, all of which are tested
including ransomware systems or extended times frequently
and fraudulent to recover data or functionality by internal staff and by specialist external
external email could impact the Group's bodies. This framework is established as
activity. These ability to effectively the key control to mitigate cyber risk and
kinds of attacks operate its facilities is applied consistently throughout the Group.
are generally and affect its sales and The increased prominence of IT risk is
increasing in reputation. mitigated
frequency and by investments in IT infrastructure and
sophistication. now forms a regular part of the Group Risk
Management Committee agenda and presentations
Increased to the Board. In accordance with Group strategy
IT risk is considered when looking at new
ventures and control measures implemented
in new sites follow the Group common standards.
There is internal training and resources
available with emphasis on prevention, user
awareness and recovery. Increasingly, IT
forms part of site business continuity
exercises
which test and help develop the capacity
to respond to possible crises or incidents.
The technical infrastructure to prevent
attacks, safeguard data and the resilience
to recover are continuously developed including
yearly assessments to meet emerging threats.
IT systems including financial and banking
systems are configured to prevent fraudulent
payments. There are monthly IT security
reviews to ensure compliance with expected
levels of applications updates, and of server
and data centres together with yearly
penetration
testing.
------------------------------------- -------------------------------------------------
Risk 9
A significant Such breach in health & The Group has established robust health
breach of health safety legislation could & safety processes and procedures across
& safety legislation lead to reputational damage its operations, including a Group oversight
as complexity and regulatory penalties, function which provides key guidance and
increases in managing including restrictions support necessary to strengthen monitoring,
sites across different on operations, fines or best practice and compliance. The Group
product groups personal litigation claims. has also rolled out an enhanced standardised
and geographies. safety framework. Health and safety performance
No movement is reviewed regularly by the Board.
------------------------------------- -------------------------------------------------
Risk 10
The Group's business Potential physical impacts We continue to develop our approach to climate
and supply chain from climate change could change risk mitigation. We have committed
is affected by include a higher incidence to set a science-based target through the
climate change of extreme weather events Science Based Targets initiative and signed
risks comprising such as flooding, drought, the Business Ambition for 1.5degC pledge
both physical and forest fires that could to decarbonise our own operations and supply
and transition disrupt our supply chains chains. We have set energy and water efficiency
risks. Physical and potentially impact targets for our sites and continue to engage
risks include production capabilities, in global collaborative action for
long-term rises increase costs and add decarbonisation
in temperature complexity. Action taken of our key raw materials. We are directing
and sea levels by societies could reduce our efforts towards a net-zero carbon footprint
as well as changes the severity of these impacts. before 2050.
to the frequency
and severity of Governmental efforts to Shifts in consumer demand are an opportunity
extreme weather mitigate climate change for growth in our portfolio of plant based
events. Transition may lead to policy and and seafood products. Additionally, we are
risks include regulatory changes as well ensuring we have the flexibility to adapt
policy changes, as shifts in consumer demand. our supply chains over time to mitigate
reputational impacts, The potential transitional physical disruption.
and shifts in impacts include additional We are conducting an assessment of the key
market preferences costs of low greenhouse physical and transition risks impacting
and technology. gas emission farming systems, our business in line with the Task Force
and the potential of carbon on Climate-related Financial Disclosures
Increased price regulation aimed (TCFD) recommendations. We are also, for
at shifting consumers to the first time this year, reporting on our
lower carbon foods, which initial assessment of climate risks and
may reduce the profitability opportunities in line with the TCFD framework.
of some of our products.
Additionally there is increased
stakeholder focus on climate
change issues. Our reputation
could be impacted if we
are not active in reducing
the climate impacts of
our operations and supply
chains, resulting in lower
demand for our products.
------------------------------------- -------------------------------------------------
Note: References in this preliminary announcement to the
Strategic report, the Corporate and social responsibility report,
the Directors' report and the Corporate Governance statement are to
reports which will be available in the Company's full published
accounts.
Responsibility statement of the Directors in respect of the
Annual report and financial statements
Each of the Directors whose names and functions are set out
below confirms that to the best of their knowledge and belief:
-- the Group and Company financial statements, which have been
prepared in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities and
financial position of the Group and Company and profit of the
Group; and
-- the management reports, which comprise the Strategic report
and the Directors' report, include a fair review of the development
and performance of the business and the position of the Group and
the Company, together with a description of the principal risks and
uncertainties that it faces.
This responsibility statement was approved by the Board of
Directors on 5 April 2022 and is signed on its behalf by:
Directors
R Watson OBE Chairman
N Majewski Chief Financial Officer
Consolidated income statement
2021 2020
52 weeks 53 weeks
Notes GBP'000 GBP'000
------------------------------------------------- ----- ----------- -----------
Continuing operations
------------------------------------------------- ----- ----------- -----------
Revenue 3 3,301,970 2,774,036
------------------------------------------------- ----- ----------- -----------
Cost of sales (2,935,892) (2,452,093)
------------------------------------------------- ----- ----------- -----------
Gross profit 366,078 321,943
------------------------------------------------- ----- ----------- -----------
Distribution costs (25,083) (23,246)
------------------------------------------------- ----- ----------- -----------
Other administrative expenses (272,438) (236,859)
================================================= ===== =========== ===========
Exceptional items 4, 18 (7,050) -
------------------------------------------------- ----- ----------- -----------
Total administrative expenses (279,488) (236,859)
================================================= ===== =========== ===========
Share of profit in joint ventures 1,925 5,029
------------------------------------------------- ----- ----------- -----------
Operating profit 63,432 66,867
------------------------------------------------- ----- ----------- -----------
Finance income 5 10 22
------------------------------------------------- ----- ----------- -----------
Other finance costs (14,913) (12,861)
================================================= ===== =========== ===========
Exceptional finance costs 4, 18 (1,131) -
------------------------------------------------- ----- ----------- -----------
Total finance costs 5 (16,044) (12,861)
------------------------------------------------- ----- ----------- -----------
Finance costs - net (16,034) (12,839)
------------------------------------------------- ----- ----------- -----------
Profit before income tax 47,398 54,028
------------------------------------------------- ----- ----------- -----------
Income tax expense 6 (11,232) (11,988)
================================================= ===== =========== ===========
Exceptional tax income 4, 18 3,116 -
------------------------------------------------- ----- ----------- -----------
Total income tax expense (8,116) (11,988)
------------------------------------------------- ----- ----------- -----------
Profit for the period 39,282 42,040
------------------------------------------------- ----- ----------- -----------
Attributable to:
------------------------------------------------- ----- ----------- -----------
Owners of the parent 37,143 39,736
------------------------------------------------- ----- ----------- -----------
Non-controlling interests 2,139 2,304
------------------------------------------------- ----- ----------- -----------
39,282 42,040
------------------------------------------------- ----- ----------- -----------
Earnings per share attributable to owners of the
parent during the year
------------------------------------------------- ----- ----------- -----------
Basic (pence) 7 45.0 48.6
------------------------------------------------- ----- ----------- -----------
Diluted (pence) 7 44.5 47.9
------------------------------------------------- ----- ----------- -----------
Consolidated statement of comprehensive income
2021 2020
52 weeks 53 weeks
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Profit for the period 39,282 42,040
----------------------------------------------------------- -------- --------
Other comprehensive (expense)/income
----------------------------------------------------------- -------- --------
Currency translation differences (7,090) 4,682
----------------------------------------------------------- -------- --------
Other comprehensive (expense)/income for the year net of
tax (7,090) 4,682
----------------------------------------------------------- -------- --------
Total comprehensive income for the year 32,192 46,722
----------------------------------------------------------- -------- --------
Total comprehensive income attributable to:
----------------------------------------------------------- -------- --------
Owners of the parent 30,417 44,101
----------------------------------------------------------- -------- --------
Non-controlling interests 1,775 2,621
----------------------------------------------------------- -------- --------
32,192 46,722
----------------------------------------------------------- -------- --------
The notes are an integral part of these consolidated financial statements.
