Interim results for the 28 weeks to 13 July 2014

RNS Number : 1282R

Hilton Food Group PLC

09 September 2014

 



Tuesday 9 September 2014

Hilton Food Group plc

Interim results for the 28 weeks to 13 July 2014

Building for the future

Hilton Food Group plc, the specialist retail meat packing business supplying major international food retailers in Europe and Australia, is pleased to announce its interim results for the 28 weeks to 13 July 2014.

	28 weeks to 13 July 2014	28 weeks to 14 July 2013	Percentage growth	52 weeks to 29 December 2013
Volume (tonnes)	121,832	116,942	4.2%	223,568
Turnover	£592.3m	£593.8m	(0.3)%	£1,124.8m
Operating profit	£13.6m	£13.4m	1.1%	£25.8m
Profit after tax	£10.2m	£10.0m	1.8%	£19.4m
Free cash (outflow)/inflow before dividends and financing	£(2.8)m	£8.7m		£17.0m
Net debt/(cash)	£5.6m	£1.6m		£(4.9)m
Basic earnings per share	13.1p	13.0p	0.8%	25.0p
Interim dividend to be paid on 28 November 2014	3.8p	3.65p	4.1%	12.75p

Highlights:

·      Further volume growth achieved in Western Europe, despite continuing weakness in consumer spending, with UK volumes building following the start of the Tesco contract and  recently introduced products performing well in Holland

·      Turnover growth held back by currency movements and lower raw material prices. Growth in underlying profitability similarly affected by currency movements, together with start-up costs incurred in Australia and the UK

·      Continuing progress achieved with our joint venture in Australia

-      conversion of Woolworths' Bunbury facility in Western Australia to expand retail packing completed

-      construction of a new purpose built retail packing facility for Woolworths in Victoria on schedule, 

with operations expected to commence in the second half of 2015

·      Strong cash generation has enabled major capital reinvestment programmes in the UK and Sweden with only a limited increase in net debt

·      Robust balance sheet with the interim dividend increased from 3.65p to 3.8p, an increase of 4.1%

Commenting, Robert Watson OBE, Chief Executive of Hilton Food Group plc said:

"There is good underlying momentum in the business.  During the year we are progressing a major expansion of our UK facilities, the re-equipment of our facilities in Sweden and the development of a new facility in Victoria, Australia. Our aim is to extend the geographic reach of the Hilton model and we continue to look for new opportunities".

Enquiries:

Hilton Food Group - Robert Watson OBE, Nigel Majewski	Tel: [phone]
Citigate Dewe Rogerson - Tom Baldock, Shabnam Bashir	Tel: [phone]

Financial review

The Group is presenting its interim results for the 28 weeks to 13 July 2014, together with comparative information for the 28 weeks to 14 July 2013 and the 52 weeks to 29 December 2013. The interim results of the Group are prepared in accordance with IAS 34 as adopted by the European Union (EU).

Hilton's underlying trading performance has remained positive, despite significant currency headwinds and competitive retail grocery markets, with weak macroeconomic conditions persisting across most of our European markets. Volumes increased by 4.2%, reflecting the start of the new contractual arrangements with Tesco in the UK and the introduction of new product lines in Holland. Turnover fell by 0.3% to £592.3m (2013: £593.8m), impacted by adverse exchange translation movements (reducing turnover by 3.6%) and lower raw material meat prices. Further details of turnover and volume growth by segment are detailed in the Review of operations below.

Operating profit for the first 28 weeks of 2014, at £13.6m, was 1.1% ahead of the corresponding period last year, despite the impact of start-up costs in Australia and the UK and adverse exchange translation movements.

The operating profit margin was 2.3%, in line with the corresponding period last year.

Net finance costs, at £0.5m, were in line with last year (2013: £0.5m) with net debt increasing towards the end of the period and sterling and euro inter-bank offered rates remaining close to historically low levels. Interest cover was 30 times (29 times in 2013).

The taxation charge for the period was £2.9m (2013: £2.9m), representing an effective underlying rate of tax of 22.2%, as compared with 22.6% last year. Profit after taxation, at £10.2m, was £0.2m (1.8%) above last year (2013: £10.0m) with higher operating profit and a slightly lower effective rate of taxation.

The share of profit in our joint venture of £0.2m (2013: £0.1m) comprises the Group's 50% share of the post-tax profits of our Australian joint venture company (£0.6m after tax in the first 28 weeks), less start-up costs recharged to the joint venture company of £0.4m. Start-up costs are always incurred in advance of the start-up of new facilities, such as the new build underway in Victoria.

