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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hilton Food | AQSE:HFG.GB | Aquis Stock Exchange | Ordinary Share | GB00B1V9NW54 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2.00 | 0.22% | 905.00 | 860.00 | 950.00 | 920.00 | 892.00 | 920.00 | 0.00 | 16:29:49 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Dec 2022 to Dec 2024
TIDMHFG
RNS Number : 3829V
Hilton Food Group PLC
05 April 2023
5 April 2023
Hilton Food Group plc
International Food and Supply Chain Services Partner of Choice
Volume and revenue growth against volatile backdrop during 2022; well positioned for year ahead
Hilton Foods today announces its preliminary results for the 52 weeks ended 1 January 2023. The business has also published a separate announcement this morning regarding a change of leadership.
Strategic overview:
1. Outstanding Protein Products
o Strength and resilience in core meat category, underpinned by strong commercial partnerships
o Challenging seafood performance, with robust recovery plans in place to restore profitability
o Further vegan and vegetarian growth through branded partnerships and private label expansion
o Double digit growth in easier meals, with launch of award-winning new products
2. Growing across international markets
o Strong performance in APAC including first full year of trading in New Zealand
o New partnership formed in Singapore with Country Foods, a wholly owned subsidiary of SATS, Asia's leading provider of food solutions and gateway services
o Growth through geographical diversification with Foppen acquisition
3. Industry-leading technology
o Increased ownership of Foods Connected supply chain management platform to 65%
o Agito joint venture reinforcing automation and engineering capabilities
4. Delivered through The Sustainable Protein Plan
o Introduction of stretching ESG performance metrics into our LTIP Scheme including targets for Scope 1 & 2 energy efficiency, packaging recycled content and food waste
o Progress across people, planet and product pillars, including exceeding 2025 target for women in leadership positions and A- rating from CDP on Climate Change
Financial overview:
-- Group revenue up 16.5% to GBP3.8bn (2021: GBP3.3bn), underpinned by contribution from newly acquired businesses, first full year of trading in New Zealand and inflationary impact
-- Volume growth of 4.3% to 513,816 tonnes (2021: 492,588 tonnes) -- Adjusted operating profit down 3.3% to GBP71.1m (2021: GBP73.6m)
-- IFRS operating profit down 14.8% to GBP54.0m (2021: GBP63.4m) after exceptional items of GBP11.9m, relating predominantly to 2021 fire at Belgium site
-- Adjusted basic earnings per share down 26.4% at 45.1p (2021: 61.3p) -- IFRS basic earnings per share down 56.0% at 19.8p (2021: 45.0p) -- Strong cash flows from operating activities of GBP98.3m (2021: GBP121.3m)
-- Net bank debt GBP211.6m (2021: GBP84.6m) following GBP83.6m investments in acquisitions/JVs and GBP56.8m capex investment with a strong balance sheet following refinancing
-- Proposed final dividend of 22.6p, taking total dividend for 2022 to 29.7p (2021: 29.7p)
Outlook and current trading
Against the backdrop of a challenging environment, with global uncertainties impacting supply chains and inflation, Hilton's trading performance since the beginning of 2023 has been in line with the Board's expectations and the business is well positioned for the year ahead. We continue to explore opportunities with existing and new customers for further expansion in our domestic and overseas markets.
Our short and medium term growth prospects are underpinned by the acquisitions of Foppen, Dalco and Fairfax Meadow, the new partnership in Singapore and recovery in our UK Seafood business as well as further opportunities arising across our markets by the development of our cross-category business and the application of our supply chain management expertise.
Commenting on the results Chief Executive Philip Heffer said:
"After the challenges we faced last year in our seafood business, we took a series of steps to rebuild profitability and we are now well placed for the year ahead. Meanwhile we have continued to deliver on our strategic priorities and to set the business up for long-term, sustainable growth.
"Our meat category has performed well and we have continued to innovate with new and award winning products. We have continued to grow in new and emerging markets following the acquisitions of Foppen and Fairfax Meadow with both these businesses performing well, while also expanding in Asia with Country Foods. Despite the significant macro-economic challenges, we have continued our record of growing our volumes every year since Hilton Foods became a publicly listed company in 2007.
"Hilton Foods today is a completely different business from the company we started in 1994. Over 75% of our sales volumes are now outside the UK; we offer a wide range of protein products and categories; and we have built a technology services offer which is best-in-class in the industry. The global economy today is more uncertain than at any time in the past thirty years, but Hilton Foods is well set for long-term success."
Financial performance - overview:
Hot Features
Premium
2022 2021 Change
52 weeks 52 weeks Reported Constant
to 1 January to 2 January currency
2023 2022
Volume (tonnes) 513,816 492,588 4.3% 4.3%
Revenue GBP3,847.6m GBP3,302.0m 16.5% 16.0%
Adjusted results (1)
Adjusted operating profit GBP71.1m GBP73.6m -3.3% -3.2%
Adjusted profit before
tax GBP55.5m GBP67.2m -17.4% -17.2%
Adjusted basic earnings
per share 45.1p 61.3p -26.4%
Adjusted EBITDA GBP119.9m GBP119.5m 0.3% 0.1%
IFRS results
Operating profit GBP54.0m GBP63.4m -14.8%
Profit before tax GBP29.6m GBP47.4m -37.5%
Basic earnings per share 19.8.p 45.0p -56.0%
Cash flows from operating
activities GBP98.3m GBP121.3m -18.9%
Other measures
EBITDA GBP131.8m GBP139.0m -5.3%
Net bank debt (2) GBP211.6m GBP84.6m
Dividends paid and proposed
in respect of the year 29.7p 29.7p 0.0%
Notes
1 Adjusted results represent the IFRS results before deduction of acquisition intangibles amortisation, depreciation of fair value adjustments to property, plant & equipment, exceptional items and also IFRS 16 lease adjustments as detailed in the Alternative performance measures note 17. Unless otherwise stated financial metrics in the Chairman's statement, Chief Executive's summary and Performance and financial review refer to the Adjusted results
2 Net bank debt represents borrowings less cash and cash equivalents excluding lease liabilities
Enquiries
Hilton Foods Tel: +44 (0) 1480 387214
Philip Heffer, Chief Executive Officer
Matt Osborne, Chief Financial Officer
Headland Consultancy Limited Tel: +44 (0) 20 3805 4822
Edward Young Email: hiltonfood@headlandconsultancy.com
Will Smith
Joanna Clark
This announcement contains inside information.
About Hilton Foods
Hilton Foods is a leading international multi-protein producer, serving customers and retail partners across the world with high quality meat, seafood, vegan and vegetarian foods and meals. We are a business of over 7,000 employees, operating from 24 technologically advanced food processing, packing and logistics facilities across 19 markets in Europe, Asia Pacific and North America. For almost thirty years, our business has been built on dedicated partnerships with our customers and suppliers, many forged over several decades, and together we target long-term, sustainable growth and shared value. We supply our customers with high quality, traceable, and assured food products, with high standards of technical excellence and expertise.
Chairman's introduction
Strategic progress
This has been a year of unprecedented global and economic challenges, but Hilton Foods has continued to make strategic progress. We manufacture high quality multi-protein products utilising industry leading technology in our highly automated facilities, including advanced robotics. Together with leveraging our expertise we can offer improved supply chain efficiencies to our customers whilst committed to our sustainable protein plan. The depth of our partnerships is illustrated through physical air bridges installed in facilities in Australia and New Zealand that link our processing facilities directly to our customers' distribution centres. Use of these fully automated conveyor air bridges further optimises the supply chain process bringing significant logistics efficiency savings with lower carbon emissions.
During the year we acquired Foppen, a specialist smoked salmon business, with facilities in the Netherlands and Greece, which enhances our existing fish portfolio and is an entry point into the North American retail market. We also agreed a joint venture with Agito, an Australian automation and technology solutions business with ambitions for European expansion, which brings together excellence in automation and food supply chain expertise. This JV, together with an increased stake in Foods Connected, fits neatly into a newly created Hilton Food Services division to leverage supply chain solutions to meet our customers' needs. Additionally we invested in Cellular Agriculture, a leading cultivated protein tech business and formed a new partnership with Country Foods in Singapore.
We continue to explore opportunities to develop our cross-category business in both domestic and overseas markets as well as applying our state-of-the-art skills and experience to deliver value to our customers.
Group performance
In 2022 we increased our overall volumes maintaining a trend of continuous growth achieved in every year since Hilton's flotation in 2007. However this was overshadowed by significant challenges in our UK Seafood business including the impact of unprecedented inflation levels with price recovery taking longer than anticipated. There was also further disruption through automation investments which will deliver longer term efficiency benefits.
We have taken steps to rebuild sustainable profitability in this business and we remain confident in the opportunities which the seafood category will present for Hilton Foods over the coming years, serving a range of domestic and international customers with market-leading salmon, white fish, shellfish, coated fish, prawn cocktails and other added value fish products
Hilton Foods generated strong operating cash flows during 2022 enabling further significant investment in our facilities to increase capacity, improve operational efficiency and offer innovative solutions to our retailer partners. Hilton Foods remains financially strong with significant cash balances, undrawn committed bank facilities and operating well within our banking covenants.
Dividend policy
The Group has maintained a progressive dividend policy since flotation and despite the impact of the challenges faced in 2022 remain confident that this approach continues to be appropriate. With the proposed final dividend of 22.6p per ordinary share , total dividends in respect of 2022 will be 29.7p per ordinary share, maintaining the dividend compared to last year.
Our Board, purpose and governance
The Hilton Board is responsible for the long-term success of the Group and establishing its purpose, values and strategy aligned with its desired culture. Our purpose is to create efficiency and flexibility in the food supply chain whilst maintaining high quality through innovative and sustainable food manufacturing and supply chain solutions with the ambition to be the first choice partner for food retailers seeking excellence, insight and growth.
To achieve this the Board has an appropriate mix of skills, depth and diversity and a range of practical business experience, which is available to support and guide our management teams across a wide range of countries as well as having in place succession planning and maintaining a talent pipeline. We remain committed to achieving good governance balanced against our desire to preserve an agile and entrepreneurial approach. I would like to thank my colleagues on the Board for their support, counsel and expertise during the year. During the year Patricia Dimond joined the Board as an independent Non-Executive Director and subsequently became Audit Committee chair when John Worby stepped down. Angus Porter then became the Senior Independent Director. Nigel Majewski also stepped down as CFO and was replaced by Matt Osborne, formerly the Group Financial Controller, who has made a strong start in the role.
Philip Heffer advised the Board that he wished to step down from his role as CEO in 2023. I am delighted that Steve Murrells, CBE has accepted our invitation to join Hilton as its next CEO and that Philip will remain in the business in a new role of Co-Founder and Board Advisor. Steve has an outstanding record as a leader within the food industry working in senior positions with Tesco plc and more recently at Tulip Ltd 2009 - 2012 as CEO and Co-operative Group Ltd 2012 - 2022 as CEO Retail and from 2017 as Group CEO. Steve was appointed Commander of the Order of the British Empire (CBE) in the 2022 New Year Honours for services to the food supply chain. Steve will join the Board in July 2023. Philip has spent almost 30 years with Hilton Foods, including the last five years as Group CEO and will support Steve ensuring a smooth transition. I would like to thank Philip for everything he has contributed to Hilton Foods. He has been instrumental to the growth of the business we founded together in 1994 and I am extremely pleased that we will continue to benefit from his experience and expertise in his new advisory role.
The Board takes its responsibilities very seriously to promote the success of the Company for the benefit of its stakeholders as a whole. We take the interests of our workforce and other stakeholders fully into account in Board discussions and decision making. Details of the Group's policies and procedures that have been implemented to enhance stakeholder and workforce engagement, which explain how these interests have influenced our decisions, are set out in the governance section of our Annual report.
Sustainability
2022 marks the first full year of our new Sustainable Protein Plan strategy. This gives added focus and energy to the work we are doing to make our business more sustainable and become a core part of the wider growth strategy for the business. This Plan includes a range of stretching targets aligned closely with the UN Sustainable Development Goals including setting Science Based Targets on the way to achieving net zero emissions before 2050 and net negative thereafter.
Our position in the food supply chain means that we have opportunities working with partners from farm to fork to make a positive difference and innovate across the value chain. We recognise the commercial benefits of highly traceable, sustainably sourced proteins. For us, growing our business and supporting the planet go hand in hand. During the year we introduced ESG performance metrics into our long term incentive plan including emissions, packaging recycling and food waste targets to align our senior leaders with supporting the delivery of the Sustainable Protein Plan.
Annual General Meeting
This year's AGM will be held at Hilton's offices at 2-8 The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE in a hybrid format on Tuesday 23 May 2023 at noon. Please refer to our website at www.hiltonfoods.com/investors/agm/ for further guidance.
Robert Watson OBE
Chairman
4 April 2023
Chief Executive's summary
Business development
The Group's expansion is based on its established and proven track record, international reputation and experience and the recognised success of the close partnerships we have forged and maintained with successful retail partners over many years. Hilton's business model has proved successful in Europe and APAC supplemented by targeted acquisitions. We have demonstrated that this business model is capable of being successfully applied to both new proteins and transferred to new countries, adapted with our local customers to meet their specific requirements.
2022 Performance overview
2022 saw continued year-on-year sales growth driven by higher raw material prices and volume growth including through the acquisition of Foppen, full year volumes from Fairfax Meadow and Dalco acquired in 2021 and the New Zealand facility which opened in 2021 where there was strong trading. We have demonstrated strength and resilience in our core meat category with award winning products across the categories in which we operate. We continue to remain focused on responding to consumer needs in our development of new products and leveraging our industry leading technology to support our core protein business.
Overall volume increased by 4.3% to 513,816 tonnes (2021: 492,588 tonnes). In 2022 over 75% of the Group's volumes were produced in countries outside the UK. Adjusted operating profit fell by 3.3% and the overall operating margin decreased to 1.8% (2021: 2.2%) due to challenges in our UK Seafood business including the impact of unprecedented inflation levels with price recovery taking longer than anticipated. There was also further disruption through automation investments which will deliver longer term efficiency benefits.
A new leadership team is in place in our UK Seafood business which is performing well to implement a series of steps to rebuild profitability in this category. We are working in partnership with our customers to recover inflation, reduce costs and optimize the ranges we produce as well as leveraging the benefits which will come through our investment in industry-leading automation and other initiatives. The margin per kg decreased to 13.8p (2021: 14.9p). Our customer service level remains best in class at 95.9% (2021: 96.4%).