Consolidated and Company Balance sheets
Group Company
2021 2020 2021 2020
Notes GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- --------- --------- ------- -------
Assets
--------------------------------------- ----- --------- --------- ------- -------
Non-current assets
--------------------------------------- ----- --------- --------- ------- -------
Property, plant and equipment 9 291,488 290,846 - -
--------------------------------------- ----- --------- --------- ------- -------
Intangible assets 10 105,775 70,071 - -
--------------------------------------- ----- --------- --------- ------- -------
Lease: right of use assets 11 222,004 235,135 - -
--------------------------------------- ----- --------- --------- ------- -------
Investments 5,539 12,622 247,785 157,221
--------------------------------------- ----- --------- --------- ------- -------
Trade and other receivables 2,239 - - -
--------------------------------------- ----- --------- --------- ------- -------
Deferred income tax assets 6,952 6,219 - -
--------------------------------------- ----- --------- --------- ------- -------
633,997 614,893 247,785 157,221
--------------------------------------- ----- --------- --------- ------- -------
Current assets
--------------------------------------- ----- --------- --------- ------- -------
Inventories 156,517 116,941 - -
--------------------------------------- ----- --------- --------- ------- -------
Trade and other receivables 230,388 199,642 2,874 14,272
--------------------------------------- ----- --------- --------- ------- -------
Current tax assets 5,212 - - -
--------------------------------------- ----- --------- --------- ------- -------
Other financial asset 1,140 - - -
--------------------------------------- ----- --------- --------- ------- -------
Cash and cash equivalents 140,170 123,816 151 190
--------------------------------------- ----- --------- --------- ------- -------
533,427 440,399 3,025 14,462
--------------------------------------- ----- --------- --------- ------- -------
Total assets 1,167,424 1,055,292 250,810 171,683
--------------------------------------- ----- --------- --------- ------- -------
Equity
--------------------------------------- ----- --------- --------- ------- -------
Equity attributable to owners of the parent
---------------------------------------------- --------- --------- ------- -------
Ordinary shares 8,893 8,194 8,893 8,194
--------------------------------------- ----- --------- --------- ------- -------
Share premium 142,043 65,619 142,043 65,619
--------------------------------------- ----- --------- --------- ------- -------
Own shares (87) - - -
--------------------------------------- ----- --------- --------- ------- -------
Employee share schemes reserve 6,990 6,123 - -
--------------------------------------- ----- --------- --------- ------- -------
Foreign currency translation reserve (2,106) 4,620 - -
--------------------------------------- ----- --------- --------- ------- -------
Retained earnings 176,449 161,607 28,850 26,851
--------------------------------------- ----- --------- --------- ------- -------
Reverse acquisition reserve (31,700) (31,700) - -
--------------------------------------- ----- --------- --------- ------- -------
Merger reserve 919 919 71,019 71,019
--------------------------------------- ----- --------- --------- ------- -------
301,401 215,382 250,805 171,683
--------------------------------------- ----- --------- --------- ------- -------
Non-controlling interests 6,548 6,556 - -
--------------------------------------- ----- --------- --------- ------- -------
Total equity 307,949 221,938 250,805 171,683
--------------------------------------- ----- --------- --------- ------- -------
Liabilities
--------------------------------------- ----- --------- --------- ------- -------
Non-current liabilities
--------------------------------------- ----- --------- --------- ------- -------
Borrowings 13 - 206,228 - -
--------------------------------------- ----- --------- --------- ------- -------
Lease liabilities 11 228,977 238,995 - -
--------------------------------------- ----- --------- --------- ------- -------
Deferred consideration - 3,318 - -
--------------------------------------- ----- --------- --------- ------- -------
Deferred income tax liabilities 4,132 2,384 - -
--------------------------------------- ----- --------- --------- ------- -------
233,109 450,925 - -
--------------------------------------- ----- --------- --------- ------- -------
Current liabilities
--------------------------------------- ----- --------- --------- ------- -------
Borrowings 13 224,732 39,759 - -
--------------------------------------- ----- --------- --------- ------- -------
Lease liabilities 11 14,419 6,250 - -
--------------------------------------- ----- --------- --------- ------- -------
Trade and other payables 387,215 332,354 5 -
--------------------------------------- ----- --------- --------- ------- -------
Current tax liabilities - 4,066 - -
--------------------------------------- ----- --------- --------- ------- -------
626,366 382,429 5 -
--------------------------------------- ----- --------- --------- ------- -------
Total liabilities 859,475 833,354 5 -
--------------------------------------- ----- --------- --------- ------- -------
Total equity and liabilities 1,167,424 1,055,292 250,810 171,683
--------------------------------------- ----- --------- --------- ------- -------
The notes are an integral part of these consolidated financial statements.
The financial statements were approved by the Board on 5 April 2022 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 GBP24,301,000 (2020: GBP21,000,000).
Consolidated and Company Statement of changes in equity
Attributable to owners of the parent
==========================================================================================
Employee Foreign
share currency Reverse
Share Share Own schemes translation Retained acquisition Merger Non-controlling Total
capital premium shares 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 GBP'000
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 30
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 8 - - - - - (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
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - - 37,143 - - 37,143 2,139 39,282
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Other
comprehensive
expense
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Currency translation
differences - - - - (6,726) - - - (6,726) (364) (7,090)
--------------------- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - - (6,726) 37,143 - - 30,417 1,775 32,192
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 699 76,424 - - - - - - 77,123 - 77,123
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Purchase of
own
shares - - (2,278) - - - - - (2,278) - (2,278)
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Adjustment in
respect
of employee
share
schemes - - - 2,725 - - - - 2,725 - 2,725
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Settlement of
employee
share scheme - - 2,191 (2,191) - - - - - - -
--------------------- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Tax on employee share
schemes - - - 333 - - - - 333 - 333
--------------------- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 8 - - - - - (22,301) - - (22,301) (1,783) (24,084)
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total transactions
with owners 699 76,424 (87) 867 - (22,301) - - 55,602 (1,783) 53,819
--------------------- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 2
January
2022 8,893 142,043 (87) 6,990 (2,106) 176,449 (31,700) 919 301,401 6,548 307,949
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Company
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 30
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 8 - - - - - (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
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Profit for the
year - - - - - 24,300 - - 24,300
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for
the year - - - - - 24,300 - - 24,300
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 699 76,424 - - - - - - 77,123
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Dividends paid 8 - - - - - (22,301) - - (22,301)
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Total transactions
with owners 699 76,424 - - - (22,301) - - 54,822
--------------------- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
Balance at 2
January
2022 8,893 142,043 - - - 28,850 - 71,019 250,805
-------------- ----- ------- ------- ------- -------- ----------- -------- ----------- ------- -------- --------------- --------
The notes are an integral part of these consolidated financial
statements.