Basic earnings per share in the first 28 weeks of 2014, at 13.1p, were 0.8% ahead of those for the first half of last year with a 2.1% increase in net income being offset by an increased number of shares in issue, following executive and sharesave scheme share option exercises.

The Directors will declare an interim dividend of 3.8 pence per share, amounting to £2.8m (compared with an interim dividend of 3.65 pence per share in 2013) to be paid on 28 November 2014, to shareholders on the register at close of business on 31 October 2014.    

In the first 28 weeks of 2014 the Group experienced a £2.8m free cash outflow, before dividends and financing (after incurring £21.3m of capital expenditure), as compared to an inflow of £8.7m last year (after capital expenditure of £7.2m). Group borrowings, net of cash balances of £19.6m, were £5.6m at 13 July 2014 (£4.9m net cash at 29 December 2013), reflecting the start of the major capital investment programmes in the UK and Sweden

At 13 July 2014 the Group had undrawn overdraft and loan borrowing facilities of £64.4m (£18.3m at 29 December 2013).

The principal risks and uncertainties facing the Group's businesses

Hilton has well developed processes and structures for identifying and then mitigating the key risks which the Group faces. The most significant risks and uncertainties faced by the Group, together with the Group's risk management processes are detailed in the review of Risk Management and principal risks on pages 22 to 24 of the Hilton Food Group plc annual report and financial statements 2013. The principal risks and uncertainties identified in that report, which remain unchanged, were:  

·	The Group is dependent on a small number of customers who exercise significant buying power and influence;
·	The Group's growth potential is dependent on the success of its customers and the future growth of their packed meat sales;
·	The Group's business is dependent on the macroeconomic environment and levels of consumer spending in the countries in which it operates;
·	The Group's business is reliant on a number of key personnel and its ability to manage growth and change successfully;
·	The Group's business is dependent on maintaining a wide and flexible global meat supply base; and
·	Outbreaks of disease and feed contamination affecting livestock and media concerns can impact the Group's sales.

These risks and uncertainties are expected to remain unchanged with respect to the last 24 weeks of the 2014 financial year, over which the economic environment across Europe is expected to improve, but potentially only gradually.

The risks and uncertainties outlined above had no material adverse impact on the results for the 28 weeks to 13 July 2014, beyond the continuing effects of the difficult macroeconomic environment across Europe on consumer spending levels, as identified in this interim management report.

Forward looking information

This interim management report contains forward looking statements. Such statements are unavoidably subject to risk factors associated with, amongst other things, economic, political and business developments which may occur from time to time across the countries in which the Group operates.  It is believed that the expectations reflected in these statements are reasonable, but all forward looking statements and forecasts are by their nature predictive, speculative and involve risk and uncertainty, quite simply because they relate to events and depend on circumstances that will occur in the future.

Going concern

The Group's bank borrowings are detailed in note 9 to the condensed consolidated interim financial information and the principal banking facilities which support the Group's existing and contracted new business are committed until 2019. The Group is in compliance with all its banking covenants. Future expansion which is not yet contracted for, and which is not built into internal budgets and forecasts, may require additional or extended banking facilities and such future expansion will depend on our ability to negotiate appropriate additional or extended facilities as and when required.

The financial position of the Group including its cash flows, liquidity position and borrowings are described above, with its business activities and the factors likely to affect its future development, performance and position being covered in the Review of operations, below. As at the date of this report, the Directors have a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future. Accordingly, the condensed consolidated interim financial information has been prepared on a going concern basis.

Review of operations

The broad spread of the Group's operations across Europe and the Asia Pacific region represents a clear strength, in terms of reducing Hilton's dependence on the state of any one national economy, particularly during less certain economic times.

With 67% of Group's sales in the first half of 2014 made in currencies other than its reporting currency, its results reported in Sterling have, however, inevitably been influenced by the relative strength of Sterling against these currencies. Over the 28 weeks to 13 July 2014 the various overseas currencies in which the Group trades have all depreciated against Sterling, compared with the corresponding period in 2013, the Euro by 3.5%, the Danish Krone by 3.6%, the Polish Zloty by 3.4%, the Swedish Krona by 8.1% and the Australian dollar by 16.5%.