The wide geographical spread of the Group increases its resilience by minimising its reliance on any one individual economy. Hilton's results are reported in Sterling and are therefore sensitive to changes in the value of Sterling compared to the range of overseas currencies in which the Group trades. During 2022 the impact of average exchange rates on our results compared with 2021 was marginal.
Sustainability
Despite the current global instability we have maintained our focus on sustainability. Our strategy is to build a platform to create sustainable value over the long-term part of which is our Sustainable Protein Plan which is a blueprint for social and environmental progress across three pillars being product, planet and people. Through partnerships, we can help to create a more circular and sustainable food system that provides healthy and affordable proteins for consumers who have seen the cost of cooking double, and who worry about the health of their families and the future of our planet.
Through product innovation, we are working to decarbonise cattle, deliver zero emission factories and eliminate deforestation. We are committed to achieving fully recyclable retail plastic packaging and have achieved 70% recycled content plastic packaging across the Group. The investment in the meat technology business Cellular Agriculture can help Hilton become a leader in the emerging market for cultured meat. I am pleased with our progress on our planet targets. Hilton Foods was awarded a score of A- in this year's climate assessment by the Carbon Disclosure Project achieving recognition as a Supplier Engagement Leader. However we need to go further. We will, during 2023, submit even more ambitious targets to the Science Based Targets initiative. These will be consistent with achieving 1.5degC and see us commit to reach net zero well before our current 2050 target. The third part of our plan is about our people. Our commitment is to protect human rights, employee wellbeing and support career development and we are participants in the UN Global Compact.
Segment performance
Europe
Adjusted operating profit of GBP49.7m (2021: GBP 61.8 m) on turnover of GBP 2,254.7 m (2021: GBP1,987.4m)
This operating segment covers the Group's businesses and joint ventures in the UK, Ireland, Holland, Belgium, Sweden, Denmark, Portugal and Central Europe. Our products are sold in 14 countries across Europe. Our food service business Fairfax Meadow and our vegan/vegetarian business Dalco were acquired in 2021. During 2022 we acquired Foppen which completed in March as well as increasing our stake in Foods Connected from 50% to 65% and in Hilton Food Solutions from 55% to 65%.
Volumes increased by 4.1% attributable to the newly acquired businesses and there was good growth in convenience volumes in Central Europe and at Dalco. Sales grew by 13.4% due to raw material price inflation and the higher volumes. However adjusted operating profit fell by 19.6% due to the impact of the performance in our UK Seafood business. Operating margins decreased to 2.2% (2021: 3.1%) and operating profit margin per kg decreased to 13.4p (2021: 18.5p).
APAC
Adjusted operating profit of GBP26.7m (2021: GBP22.4m) on turnover of GBP1,592.9m (2021: GBP1,314.6m)
In Australia the Group operates facilities in Bunbury, Western Australia, Melbourne, Victoria and Brisbane, Queensland. A new food park facility in New Zealand opened in July 2021 to supply beef, lamb, pork, chicken, seafood and added-value products.
Volumes for the year increased by 4.7% through the full year of trading at the New Zealand facility. Sales increased by 21.2% driven by inflation in Australia and the new facility in New Zealand. Adjusted operating profit increased by 19.4% given the higher volumes as well as benefitting from recovery of increased interest costs. Operating margins were steady at 1.7% (2021: 1.7%) and the operating profit margin per kg increased to 16.1p (2021: 14.1p).
Past and future trends
Over recent decades major retailers have progressively rationalised their supply base through large scale, centralised packing solutions capable of producing private label packed fresh food products. This achieves lower costs with consistent high food safety, food integrity, traceability and quality standards allowing supermarket groups to focus on their core retail business whilst addressing consumers' continuing requirement for quality and value. This trend towards increased use of centralised packing solutions is likely to continue, albeit at different speeds across the world, representing potential future geographical expansion opportunities for Hilton. In addition consumer buying patterns are evolving with more seafood and vegetarian proteins being eaten. Through Hilton's diversification into these proteins we are well placed to grow our business.
Philip Heffer
Chief Executive Officer
4 April 2023
Performance and financial review
Summary of Group performance
This performance and financial review covers the Group's financial performance and position in 2022. Hilton's overall financial performance saw continued strong growth in volumes and sales although profitability and basic earnings per share on an adjusted basis were adversely impacted by the challenges faced in our UK Seafood business. Cash flow generation was strong, supporting our ongoing significant investment in facilities.
Basis of preparation
The Group is presenting its results for the 52 week period ended 1 January 2023, with comparative information for the 52 week period ended 2 January 2022. The financial statements of the Group are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and UK adopted International Accounting Standards.
Hilton uses Alternative Performance Measures (APMs) to monitor the underlying performance of the Group. Management use these APMs to monitor and manage the business's performance day-to-day and therefore believe they provide useful additional information to shareholders and wider users of the financial statements.
2022 Financial performance
Volume and revenue
Volumes grew by 4.3% in the year reflecting the acquisition of Foppen, full year volumes from Fairfax Meadow and Dalco which were acquired in 2021 and the New Zealand facility which opened in 2021. Additional details of volume growth by business segment are set out in the Chief Executive's summary. Revenue increased 16.5% and by 16.0% on a constant currency basis reflecting higher raw material prices and volume growth.
Operating profit and margin
Adjusted operating profit of GBP71.1m (2021: GBP73.6m) was 3.3% lower than last year and 3.2% lower on a constant currency basis due to challenges in our Seafood business. IFRS operating profit was GBP54.0m (2021: GBP63.4m) after charging GBP11.9m in exceptional costs (2021: GBP7.1m) reflecting costs relating to the Belgium fire, acquisition and reorganisation costs offset by a gain on the acquisition of 100% of Foods Connected. The operating profit margin in 2022 declined to 1.8% (2021: 2.2%) and the operating profit per kilogram of packed food sold fell to 13.8p (2021: 14.9p) attributable to the Seafood business challenges.
Net finance costs
Adjusted net finance costs excluding exceptional items and lease interest increased to GBP15.7m (2021: GBP6.4m) reflecting higher borrowings that financed our acquisition and expansion programme and the impact of higher market interest rates. Interest cover as a proportion of adjusted operating profit in 2022 reduced to 4.5 times (2021: 11 times). IFRS net finance costs were GBP24.4m (2021: GBP16.0m).
Taxation
The adjusted taxation charge for the period was GBP13.5m (2021: GBP14.5m). The effective tax rate was 24.3.% (2021: 21.6%). The IFRS taxation charge was GBP10.1m (2021: GBP8.1m) with an effective tax rate of 34.2% (2021: 17.1%).
Net income
Adjusted net income, representing profit for the year attributable to owners of the parent, of GBP40.2m (2021: GBP50.5m) was 20.4% lower than last year and 20.0% lower on a constant currency basis. IFRS net income was GBP17.7m (2021: GBP37.1m).
Earnings per share
Adjusted basic earnings per share 45.1p (2021: 61.3p) was 26.4% lower than last year and 26.3% on a constant currency basis. IFRS basic earnings per share were 19.8p (2021: 45.0p). Diluted earnings per share were 19.7p (2021: 44.5p).
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Adjusted EBITDA, which is used by the Group as an indicator of cash generation, increased marginally to GBP119.9m (2021: GBP119.5m). IFRS EBITDA was GBP131.8m (2021: GBP139.0m).
Free cash flow and net debt position
Operating cash flow was strong in 2022 with cash flows from operating activities of GBP98.3m (2021: GBP121.3m) reflecting planned inventory increases. IFRS free cash outflow, after capital expenditure of GBP56.8m and investments in acquisitions and joint ventures GBP83.6m but before dividends and financing, was GBP79.4m (2021: outflow GBP8.1m restated).
The Group closing net bank debt comprising borrowings less cash and cash equivalents excluding lease liabilities, was GBP211.6m (2021: GBP84.6m) reflecting bank borrowings of GBP298.8m net of cash balances of GBP87.2m. Net bank debt increased following investments in acquisitions/JVs GBP83.6m and capex investment GBP56.8m. Net debt including lease liabilities was GBP457.7m (2021: GBP328.0m).
At the end of 2022 the Group had undrawn committed bank facilities under its syndicated banking facilities of GBP106.4m (2021: GBP96.8m). These banking facilities are subject to covenants comprising net bank debt to EBITDA and EBITDA interest cover. Headroom under these covenants at the end of the year was at least 66% for these metrics. During the year the Group renewed its banking facilities with a GBP424m five year revolving credit and term loan facility agreed with a syndicate of lenders which is due to expire in January 2027.
The resilience of the Group has been assessed by applying significant downside sensitivities to the Group's cash flow projections. Allowing for these sensitivities and potential mitigating actions the Board is satisfied that the Group has adequate headroom under its existing committed facilities and will be able to continue to operate well within its banking covenants.
Dividends
The Group has maintained a progressive dividend policy since flotation and has recommended a final dividend of 22.6p per ordinary share in respect of 2022. This, together with the interim dividend of 7.1p per ordinary share paid in December 2022, maintains the full year dividend, as compared with last year at 29.7p per ordinary share. The final dividend, if approved by shareholders, will be paid on 30 June 2023 to shareholders on the register on 2 June 2023 and the shares will be ex dividend on 1 June 2023.
Key performance indicators
How we measure our performance against our strategic objectives
The Board monitors a range of financial and non-financial key performance indicators (KPIs) to measure the Group's performance over time in building shareholder value and achieving the Group's strategic priorities. The nine headline KPI metrics used by the Board for this purpose, together with our performance over the past two years, is set out below:
2022 2021 Definition, method of calculation
and analysis
(52 weeks) (52 weeks)
Financial KPIs
------------- --------------- ----------------------------------------------
Year on year revenue growth expressed
as a percentage. The 2022 increase
reflected higher raw material prices
Revenue growth (%) 16.5% 19.0% and volume growth.
------------- --------------- ----------------------------------------------
Adjusted operating 1.8% 2.2% Adjusted operating profit expressed
profit margin (%) as a percentage of turnover. The operating
profit margin % in 2022 was lower
due to challenges in our Seafood business.
------------- --------------- ----------------------------------------------
Adjusted operating 13.8 14.9 Adjusted operating profit per kilogram
profit margin (pence processed and sold in pence. The decrease
per kg) in 2022 compared with 2021 reflects
the challenges in our Seafood business.
------------- --------------- ----------------------------------------------
Adjusted earnings 119.9 119.5 Adjusted operating profit before depreciation
before interest, and amortisation which increased marginally
taxation, depreciation year on year.
and amortisation
(EBITDA) (GBPm)
------------- --------------- ----------------------------------------------
Free cash flow (GBPm) (79.4) (8.1) restated IFRS cash (outflow) before minorities,
dividends and financing. Operating
cash flow generation in 2022 was higher
due to increased investments in acquisitions
and joint ventures, adverse working
capital movements and higher interest
payments.
------------- --------------- ----------------------------------------------
Net debt / EBITDA 1.8 0.7 Year end net bank debt as a percentage
ratio (times) of adjusted EBITDA. The increase is
due to the Foppen acquisition which
completed during the year and the
distorting impact of the related equity
raise GBP75m in 2021.
------------- --------------- ----------------------------------------------
Non-financial KPIs
------------- --------------- ----------------------------------------------
Growth in sales volumes 4.3% 5.0% Year on year volume growth. Volume
(%) growth in 2022 comprised Foppen acquired
in the year and full year volumes
from Fairfax Meadow and Dalco acquired
in 2021 and the New Zealand facility
opened in 2021.
------------- --------------- ----------------------------------------------
Employee and labour 65.7 60.9 Labour cost of producing food products
agency costs (pence as a proportion of volume. The increase
per kg) reflects relatively greater labour
complexity in the recently acquired
businesses including Foppen, Fairfax
Meadow and Dalco.
------------- --------------- ----------------------------------------------
Packs of product delivered as a %
Customer service of the orders placed. The customer
level (%) 95.9% 96.4% service level remains best in class.
------------- --------------- ----------------------------------------------
In addition, a much wider range of financial and operating KPIs are continuously tracked at business unit level.
Going concern statement
The Directors have performed a detailed assessment, including a review of the Group's budget for the 2023 financial year and its longer term plans, including consideration of the principal risks faced by the Group. The resilience of the Group has been assessed by applying significant downside sensitivities to the Group's cash flow projections. Allowing for these sensitivities and potential mitigating actions the Board is satisfied that the Group is able to continue to operate well within its banking covenants and has adequate headroom under its new committed facilities which do not expire until 2027. The Directors are satisfied that the Company and the Group have adequate resources to continue to operate and meet its liabilities as they fall due for the foreseeable future, a period considered to be at least 12 months from the date of signing these financial statements. For this reason they continue to adopt the going concern basis for preparing the financial statements.
The Group's bank borrowings as detailed in the financial statements and the principal banking facilities, which support the Group's existing and contracted new business, are committed. The Group is in full compliance with all its banking covenants and based on forecasts and sensitised projections is expected to remain in compliance. Future geographical expansion which is not yet contracted, and which is not built into our internal budgets and forecasts, may require additional or extended banking facilities and such future geographical expansion will depend on our ability to negotiate appropriate additional or extended facilities, as and when they are required. During the year the Group renewed its banking facilities with a 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 2025. A period of three years has been chosen for the purpose of this viability statement as it is aligned with the Group's three year plan, which is based on the Group's current customers and does not incorporate the benefits from any potential new contract gains over this period.
The Directors' assessment has been made with reference to the Group's current position and strategy taking into account the Group's principal risks, including those in relation to Covid-19, and how these are managed. The strategy and associated principal risks, which the Directors review at least annually, are incorporated in the three year plan and such related scenario testing as is required. The three year plan makes reasoned assumptions in relation to volume growth based on the position of our customers and expected changes in the macroeconomic environment and retail market conditions, expected changes in food raw material, packaging and other costs, together with the anticipated level of capital investment required to maintain our facilities at state-of-the-art levels.
Cautionary statement
This Strategic report contains forward-looking statements. Such statements are based on current expectations and assumptions and are subject to risk factors and uncertainties which we believe are reasonable. Accordingly Hilton's actual future results may differ materially from the results expressed or implied in these forward-looking statements. We do not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Matt Osborne
Chief Financial Officer
4 April 2023
Risk management and principal risks
Risks and risk management
In accordance with provision 28 of the 2018 UK Corporate Governance Code, the Directors confirm that they have carried out a robust assessment of the emerging and principal risks facing the Group that might impede the achievement of its strategic and operational objectives as well as affect performance or cash position. As a leading food processor in a fast-moving environment it is critical that the Group identifies, assesses and prioritises its risks. The result of this assessment is a statement of the principal risks facing the Group together with a description of the main controls and mitigations that reduce the effect of those risks were they to crystallise. This, together with the adoption of appropriate mitigation actions, enables us to monitor, minimise and control both the probability and potential impact of these risks.