Consolidated and Company Cash flow statements
Group Company
2021 2020 2021 2020
52 weeks 53 weeks 52 weeks 53 weeks
Notes GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- -------- -------- -------- --------
Cash flows from operating activities
--------------------------------------- ----- -------- -------- -------- --------
Cash generated from operations 14 121,259 120,771 - -
--------------------------------------- ----- -------- -------- -------- --------
Interest paid (16,044) (12,861) - -
--------------------------------------- ----- -------- -------- -------- --------
Income tax paid (19,210) (16,254) - -
--------------------------------------- ----- -------- -------- -------- --------
Net cash generated from operating
activities 86,005 91,656 - -
--------------------------------------- ----- -------- -------- -------- --------
Cash flows from investing activities
--------------------------------------- ----- -------- -------- -------- --------
Acquisition of subsidiary, net of
debt acquired (39,062) - - -
--------------------------------------- ----- -------- -------- -------- --------
Other financial asset - restricted
cash (1,140) - - -
--------------------------------------- ----- -------- -------- -------- --------
Settlement of deferred consideration (2,500) - - -
--------------------------------------- ----- -------- -------- -------- --------
Issue of inter-company loan - - (77,377) (4,000)
--------------------------------------- ----- -------- -------- -------- --------
Purchases of property, plant and
equipment (56,251) (92,803) - -
--------------------------------------- ----- -------- -------- -------- --------
Proceeds from sale of property, plant
and equipment 114 134 - -
--------------------------------------- ----- -------- -------- -------- --------
Purchases of intangible assets (1,115) (2,703) - -
--------------------------------------- ----- -------- -------- -------- --------
Interest received 10 22 - -
--------------------------------------- ----- -------- -------- -------- --------
Dividends received - - 24,300 21,000
--------------------------------------- ----- -------- -------- -------- --------
Dividends received from joint venture 2,273 4,271 - -
--------------------------------------- ----- -------- -------- -------- --------
Net cash (used in)/generated from
investing activities (97,671) (91,079) (53,077) 17,000
--------------------------------------- ----- -------- -------- -------- --------
Cash flows from financing activities
--------------------------------------- ----- -------- -------- -------- --------
Proceeds from borrowings 67,062 92,563 - -
--------------------------------------- ----- -------- -------- -------- --------
Repayments of borrowings (79,819) (48,908) - -
--------------------------------------- ----- -------- -------- -------- --------
Payment of lease liability (6,588) (15,044) - -
--------------------------------------- ----- -------- -------- -------- --------
Issue of ordinary shares 77,123 1,389 75,339 1,389
--------------------------------------- ----- -------- -------- -------- --------
Purchase of own shares (2,278) - - -
--------------------------------------- ----- -------- -------- -------- --------
Dividends paid to owners of the parent (22,301) (18,321) (22,301) (18,321)
--------------------------------------- ----- -------- -------- -------- --------
Dividends paid to non-controlling
interests (1,783) (1,776) - -
--------------------------------------- ----- -------- -------- -------- --------
Net cash generated from/(used in)
financing activities 31,416 9,903 53,038 (16,932)
--------------------------------------- ----- -------- -------- -------- --------
Net increase/(decrease) in cash and
cash equivalents 19,750 10,480 (39) 68
--------------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents at beginning
of the year 123,816 110,514 190 122
--------------------------------------- ----- -------- -------- -------- --------
Exchange (losses)/gains on cash and
cash equivalents (3,396) 2,822 - -
--------------------------------------- ----- -------- -------- -------- --------
Cash and cash equivalents at end
of the year 140,170 123,816 151 190
--------------------------------------- ----- -------- -------- -------- --------
The notes are an integral part of these consolidated financial statements.
Notes to the financial statements
1 General information
Hilton Food Group plc ('the Company') and its subsidiaries
(together 'the Group') is a leading specialist international food
packing business supplying major international food retailers in
fourteen European countries, Australia and New Zealand. The
Company's subsidiaries are listed in a note to the full financial
statements.
The Company is a public company limited by shares incorporated
and domiciled in the UK and registered in England. The address of
the registered office is 2-8 The Interchange, Latham Road,
Huntingdon, Cambridgeshire PE29 6YE. The registered number of the
Company is 06165540.
The Company maintains a Premium Listing on the London Stock
Exchange.
The financial year represents the 52 weeks to 2 January 2022
(prior financial year 53 weeks to 3 January 2021).
This preliminary announcement was approved for issue on 5 April
2022.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual
financial statements for the year ended 3 January 2021.
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 UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
The consolidated and company financial statements have been
prepared on the going concern basis. The reasons why the Directors
consider this basis to be appropriate are set out in the
Performance and financial review.
The financial statements are presented in Sterling and all
values are rounded to the nearest thousand (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 2 January 2022 and 3 January 2021 but is
derived from those accounts. Statutory accounts for 2020 have been
delivered to the Registrar of Companies and those for 2021 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
3 Segment information
Management have determined the operating segments based on the
reports reviewed by the Executive Directors that are used to make
strategic decisions.
The Executive Directors have considered the business from both a
geographic and product perspective.
From a geographic perspective, the Executive Directors consider
that the Group has nine operating segments: i) United Kingdom; ii)
Netherlands; iii) 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.
From a product perspective the Executive Directors consider that
the Group has only one identifiable product, wholesaling of food
protein products including meat, seafood and vegetarian. The
Executive Directors consider that no further segmentation is
appropriate, as all of the Group's operations are subject to
similar risks and returns and exhibit similar long term financial
performance.