Western Europe

Operating profit of £14.8m (2013: £14.6m) on turnover of £545.8m (2013: £543.5m)

Volume growth of 5.4% was achieved in Western Europe, driven by the start of the new Tesco contract in the UK, product innovation and range extension. Turnover growth was, however, only 0.4%, reflecting both the effect of lower raw material meat costs on our cost plus contracts and the impact of unfavourable exchange rate movements. Major capital expenditure programmes are currently underway in the UK, to modernise the Group's Huntingdon site and extend its capacity to service the new Tesco contract, and at Vasteras in Sweden, to modernise the site and improve operational efficiency.

Consumer spending has remained weak and to offset the impact of this we have continued to work diligently with our customers on product and packaging development, extending the range of products supplied and maintaining our unremitting focus on product quality, integrity and traceability.

Central Europe

Operating profit of £1.2m (2013: £1.3m) on turnover of £46.5m (2013: £50.3m)

Our facility at Tychy, in Southern Poland supplies Ahold stores in the Czech Republic and Slovakia, Tesco stores in the Czech Republic, Hungary, Poland and Slovakia and Rimi stores in Latvia, Lithuania and Estonia. 

In the first 28 weeks of 2014 the business faced extremely competitive markets characterised by a high degree of consumer price sensitivity. Volumes were consequently 2.6% lower than in the corresponding period last year and turnover reported in sterling fell by 7.4%, reflecting unfavourable exchange rate movements and lower raw material prices.

Central costs and other (including Australia)

Net operating cost of £2.4m (2013: £2.5m).

This segment includes the profit net of start-up costs from Australia of £0.2m (2013: net loss £0.5m) and central costs of £2.6m (2013: £2.0m and £2.8m in 2012).

In Australia the Group is involved in a joint venture with Woolworths, under which it earns a fifty per cent share of the fees charged by the joint venture company for operating certain meat processing and packing plants for Woolworths, based on the volume of retail packed meat delivered to Woolworths' stores.

In May 2013 the joint venture company took over responsibility for the operation of Woolworths' Western Australian meat processing centre in Bunbury, near Perth. The conversion of this facility to enable a substantial increase in retail packed meat production is now completed with subsequent sales of retail packed meat reaching targeted levels.

In August 2013 the building of a purpose built retail packing facility near Melbourne in Victoria was announced which will be operated by the joint venture company. Construction is now in progress and the facility is expected to commence production in the second half of 2015.

Investment in our existing facilities

Hilton continues to invest in all its European facilities to maintain the state of the art levels required to service its customers' growth, extend the range of products supplied to those customers and deliver both first class service levels and further increases in production efficiency. This investment ensures that we can achieve low unit costs and competitive selling prices at increasingly high levels of production throughput. Capital expenditure in the period was £21.3m (2013: £7.2m) reflecting the start of the major capital expenditure programmes at Huntingdon and Vasteras referred to above.

Our Staff

The progress made by the Group in the first half of 2014 against a retail environment and economic backdrop which remained challenging is once again attributable to the quality of the workforces and management teams we have in each country. On behalf of the Board, we would like to thank them for their continuing commitment, enthusiasm, professionalism and support.

Outlook

Hilton has continued to deliver year on year volume growth through difficult and uncertain economic times. It is expected that consumers' drive for value will continue, but with up to date and well invested facilities, a broad geographic customer spread, flexible procurement capabilities and a constant focus on product quality, integrity and traceability, the Group remains well equipped to meet such challenges and deliver growth.

Looking ahead to the remainder of 2014, currency headwinds could well continue along with pressure from constrained consumer expenditure in Europe. With higher start-up costs the Group is likely in 2014 to deliver levels of profitability similar to those achieved in 2013.

Hilton continues to explore further opportunities for geographical expansion and growth in its existing businesses through new product development and range extension.

Sir David Naish DL	Robert Watson OBE
Non-Executive Chairman	Chief Executive

8 September 2014

Statement of Directors' responsibilities

The Directors confirm that, to the best of their knowledge:

(a)  the attached condensed consolidated interim financial information has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union;

(b)  the Financial review and Review of operations which constitute the 'interim management report' include a fair review of the information required by DTR 4.2.7R (indication of important events during the first 28 weeks and description of principal risks and uncertainties for the remaining 24 weeks of the year); and

(c)  the attached condensed consolidated interim financial information includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and any changes therein).