How we manage risk
The Group takes a proactive approach to risk management with well-developed structures and a range of processes for identifying, assessing, prioritising and mitigating its key risks, as the delivery of our strategy depends on our ability to make sound risk informed decisions. The Group's internal audit function derives its risk-based assurance plan on the controls after considering the risk assessment and reports its findings to the Audit Committee. For more detail please see Who is responsible for risk at Hilton?
Risk management process and risk appetite
The Board believes that in carrying out the Group's businesses it is vital to strike the right balance between an appropriate and comprehensive control environment and encouraging the level of entrepreneurial freedom of action required to seek out and develop new business opportunities; but, however skilfully this balance between risk and reward is struck, the business will always be subject to a number of risks and uncertainties, as outlined below.
All types of risk applicable to the business are regularly reviewed and a formal risk assessment is carried out to highlight key risks to the business and to determine actions that can reasonably and cost effectively be taken to mitigate them.
Not all the risks listed are within the Group's control and others may be unknown or currently considered immaterial, but could turn out to be material in the future. These risks, together with our risk mitigation strategies, should be considered in the context of the Group's risk management and internal control framework, details of which are set out in the Corporate governance statement. It must be recognised that systems of internal control are designed to manage rather than completely eliminate any identified risks.
Risk management during 2022
Cost of living crisis and the Russia-Ukraine War
The macroeconomic and geopolitical landscape, exacerbated by the Ukrainian War, is having an unprecedented impact on our supply chains, operations, consumers and customers. Energy price volatility and an acute cost of living crisis is impacting consumer spending and eating habits. This has resulted in high-profile food price inflation and extreme cost volatility.
Our continued focus on cost control, innovation and factory efficiency is enabling us to manage the inflationary pressures the industry is currently facing. Through our strong customer relationships we are able to support consumers to navigate through these challenging times.
Brexit
Hilton's exposure is generally mitigated through our predominantly local sourcing and operating model. Impacts are likely to continue through 2023 as the UK and EU regulatory and trade environments evolve. The Group is ensuring compliance through ongoing engagement with the appropriate authorities and regulatory forums. We continue to monitor policy changes and amend processes and operations as required. Our labour recruitment and retention strategies are evolving in line with this changing landscape and our continued focus on technology and automation further reduce risk exposure in this area.
Principal risks
The most significant business risks that the Group faces, together with the measures we have adopted to mitigate these risks, are outlined in the table below. This is not intended to constitute an exhaustive analysis of all risks faced by the Group, but rather to highlight those which are the most significant, as viewed from the standpoint of the Group as a whole.
Description of Its potential impact Risk mitigation measures and
risk strategies adopted
Risk 1
The progress of No business is immune to Our strong and diversifying growth
the Group's business difficult economic climates. model, based on successful diversification
is affected by The current macroeconomic across different proteins, expanding
the macroeconomic environment is placing as a technology-led supply chain
and geopolitical extraordinary financial partner and built on our strong
environment and pressures on businesses ESG credentials underpins our
levels of consumer and consumers. The inflationary business resilience.
spending. pressures resulting from
the Covid-19 pandemic, We continue to broaden product
movement the Ukrainian conflict ranges with our strong retail
and wider economic and partners, maintaining a single-minded
political instability are focus on minimising unit packing
exacerbating the challenging costs, whilst continuing to deliver
market conditions. high levels of product quality
and integrity.
Consumers are changing
their shopping and eating The Group is able to harness
habits and our retail customers its innovative and agile approach
are under immense pressure with its class-leading technology
to deliver value and are and systems to respond quickly
therefore sharing that and effectively to macroeconomic
pressure with supplier challenges and opportunities.
partners.
--------------------------------------- ---------------------------------------------
Risk 2
The Group's growth The Group's products predominantly The Group plays a very proactive
potential may carry the brand labels role in enhancing its customers'
be affected by of the customer to whom brand values, through providing
the success of packed food is supplied high quality, competitively priced
its customers and it is accordingly dependent products, high service levels,
and the growth on its customers' success continuing product and packaging
of their packed in maintaining or improving innovation and category management
food sales. consumer perception of support. It recognises that quality
No movement their own brand names and and traceability assurance are
packed food offerings. integral to its customers' brands
Consumer perception is and works closely with its customers
increasingly influenced to ensure rigorous quality assurance
by environmental, social standards are met. It is continuously
and governance (ESG) considerations. measured by its customers across
a very wide range of parameters,
including delivery time, product
specification, product traceability
and accuracy of documentation
and targets demanding service
levels across all these parameters.
The Group works closely with
its customers to identify continuing
improvement opportunities across
the supply chain, including enhancing
product presentation, extending
shelf life and reducing wastage
at every stage in the supply
chain.
Our ESG strategy underpins the
growth of our product sectors
for our customers, and supports
them to reach their goals. Our
ambitious 2025 Sustainable Protein
Plan is in partnership with our
customers and suppliers as we
engage in the key collaborative
initiatives that drive sustainability
for our sectors and raise the
bar together.
We have set stretching goals
that drive impactful actions
that become integrated into our
core business practices. Our
data collection platform, Foods
Connected, demonstrates the assurance
of standards across our supply
chains, and allows us to measure
progress towards our 2025 targets.
The detail of our strategy and
its impact are described within
the Sustainability section of
this report.
--------------------------------------- ---------------------------------------------
Risk 3
The Group strategy The Group has a relatively The Group is progressively widening
focuses on a small narrow, but expanding, its customer base and maintaining
number of customers customer base, with sales a high level of investment in
who can exercise to subsidiary or associated state-of-the-art facilities,
significant buying companies of the Tesco, which together with management's
power and influence Ahold and Woolworths groups continuous focus on reducing
when it comes still comprising the larger costs, allow it to operate very
to contractual part of Hilton's revenue. efficiently at very high throughputs
renewal terms The larger retail chains and price its products competitively.
at 5 to 15-year continue to focus on strengthening
intervals. their market share of protein Hilton operates a decentralised,
movement products in the countries entrepreneurial business structure,
in which we operate, creating which enables it to work very
an increasingly competitive closely and flexibly with its
retail environment. This retail partners in each country,
has increased the buying in order to achieve high service
power of the Group's customers levels in terms of orders delivered,
which in turn increases delivery times, compliance with
their negotiating power product specifications and accuracy
with the Group, which could of documentation, all backed
enable them to seek better by an uncompromising focus on
terms over time. food safety, product integrity
and traceability assurance.
During periods of unprecedented
inflationary pressure, Hilton has long-term supply agreements
misalignment between production in place with its major customers,
costs and agreed operational with pricing either on a cost
packing rates may occur, plus or agreed packing rate basis.
potentially impacting profitability.
The Group maintains an ongoing
focus on cost control, innovation
and factory efficiency to manage
inflationary pressures. Hilton
continues to evolve and respond
to changing market conditions.
The provision of added value
services deepens the relationships
Hilton has with its retailer
partners and investment in these
services means that we are able
to develop and maintain a technology
advantage within our industry.
--------------------------------------- ---------------------------------------------
Risk 4
As Hilton continues The Group may struggle The Group carefully manages its
to grow there to meet key strategic objectives skilled resources including succession
is more reliance and projects and fail to planning and maintaining a talent
on key personnel adhere to regulatory and pipeline. The Group is evolving
and their ability legislative requirements, its people capability balanced
to manage growth, which in turn detracts with an appropriate management
change, integration from our performance delivery structure within the overall
and compliance for our customers. organisation. Hilton continues
across new legislative to invest in on-the-job training
and regulatory and career development, whilst
environments. recruiting high quality new employees,
This risk increases as required to facilitate the
as the Group continues Group's ongoing growth. Appointment
to expand with of additional key resources and
new customers alignment of structures have
and into new territories supported the enhancement of
either organically project management control and
or through acquisition oversight. Control systems embedded
with potentially in project management enable
greater reliance the risks of growth to be appropriately
on stretched skilled highlighted and managed. To underscore
resource and execution our efforts, we have active relationships
of simultaneous with strong industry experts
growth projects. across all areas of business
growth.
No movement
In the current climate, strong
partnership and proximity to
our customers are fundamental.
Hilton's leadership continues
to develop its organisational
structures to ensure as close
a relationship with our retail
partners as possible.
--------------------------------------- ---------------------------------------------
Risk 5
The Group's business The Group is reliant on The Group maintains a flexible
strength is affected its suppliers to provide global and local food supply
by its ability sufficient volume of products, base, which is progressively
to maintain a to the agreed specifications, widening as it expands and is
wide and flexible in the very short lead continuously audited to ensure
global food supply times required by its customers, standards are maintained, so
base operating with efficient supply chain as to have in place a wide range
at standards that management being a key of options should supply disruptions
can continuously business attribute. The occur.
achieve the specifications Group has both local and
set by Hilton global sourcing models. Further assurance is provided
and its customers. Current or future tariffs, through the supply chain control
No movement quotas or trade barriers and transparency the Group has
imposed by supplier countries enabled by its supplier management
and other global trade platform, Foods Connected, which
developments, could materially facilitates robust supplier relationships.
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
within the supply the Group's ability to a trusted raw material supply
chain including procure sufficient quantities base, all components of which
outbreaks of disease of safe raw material. meet stringent national, international
and feed contaminants and customer standards. The Group
affecting livestock is subject to demanding standards
and fish. which are independently monitored
No movement in every country and reliable
product traceability and high
welfare standards from the farm
to the consumer are integral
to the Group's business model.
The Group ensures full traceability
from source to packed product
across all suppliers, supported
by a comprehensive ongoing audit
programme. Within our factories,
Global Food Safety Initiative
(GFSI) benchmarked food safety
standards and our own factory
standard assessments drive the
enhancement of the processes
and controls that are necessary
to ensure that the risks of contaminants
throughout the processing, packing
and distribution stages are mitigated
and traceable should a risk ever
materialise.
--------------------------------------- ---------------------------------------------
Risk 7
Significant incidents Such incidents could result The Group has robust business
such as fire, in systems or manufacturing continuity plans in place including
flood, pandemic process stoppages with sister site support protocols
or interruption consequent disruption and enabling other sites to step
of supply of key loss of efficiency which in with manufacturing and distribution
utilities could could impact the Group's of key product lines where necessary.
impact the Group's sales. Continuity management systems
business continuity. and plans are suitably maintained
The legacy of and adequately tested including
the Covid-19 pandemic building risk assessments and
continues to present emergency power solutions. There
challenges across are appropriate insurance arrangements
the globe. in place to mitigate against
No movement any associated financial loss.
We continue to mitigate against
the legacy impact of the Covid-19
pandemic.
--------------------------------------- ---------------------------------------------
Risk 8
The Group's IT The Group's operations The Group has a robust IT control
systems could are underpinned by a variety framework, minimum operating
be subject to of IT systems. Loss or standards, including working
cyber-attacks, disruption to those IT towards National Institute of
including ransomware systems or extended times Technology requirements, all
and fraudulent to recover data or functionality of which are tested frequently
external email could impact the Group's by internal staff and by specialist
activity. These ability to effectively external bodies. This framework
kinds of attacks operate its facilities is established as the key control
are generally and affect its sales and to mitigate cyber risk and is
increasing in reputation. applied consistently throughout
frequency and the Group. The increased prominence
sophistication. of IT risk is mitigated by investments
in IT infrastructure and now
No movement forms a regular part of the Group
Risk Management Committee agenda
and presentations to the Board.
In accordance with Group strategy
IT risk is considered when looking
at new ventures and control measures
implemented in new sites follow
the Group common standards. There
is internal training and resources
available with emphasis on prevention,
user awareness and recovery.
Increasingly, IT forms part of
site business continuity exercises
which test and help develop the
capacity to respond to possible
crises or incidents. The technical
infrastructure to prevent attacks,
safeguard data and the resilience
to recover are continuously developed
including yearly assessments
to meet emerging threats. IT
systems including financial and
banking systems are configured
to prevent fraudulent payments.
There are monthly IT security
reviews to ensure compliance
with expected levels of applications
updates, and of server and data
centres together with yearly
penetration testing.
--------------------------------------- ---------------------------------------------
Risk 9
A significant Such breach in health and The Group has established robust
breach of health safety legislation could health and safety processes and
and safety legislation lead to reputational damage procedures across its operations,
as complexity and regulatory penalties, including a Group oversight function
increases in managing including restrictions which provides key guidance and
sites across different on operations, fines or support necessary to strengthen
product groups personal litigation claims. monitoring, best practice and
and geographies. compliance. The Group has also
No movement rolled out an enhanced standardised
safety framework. Health and
safety performance is reviewed
regularly by the Board.
--------------------------------------- ---------------------------------------------
Risk 10
The Group's business Potential physical impacts We continue to develop our approach
and supply chain from climate change could to climate change risk mitigation.
is affected by include a higher incidence We have committed to set a science-based
climate change of extreme weather events target through the Science Based
risks comprising such as flooding, drought, Targets initiative and signed
both physical and forest fires that could the Business Ambition for 1.5degC
and transition disrupt our supply chains pledge to decarbonise our own
risks. Physical and potentially impact operations and supply chains.
risks include production capabilities, We have set energy and water
long-term rises increase costs and add efficiency targets for our sites
in temperature complexity. Action taken and continue to engage in global
and sea levels by societies could reduce collaborative action for decarbonisation
as well as changes the severity of these impacts. of our key raw materials. We
to the frequency are directing our efforts towards
and severity of Governmental efforts to a net zero carbon footprint before
extreme weather mitigate climate change 2050.
events. Transition may lead to policy and
risks include regulatory changes as well Shifts in consumer demand are
policy changes, as shifts in consumer demand. an opportunity for growth in
reputational impacts, The potential transitional our portfolio of plant based
and shifts in impacts include additional and seafood products. Additionally,
market preferences costs of low greenhouse we are ensuring we have the flexibility
and technology. gas emission farming systems, to adapt our supply chains over
and the potential of carbon time to mitigate physical disruption.