The segment information provided to the Executive Directors for the reportable
segments is as follows:
2021 2020
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 2,040,618 1,314,602 - 3,355,220 2,044,190 784,455 - 2,828,645
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Inter-co revenue (53,250) - - (53,250) (54,609) - - (54,609)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Third party revenue 1,987,368 1,314,602 - 3,301,970 1,989,581 784,455 - 2,774,036
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Adjusted operating
profit/(loss) segment
result (see note
18) 61,788 22,370 (10,591) 73,567 62,581 17,209 (12,762) 67,028
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Amortisation of
acquired intangibles (2,778) - - (2,778) (2,449) - - (2,449)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Exceptional items (6,994) - - (6,994) - - - -
============================ --------- ----------- -------- --------- --------- ----------- -------- ---------
Impact of IFRS 16 291 (654) - (363) 406 1,882 - 2,288
============================ --------- ----------- -------- --------- --------- ----------- -------- ---------
Operating profit/(loss)
segment result 52,307 21,716 (10,591) 63,432 60,538 19,091 (12,762) 66,867
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Finance income 10 - - 10 22 - - 22
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Finance costs (2,881) (10,017) (3,146) (16,044) (3,243) (8,140) (1,478) (12,861)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Income tax (expense)/credit (7,965) (1,761) 1,610 (8,116) (11,165) (2,568) 1,745 (11,988)
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Profit/(loss) for
the year 41,471 9,938 (12,127) 39,282 46,152 8,383 (12,495) 42,040
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Depreciation and
amortisation 33,039 33,604 140 66,783 32,433 25,877 91 58,401
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Additions to non-current
assets 29,587 27,528 662 57,777 24,459 70,733 314 95,506
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Segment assets 643,157 462,556 49,547 1,155,260 568,638 453,143 27,292 1,049,073
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Current income tax
assets 5,212 -
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Deferred income
tax assets 6,952 6,219
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Total assets 1,167,424 1,055,292
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Segment liabilities 346,403 419,611 89,329 855,343 324,582 427,050 75,272 826,904
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Current income tax
liabilities - 4,066
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Deferred income
tax liabilities 4,132 2,384
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
Total liabilities 859,475 833,354
---------------------------- --------- ----------- -------- --------- --------- ----------- -------- ---------
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 18). 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
------------------------ ---------------------
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by geographical area
----------------------------------------- ----------- ----------- ---------- ---------
United Kingdom - country of domicile 1,122,047 1,125,955 196,857 165,564
----------------------------------------- ----------- ----------- ---------- ---------
Netherlands 298,535 301,537 34,857 7,545
----------------------------------------- ----------- ----------- ---------- ---------
Belgium 25,687 6,617 1,327 10,381
----------------------------------------- ----------- ----------- ---------- ---------
Sweden 220,065 221,886 12,814 18,060
----------------------------------------- ----------- ----------- ---------- ---------
Republic of Ireland 95,349 102,460 4,711 6,025
----------------------------------------- ----------- ----------- ---------- ---------
Denmark 116,156 122,643 16,046 18,444
----------------------------------------- ----------- ----------- ---------- ---------
Central Europe 109,529 108,483 22,297 25,164
----------------------------------------- ----------- ----------- ---------- ---------
Australasia 1,314,602 784,455 338,136 357,491
----------------------------------------- ----------- ----------- ---------- ---------
3,301,970 2,774,036 627,045 608,674
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by principal customer
----------------------------------------- ----------- ----------- ---------- ---------
Customer 1 1,156,771 1,168,179
----------------------------------------- ----------- ----------- ---------- ---------
Customer 2 327,293 330,644
----------------------------------------- ----------- ----------- ---------- ---------
Customer 3 231,492 232,022
----------------------------------------- ----------- ----------- ---------- ---------
Customer 4 113,555 117,197
----------------------------------------- ----------- ----------- ---------- ---------
Customer 5 1,314,602 784,455
----------------------------------------- ----------- ----------- ---------- ---------
Other 158,257 141,539
----------------------------------------- ----------- ----------- ---------- ---------
3,301,970 2,774,036
----------------------------------------- ----------- ----------- ---------- ---------
4 Exceptional items
Operating Finance Tax Profit
profit costs after tax
2021 2021 2021 2021
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- ------- ------- ----------
Fire in Belgium 11,661 - (2,901) 8,760
------------------------------- --------- ------- ------- ----------
Impact of acquisition of Dalco (6,837) - - (6,837)
------------------------------- --------- ------- ------- ----------
Acquisition costs 2,226 1,131 (215) 3,142
------------------------------- --------- ------- ------- ----------
Total exceptional costs 7,050 1,131 (3,116) 5,065
------------------------------- --------- ------- ------- ----------
Fire in Belgium
In June 2021 the Group's facility in Belgium suffered an
extensive fire and as a result exceptional costs totalling
GBP11,661,000 have been recognised. The costs include the
impairment of tangible fixed assets and leased assets destroyed of
GBP6,377,000 and GBP2,239,000 respectively, the cost of inventory
that was destroyed as a result of the fire of GBP1,344,000 and
other related additional costs of GBP3,884,000, offset by a gain of
GBP2,183,000 arising from the early settlement of related lease
liabilities.
An exceptional tax credit has been of GBP2,901,000 has been
recognised in respect of these costs.
The Group continues to work closely with its insurers to
progress the related claims. The results for the period to 2
January 2022 do not include potential income that may be received
in respect of these claims with the insurance proceeds therefore
considered to be contingent assets; at this stage in the claims
process the value of the contingent asset has yet to be determined.
Legal claims have been made against the Group in connection with
the fire, however at this stage the Group considers the likelihood
of incurring financial liabilities as a result of them is
remote.
Impact of acquisition of Dalco
On 1 October 2021 the Group acquired the remaining 50% interest
in Dalco Food BV (see note 12) and the financial position and
performance of the business was fully consolidated from this date.
The Group's joint venture interest was effectively disposed of at
this date with an exceptional gain of GBP6,837,000, being the
difference between the carrying value and fair value of the joint
venture interest, recognised.
Acquisition Costs
During the year the Group has recognised exceptional acquisition
costs in respect legal and professional fees and other related
costs of GBP2,226,000. A further GBP1,131,000 of exceptional
finance costs have been recognised related to the agreement of
short term acquisition bridge financing.
An exceptional tax credit of GBP215,000 has been recognised in
respect of exceptional finance costs that are allowable for
deductible for tax purposes.
5 Finance income and costs
2021 2020
Group GBP'000 GBP'000
----------------------------------- -------- --------
Finance income
----------------------------------- -------- --------
Other interest income 10 22
----------------------------------- -------- --------
Finance income 10 22
----------------------------------- -------- --------
Finance costs
----------------------------------- -------- --------
Bank borrowings (5,132) (4,483)
----------------------------------- -------- --------
Interest on lease liabilities (8,536) (6,919)
----------------------------------- -------- --------
Exceptional finance costs (note 4) (1,131) -
=================================== ======== ========
Other interest expense (1,245) (1,459)
----------------------------------- -------- --------
Finance costs (16,044) (12,861)
----------------------------------- -------- --------
Finance costs - net (16,034) (12,839)
----------------------------------- -------- --------
6 Income tax expense
2021 2020
Group GBP'000 GBP'000
-------------------------------------------------- ------- -------
Current income tax
-------------------------------------------------- ------- -------
Current tax on profits for the year 12,646 17,878
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years (2,322) (273)
-------------------------------------------------- ------- -------
Total current tax 10,324 17,605
-------------------------------------------------- ------- -------
Deferred income tax
-------------------------------------------------- ------- -------
Origination and reversal of temporary differences (3,342) (5,721)
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous years 1,134 104
-------------------------------------------------- ------- -------
Total deferred tax (2,208) (5,617)
-------------------------------------------------- ------- -------
Income tax expense 8,116 11,988
-------------------------------------------------- ------- -------
Deferred tax charged directly to equity during the year in
respect of employee share schemes amounted to GBP333,000 (2020:
charge GBP136,000).
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 Government made a number of budget announcements on 3 March
2021. These include confirming that the rate of corporation tax
will increase to 25% from 1 April 2023. This new law was
substantively enacted on 24 May 2021. Deferred taxes at the balance
sheet date have been measured using these enacted tax rates and
reflected in these financial statements.
The tax on the Group's profit before income tax differs (2020:
differs) from the theoretical amount that would arise using the
standard rate of UK Corporation Tax of 19% (2020: 19%) applied to
profits of the consolidated entities as follows:
2021 2020
GBP'000 GBP'000
============================================================ ======= =======
Profit before income tax 47,398 54,028
------------------------------------------------------------ ------- -------
Tax calculated at the standard rate of UK Corporation Tax
19% (2020: 19%) 9,006 10,265
------------------------------------------------------------ ------- -------
(Income)/expense not deductible for tax purposes (15) 834
------------------------------------------------------------ ------- -------
Joint venture received net of tax (471) (1,364)
------------------------------------------------------------ ------- -------
Adjustments to tax in respect of previous periods (1,188) (169)
------------------------------------------------------------ ------- -------
Profits taxed at rates other than 19% (2020: 19%) 2,746 2,501
------------------------------------------------------------ ------- -------
Deferred tax on IFRS 16 (1,047) (87)
------------------------------------------------------------ ------- -------
Impact of changes in tax rates 414 -
------------------------------------------------------------ ------- -------
Non-taxable gain on acquisition of JV (1,299) -
------------------------------------------------------------ ------- -------
Other (30) 8
------------------------------------------------------------ ------- -------
Income tax expense 8,116 11,988
------------------------------------------------------------ ------- -------
There is no tax impact relating to components of other
comprehensive income.