The Directors of Hilton Food Group plc were listed in the Hilton Food Group plc annual report and financial statements 2013 on pages 32 and 33 and there have been no changes in Directors since 29 December 2013, a list of which is maintained on the Hilton Food Group plc website at www.hiltonfoodgroupplc.com.

On behalf of the Board

Robert Watson OBE

Chief Executive

Nigel Majewski

Finance Director

Income statement

		28 weeks ended 13 July 2014	28 weeks ended 14 July 2013
Continuing operations	Note	£'000	£'000
Revenue	4	592,305	593,821
Cost of sales		(521,526)	(522,797)
Gross profit		70,779	71,024
Distribution costs		(5,881)	(5,188)
Administrative expenses		(51,488)	(52,495)
Share of profit in joint venture		160	80
Operating profit	4	13,570	13,421
Finance income		49	74
Finance costs		(499)	(542)
Finance costs - net		(450)	(468)
Profit before income tax		13,120	12,953
Income tax expense	5	(2,909)	(2,927)
Profit for the period		10,211	10,026
Profit attributable to:
Owners of the parent		9,463	9,270
Non-controlling interests		748	756
		10,211	10,026
Earnings per share for profit attributable to owners of the parent
- Basic (pence)	7	13.1	13.0
- Diluted (pence)	7	13.0	12.9

Statement of comprehensive income

		28 weeks ended 13 July 2014	28 weeks ended 14 July 2013
		£'000	£'000
Profit for the period		10,211	10,026
Other comprehensive income
Currency translation differences		(3,006)	2,063
Other comprehensive income for the period net of tax		(3,006)	2,063
Total comprehensive income for the period		7,205	12,089
Total comprehensive income attributable to:
Owners of the parent		6,675	11,118
Non-controlling interests		530	971
		7,205	12,089

The notes form an integral part of this condensed consolidated interim financial information.

Balance sheet

		13 July 2014	14 July 2013	29 December 2013
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment	8	63,283	56,290	58,876
Intangible assets	8	8,916	2,963	2,660
Investments		572	73	405
Deferred income tax assets		1,199	1,110	1,313
		73,970	60,436	63,254
Current assets
Inventories		22,461	23,351	23,837
Trade and other receivables		111,228	126,428	124,356
Current income tax assets		2,882	1,247	745
Cash and cash equivalents		19,586	29,764	34,642
		156,157	180,790	183,580
Total assets		230,127	241,226	246,834
Equity
Share capital	10	7,244	7,157	7,216
Share premium		6,396	3,849	5,885
Employee share schemes reserve		996	1,321	857
Foreign currency translation reserve		(366)	3,947	2,422
Retained earnings		66,862	58,063	63,989
Reverse acquisition reserve		(31,700)	(31,700)	(31,700)
Merger reserve		919	919	919
Capital and reserves attributable to owners of the parent		50,351	43,556	49,588
Non-controlling interests		4,133	4,040	4,670
Total equity		54,484	47,596	54,258
Liabilities
Non-current liabilities
Borrowings	9	18,035	20,430	18,616
Deferred income tax liabilities		1,371	2,076	1,459
		19,406	22,506	20,075
Current liabilities
Borrowings	9	7,168	10,958	11,104
Trade and other payables		147,820	159,700	161,397
Current income tax liabilities		1,249	466	-
		156,237	171,124	172,501
Total liabilities		175,643	193,630	192,576
Total equity and liabilities		230,127	241,226	246,834

The notes form an integral part of this condensed consolidated interim financial information.