No movement price regulation aimed We continue to review and develop
at shifting consumers to our assessment of the key physical
lower carbon foods, which and transition risks impacting
may reduce the profitability our business in line with the
of some of our products. Task Force on Climate-related
Additionally there is increased Financial Disclosures (TCFD)
stakeholder focus on climate recommendations. Our full assessment
change issues. Our reputation of climate risks and opportunities
could be impacted if we in line with the TCFD framework
are not active in reducing is described within the Sustainability
the climate impacts of section of this report.
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 4 April 2023 and is signed on its behalf by:
Directors
R Watson OBE Chairman M Osborne Chief Financial Officer
Consolidated statement of comprehensive income
2022 2021
52 weeks 52 weeks
Notes GBP'000 GBP'000
------------------------------------------------- ----- ----------- -----------
Restated
(note 2)*
------------------------------------------------- ----- ----------- -----------
Continuing operations
------------------------------------------------- ----- ----------- -----------
Revenue 3 3,847,600 3,301,970
------------------------------------------------- ----- ----------- -----------
Cost of sales* (3,464,837) (2,982,155)
------------------------------------------------- ----- ----------- -----------
Gross profit 382,763 319,815
------------------------------------------------- ----- ----------- -----------
Distribution costs (42,028) (25,083)
------------------------------------------------- ----- ----------- -----------
Other administrative expenses* (276,048) (226,175)
================================================= ===== =========== ===========
Exceptional items 4 (11,896) (7,050)
------------------------------------------------- ----- ----------- -----------
Total administrative expenses (287,944) (233,225)
================================================= ===== =========== ===========
Share of profit in joint ventures 1,235 1,925
------------------------------------------------- ----- ----------- -----------
Operating profit 54,026 63,432
------------------------------------------------- ----- ----------- -----------
Finance income 5 356 10
------------------------------------------------- ----- ----------- -----------
Other finance costs (24,768) (14,913)
================================================= ===== =========== ===========
Exceptional finance costs 4 - (1,131)
------------------------------------------------- ----- ----------- -----------
Total finance costs 5 (24,768) (16,044)
------------------------------------------------- ----- ----------- -----------
Finance costs - net (24,412) (16,034)
------------------------------------------------- ----- ----------- -----------
Profit before income tax 29,614 47,398
------------------------------------------------- ----- ----------- -----------
Income tax expense (10,267) (11,232)
================================================= ===== =========== ===========
Exceptional tax income 4 145 3,116
------------------------------------------------- ----- ----------- -----------
Total income tax expense 6 (10,122) (8,116)
------------------------------------------------- ----- ----------- -----------
Profit for the period 19,492 39,282
------------------------------------------------- ----- ----------- -----------
Attributable to:
------------------------------------------------- ----- ----------- -----------
Owners of the parent 17,706 37,143
------------------------------------------------- ----- ----------- -----------
Non-controlling interests 1,786 2,139
------------------------------------------------- ----- ----------- -----------
19,492 39,282
------------------------------------------------- ----- ----------- -----------
Earnings per share attributable to owners of the
parent during the year
------------------------------------------------- ----- ----------- -----------
Basic (pence) 7 19.8 45.0
------------------------------------------------- ----- ----------- -----------
Diluted (pence) 7 19.7 44.5
------------------------------------------------- ----- ----------- -----------
*Restated
2022 2021
52 weeks 52 weeks
GBP'000 GBP'000
---------------------------------------------------------- --------- --------
Profit for the period 19,492 39,282
---------------------------------------------------------- --------- --------
Other comprehensive (expense)/income
---------------------------------------------------------- --------- --------
Items that may be reclassified to profit or loss
---------------------------------------------------------- --------- --------
Currency translation differences 29 (7,090)
---------------------------------------------------------- --------- --------
Gain on cash flow hedges 786 -
---------------------------------------------------------- --------- --------
Other comprehensive (expense) for the year net of tax 815 (7,090)
---------------------------------------------------------- --------- --------
Total comprehensive income for the year 20,307 32,192
---------------------------------------------------------- --------- --------
Total comprehensive income attributable to:
---------------------------------------------------------- --------- --------
Owners of the parent 18,219 30,417
---------------------------------------------------------- --------- --------
Non-controlling interests 2,088 1,775
---------------------------------------------------------- --------- --------
20,307 32,192
---------------------------------------------------------- --------- --------
The notes are an integral part of these consolidated financial statements.
Consolidated and Company Balance sheets
Group Company
2022 2021 2022 2021
Notes GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- --------- --------- ------- -------
Assets
--------------------------------------- ----- --------- --------- ------- -------
Non-current assets
--------------------------------------- ----- --------- --------- ------- -------
Property, plant and equipment 9 327,611 291,488 - -
--------------------------------------- ----- --------- --------- ------- -------
Intangible assets 10 160,480 105,775 - -
--------------------------------------- ----- --------- --------- ------- -------
Lease: right of use assets 11 216,578 222,004 - -
--------------------------------------- ----- --------- --------- ------- -------
Investments 6,208 5,539 247,785 247,785
--------------------------------------- ----- --------- --------- ------- -------
Trade and other receivables - 2,239 - -
--------------------------------------- ----- --------- --------- ------- -------
Deferred income tax assets 13,801 6,952 - -
--------------------------------------- ----- --------- --------- ------- -------
724,678 633,997 247,785 247,785
--------------------------------------- ----- --------- --------- ------- -------
Current assets
--------------------------------------- ----- --------- --------- ------- -------
Inventories 206,729 156,517 - -
--------------------------------------- ----- --------- --------- ------- -------
Trade and other receivables 271,160 230,388 5,875 2,874
--------------------------------------- ----- --------- --------- ------- -------
Current tax assets 5,995 5,212 - -
--------------------------------------- ----- --------- --------- ------- -------
Other financial asset - 1,140 - -
--------------------------------------- ----- --------- --------- ------- -------
Cash and cash equivalents 87,224 140,170 186 151
--------------------------------------- ----- --------- --------- ------- -------
571,108 533,427 6,061 3,025
--------------------------------------- ----- --------- --------- ------- -------
Total assets 1,295,786 1,167,424 253,846 250,810
--------------------------------------- ----- --------- --------- ------- -------
Equity
--------------------------------------- ----- --------- --------- ------- -------
Equity attributable to owners of the parent
---------------------------------------------- --------- --------- ------- -------
Ordinary shares 8,943 8,893 8,943 8,893
--------------------------------------- ----- --------- --------- ------- -------
Share premium 144,926 142,043 144,926 142,043
--------------------------------------- ----- --------- --------- ------- -------
Own shares - (87) - -
--------------------------------------- ----- --------- --------- ------- -------
Employee share schemes reserve 5,004 6,990 - -
--------------------------------------- ----- --------- --------- ------- -------
Foreign currency translation reserve (2,379) (2,106) - -
--------------------------------------- ----- --------- --------- ------- -------
Cashflow hedging reserve 786 - - -
--------------------------------------- ----- --------- --------- ------- -------
Retained earnings 167,862 176,449 28,958 28,850
--------------------------------------- ----- --------- --------- ------- -------
Reverse acquisition reserve (31,700) (31,700) - -
--------------------------------------- ----- --------- --------- ------- -------
Merger reserve 919 919 71,019 71,019
--------------------------------------- ----- --------- --------- ------- -------
294,361 301,401 253,846 250,805
--------------------------------------- ----- --------- --------- ------- -------
Non-controlling interests 10,956 6,548 - -
--------------------------------------- ----- --------- --------- ------- -------
Total equity 305,317 307,949 253,846 250,805
--------------------------------------- ----- --------- --------- ------- -------
Liabilities
--------------------------------------- ----- --------- --------- ------- -------
Non-current liabilities
--------------------------------------- ----- --------- --------- ------- -------
Borrowings 13 270,510 - - -
--------------------------------------- ----- --------- --------- ------- -------
Lease liabilities 11 230,152 228,977 - -
--------------------------------------- ----- --------- --------- ------- -------
Deferred income tax liabilities 15,921 4,132 - -
--------------------------------------- ----- --------- --------- ------- -------
516,583 233,109 - -
--------------------------------------- ----- --------- --------- ------- -------
Current liabilities
--------------------------------------- ----- --------- --------- ------- -------
Borrowings 13 28,279 224,732 - -
--------------------------------------- ----- --------- --------- ------- -------
Lease liabilities 11 16,006 14,419 - -
--------------------------------------- ----- --------- --------- ------- -------
Trade and other payables 426,203 387,215 - 5
--------------------------------------- ----- --------- --------- ------- -------
Financial liabilities at fair value
through OCI 3,398 - - -
--------------------------------------- ----- --------- --------- ------- -------
473,886 626,366 - 5
--------------------------------------- ----- --------- --------- ------- -------
Total liabilities 990,469 859,475 - 5
--------------------------------------- ----- --------- --------- ------- -------
Total equity and liabilities 1,295,786 1,167,424 253,846 250,810
--------------------------------------- ----- --------- --------- ------- -------
The notes are an integral part of these consolidated financial statements.
R. Watson M. Osborne
Director Director
Hilton Food Group plc - Registered number: 06165540
The Company has taken advantage of the exemption in Section 408 Companies Act 2006 not to publish its individual income statement, statement of comprehensive income and related notes. Profit for the period dealt with in the income statement of Hilton Food Group plc amounted to GBP25,600,000 (2021: GBP24,300,000).
Consolidated and Company Statement of changes in equity
Attributable to owners of the parent
----------------------------------------------------------------------------------------------------
Employee Foreign
share currency Cashflow Reverse
Share Share Own schemes translation hedge Retained acquisition Merger Non-controlling Total
capital premium shares reserve 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 GBP'000
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Balance at 4
January 2021 8,194 65,619 - 6,123 4,620 - 161,607 (31,700) 919 215,382 6,556 221,938
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Profit for the
period - - - - - - 37,143 - - 37,143 2,139 39,282
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Other
comprehensive
income
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Currency
translation
differences - - - - (6,726) - - - - (6,726) (364) (7,090)
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Total
comprehensive
income for the
period - - - - (6,726) - 37,143 - - 30,417 1,775 32,192
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Issue of new
shares 699 76,424 - - - - - - - 77,123 - 77,123
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Purchase of
own shares - - (2,278) - - - - - - (2,278) - (2,278)
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Adjustment in
respect of
employee
share schemes - - - 2,725 - - - - - 2,725 - 2,725
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Settlement of
employee share
scheme - - 2,191 (2,191) - - - - - - - -
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Tax on employee
share schemes - - - 333 - - - - - 333 - 333
----------------------- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Dividends paid 8 - - - - - - (22,301) - - (22,301) (1,783) (24,084)
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
Total
transactions
with owners 699 76,424 (87) 867 - - (22,301) - - 55,602 (1,783) 53,819
---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Balance at 2 January 2022 8,893 142,043 (87) 6,990 (2,106) - 176,449 (31,700) 919 301,401 6,548 307,949 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Profit for the period - - - - - - 17,706 - - 17,706 1,786 19,492 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Other comprehensive expense ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Currency translation differences - - - - (273) - - - - (273) 302 29 ----------------------- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Gain on cash flow hedging - - - - - 786 - - - 786 - 786 ----------------------- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Total comprehensive income for the period - - - - (273) 786 17,706 - - 18,219 2,088 20,307 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Transactions with non-controlling interests - - - - - - (801) - - (801) 3,584 2,783 ================ ===== ======= ======= ======= ======== =========== ======== ======== =========== ======= ======== =============== ======== Issue of new shares 50 2,883 - - - - - - - 2,933 - 2,933 ================ ===== ======= ======= ======= ======== =========== ======== ======== =========== ======= ======== =============== ======== Adjustment in respect of employee share schemes - - - (655) - - - - - (655) - (655) ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Settlement of employee share scheme - - 87 (300) - - - - - (213) - (213) ----------------------- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Tax on employee share schemes - - (1,031) - - - - - (1,031) - (1,031) ----------------------- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Dividends paid 8 - - - - - - (25,492) - - (25,492) (1,264) (26,756) ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Total transactions with owners 50 2,883 87 (1,986) - - (26,293) - - (25,259) 2,320 (22,939) ----------------------- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Balance at 1 January 2023 8,943 144,926 - 5,004 (2,379) 786 167,862 (31,700) 919 294,361 10,956 305,317 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Company ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Balance at 4 January 2021 8,194 65,619 - - - - 26,851 - 71,019 171,683 - 171,683 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Profit for the period - - - - - - 24,300 - - 24,300 - 24,300 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Total comprehensive income for the year - - - - - - 24,300 - - 24,300 - 24,300 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Issue of new shares 699 76,424 - - - - - - - 77,123 - 77,123 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Dividends paid 8 - - - - - - (22,301) - - (22,301) - (22,301) ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Total transactions with owners 699 76,424 - - - - (22,301) - - 54,822 - 54,822 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Balance at 2 January 2022 8,893 142,043 - - - - 28,850 - 71,019 250,805 - 250,805 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Profit for the period - - - - - - 25,600 - - 25,600 - 25,600 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Total comprehensive income for the period - - - - - - 25,600 - - 25,600 - 25,600 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Issue of new shares 50 2,883 - - - - - - - 2,933 - 2,933 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Dividends paid 8 - - - - - - (25,492) - - (25,492) - (25,492) ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Total transactions with owners 50 2,883 - - - - (25,492) - - (22,559) - (22,559) ----------------------- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- -------- Balance at 1 January 2023 8,943 144,926 - - - - 28,958 - 71,019 253,846 - 253,846 ---------------- ----- ------- ------- ------- -------- ----------- -------- -------- ----------- ------- -------- --------------- --------
The notes are an integral part of these consolidated financial statements.