Adjustments to tax in respect of prior periods have resulted from changes
in assumptions in respect of deductible expenses and the application of
capital allowances.
7 Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to owners of the parent by the weighted average number
of ordinary shares in issue during the 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.
2021 2020
Group Basic Diluted Basic Diluted
------------------------------------ ------------ ------ ------- ------ -------
Profit attributable to owners of
the parent (GBP'000) 37,143 37,143 39,736 39,736
------------------------------------ ------------ ------ ------- ------ -------
Weighted average number of ordinary
shares in issue (thousands) 82,456 82,456 81,835 81,835
------------------------------------ ------------ ------ ------- ------ -------
Adjustment for share options (thousands) - 1,098 - 1,084
------------------------------------ ------------ ------ ------- ------ -------
Adjusted weighted average number
of ordinary shares (thousands) 82,456 83,554 81,835 82,919
------------------------------------ ------------ ------ ------- ------ -------
Basic and diluted earnings per
share (pence) 45.0 44.5 48.6 47.9
------------------------------------ ------------ ------ ------- ------ -------
8 Dividends
2021 2020
Group and Company GBP'000 GBP'000
----------------------------------------------------------- ------- -------
Final dividend in respect of 2020 paid 19.0p per ordinary
share (2019: 15.4p) 15,561 12,586
----------------------------------------------------------- ------- -------
Interim dividend in respect of 2021 paid 8.2p per ordinary
share (2020: 7.0p) 6,740 5,735
----------------------------------------------------------- ------- -------
Total dividends paid 22,301 18,321
----------------------------------------------------------- ------- -------
The Directors propose a final dividend of 21.5p per share
payable on 1 July 2022 to shareholders who are on the register at 3
June 2022. This dividend totalling GBP19.1m has not been recognised
as a liability in these consolidated financial statements.
9 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 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 30 December 2019 67,826 154,875 3,664 197 226,562
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 3 January 2021 67,173 218,338 5,165 170 290,846
-------------------------------------- -------------- ---------- ------------- -------------- --------
Cost
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 4 January 2021 97,523 443,243 20,498 172 561,436
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (3,248) (19,497) (1,136) (8) (23,889)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Acquisition (note 12) 2,315 7,843 548 123 10,829
-------------------------------------- -------------- ---------- ------------- -------------- --------
Additions 15,125 37,487 3,606 33 56,251
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exceptional impairment (note 4) - (7,049) - - (7,049)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Transfer to intangible assets 430 (769) (4,165) 3 (4,501)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (469) (260) (735) (15) (1,479)
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 2 January 2022 111,676 460,998 18,616 308 591,598
-------------------------------------- -------------- ---------- ------------- -------------- --------
Accumulated depreciation
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 4 January 2021 30,350 224,905 15,333 2 270,590
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (924) (10,560) (781) (7) (12,272)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Charge for the year 4,440 37,384 2,297 65 44,186
-------------------------------------- -------------- ---------- ------------- -------------- --------
Exceptional impairment (note 4) - (672) - - (672)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Transfer to intangible assets - - (553) - (553)
-------------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (87) (192) (878) (12) (1,169)
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 2 January 2022 33,779 250,865 15,418 48 300,110
-------------------------------------- -------------- ---------- ------------- -------------- --------
Net book amount
-------------------------------------- -------------- ---------- ------------- -------------- --------
At 2 January 2022 77,897 210,133 3,198 260 291,488
-------------------------------------- -------------- ---------- ------------- -------------- --------
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 GBP13,025,000 (2020: GBP20,318,000).
Additions to property, plant and equipment include capitalised
interest costs of GBP725,000 (2020: GBP409,000).
10 Intangible assets
Brand and
Computer customer
software relationships Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- -------------- -------- -------
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 and 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 30 December 2019 4,579 17,378 47,582 69,539
-------------------------------------------- --------- -------------- -------- -------
At 3 January 2021 7,560 14,929 47,582 70,071
-------------------------------------------- --------- -------------- -------- -------
Cost
-------------------------------------------- --------- -------------- -------- -------
At 4 January 2021 10,980 22,560 47,582 81,122
-------------------------------------------- --------- -------------- -------- -------
Exchange adjustments (411) - - (411)
-------------------------------------------- --------- -------------- -------- -------
Acquisition (note 12) 158 12,519 21,900 34,577
-------------------------------------------- --------- -------------- -------- -------
Additions 1,526 - - 1,526
-------------------------------------------- --------- -------------- -------- -------
Transfer from property, plant & equipment 4,501 - - 4,501
-------------------------------------------- --------- -------------- -------- -------
Disposals (3) - - (3)
-------------------------------------------- --------- -------------- -------- -------
At 2 January 2022 16,751 35,079 69,482 121,312
-------------------------------------------- --------- -------------- -------- -------
Accumulated amortisation
-------------------------------------------- --------- -------------- -------- -------
At 4 January 2021 3,420 7,631 - 11,051
-------------------------------------------- --------- -------------- -------- -------
Exchange adjustments (235) - - (235)
-------------------------------------------- --------- -------------- -------- -------
Charge for the year 1,468 2,702 - 4,170
-------------------------------------------- --------- -------------- -------- -------
Transfer from property, plant & equipment 553 - - 553
-------------------------------------------- --------- -------------- -------- -------
Disposals (2) - - (2)
-------------------------------------------- --------- -------------- -------- -------
At 2 January 2022 5,204 10,333 - 15,537
-------------------------------------------- --------- -------------- -------- -------
Net book amount
-------------------------------------------- --------- -------------- -------- -------
At 2 January 2022 11,547 24,746 69,482 105,775
-------------------------------------------- --------- -------------- -------- -------
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 (now trading as Hilton Seafood UK) in 2017
and GBP2,789,000 recognised in 2019 following the acquisition of SV
Cuisine Limited. Hilton Seafood UK and SV Cuisine are each
considered to be separate cash generating units. The recoverable
amount of the Seachill cash generating unit was based on its fair
value less costs of disposal after allowing for the impact of
planned investment and the recoverable amount of SV Cuisine was
determined on a value-in-use basis based, 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% (2020: 10%) or a post-tax discount rate of 8%
(2020: 8%) with a growth rate of 2% (2020: 2%) used to extrapolate
cash flows. Discount rates and growth rates are calculated with
reference to external benchmarks and where relevant past
experience.
Sensitivity to changes in assumptions
The calculation is most sensitive to changes in the assumptions
used for projected cash flow, the pre-tax discount rate and the
growth rate. Management considers that reasonably possible changes
in assumptions would be an increase in discount rate of 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 pre-tax 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.
Goodwill acquired in the year
Goodwill and other intangible assets totalling GBP34,577,000
have been provisionally recognised following the acquisitions of
Dalco Food BV and Fairfax Meadow Europe Limited in the year (see
note 12). Dalco and Fairfax Meadow will each form separate cash
generating units for impairment testing purposes and impairment
testing will begin before the end of the current financial
year.