Consolidated and Company Cash flow statements
Group Company
2022 2021 2022 2021
52 weeks 52 weeks 52 weeks 52 weeks
Restated
Notes GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- --------- -------- -------- --------
Cash flows from operating activities
--------------------------------------- ----- --------- -------- -------- --------
Cash generated from operations 14 98,312 121,259 - -
--------------------------------------- ----- --------- -------- -------- --------
Interest paid (24,768) (16,044) - -
--------------------------------------- ----- --------- -------- -------- --------
Income tax paid (13,881) (19,210) - - --------------------------------------- ----- --------- -------- -------- -------- Net cash generated from operating activities 59,663 86,005 - - --------------------------------------- ----- --------- -------- -------- -------- Cash flows from investing activities --------------------------------------- ----- --------- -------- -------- -------- Acquisition of subsidiary* (81,822) (35,453) - - --------------------------------------- ----- --------- -------- -------- -------- Acquisition investments (1,764) - - - --------------------------------------- ----- --------- -------- -------- -------- Other financial asset - restricted cash - (1,140) - - --------------------------------------- ----- --------- -------- -------- -------- Settlement of deferred consideration - (2,500) - - --------------------------------------- ----- --------- -------- -------- -------- Issue of inter-company loan - - (1,206) (77,377) --------------------------------------- ----- --------- -------- -------- -------- Purchases of property, plant and equipment (55,140) (56,251) - - --------------------------------------- ----- --------- -------- -------- -------- Proceeds from sale of property, plant and equipment 261 114 - - --------------------------------------- ----- --------- -------- -------- -------- Purchases of intangible assets (1,622) (1,115) - - --------------------------------------- ----- --------- -------- -------- -------- Interest received 356 10 - - --------------------------------------- ----- --------- -------- -------- -------- Dividends received - - 25,600 24,300 --------------------------------------- ----- --------- -------- -------- -------- Dividends received from joint venture 672 2,273 - - --------------------------------------- ----- --------- -------- -------- -------- Net cash (used in)/generated from investing activities (139,059) (94,062) 24,394 (53,077) --------------------------------------- ----- --------- -------- -------- -------- Cash flows from financing activities --------------------------------------- ----- --------- -------- -------- -------- Purchase of non-controlling interest (1,151) - - - --------------------------------------- ----- --------- -------- -------- -------- Proceeds from borrowings* 295,790 65,237 - - --------------------------------------- ----- --------- -------- -------- -------- Repayments of borrowings (228,565) (79,819) - - --------------------------------------- ----- --------- -------- -------- -------- Payment of lease liability (15,631) (6,588) - - --------------------------------------- ----- --------- -------- -------- -------- Issue of ordinary shares* 1,133 75,339 1,133 75,339 --------------------------------------- ----- --------- -------- -------- -------- Purchase of own shares - (2,278) - - --------------------------------------- ----- --------- -------- -------- -------- Dividends paid to owners of the parent (25,492) (22,301) (25,492) (22,301) --------------------------------------- ----- --------- -------- -------- -------- Dividends paid to non-controlling interests (1,264) (1,783) - - --------------------------------------- ----- --------- -------- -------- -------- Net cash generated from/(used in) financing activities 24,820 27,807 (24,359) 53,038 --------------------------------------- ----- --------- -------- -------- -------- Net (decrease)/increase in cash and cash equivalents (54,576) 19,750 35 (39) --------------------------------------- ----- --------- -------- -------- -------- Cash and cash equivalents at beginning of the year 140,170 123,816 151 190 --------------------------------------- ----- --------- -------- -------- -------- Exchange gains/(losses) on cash and cash equivalents 1,630 (3,396) - - --------------------------------------- ----- --------- -------- -------- -------- Cash and cash equivalents at end of the year 87,224 140,170 186 151 --------------------------------------- ----- --------- -------- -------- -------- The notes are an integral part of these consolidated financial statements.
Notes to the financial statements
1 General information
Hilton Food Group plc ('the Company') and its subsidiaries (together 'the Group') is a leading specialist international food packing business supplying major international food retailers in fourteen European countries, Australia and New Zealand. The Company's subsidiaries are listed in a note to the full financial statements.
The Company is a public company limited by shares incorporated and domiciled in the UK and registered in England. The address of the registered office is 2-8 The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE. The registered number of the Company is 06165540.
The Company maintains a Premium Listing on the London Stock Exchange.
The financial period represents the 52 weeks to 1 January 2023 (prior financial period 52 weeks to 2 January 2022).
This preliminary announcement was approved for issue on 4 April 2023.
2 Summary of significant accounting policies
The accounting policies are consistent with those of the annual financial statements for the year ended 2 January 2022.
Basis of preparation
The consolidated and company financial statements of Hilton Food Group plc have been prepared under the historical cost convention except for certain financial assets and liabilities measured at fair value and in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The consolidated and company financial statements have been prepared on the going concern basis. The reasons why the Directors consider this basis to be appropriate are set out in the Performance and financial review.
The financial statements are presented in Sterling and all values are rounded to the nearest thousand (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 1 January 2023 and 2 January 2022 but is derived from those accounts. Statutory accounts for 2021 have been delivered to the Registrar of Companies and those for 2022 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Prior period adjustments
Following discussions with the FRC in connection with their limited scope review of the 2021 Annual Report, that was focused on disclosures relating to business combinations, prior period adjustments have been made to restate the Consolidated cash flow statement, Deferred tax disclosures and the disclosures of the Analysis and movement in net debt (note 15).
Presentation of cash outflow for the acquisition of subsidiary
The 2021 Consolidated cash flow statement recognised a GBP39,062,000 cash out flow within investing activities for the acquisition of subsidiary.
This figure included:
- GBP8,504,000 of debt acquired as part of the acquisition of Fairfax Meadow Europe Limited that was immediately repaid as a result of the requirements of change of control clauses within related bank facility agreements.
- GBP1,824,000 of debt acquired as part of the Dalco acquisition.
- GBP1,785,000 in respect of the fair value of shares transferred to the vendors as part of the consideration for the acquisition of Dalco. This amount was offset by a corresponding cash inflow recognised within the total GBP77,123,000 cash inflow from the issue of ordinary shares included within financing activities.
(i) Acquisition of Fairfax Meadow
The repayment of the loans acquired with Fairfax Meadow was triggered by pre-existing change of control clauses requiring the debt to be repaid and therefore, in accordance IAS 7, the repayment of the acquired debt was classified within the cash out flow from the acquisition of a subsidiary.
However, as the cashflows were not between the group and the vendors of Fairfax Meadow the fair value of the acquired debt has been included within the fair value of assets and liabilities acquired rather than as part of consideration.
As a result of this classification the GBP8,504,000 debt acquired and subsequently repayment should have been recognised as separate line items with the movements in net debt note. The movement in net debt detailed in note 15 for the 2021 financial period has therefore been restated to reflect this.
(ii) Acquisition of Dalco
The GBP1,824,000 of debt acquired as part of the acquisition of Dalco was not repaid at the point of acquisition and the GBP1,785,000 consideration paid in shares to the vendors was a non-cash item and therefore neither item should have been recognised as part of the cash out flow for the acquisition of a subsidiary.
To correct for this the 2021 comparative cashflow statement has been restated as follows:
- the cash outflow for the acquisition of subsidiary has been reduced by GBP3,609,000 to GBP35,453,000 with a corresponding GBP3,609,000 reduction in the net cash outflow from investing activities to GBP94,062,000.
- Proceeds from borrowings reduced by GBP1,824,000 to GBP65,238,000. - Issue of ordinary shares reduced by GBP1,785,000 to GBP75,339,000.
- With a corresponding overall reduction of GBP3,609,000 in net cash generated from financing activities reduced to GBP27,807,000.
An adjustment has also been made to restate the movement in net debt for 2021 in note 15 to show GBP1,824,000 of further debt acquired with a corresponding reduction to GBP65,238,000 in the proceeds of new borrowings.
Deferred Tax
The provisional fair value assessment of the assets and liabilities acquired through business combinations recognised in the 2021 Annual Report included total deferred tax liabilities of GBP3,266,000.
In the 2021's financial statement disclosures the total deferred tax amount recognised was included within the movement of deferred tax as a result of accelerated capital allowances.
However, included within this total figure was GBP3,001,000 recognised in respect of acquired brand and customer relationship intangible assets.
The prior period deferred tax note movements have therefore been restated to correctly classify the movement that related to the valuation of acquired brand and customer relationship intangible assets.
Depreciation
Following a review of expense classification, the Group has reclassified depreciation relating to buildings, plant and machinery from administration expenses to cost of sales as these assets are directly involved in production. As a result, the Group has restated the comparative figures for this reclassification. The restatement has no impact on operating profit and results in cost of sales increasing by GBP46,263,000 in the prior period with a corresponding reduction in gross profit. Other Administrative expenses have also therefore reduced by GBP46,263,000.
3 Segment information
Management have determined the operating segments based on the reports reviewed by the Executive Directors that are used to make strategic decisions.
The Executive Directors have considered the business from both a geographic and product perspective.
From a geographic perspective, the Executive Directors consider that the Group has nine operating segments: i) United Kingdom; ii) Netherlands; iii) Belgium; iv) Republic of Ireland; v) Sweden; vi) Denmark; vii) Central Europe including Poland, Czech Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia; viii) Portugal; ix) APAC and x) Central costs. The United Kingdom, Netherlands, Belgium, Republic of Ireland, Sweden, Denmark, Central Europe and Portugal have been aggregated into one reportable segment 'Europe' as they have similar economic characteristics as identified in IFRS 8. APAC and Central costs comprise the other reportable segments.
From a product perspective the Executive Directors consider that the Group has only one identifiable product, wholesaling of food protein products including meat, seafood and vegetarian. The Executive Directors consider that no further segmentation is appropriate, as all of the Group's operations are subject to similar risks and returns and exhibit similar long term financial performance.
The segment information provided to the Executive Directors for the reportable
segments is as follows:
2022 2021
Central Total Central Total
Europe APAC costs Europe APAC costs
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Total revenue 2,348,355 1,592,946 - 3,941,301 2,040,618 1,314,602 - 3,355,220
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Inter-co revenue (93,701) - - (93,701) (53,250) - - (53,250)
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Third party revenue 2,254,654 1,592,946 - 3,847,600 1,987,368 1,314,602 - 3,301,970
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Adjusted operating
profit/(loss) segment
result (see note
17) 49,672 26,705 (5,233) 71,144 61,788 22,370 (10,591) 73,567
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Amortisation of
acquired intangibles (8,257) - - (8,257) (2,778) - - (2,778)
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Exceptional items (9,014) - (2,882) (11,896) (6,994) - - (6,994)
============================ --------- --------- -------- --------- --------- --------- -------- ---------
Impact of IFRS 16 915 2,120 - 3,035 291 (654) - (363)
============================ --------- --------- -------- --------- --------- --------- -------- ---------
Operating profit/(loss)
segment result 33,316 28,825 (8,115) 54,026 52,307 21,716 (10,591) 63,432
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Finance income 356 - - 356 10 - - 10
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Finance costs (8,094) (5,336) (11,338) (24,768) (2,881) (10,017) (3,146) (16,044)
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Income tax (expense)/credit (3,469) (7,505) 852 (10,122) (7,965) (1,761) 1,610 (8,116)
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Profit/(loss) for
the period 22,109 15,984 (18,601) 19,492 41,471 9,938 (12,127) 39,282
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Depreciation and
amortisation 39,776 37,640 353 77,769 33,039 33,604 140 66,783
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Additions to non-current
assets 46,197 9,643 1,167 57,007 29,587 27,528 662 57,777
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Segment assets 769,936 481,229 24,825 1,275,990 643,157 462,556 49,547 1,155,260
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Current income tax
assets - - - 5,995 - - - 5,212
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Deferred income
tax assets - - - 13,801 - - - 6,952
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Total assets - - - 1,295,786 - - - 1,167,424
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Segment liabilities 386,903 466,492 121,153 974,548 346,403 419,611 89,329 855,343
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Deferred income
tax liabilities - - - 15,921 - - - 4,132
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Total liabilities - - - 990,469 - - - 859,475
---------------------------- --------- --------- -------- --------- --------- --------- -------- ---------
Sales between segments are carried out at arm's length.
The Executive Directors assess the performance of each operating segment based on its operating profit before exceptional items and amortisation of acquired intangibles and also before the impact of IFRS 16 (see note 17). Operating profit is measured in a manner consistent with that in the income statement.
The amounts provided to the Executive Directors with respect to total assets and liabilities are measured in a manner consistent with that of the financial statements. The assets are allocated based on the operations of the segment and their physical location. The liabilities are allocated based on the operations of the segment.
The Group has five principal customers (comprising groups of entities known to be under common control), Tesco, Ahold Delhaize, Coop Danmark, ICA Gruppen and Woolworths. These customers are located in the United Kingdom, Netherlands, Belgium, Republic of Ireland, Sweden, Denmark and Central Europe including Poland, Czech Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia and APAC.
Analysis of revenues from external customers and non-current
assets are as follows:
Non-current assets
Revenues from external excluding deferred
customers tax assets
------------------------ ---------------------
2022 2021 2022 2021
Group GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by geographical area
----------------------------------------- ----------- ----------- ---------- ---------
United Kingdom - country of domicile 1,184,006 1,122,047 257,481 196,857
----------------------------------------- ----------- ----------- ---------- ---------
Netherlands 446,387 298,535 56,671 34,857
----------------------------------------- ----------- ----------- ---------- ---------
Belgium 26,915 25,687 883 1,327
----------------------------------------- ----------- ----------- ---------- ---------
Sweden 237,438 220,065 9,119 12,814
----------------------------------------- ----------- ----------- ---------- ---------
Republic of Ireland 83,686 95,349 3,008 4,711
----------------------------------------- ----------- ----------- ---------- ---------
Denmark 131,845 116,156 16,468 16,046
----------------------------------------- ----------- ----------- ---------- ---------
Central Europe 142,905 109,529 23,717 22,297
----------------------------------------- ----------- ----------- ---------- ---------
APAC 1,594,418 1,314,602 343,530 338,136
----------------------------------------- ----------- ----------- ---------- ---------
3,847,600 3,301,970 710,877 627,045
----------------------------------------- ----------- ----------- ---------- ---------
Analysis by principal customer
----------------------------------------- ----------- ----------- ---------- ---------
Customer 1 1,100,571 1,156,771
----------------------------------------- ----------- ----------- ---------- ---------
Customer 2 341,289 327,293
----------------------------------------- ----------- ----------- ---------- ---------
Customer 3 230,716 231,492
----------------------------------------- ----------- ----------- ---------- ---------
Customer 4 124,506 113,555
----------------------------------------- ----------- ----------- ---------- ---------
Customer 5 1,430,806 1,314,602
----------------------------------------- ----------- ----------- ---------- ---------
Other 619,712 158,257
----------------------------------------- ----------- ----------- ---------- ---------
3,847,600 3,301,970
----------------------------------------- ----------- ----------- ---------- ---------
4 Exceptional items
Operating Finance Profit
profit costs Tax after tax
2022 2022 2022 2022
Group GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------- ------- ----------
Fire in Belgium 9,500 - - 9,500
----------------------------------- --------- ------- ------- ----------
Acquisition of Foods Connected Ltd (2,701) - - (2,701)
----------------------------------- --------- ------- ------- ----------
Acquisition related costs 1,204 - - 1,204
----------------------------------- --------- ------- ------- ----------
Reorganisation costs 3,893 - (145) 3,748
----------------------------------- --------- ------- ------- ----------
Total exceptional costs 11,896 - (145) 11,751
----------------------------------- --------- ------- ------- ----------
Operating Finance Profit
profit costs Tax 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. The Group continues to work closely with its insurers to progress related insurance claims. The results for the period to 1 January 2023 do not include potential income that may be received in respect of these claims with the insurance proceeds therefore considered to be contingent assets; at this stage in the claims process the value of the contingent asset has yet to be determined. Legal claims have been made against the Group in connection with the fire, however at this stage the Group considers the likelihood of incurring financial liabilities as a result of them is remote.
Exceptional costs totalling GBP9,500,000 have been recognised in the period relating to additional costs incurred in continuing to operate in Belgium including the ongoing insurance and legal claim.
In the prior period an exceptional impairment totalling GBP11,661,000 was recognised in respect of assets that were destroyed by the fire, alongside additional costs incurred in continuing to operate in Belgium including insurance and legal claims.
Acquisition of Foods Connected Ltd
On 7 July 2022 the Group acquired a further 15% interest in Foods Connected Ltd taking its total holding to 65% (see note 12) and the financial position and performance of the business was fully consolidated from this date. The Group's existing joint venture interest was effectively disposed of at this date with an exceptional gain of GBP2,701,000, being the difference between the carrying value and fair value of the joint venture interest, recognised.
In 2021 the Group acquired the remaining 50% interest in Dalco Food BV (see note 12) and the financial position and performance of the business was fully consolidated from this date. The Group's joint venture interest was effectively disposed of at this date with an exceptional gain of GBP6,837,000, being the difference between the carrying value and fair value of the joint venture interest, recognised.
Reorganisation Costs
During the period exceptional reorganisation costs of GBP3,893,000 have been recognised by the Group. These costs resulted from on-going efficiency and restructuring programs resulting in redundancies at a number of facilities operated by the Group. An exceptional tax credit of GBP145,000 has been recognised in respect of these costs.
Acquisition Costs
During the period the Group has recognised exceptional acquisition costs relating primarily to the acquisition of Foppen in respect legal and professional fees and other related costs of GBP1,204,000. In 2021 the business recognised GBP2,226,000 of exceptional acquisition costs in respect to legal and professional fees and GBP1,131,000 of exceptional finance costs related to the agreement of short term acquisition bridge finance.
5 Finance income and finance costs
2022 2021
Group GBP'000 GBP'000
----------------------------------- -------- --------
Finance income
----------------------------------- -------- --------
Other interest income 356 10
----------------------------------- -------- --------
Finance income 356 10
----------------------------------- -------- --------
Finance costs
----------------------------------- -------- --------
Bank borrowings (12,241) (5,132)
----------------------------------- -------- --------
Interest on lease liabilities (8,758) (8,536)
----------------------------------- -------- --------
Exceptional finance costs (note 4) - (1,131)
=================================== ======== ========
Other interest expense (3,769) (1,245)
----------------------------------- -------- --------
Finance costs (24,768) (16,044)
----------------------------------- -------- --------
Finance costs - net (24,412) (16,034)
----------------------------------- -------- --------
6 Income tax expense
2022 2021
Group GBP'000 GBP'000
-------------------------------------------------- ------- -------
Current income tax
-------------------------------------------------- ------- -------
Current tax on profits for the period 13,697 12,646
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous periods 195 (2,322)
-------------------------------------------------- ------- -------
Total current tax 13,892 10,324
-------------------------------------------------- ------- -------
Deferred income tax
-------------------------------------------------- ------- -------
Origination and reversal of temporary differences (3,753) (3,342)
-------------------------------------------------- ------- -------
Adjustments to tax in respect of previous periods (17) 1,134
-------------------------------------------------- ------- -------
Total deferred tax (3,770) (2,208)
-------------------------------------------------- ------- -------
Income tax expense 10,122 8,116
-------------------------------------------------- ------- -------
Deferred tax charged directly to equity during the period in respect of employee share schemes amounted to GBP1,031,409 (2021: charge GBP333,000).
Factors affecting future tax charges
The Group operates in numerous tax jurisdictions around the world and is subject to factors that may affect future tax charges including transfer pricing, tax rate changes and tax legislation changes.
The UK Government made a number of budget announcements on 3 March 2021. These include confirming that the rate of corporation tax will increase to 25% from 1 April 2023. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
The tax on the Group's profit before income tax differs (2021: differs) from the theoretical amount that would arise using the standard rate of UK Corporation Tax of 19% (2021: 19%) applied to profits of the consolidated entities as follows:
2022 2021
GBP'000 GBP'000
============================================================ ======= =======
Profit before income tax 29,614 47,398
------------------------------------------------------------ ------- -------
Tax calculated at the standard rate of UK Corporation Tax
19% (2021: 19%) 5,627 9,006
------------------------------------------------------------ ------- -------
Effects of:
------------------------------------------------------------ ------- -------
Expense/(income) not deductible for tax purposes 1,074 (15)
------------------------------------------------------------ ------- -------
Joint venture received net of tax (238) (471)
------------------------------------------------------------ ------- -------
Adjustments to tax in respect of previous periods 178 (1,188)
------------------------------------------------------------ ------- -------
Profits taxed at rates other than 19% (2021: 19%) 5,867 2,746
------------------------------------------------------------ ------- -------
Impact of change in tax rates (398) (633)
------------------------------------------------------------ ------- -------
Non-taxable gain on acquisition of JV (513) (1,299)
------------------------------------------------------------ ------- -------
Unrelieved losses carried forward (444) -
------------------------------------------------------------ ------- -------
Deferred tax recognised in reserves (1,031)
------------------------------------------------------------ ------- -------
Other - (30)
------------------------------------------------------------ ------- -------
Income tax expense 10,122 8,116
------------------------------------------------------------ ------- -------
Adjustments to tax in respect of prior periods have resulted from changes
in assumptions in respect of deductible expenses and the application of
capital allowances.
7 Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the period.
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has share options for which a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Group's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
2022 2021
Group Basic Diluted Basic Diluted
------------------------------------ ------------ ------ ------- ------ -------
Profit attributable to owners of
the parent (GBP'000) 17,706 17,706 37,143 37,143
------------------------------------ ------------ ------ ------- ------ -------
Weighted average number of ordinary
shares in issue (thousands) 89,234 89,234 82,456 82,456
------------------------------------ ------------ ------ ------- ------ -------
Adjustment for share options (thousands) - 690 - 1,098
------------------------------------ ------------ ------ ------- ------ -------
Adjusted weighted average number
of ordinary shares (thousands) 89,234 89,924 82,456 83,554
------------------------------------ ------------ ------ ------- ------ -------
Basic and diluted earnings per
share (pence) 19.8 19.7 45.0 44.5
------------------------------------ ------------ ------ ------- ------ -------
8 Dividends
2022 2021
Group and Company GBP'000 GBP'000
----------------------------------------------------------- ------- -------
Final dividend in respect of 2021 paid 21.5p per ordinary
share (2020: 19.0p) 19,143 15,561
----------------------------------------------------------- ------- -------
Interim dividend in respect of 2022 paid 7.1p per ordinary
share (2021: 8.2p) 6,349 6,740
----------------------------------------------------------- ------- -------
Total dividends paid 25,492 22,301
----------------------------------------------------------- ------- -------
The Directors propose a final dividend of 22.6p (2021: 21.5p) per share payable on 30 June 2023 to shareholders who are on the register at 2 June 2023. This dividend totalling GBP20.2m (2021: 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 4 January 2021 97,523 443,243 20,498 172 561,436
-------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (3,248) (19,497) (1,136) (8) (23,889)
-------------------------------- -------------- ---------- ------------- -------------- --------
Acquisition (note 12) 2,315 7,843 548 123 10,829
-------------------------------- -------------- ---------- ------------- -------------- --------
Additions 15,125 37,487 3,606 33 56,251
-------------------------------- -------------- ---------- ------------- -------------- --------
Exceptional impairment (note 4) - (7,049) - - (7,049)
-------------------------------- -------------- ---------- ------------- -------------- --------
Transfer 430 (769) (4,165) 3 (4,501)
-------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (469) (260) (735) (15) (1,479)
-------------------------------- -------------- ---------- ------------- -------------- --------
At 2 January 2022 111,676 460,998 18,616 308 591,598
-------------------------------- -------------- ---------- ------------- -------------- --------
Accumulated depreciation
-------------------------------- -------------- ---------- ------------- -------------- --------
At 4 January 2021 30,350 224,905 15,333 2 270,590
-------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments (924) (10,560) (781) (7) (12,272)
-------------------------------- -------------- ---------- ------------- -------------- --------
Charge for the period 4,440 37,384 2,297 65 44,186
-------------------------------- -------------- ---------- ------------- -------------- --------
Exceptional impairment (note 4) - (672) - - (672)
-------------------------------- -------------- ---------- ------------- -------------- --------
Transfer - - (553) - (553)
-------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (87) (192) (878) (12) (1,169)
-------------------------------- -------------- ---------- ------------- -------------- --------
At 2 January 2022 33,779 250,865 15,418 48 300,110
-------------------------------- -------------- ---------- ------------- -------------- --------
Net book amount
-------------------------------- -------------- ---------- ------------- -------------- --------
At 4 January 2021 67,173 218,338 5,165 170 290,846
-------------------------------- -------------- ---------- ------------- -------------- --------
At 2 January 2022 77,897 210,133 3,198 260 291,488
-------------------------------- -------------- ---------- ------------- -------------- --------
Cost
-------------------------------- -------------- ---------- ------------- -------------- --------
At 3 January 2022 111,676 460,998 18,616 308 591,598
-------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments 3,313 15,110 654 25 19,102
-------------------------------- -------------- ---------- ------------- -------------- --------
Acquisition (note 12) 6,040 11,443 1,263 81 18,827
-------------------------------- -------------- ---------- ------------- -------------- --------
Additions 6,484 44,946 3,591 119 55,140
-------------------------------- -------------- ---------- ------------- -------------- --------
Transfer - 496 100 - 596
-------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (7) (1,171) (47) - (1,225)
-------------------------------- -------------- ---------- ------------- -------------- --------
At 1 January 2023 127,506 531,822 24,177 533 684,038
-------------------------------- -------------- ---------- ------------- -------------- --------
Accumulated depreciation
-------------------------------- -------------- ---------- ------------- -------------- --------
At 3 January 2022 33,779 250,865 15,418 48 300,110
-------------------------------- -------------- ---------- ------------- -------------- --------
Exchange adjustments 1,122 7,960 406 17 9,505
-------------------------------- -------------- ---------- ------------- -------------- --------
Charge for the period 7,623 36,529 2,712 121 46,985
-------------------------------- -------------- ---------- ------------- -------------- --------
Transfer - 496 100 - 596
-------------------------------- -------------- ---------- ------------- -------------- --------
Disposals (7) (717) (45) - (769)
-------------------------------- -------------- ---------- ------------- -------------- --------
At 1 January 2023 42,517 295,133 18,591 186 356,427
-------------------------------- -------------- ---------- ------------- -------------- --------
Net book amount
-------------------------------- -------------- ---------- ------------- -------------- --------
At 1 January 2023 84,989 236,689 5,586 347 327,611
-------------------------------- -------------- ---------- ------------- -------------- --------
The cost and net book amount of property plant and equipment in the course of its construction included above comprise plant and machinery GBP26,877,000 (2021: GBP13,025,000).
Additions to property, plant and equipment include capitalised interest costs of GBPNil (2021: GBP725,000).
10 Intangible assets
Brand and
Computer customer
software relationships Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- --------- -------------- -------- -------
Cost
----------------------------------------- --------- -------------- -------- -------
At 4 January 2021 10,980 22,560 47,582 81,122
----------------------------------------- --------- -------------- -------- -------
Exchange adjustments (411) - - (411)
----------------------------------------- --------- -------------- -------- -------
Acquisition (note 12) 158 12,519 21,900 34,577
----------------------------------------- --------- -------------- -------- -------
Additions 1,526 - - 1,526
----------------------------------------- --------- -------------- -------- -------
Transfer 4,501 - - 4,501
----------------------------------------- --------- -------------- -------- -------
Disposals (3) - - (3)
----------------------------------------- --------- -------------- -------- -------
At 2 January 2022 16,751 35,079 69,482 121,312
----------------------------------------- --------- -------------- -------- -------
Accumulated amortisation
----------------------------------------- --------- -------------- -------- -------
At 4 January 2021 3,420 7,631 - 11,051 ----------------------------------------- --------- -------------- -------- ------- Exchange adjustments (235) - - (235) ----------------------------------------- --------- -------------- -------- ------- Charge for the period 1,468 2,702 - 4,170 ----------------------------------------- --------- -------------- -------- ------- Transfer 553 - - 553 ----------------------------------------- --------- -------------- -------- ------- Disposals (2) - - (2) ----------------------------------------- --------- -------------- -------- ------- At 2 January 2022 5,204 10,333 - 15,537 ----------------------------------------- --------- -------------- -------- ------- Net book amount ----------------------------------------- --------- -------------- -------- ------- At 4 January 2021 7,560 14,929 47,582 70,071 ----------------------------------------- --------- -------------- -------- ------- At 2 January 2022 11,547 24,746 69,482 105,775 ----------------------------------------- --------- -------------- -------- ------- Cost ----------------------------------------- --------- -------------- -------- ------- At 3 January 2022 16,751 35,079 69,482 121,312 ----------------------------------------- --------- -------------- -------- ------- Exchange adjustments 19 - - 19 ----------------------------------------- --------- -------------- -------- ------- Acquisition (note 12) 2,849 37,452 21,105 61,406 ----------------------------------------- --------- -------------- -------- ------- Impact of finalising fair value of prior year acquisitions (note 12) - 9,440 (8,053) 1,387 ----------------------------------------- --------- -------------- -------- ------- Additions 1,867 - - 1,867 ----------------------------------------- --------- -------------- -------- ------- Transfer (596) - - (596) ----------------------------------------- --------- -------------- -------- ------- At 1 January 2023 20,890 81,971 82,534 185,395 ----------------------------------------- --------- -------------- -------- ------- Accumulated amortisation ----------------------------------------- --------- -------------- -------- ------- At 3 January 2022 5,204 10,333 - 15,537 ----------------------------------------- --------- -------------- -------- ------- Charge for the period 2,019 7,955 - 9,974 ----------------------------------------- --------- -------------- -------- ------- Transfer (596) - - (596) ----------------------------------------- --------- -------------- -------- ------- At 1 January 2023 6,627 18,288 - 24,915 ----------------------------------------- --------- -------------- -------- ------- Net book amount ----------------------------------------- --------- -------------- -------- ------- At 1 January 2023 14,263 63,683 82,534 160,480 ----------------------------------------- --------- -------------- -------- -------
Amortisation charges are included within administrative expenses in the income statement.