11 Leases
(i) Amounts recognised in the balance sheet
The balance sheet includes the following amounts
relating to leases:
Lease: right of use assets Land &
Buildings Equipment Vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ---------- --------- -------- --------
Opening net book amount as 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
-------------------------------------------- ---------- --------- -------- --------
Exchange Adjustments (9,945) (147) (108) (10,200)
-------------------------------------------- ---------- --------- -------- --------
Additions 2,739 2,418 420 5,577
-------------------------------------------- ---------- --------- -------- --------
Acquisition (note 12) 6,066 5,139 1,289 12,494
-------------------------------------------- ---------- --------- -------- --------
Remeasurements, reclassification and scope
changes - (336) - (336)
-------------------------------------------- ---------- --------- -------- --------
Depreciation (16,339) (927) (1,161) (18,427)
-------------------------------------------- ---------- --------- -------- --------
Disposal of leased assets destroyed by
fire (note 4) (2,168) (19) (52) (2,239)
-------------------------------------------- ---------- --------- -------- --------
Closing net book amount at 2 January 2022 211,773 7,234 2,997 222,004
-------------------------------------------- ---------- --------- -------- --------
Lease liabilities 2021 2020
Group GBP'000 GBP'000
-------------------------------------------- ---------- --------- -------- --------
Current 14,419 6,250
-------------------------------------------- ---------- --------- -------- --------
Non-current 228,977 238,995
-------------------------------------------- ---------- --------- -------- --------
243,396 245,245
-------------------------------------------- ---------- --------- -------- --------
Maturity analysis - contractual undiscounted cash
flows 2021 2020
Group GBP'000 GBP'000
-------------------------------------------------------- --------- -------- --------
Less than one year 22,716 15,010
-------------------------------------------- ---------- --------- -------- --------
One to five years 79,010 77,822
-------------------------------------------- ---------- --------- -------- --------
More than five years 233,673 255,619
-------------------------------------------- ---------- --------- -------- --------
Total lease liabilities 335,399 348,451
-------------------------------------------- ---------- --------- -------- --------
(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 2021 2020
Group GBP'000 GBP'000
--------------------------------------------------------------- ------- -------
Buildings 16,339 13,008
----------------------------------------------------------------- ------- -------
Plant & equipment 927 4,254
----------------------------------------------------------------- ------- -------
Vehicles 1,161 1,088
----------------------------------------------------------------- ------- -------
18,427 18,350
--------------------------------------------------------------- ------- -------
Interest expenses (included in finance costs) 8,536 6,919
---------------------------------------------------------------- ------- -------
Expenses relating to short-term leases
(included in costs of goods sold and administrative
expenses) 136 278
----------------------------------------------------------------- ------- -------
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) 3 24
----------------------------------------------------------------- ------- -------
The total cash outflow for leases in 2021 was GBP17,307,000
(2020: GBP59,488,000).
Variable Lease Payments
Leases with liabilities recognised of GBP9,824,000 (2020: GBP10,163,000),
accounting for 4.0% (2020: 4.1%) 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 2 January
2021, lease liabilities would have increased by 2021: GBP1,895,000 (2020:
GBP633,000).
In addition, leases with liabilities recognised totalling GBP6,408,000
(2020: GBP11,063,000), accounting for 2.6% (2020: 4.5%) 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 2 January 2022, lease liabilities would have increased by GBP278,000
(2020: GBP44,000).
12 Business combinations
On 1 October 2021 the Group completed the purchase of the
remaining 50% of Dalco Food BV (Dalco) taking its interest from 50%
to 100%. Dalco is a leading producer of vegetarian and vegan
proteins supplying both retail and food service customers from its
facilities in the Netherlands.
On 28 October 2021 the Group acquired 100% of the share capital
of Fairfax Meadow Europe Limited (Fairfax Meadow) a leading meat
supplier to the UK foodservice sector.
Fairfax
Dalco Food Meadow Europe
BV Limited
Group GBP'000 GBP'000
-------------------------------------------- ---------- --------------
Property, plant and equipment 4,393 6,436
-------------------------------------------- ---------- --------------
Intangibles - Software 113 45
-------------------------------------------- ---------- --------------
Brand and customer relationship intangibles - 12,519
============================================ ========== ==============
Lease: Right-of-use asset 5,303 7,191
============================================ ========== ==============
Inventories 8,143 7,982
============================================ ========== ==============
Trade and other receivables 5,992 13,643
============================================ ========== ==============
Trade and other payables (8,767) (16,781)
============================================ ========== ==============
Borrowings (1,824) (8,504)
============================================ ========== ==============
Lease liabilities (5,303) (7,094)
============================================ ========== ==============
Deferred tax (242) (3,024)
============================================ ========== ==============
Goodwill 18,967 2,933
-------------------------------------------- ---------- --------------
Fair value of assets acquired 26,775 15,346
-------------------------------------------- ---------- --------------
Consideration:
-------------------------------------------- ---------- --------------
Paid on completion 13,388 15,346
============================================ ========== ==============
Deemed fair value of existing 50% interest 13,387 -
-------------------------------------------- ---------- --------------
26,775 15,346
-------------------------------------------- ---------- --------------
Dalco Food BV
The acquisition of the remaining 50% of Dalco allows the Group
to take full control of the business enabling it to further
diversify and strengthen its protein offering in the fast-growing
vegan and vegetarian market.
Consideration for the acquisition of the 50% interest in Dalco
totalled GBP13,388,000 and comprised cash of GBP11,603,000, and
Hilton Food Group plc shares with a market value at the date of
issue of GBP1,785,000.
As a result of the acquisition, and to allow full consolidation
of Dalco as a subsidiary the group has recognised an exceptional
gain of GBP6,837,000 (see note 4) being the difference between the
carrying value of its joint venture interest at the date of
acquisition and its fair value.
Due to the timing of completion of the acquisition and the
timing of other acquisition activity undertaken by the group in
2021, the exercise to assess the fair values of assets and
liabilities acquired is on-going and therefore amounts presented
above are provisional and expected to change.
The provisional fair value of property, plant and equipment
acquired, disclosed above, is the book value recognised by Dalco at
the date of acquisition. A review of acquired property, plant and
equipment is currently being undertaken by qualified surveyors and
once concluded is expected to give rise to adjustments to the fair
value recognised.
An exercise is also underway to establish the fair value of
Dalco's customer relationships and long term supply agreements, the
fair value of brands used within the Dalco business and to identify
and value any other intangible assets acquired as part of the
business combination.
Goodwill of GBP18.8m has provisionally been recognised, however
the conclusion of the on-going work in respect of the valuation of
tangible and intangible fixed assets acquired is expected to result
in an overall reduction in the level recognised. Residual goodwill
is expected to mainly relating to the strategic benefits for Hilton
of diversifying its product portfolio into the vegan and vegetarian
protein market.
The value of other assets and liabilities reflect the amounts
expected to be realised or paid respectively.
Fairfax Meadow Europe Limited
The acquisition of Fairfax Meadow improves the access for Hilton
to the out-of-home channel, providing an opportunity for the Group
to diversify into the foodservice sector and contribute to the
group sustainable growth.
Consideration for the acquisition of Fairfax Meadow totalled
GBP15,346,000 paid entirely in cash.
Goodwill has arisen and mainly relates to the strategic benefits
for Hilton of diversifying its product portfolio into the food
service sector.
The fair value of property, plant and equipment acquired was
established following a review undertaken by qualified surveyors
and reflect their existing use value.
Customer relationship intangibles have been recognised and
relate to the supply agreements and long standing relationships
that Fairfax Meadow has with its customers. Brand intangibles have
been recognised in respect of the Fairfax Meadow trading name and
other brands employed by the business. The fair value of these
intangible assets of GBP12,519,000 have been aggregated as they are
considered to be linked with their value each dependent on the
other and will be amortised over their useful economic lives of 5-9
years.