Goodwill Impairment Testing
Goodwill includes Seachill UK Limited GBP44,000,000 (purchased 2017), SV Cuisine Limited GBP2,789,000 (purchased 2021), Dalco GBP10,168,000 (purchased in 2021), Fairfax Meadow Limited GBP3,685,000 (purchased in 2021), Dutch Seafood Company BV (Foppen) GBP17,805,000 (purchased in 2022) and Foods Connected Ltd GBP3,300,000 (controlling interest purchased in 2022). Each business is considered to be a separate cash generating units. The recoverable amount of the cash generating units was based on a value-in-use basis using a discounted cash flow model. For each cash generating unit the recoverable amounts calculated exceeded their carrying value.
The key assumptions used in the calculations are projected EBITDA, projected profit after tax, the pre-tax and post-tax discount rates and the growth rates used to extrapolate cash flows beyond the projected period. EBITDA and profit after tax are based on one-year budgets approved by the Board and longer term, three year, projections based on past experience adjusted to take account of the impact of expected changes to sales prices, volumes, business mix and margin. Cash flows are discounted at a pre-tax discount rate of 9.6%-10% (2021: 10%) with a growth rate of 2% (2021: 2%) used to extrapolate cash flows. Discount rates and growth rates are calculated with reference to external benchmarks and where relevant past experience.
Sensitivity to changes in assumptions
The calculation is most sensitive to changes in the assumptions used for projected cash flow, the pre-tax discount rate and the growth rate. Management considers that reasonably possible changes in assumptions would be an increase in discount rate of 0.5%, a reduction in growth rate of 0.5% percentage point or a 5% reduction in budgeted cash flow. The impact in running reasonable sensitivities did not result in a material impairment in any of the CGU's subject to impairment testing.
No indicators of impairment were identified in respect of other, amortised, intangible assets and therefore no impairment review has been undertaken.
Goodwill acquired in the period
Goodwill and other intangible assets totalling GBP21,105,000 has been provisionally recognised following the acquisitions of Foods Connected Ltd and final numbers for Foppen Group with each forming separate cash generating units in the period (see note 12). The individual cash generating units have been tested for impairment in the 2022 financial period.
11 Leases
(i) Amounts recognised in the balance
sheet
The balance sheet includes the following amounts
relating to leases:
Lease: right of use assets Land &
Buildings Equipment Vehicles Total
Group GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- ---------- --------- -------- --------
Opening net book amount as at 4 January
2021 231,420 1,106 2,609 235,135
----------------------------------------------------- ---------- --------- -------- --------
Exchange Adjustments (9,945) (147) (108) (10,200)
----------------------------------------------------- ---------- --------- -------- --------
Additions 2,739 2,418 420 5,577
----------------------------------------------------- ---------- --------- -------- --------
Acquisition (note 12) 6,066 5,139 1,289 12,494
----------------------------------------------------- ---------- --------- -------- --------
Remeasurements, reclassification and scope
changes - (336) - (336)
----------------------------------------------------- ---------- --------- -------- --------
Depreciation (16,339) (927) (1,161) (18,427)
----------------------------------------------------- ---------- --------- -------- --------
Disposal of leased assets destroyed by
fire (note 4) (2,168) (19) (52) (2,239)
----------------------------------------------------- ---------- --------- -------- --------
Closing net book amount at 2 January 2022
and 3 January 2023 211,773 7,234 2,997 222,004
----------------------------------------------------- ---------- --------- -------- --------
Exchange Adjustments 5,946 230 80 6,256
----------------------------------------------------- ---------- --------- -------- --------
Additions 2,462 2,272 1,101 5,835
----------------------------------------------------- ---------- --------- -------- --------
Acquisition (note 12) 3,106 - 108 3,214
----------------------------------------------------- ---------- --------- -------- --------
Remeasurements, reclassification and scope
changes 120 - (71) 49
----------------------------------------------------- ---------- --------- -------- --------
Depreciation (17,105) (1,945) (1,730) (20,780)
----------------------------------------------------- ---------- --------- -------- --------
Closing net book amount at 1 January 2023 206,302 7,791 2,485 216,578
----------------------------------------------------- ---------- --------- -------- --------
Lease liabilities 2022 2021
Group GBP'000 GBP'000
----------------------------------------------------- ---------- --------- -------- --------
Current 16,006 14,419
----------------------------------------------------- ---------- --------- -------- --------
Non-current 230,152 228,977
----------------------------------------------------- ---------- --------- -------- --------
246,158 243,396
----------------------------------------------------- ---------- --------- -------- --------
Maturity analysis - contractual undiscounted cash
flows 2022 2021
Group GBP'000 GBP'000
----------------------------------------------------------------- --------- -------- --------
Less than one year 22,645 22,716
----------------------------------------------------- ---------- --------- -------- --------
One to five years 86,449 79,010
----------------------------------------------------- ---------- --------- -------- --------
More than five years 220,081 233,673
----------------------------------------------------- ---------- --------- -------- --------
Total lease liabilities 329,175 335,399
----------------------------------------------------- ---------- --------- -------- --------
(ii) Amounts recognised in the consolidated income statement
The income statement shows the following amounts
related to leases:
Depreciation charge on right-of-use assets 2022 2021
Group GBP'000 GBP'000
----------------------------------------------------- ---------- --------- -------- --------
Buildings 17,105 16,339
----------------------------------------------------- ---------- --------- -------- --------
Plant & equipment 1,945 927
----------------------------------------------------- ---------- --------- -------- --------
Vehicles 1,730 1,161
----------------------------------------------------- ---------- --------- -------- --------
20,780 18,427
----------------------------------------------------- ---------- --------- -------- --------
Interest expenses (included in finance costs) 8,758 8,536
----------------------------------------------------------------- --------- -------- --------
Expenses relating to short-term leases
(included in costs of goods sold and administrative
expenses) 748 136
----------------------------------------------------- ---------- --------- -------- --------
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
----------------------------------------------------- ---------- --------- -------- --------
The total cash outflow for leases in 2022 was GBP24,387,000
(2021: GBP17,307,000).
Variable Lease Payments
Leases with liabilities recognised of GBP9,476,000 (2021: GBP9,824,000),
accounting for 3.8% (2021: 4.0%) of total lease liabilities, are subject
to five yearly RPI linked rent reviews. These rent reviews are subject
to a minimum collar, the impact of which is included in the calculation
of lease liabilities and a maximum cap. If the impact of these variable
lease payments had been recognised, applying index levels as at 1 January
2023, lease liabilities would have increased by 2022: GBP4,536,000 (2021:
GBP1,895,000).
In addition, leases with liabilities recognised totalling GBP5,021,000
(2021: GBP6,408,000), accounting for 2.0% (2021: 2.6%) of total lease liabilities,
are subject to annual CPI linked rent increases. If the impact of these
variable lease payments had been recognised, applying index levels as at
1 January 2023, lease liabilities would have increased by GBP1,054,000
(2021: GBP278,000).
12 Business combinations
2022
On 16 March 2022 the Group acquired 100% of the share capital of Dutch Seafood Company BV (Foppen Group BV), a leading international producer of speciality smoked salmon products.
On 7 July 2022 the Group completed the purchase of an additional 15% of Foods Connected Ltd taking its interest from 50% to 65%. Foods Connected Ltd provides Software Solutions for Supply Chain, Procurement, Food Safety, Quality and CSR.
Dutch Seafood
Company Foods Connected
BV (Foppen) Ltd
Group GBP'000 GBP'000
-------------------------------------------- ------------- ---------------
Property, plant and equipment 16,792 71
-------------------------------------------- ------------- ---------------
Intangibles-Technology - 2,849
-------------------------------------------- ------------- ---------------
Brand and customer relationship intangibles 30,488 6,964
-------------------------------------------- ------------- ---------------
Lease: Right-of-use asset 3,214 -
-------------------------------------------- ------------- ---------------
Inventories 22,580 -
-------------------------------------------- ------------- ---------------
Trade and other receivables 13,556 1,231
-------------------------------------------- ------------- ---------------
Cash and cash equivalents - 230
-------------------------------------------- ------------- ---------------
Trade and other payables (13,334) (1,509)
-------------------------------------------- ------------- ---------------
Borrowings (56,938) -
-------------------------------------------- ------------- ---------------
Lease liabilities (3,214) -
-------------------------------------------- ------------- ---------------
Deferred tax (3,050) (1,882)
-------------------------------------------- ------------- ---------------
Derivative financial instruments (2,785) -
-------------------------------------------- ------------- ---------------
Goodwill 17,805 3,300
-------------------------------------------- ------------- ---------------
Fair value of assets acquired 25,114 11,254
-------------------------------------------- ------------- ---------------
Consideration
-------------------------------------------- ------------- ---------------
Paid on completion 25,114 -
-------------------------------------------- ------------- ---------------
Issue of shares - 1,688
-------------------------------------------- ------------- ---------------
Non-controlling interest - 3,939
-------------------------------------------- ------------- ---------------
Deemed fair value of existing 50% interest - 5,627
-------------------------------------------- ------------- ---------------
25,114 11,254
-------------------------------------------- ------------- ---------------
Dutch Seafood Company BV (Foppen)
The acquisition of Foppen improves the access for Hilton to the specialised smoked salmon market with a presence in the USA, Canada, Netherlands and Greece. The additional markets provide an opportunity for the Group to diversify its geographic presence whilst leveraging best practices and cost savings with the existing UK Seafood business.
Consideration for the acquisition of Foppen totalled GBP25,114,000 paid entirely in cash.
Customer relationship intangibles have been recognised and relate to the supply agreements and long-standing relationships that Foppen has with its customers. Brand intangibles have been recognised in respect of the Foppen trading name and other brands employed by the business. The fair value of these intangible assets of GBP30,488,000 has been aggregated as they are considered to be linked with their value each dependent on the other and will be amortised over their useful economic lives of 5-10 years.
The value of other assets and liabilities reflect the amounts expected to be realised or paid respectively.
Goodwill of GBP17,805,000 has been recognised and mainly relates to the strategic benefits for Hilton of diversifying its product and geographic portfolio.
In the period the Group has recognised exceptional acquisition-related costs of GBP1,204,000 in respect of legal and professional and other related activities associated with acquisition activity.
The Consolidated cash flow statement recognises a GBP82,052,000 for cash out flow within investing activities for the acquisition of subsidiary. This figure comprises GBP56,938,000 of debt repaid immediately on completion of the acquisition as a result of the requirements of change of control clauses within related bank facility agreements and the GBP25,114,000 cash consideration paid to the vendors.
The acquired business contributed revenues of GBP86,073,000 and operating profit of GBP4,300,000 to the group for the period from 16 March to 1 January 2023.
Foods Connected Ltd
Consideration for the acquisition of the 15% interest in Foods Connected Ltd totalled GBP1,688,000 comprised of 170,305 Hilton Food Group plc shares at Market Value taking the holding of Foods Connected to 65%. The acquisition of Foods Connected provides an opportunity to deliver growth through new customer agreements with retailers and manufacturers across Europe and Australia and provides HFG control over the business.
As a result of the acquisition, and to allow full consolidation of Foods Connected Ltd as a subsidiary the Group has recognised an exceptional gain of GBP2,701,000 being the difference between the carrying value of its joint venture interest at the date of acquisition and its fair value.
The fair value of the technology acquired was established following a review undertaken by qualified personnel and reflects their existing use value.
The value of Intangible assets -technology used in the company's operations have been reviewed and valued at GBP2,849,000.
The value of customer relationships have also been assessed with the support of competent professionals. Customer relationships have been assessed to have a fair value of GBP6,964,000 and a useful economic life of 22 years. The value of other assets and liabilities reflect the amounts expected to be realised or paid respectively.
Goodwill of GBP3,300,000 has provisionally been recognised in 2022. Residual goodwill relates to the strategic benefits for Hilton of diversifying its business and the know-how of Foods Connected Ltd's employees.
The value of other assets and liabilities reflect the amounts expected to be realised or paid, respectively.
The acquired business contributed revenues of GBP2,876,000 and operating profit of GBP262,000 to the group for the period from 7 July to 1 January 2023.
2021
Fairfax
Dalco Food Meadow Europe
BV Limited
Group GBP'000 GBP'000
------------------------------------------- ---------- --------------
Property, plant and equipment 6,047 6,782
------------------------------------------- ---------- --------------
Brand and customer relationship intangibles 10,193 11,766
------------------------------------------- ---------- --------------
Lease: Right-of-use asset 5,303 7,191
------------------------------------------- ---------- --------------
Inventories 8,142 7,982
------------------------------------------- ---------- --------------
Trade and other receivables 5,992 13,343
------------------------------------------- ---------- --------------
Trade and other payables (8,767) (16,782)
------------------------------------------- ---------- --------------
Borrowings (1,825) (8,504)
------------------------------------------- ---------- --------------
Lease liabilities (5,303) (7,094)
------------------------------------------- ---------- --------------
Deferred tax (3,175) (3,023)
------------------------------------------- ---------- --------------
Goodwill 10,168 3,685
------------------------------------------- ---------- --------------
Fair value of assets acquired 26,775 15,346
------------------------------------------- ---------- --------------
Consideration
------------------------------------------- ---------- --------------
Paid on completion 13,388 15,346
------------------------------------------- ---------- --------------
Deemed fair value of existing 50% interest 13,387 -
------------------------------------------- ---------- --------------
26,775 15,346
------------------------------------------- ---------- --------------
During 2021 the Group completed the purchase of the remaining 50% of Dalco Food BV (Dalco) taking its interest from 50% to 100%. Dalco is a leading producer of vegetarian and vegan proteins, supplying retail and food service customers from its facilities in the Netherlands. The Group also acquired 100% of the share capital of Fairfax Meadow Europe Limited (Fairfax Meadow) a leading meat supplier to the UK foodservice sector.
Due to the timing of completion of the acquisition and the timing of other acquisition activity undertaken by the Group in 2021, the assessment of the fair values of assets and liabilities acquired was ongoing when the Group reported its 2021 annual results and were therefore provisional.