The value of other assets and liabilities reflect the amounts
expected to be realised or paid respectively.
As a result of the timing of completion of the acquisition and
the timing of other acquisition activity undertaken by the group in
2021, fair values presented for the Fairfax Meadow acquisition
reflect the initial assessment of fair value and remains subjected
to amendment for one year from the date of acquisition.
Since the date of acquisition Dalco has contributed revenue of
GBP14.8m to the Group and has realised an adjusted loss before
exceptional items and tax of GBP0.1m; Fairfax Meadow has
contributed revenue of GBP23.4m and realised adjusted profit before
tax and exceptional items of GBP0.5m.
If the acquisitions of the 50% interest in Dalco and Fairfax
Meadow had taken place at the start of the year the group would
have recognised revenue GBP3,405.1m and adjusted profit before tax
and exceptional items of GBP66.5m.
In the year the group has recognised exceptional acquisition
related costs of GBP2,226,000 in respect of legal and professional
and other related activities associated with acquisition activity
alongside exceptional finance costs of GBP1,131,000 relating to
acquisition specific bank financing. See note 4 .
Deferred Consideration
At 3 January 2021 a deferred consideration liability of
GBP3,318,000 in respect of the acquisition of SV Cuisine Limited
had been recognised. During the period the Group settled this
liability making a payment of GBP2,500,000.
13 Borrowings
2021 2020
Group GBP'000 GBP'000
---------------------------------------------- ----------------- -----------------
Current
---------------------------------------------- ----------------- -----------------
Bank borrowings 224,732 39,759
---------------------------------------------- ----------------- -----------------
Non-current
---------------------------------------------- ----------------- -----------------
Bank borrowings - 206,228
---------------------------------------------- ----------------- -----------------
Total borrowings 224,732 245,987
---------------------------------------------- ----------------- -----------------
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:
2021 2020
Currency GBP'000 GBP'000
---------------------------------------------- ----------------- -----------------
UK Pound 65,198 66,142
---------------------------------------------- ----------------- -----------------
Euro 18,277 21,217
---------------------------------------------- ----------------- -----------------
Danish Kroner 1,118 851
---------------------------------------------- ----------------- -----------------
Polish Zloty 5,384 6,560
---------------------------------------------- ----------------- -----------------
Australian Dollar 106,903 120,667
============================================== ================= =================
New Zealand Dollar 27,852 30,550
---------------------------------------------- ----------------- -----------------
224,732 245,987
---------------------------------------------- ----------------- -----------------
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's bank borrowings have been classified as current
liabilities as the bank facility agreements were due to mature in
October 2022. Since the year end the Group has refinanced these
facilities (see note 16).
The Group has undrawn committed loan facilities of GBP96.8m
(2020: GBP51.5m).
The undiscounted contractual maturity profile of the Group's
borrowings is described in a note to the full financial
statements.
Group net debt of GBP85,571,000 (2020: net debt of
GBP123,366,000) comprises borrowings, noted above, of
GBP224,732,000 (2020: GBP245,987,000) cash and cash equivalents of
GBP140,014,000 (2020: GBP123,816,000), and finance leases
previously recognised under IAS 17 of GBP853,000 (2020:
GBP1,195,000). Including total lease liabilities Group net debt is
GBP328,114,000 (2020: GBP367,416,000).
14 Cash generated from operations
2021 2020
Group GBP'000 GBP'000
------------------------------------------------------ -------- --------
Profit before income tax 47,398 54,028
------------------------------------------------------ -------- --------
Finance costs - Net 16,034 12,839
------------------------------------------------------ -------- --------
Operating profit 63,432 66,867
------------------------------------------------------ -------- --------
Adjustments for non-cash items:
------------------------------------------------------ -------- --------
Share of post tax profits of joint venture (1,925) (5,029)
------------------------------------------------------ -------- --------
Depreciation of property, plant and equipment 44,186 37,298
------------------------------------------------------ -------- --------
Depreciation of leased assets 18,427 18,350
------------------------------------------------------ -------- --------
Impairment of property, plant and equipment 6,377 -
------------------------------------------------------ -------- --------
Disposal of leased assets destroyed by fire 2,239 -
------------------------------------------------------ -------- --------
Gain on early settlement of Belgium lease liabilities (2,183) -
------------------------------------------------------ -------- --------
Amortisation of intangible assets 4,170 2,753
------------------------------------------------------ -------- --------
Amortisation of contract assets - charged to revenue - 1,197
------------------------------------------------------ -------- --------
Gain on 100% acquisition of Dalco BV (6,837) -
------------------------------------------------------ -------- --------
Loss/(gain) on disposal of non-current assets 195 (40)
------------------------------------------------------ -------- --------
Adjustment in respect of employee share schemes 2,725 2,120
------------------------------------------------------ -------- --------
Changes in working capital:
------------------------------------------------------ -------- --------
Inventories (26,656) (23,212)
------------------------------------------------------ -------- --------
Trade and other receivables (23,116) 22,995
------------------------------------------------------ -------- --------
Trade and other payables 40,225 (2,528)
------------------------------------------------------ -------- --------
Cash generated from operations 121,259 120,771
------------------------------------------------------ -------- --------
The parent company has no operating cash flows.
15 Analysis and movement in net debt
This section sets out an analysis of net debt and the movements in net
debt for each of the periods presented.
2021 2020
GBP'000 GBP'000
------------------------ ---------- ------------ --------- ----------------- ---------
Cash and cash equivalents 140,170 123,816
------------------------------------ ------------ --------- ----------------- ---------
Borrowings (including overdrafts) (224,732) (245,987)
------------------------------------ ------------ --------- ----------------- ---------
Net bank debt (84,562) (122,171)
==================================== ============ ========= ================= =========
Lease liabilities (243,396) (245,245)
------------------------------------ ------------ --------- ----------------- ---------
Net debt (327,958) (367,416)
------------------------------------ ------------ --------- ----------------- ---------
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 30 December 2019 110,514 (197,339) (86,825) (184,633) (271,458)
------------------------ ---------- ------------ --------- ----------------- ---------
Cash flows 10,480 48,908 59,388 52,267 111,655
------------------------ ---------- ------------ --------- ----------------- ---------
Lease additions - - - (99,925) (99,925)
------------------------ ---------- ------------ --------- ----------------- ---------
New borrowings - (92,563) (92,563) - (92,563)
------------------------ ---------- ------------ --------- ----------------- ---------
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)
------------------------ ---------- ------------ --------- ----------------- ---------
Cash flows 19,750 79,819 99,569 6,588 106,157
------------------------ ---------- ------------ --------- ----------------- ---------
Lease additions - - - (5,549) (5,549)
------------------------ ---------- ------------ --------- ----------------- ---------
Acquisition - - - (12,397) (12,397)
------------------------ ---------- ------------ --------- ----------------- ---------
New borrowings - (67,062) (67,062) - (67,062)
------------------------ ---------- ------------ --------- ----------------- ---------
Exchange adjustments (3,396) 8,498 5,102 10,652 15,754
------------------------ ---------- ------------ --------- ----------------- ---------
Other changes - - - 2,555 2,555
------------------------ ---------- ------------ --------- ----------------- ---------
At 2 January 2022 140,170 (224,732) (84,562) (243,396) (327,958)
------------------------ ---------- ------------ --------- ----------------- ---------
16 Events after the reporting period
The following non-adjusting events occurred after the reporting
period:
Acquisition of Dutch Seafood Company BV
On 16th March 2022 the Group acquired 100% of the share capital
of Dutch Seafood Company BV, which trades as Foppen. Foppen is a
leading international smoked salmon producer with customers in
Europe and US. The acquisition provides Hilton with the opportunity
to diversify into a complementary protein category and enhance its
customer base whilst also entering a new strategic market in the
US. Consideration for the acquisition totalled GBP25.0m paid
entirely in cash with the Group also repaying GBP54.7m of Foppen's
bank and other borrowings immediately following completion of the
acquisition.