Dalco Food BV
The acquisition of the remaining 50% of Dalco allowed the Group to take full control of the business enabling it to diversify further and strengthen its protein offering in the fast-growing vegan and vegetarian market.
Consideration for the acquisition of the 50% interest in Dalco totalled 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.
Updated fair values are presented above and have now been finalised.
Goodwill of GBP10,168,000 has been recognised in 2022 compared to GBP18,967,000 recognised in 2021 and relates to the strategic benefits for Hilton of diversifying its product portfolio into the vegan and vegetarian protein market. The adjustment in Goodwill has gone to recognising Customer and Brand relationship, uplifting the fair value of fixed assets and recognising a deferred tax liability.
The fair value of property, plant and equipment acquired was established following a review undertaken by qualified surveyors and reflects their existing use value uplifting their fair value by GBP1,540,000 an increase of GBP1,654,000 reported in 2021.
Customer relationship intangibles have been recognised and relate to the supply agreements and long-standing relationships that Dalco has with its customers. Brand intangibles have been recognised in respect of the Dalco trading name. The fair value of these intangible assets of GBP10,193,000 (GBPNil 2021) have been aggregated as they are considered to be linked with their value each dependent on the other and will be amortised over their useful economic lives of 5-10 years. As part of the transaction a deferred tax liability of GBP2,933,000 has been recognised.
The value of other assets and liabilities reflect the amounts expected to be realised or paid respectively.
Fairfax Meadow Europe Limited
The acquisition of Fairfax Meadow improves the access for Hilton to the out-of-home channel, providing an opportunity for the Group to diversify into the foodservice sector and contribute to the Group's sustainable growth.
Consideration for the acquisition of Fairfax Meadow totalled GBP15,346,000 paid entirely in cash. This figure included GBP8,504,000 of debt acquired as part of the acquisition of Fairfax Meadow Europe Limited that was immediately repaid as a result of the requirements of change of control clauses within related bank facility agreements.
Goodwill has arisen and mainly relates to the strategic benefits for Hilton of diversifying its product portfolio into the food service sector.
The fair value of property, plant and equipment acquired was established following a review undertaken by qualified surveyors and reflects their existing use value.
Customer relationship intangibles have been recognised and relate to the supply agreements and long-standing relationships that Fairfax Meadow has with its customers. Brand intangibles have been recognised in respect of the Fairfax Meadow trading name and other brands employed by the business. The fair value of these intangible assets of GBP11,766,000 (GBP12,519,000 recognised in FY 2021 accounts) have been aggregated as they are considered to be linked with their value each dependent on the other and will be amortised over their useful economic lives of 5-9 years. A corresponding increase in Goodwill has been recognised.
The value of other assets and liabilities reflect the amounts expected to be realised or paid respectively.
13 Borrowings
2022 2021
Group GBP'000 GBP'000
---------------------------------------------- ----------------- -----------------
Current
---------------------------------------------- ----------------- -----------------
Bank borrowings 28,279 224,732
---------------------------------------------- ----------------- -----------------
Non-current
---------------------------------------------- ----------------- -----------------
Bank borrowings 270,510 -
---------------------------------------------- ----------------- -----------------
Total borrowings 298,789 224,732
---------------------------------------------- ----------------- -----------------
Due to the frequent re-pricing dates of the Group's loans, the fair value
of current and non-current borrowings is approximate to their carrying
amount.
The carrying amounts of the Group's borrowings are denominated in the following
currencies:
2022 2021
Currency GBP'000 GBP'000
---------------------------------------------- ----------------- -----------------
UK Pound 79,878 65,198
---------------------------------------------- ----------------- -----------------
Euro 88,432 18,277
---------------------------------------------- ----------------- -----------------
Danish Kroner 837 1,118
---------------------------------------------- ----------------- -----------------
Polish Zloty 9,666 5,384
---------------------------------------------- ----------------- -----------------
Australian Dollar 93,162 106,903
============================================== ================= =================
New Zealand Dollar 26,814 27,852
---------------------------------------------- ----------------- -----------------
298,789 224,732
---------------------------------------------- ----------------- -----------------
Bank borrowings are repayable in quarterly instalments from 2022 - 2027 with interest charged at SONIA (or equivalent benchmark rates) plus 1.95% - 2.10%. Bank borrowings are subject to joint and several guarantees from each active Group undertaking.
The Group has undrawn committed loan facilities of GBP106m (2021: GBP96.8m).
The undiscounted contractual maturity profile of the Group's borrowings is described in a note to the full financial statements.
Group net debt is analysed as per note 15.
14 Cash generated from operations
2022 2021
Group GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Profit before income tax 29,614 47,398
---------------------------------------------------------- -------- --------
Finance costs - net 24,412 16,034
---------------------------------------------------------- -------- --------
Operating profit 54,026 63,432
---------------------------------------------------------- -------- --------
Adjustments for non-cash items:
---------------------------------------------------------- -------- --------
Share of post tax profits of joint venture (1,235) (1,925)
---------------------------------------------------------- -------- --------
Depreciation of property, plant and equipment 46,985 44,186
---------------------------------------------------------- -------- --------
Depreciation of leased assets 20,780 18,427
---------------------------------------------------------- -------- --------
Impairment of property, plant and equipment - 6,377
---------------------------------------------------------- -------- --------
Disposal of leased assets destroyed by fire - 2,239
---------------------------------------------------------- -------- --------
Gain on early settlement of Belgium lease liabilities - (2,183)
---------------------------------------------------------- -------- --------
Amortisation of intangible assets 9,974 4,170
---------------------------------------------------------- -------- --------
Gain on acquisition of Foods Connected Ltd (2022) / Dalco
BV (2021) (2,701) (6,837)
---------------------------------------------------------- -------- --------
Loss/(gain) on disposal of non-current assets - 195
---------------------------------------------------------- -------- --------
Adjustment in respect of employee share schemes (655) 2,725
---------------------------------------------------------- -------- --------
Changes in working capital:
---------------------------------------------------------- -------- --------
Inventories (23,741) (26,656)
---------------------------------------------------------- -------- --------
Trade and other receivables (14,443) (23,116)
---------------------------------------------------------- -------- --------
Trade and other payables 9,322 40,225
---------------------------------------------------------- -------- --------
Cash generated from operations 98,312 121,259
---------------------------------------------------------- -------- --------
The parent company has no operating cash flows.
15 Analysis and movement in net debt
This section sets out an analysis of net debt and the movements in net
debt for each of the periods presented.
2022 2021
Group GBP'000 GBP'000
------------------------ ---------- ------------ --------- ----------------- ---------
Cash and cash equivalents 87,224 140,170
------------------------------------ ------------ --------- ----------------- ---------
Borrowings (including overdrafts) (298,789) (224,732)
------------------------------------ ------------ --------- ----------------- ---------
Net bank debt (211,565) (84,562)
==================================== ============ ========= ================= =========
Lease liabilities (246,158) (243,396)
------------------------------------ ------------ --------- ----------------- ---------
Net debt (457,723) (327,958)
------------------------------------ ------------ --------- ----------------- ---------
Cash/other 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 4 January 2021 123,816 (245,987) (122,171) (245,245) (367,416)
------------------------ ---------- ------------ --------- ----------------- ---------
Cash flows 19,750 79,819 99,569 6,588 106,157
------------------------ ---------- ------------ --------- ----------------- ---------
Lease additions - - - (5,549) (5,549)
------------------------ ---------- ------------ --------- ----------------- ---------
Acquisition * - (10,328) (10,328) (12,397) (22,725)
------------------------ ---------- ------------ --------- ----------------- ---------
Repaid on acquisition * 8,504 8,504 - 8,504
------------------------ ---------- ------------ --------- ----------------- ---------
New borrowings* - (65,237) (65,237) - (65,237)
------------------------ ---------- ------------ --------- ----------------- ---------
Exchange adjustments (3,396) 8,497 5,101 10,652 15,753
------------------------ ---------- ------------ --------- ----------------- ---------
Other changes - - - 2,555 2,555
------------------------ ---------- ------------ --------- ----------------- ---------
At 2 January 2022 140,170 (224,732) (84,562) (243,396) (327,958)
------------------------ ---------- ------------ --------- ----------------- ---------
Cash flows (54,576) 228,565 173,989 15,631 189,620
------------------------ ---------- ------------ --------- ----------------- --------- Lease additions - - - (5,835) (5,835) ------------------------ ---------- ------------ --------- ----------------- --------- Acquisition - (56,938) (56,938) (3,214) (60,152) ------------------------ ---------- ------------ --------- ----------------- --------- Repaid on acquisition - 56,938 56,938 - 56,938 ------------------------ ---------- ------------ --------- ----------------- --------- New borrowings - (295,790) (295,790) - (295,790) ------------------------ ---------- ------------ --------- ----------------- --------- Exchange adjustments 1,630 (6,832) (5,202) (9,306) (14,508) ------------------------ ---------- ------------ --------- ----------------- --------- Other changes - - - (38) (38) ------------------------ ---------- ------------ --------- ----------------- --------- At 3 January 2023 87,224 (298,789) (211,565) (246,158) (457,723) ------------------------ ---------- ------------ --------- ----------------- --------- * Restated
16 Related party transactions and ultimate controlling party
The Directors do not consider there to be one ultimate controlling party. The companies noted below are all deemed to be related parties by way of common Directors.
Sales and purchases made on an arm's length basis on normal credit terms to related parties during the period were as follows:
Group 2022 2021
Sales GBP'000 GBP'000
--------- ---------
Sohi Meat Solutions Distribuicao de Carnes SA
- fee for services 3,190 3,175
--------------------------------------------------------------- --------- ---------
Sohi Meat Solutions Distribuicao de Carnes SA
- recharge of joint venture costs 409 331
--------------------------------------------------------------- --------- ---------
Dalco BV - 438
--------------------------------------------------------------- --------- ---------
Agito Holdings Limited 464 -
--------------------------------------------------------------- --------- ---------
Group 2022 2021
Purchases GBP'000 GBP'000
-------------------------------------------------------------- --------- ---------
Agito Holdings Limited 259 -
--------------------------------------------------------------- --------- ---------
Foods Connected Ltd - 568
--------------------------------------------------------------- --------- ---------
Amounts owing from related parties at the year end were as follows:
Owed from related
parties
2022 2021
Group GBP'000 GBP'000
-------------------------------------------------------------- --------- ---------
Foods Connected Ltd - 4
--------------------------------------------------------------- --------- ---------
Agito Holdings Limited 464 -
--------------------------------------------------------------- --------- ---------
Sohi Meat Solutions Distribuicao de Carnes SA 374 561
--------------------------------------------------------------- --------- ---------
838 565
-------------------------------------------------------------- --------- ---------
Amounts owing to related parties at the period end were as follows:
Owed to related
parties
2022 2021
Group GBP'000 GBP'000
-------------------------------------------------------------- --------- ---------
Foods Connected Ltd - 127
=============================================================== ========= =========
Agito Holdings Limited 259 -
=============================================================== ========= =========
Sohi Meat Solutions Distribuicao de Carnes SA 55 9
=============================================================== ========= =========
314 136
-------------------------------------------------------------- --------- ---------
Transaction by Directors
On 5 July 2022 the Group acquired a further 10% interest in its subsidiary
Hilton Foods Solutions Limited from Group CEO Philip Heffer, the consideration
for this acquisition was GBP1,151,000 and takes the Group's interest in
Hilton Foods Solutions Limited to 65%.
In the prior period the group settled the deferred consideration liability
recognised in respect of the acquisition of SV Cuisine Limited, making
a payment of GBP2.5m. The acquisition of SV Cuisine Limited was considered
to be a related party transaction as prior to acquisition Philip Heffer,
The Hilton Foods Group CEO, Graham Heffer and Robert Heffer, both directors
of the Group's subsidiary Hilton Food Solutions Limited, had each held
a 30% shareholding in SV Cuisine Limited.
17 Alternative Performance Measures
The Group's performance is assessed using a number of alternative performance
measures (APMs).
The Group's alternative profitability measures are presented before exceptional
items, amortisation of certain intangible assets and depreciation of fair
value adjustments made to property plant and equipment acquired through
business combinations and the impact of IFRS 16 - Leases.
The measures are presented on this basis, as management uses these measures
to assess business performance internally and therefore believe they provide
useful additional information about the Group's performance and aids a more
effective comparison of the Group's underlying trading performance from
one period to the next.
Adjusted profitability measures are reconciled to unadjusted IFRS results
on the face of the income statement below.
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 1 January GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2023
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Operating profit -
excluding exceptional
items 65,922 20,780 (23,815) 62,887 - 8,257 71,144
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Exceptional items (11,896) - - (11,896) 11,896 - -
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Operating profit 54,026 20,780 (23,815) 50,991 11,896 8,257 71,144
============================== ======== ============= =========== ========== =========== ============ ========
Net finance costs (24,412) 8,758 - (15,654) - - (15,654)
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Profit before income
tax 29,614 29,538 (23,815) 35,337 11,896 8,257 55,490
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Profit for the period 19,492 28,215 (23,815) 23,892 11,751 6,370 42,013
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Less non-controlling
interest (1,786) (3) - (1,789) - - (1,789)
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Profit attributable
to members of the parent 17,706 28,212 (23,815) 22,103 11,751 6,370 40,224
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Depreciation and amortisation 77,769 (20,780) - 56,989 - (8,257) 48,732
============================== ======== ============= =========== ========== =========== ============ ========
EBITDA 131,795 - (23,815) 107,980 11,896 - 119,876
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Earnings per share pence pence pence
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Basic 19.8 24.8 45.1
============================== ======== ============= =========== ========== =========== ============ ========
Diluted 19.7 24.6 44.7
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
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 3 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
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
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 1 January GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2023
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Europe 33,316 8,669 (9,584) 32,401 9,014 8,257 49,672
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
APAC 28,825 12,111 (14,231) 26,705 - - 26,705
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Central costs (8,115) - - (8,115) 2,882 - (5,233)
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Total 54,026 20,780 (23,815) 50,991 11,896 8,257 71,144
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
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
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
APAC 21,716 11,877 (11,223) 22,370 - - 22,370
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Central costs (10,591) - - (10,591) - - (10,591)
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
Total 63,432 18,270 (17,907) 63,795 6,994 2,778 73,567
------------------------------ -------- ------------- ----------- ---------- ----------- ------------ --------
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END
FR UPUUACUPWGQC
(END) Dow Jones Newswires
April 05, 2023 02:00 ET (06:00 GMT)
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