The timing of completion of this transaction and its proximity
to the date of these financial statements has meant that initial
accounting for the business combination has not been completed and
therefore it is impractical to provide the disclosures required by
IFRS 3, Appendix B, Paragraph 64 (e) or (h)-(q).
Agito Group Pty Limited - Joint Venture Investment
On 6 January 2022 the Group acquired a 50% joint venture
interest in Agito Group Pty Limited, a provider of automation and
software controls used in food processing and other manufacturing
facilities based in Australia, for consideration of GBP1.1m.
Bank facility agreement
On 21 January the Group agreed a GBP424m revolving credit and
term loan facility with a syndicate of lenders. The facility
refinanced the Group's existing bank facilities including undrawn
acquisition bridge financing put in place to fund the Foppen
acquisition that matured in January 2022. The Group's new bank
facility matures in January 2027 with the term loans, totalling
GBP134m, repayable in quarterly instalments beginning in April
2022.
17 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 2021 2020
Sales GBP'000 GBP'000
---------------------------------------------------------------------- --- ----------------- -------
Sohi Meat Solutions Distribuicao de Carnes SA
- fee for services 3,175 3,351
---------------------------------------------------------------------- --- ----------------- -------
Sohi Meat Solutions Distribuicao de Carnes SA
- recharge of joint venture costs 331 368
---------------------------------------------------------------------- --- ----------------- -------
Dalco BV 438 313
---------------------------------------------------------------------- --- ----------------- -------
Foods Connected Limited - 3
---------------------------------------------------------------------- --- ----------------- -------
Group 2021 2020
Purchases GBP'000 GBP'000
====================================================================== --- ----------------- -------
Foods Connected Limited 568 351
---------------------------------------------------------------------- --- ----------------- -------
Amounts owing from related parties at the year end were as follows:
Owed from related
parties
2021 2020
Group GBP'000 GBP'000
---------------------------------------------------------------------- --- ----------------- -------
Foods Connected Limited 4 15
---------------------------------------------------------------------- --- ----------------- -------
Sohi Meat Solutions Distribuicao de Carnes SA 561 393
---------------------------------------------------------------------- --- ----------------- -------
Dalco BV - 282
---------------------------------------------------------------------- --- ----------------- -------
565 690
---------------------------------------------------------------------- --- ----------------- -------
Amounts owing to related parties at the year end were as follows:
Owed to related
parties
2021 2020
Group GBP'000 GBP'000
---------------------------------------------------------------------- --- ----------------- -------
Foods Connected Limited 127 85
====================================================================== === ================= =======
Sohi Meat Solutions Distribuicao de Carnes SA 9 -
====================================================================== === ================= =======
Dalco BV - 123
---------------------------------------------------------------------- --- ----------------- -------
136 208
---------------------------------------------------------------------- --- ----------------- -------
During the period the group settled the deferred consideration liability
recognised in respect of the acquisition of SV Cuisine Limited, making
a payment of GBP2.5m. The acquisition of SV Cuisine Limited was considered
to be a related party transaction as prior to acquisition Philip Heffer,
the Hilton Food Group CEO, Graham Heffer and Robert Heffer, both directors
of the Group's subsidiary Hilton Food Solutions Limited, had each held
a 30% shareholding in SV Cuisine Limited.
18 Alternative Performance Measures
The Group's performance is assessed using a number of alternative performance
measures (APMs).
The Group's alternative profitability measures are presented before exceptional
items, amortisation of certain intangible assets and depreciation of fair
value adjustments made to property plant and equipment acquired through
business combinations and the impact of IFRS 16 - Leases.
The measures are presented on this basis, as management 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:
Amort &
Add back: Less: IAS depn of
IFRS 16 17 Lease Reported acquisition
Depreciation accounting excluding Exceptional fair value
Reported and interest costs IFRS 16 items adjustments Adjusted
52 weeks ended 2 January GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Operating profit -
excluding exceptional
items 70,482 18,214 (17,907) 70,789 - 2,778 73,567
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Exceptional items (7,050) 56 - (6,994) 6,994 - -
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Operating profit 63,432 18,270 (17,907) 63,795 6,994 2,778 73,567
============================== ======== ============= =========== ========== =========== ============ ========
Net finance costs (16,034) 8,498 - (7,536) 1,131 - (6,405)
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Profit before income
tax 47,398 26,768 (17,907) 56,259 8,125 2,778 67,162
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Profit for the period 39,282 24,037 (17,907) 45,412 5,009 2,250 52,671
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Less non-controlling
interest (2,139) (7) - (2,146) - - (2,146)
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Profit attributable
to members of the
parent 37,143 24,030 (17,907) 43,266 5,009 2,250 50,525
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Depreciation and amortisation 75,596 (20,489) - 55,107 (6,377) (2,778) 45,952
============================== ======== ============= =========== ========== =========== ============ ========
EBITDA 139,028 (2,219) (17,907) 118,902 617 - 119,519
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Earnings per share pence pence pence
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Basic 45.0 52.5 61.3
============================== ======== ============= =========== ========== =========== ============ ========
Diluted 44.5 51.8 60.5
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Add back:
Amort &
Add back: Less: IAS depn of
IFRS 16 17 Lease Reported acquisition
Depreciation accounting excluding fair value
Reported and interest costs IFRS 16 adjustments 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
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
The depreciation and amortisation figure includes GBPnil (2020: GBP1,197,000)
amortisation of contract assets charged to revenue and adds back a loss
on disposal of GBP195,000 (2020: gain GBP40,000).
Segmental operating profit reconciles to adjusted segmental operating profit
as follows:
Add back:
Amort &
Add back: Less: IAS depn of
IFRS 16 17 Lease Reported acquisition
Depreciation accounting excluding Exceptional fair value
Reported and interest costs IFRS 16 items adjustments Adjusted
52 weeks ended 2 January GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
------------------------- -------- ------------- ----------- ---------- ----------- ------------ --------
Europe 52,307 6,393 (6,684) 52,016 6,994 2,778 61,788
------------------------- -------- ------------- ----------- ---------- ----------- ------------ --------
Australasia 21,716 11,877 (11,223) 22,370 - - 22,370
------------------------- -------- ------------- ----------- ---------- ----------- ------------ --------
Central costs (10,591) - - (10,591) - - (10,591)
------------------------- -------- ------------- ----------- ---------- ----------- ------------ --------
Total 63,432 18,270 (17,907) 63,795 6,994 2,778 73,567
------------------------- -------- ------------- ----------- ---------- ----------- ------------ --------
Add back:
Amort &
Add back: Less: IAS depn of
IFRS 16 17 Lease Reported acquisition
Depreciation accounting excluding fair value
Reported and interest costs IFRS 16 adjustments 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
------------------------- -------- ------------- ----------- ---------- ----------- ------------ --------
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END
FR UPUCWCUPPGQA
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April 06, 2022 02:00 ET (06:00 GMT)
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