Statement of changes in equity

Attributable to owners of the parent

		Share capital	Share premium	Employee share schemes reserve	Foreign currency translation reserve	Retained earnings	Reverse acquisition reserve	Merger reserve	Total	Non-controlling interests	Total equity
	Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2012		7,087	2,562	1,238	2,099	54,932	(31,700)	919	37,137	3,835	40,972
Comprehensive income
Profit for the period		-	-	-	-	9,270	-	-	9,270	756	10,026
Other comprehensive income
Currency translation differences		-	-	-	1,848	-	-	-	1,848	215	2,063
Total comprehensive income		-	-	-	1,848	9,270	-	-	11,118	971	12,089
Transactions with owners
Issue of new shares	10	70	1,287	-	-	-	-	-	1,357	-	1,357
Adjustment in respect of employee share schemes		-	-	83	-	-	-	-	83	-	83
Dividends paid	6	-	-	-	-	(6,139)	-	-	(6,139)	(766)	(6,905)
Total transactions with owners		70	1,287	83	-	(6,139)	-	-	(4,699)	(766)	(5,465)
Balance at 14 July 2013		7,157	3,849	1,321	3,947	58,063	(31,700)	919	43,556	4,040	47,596
Balance at 30 December 2013		7,216	5,885	857	2,422	63,989	(31,700)	919	49,588	4,670	54,258
Comprehensive income
Profit for the period		-	-	-	-	9,463	-	-	9,463	748	10,211
Other comprehensive income											-
Currency translation differences		-	-	-	(2,788)	-	-	-	(2,788)	(218)	(3,006)
Total comprehensive income		-	-	-	(2,788)	9,463	-	-	6,675	530	7,205
Transactions with owners
Issue of new shares	10	28	511	-	-	-	-	-	539	-	539
Adjustment in respect of employee share schemes		-	-	139	-	-	-	-	139	-	139
Dividends paid	6	-	-	-	-	(6,590)	-	-	(6,590)	(1,067)	(7,657)
Total transactions with owners		28	511	139	-	(6,590)	-	-	(5,912)	(1,067)	(6,979)
Balance at 13 July 2014		7,244	6,396	996	(366)	66,862	(31,700)	919	50,351	4,133	54,484

The notes form an integral part of this condensed consolidated interim financial information.

Cash flow statement

			28 weeks ended 13 July 2014	28 weeks ended 14 July 2013
	Note		£'000	£'000
Cash flows from operating activities
Cash generated from operations			22,467	18,949
Interest paid			(499)	(542)
Income tax paid			(3,588)	(2,585)
Net cash generated from operating activities			18,380	15,822
Cash flows from investing activities
Purchase of property, plant and equipment			(14,354)	(5,973)
Proceeds from sale of property, plant and equipment			72	64
Purchase of intangible assets			(6,974)	(1,241)
Interest received			49	74
Net cash used in investing activities			(21,207)	(7,076)
Cash flows from financing activities
Proceeds from borrowings			15,473	-
Repayments of borrowings			(20,131)	(6,192)
Issue of new shares			539	1,357
Dividends paid to company shareholders			(6,590)	(6,139)
Dividends paid to non-controlling interests			(1,067)	(766)
Net cash used in financing activities			(11,776)	(11,740)
Net decrease in cash, cash equivalents and bank overdrafts			(14,603)	(2,994)
Cash, cash equivalents and bank overdrafts at start of period			34,642	31,428
Exchange (losses)/gains on cash, cash equivalents and bank overdrafts			(1,157)	1,330
Cash, cash equivalents and bank overdrafts at end of period	11		18,882	29,764

The notes form an integral part of this condensed consolidated interim financial information.

Notes to the interim financial information

1       General information

Hilton Food Group plc ("the Company") and its subsidiaries (together "the Group") is a specialist retail meat packing business supplying major international food retailers in Europe and Australia.

The Company is a public limited liability company incorporated and domiciled in the UK. The address of the registered office is 2-8 The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE. The registered number of the Company is 06165540.

The Company maintains a Premium Listing on the London Stock Exchange.

This condensed consolidated interim financial information was approved for issue on 8 September 2014.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the 52 weeks ended 29 December 2013 were approved by the Board of Directors on 26 March 2014 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

This condensed consolidated interim financial information has been reviewed, not audited.

2       Basis of preparation

This condensed consolidated interim financial information for the 28 weeks ended 13 July 2014 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union.  The condensed consolidated interim financial information should be read in conjunction with the annual report and financial statements for the 52 weeks ended 29 December 2013 which have been prepared in accordance with IFRS as adopted by the European Union.

Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the 52 weeks ended 29 December 2013, with the exception of changes in estimates that are required in determining the provision for income taxes.

3       Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual report and financial statements for the 52 weeks ended 29 December 2013, as described in those annual financial statements.

Current income tax

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

International Financial Reporting Standards

(a) Standards, amendments and interpretations effective in 2014 but not relevant to the Group's operations

IAS 27 (revised 2011) Separate financial statements

IAS 28 (revised 2011) Associates and joint ventures

IAS 32 (amendment) Financial instruments: Presentation on offsetting financial assets and financial liabilities

IAS 36 (amendment) Impairment of assets: Recoverable amount disclosures

IAS 39 (amendment) Financial instruments: Novation of derivatives and hedge accounting

IFRS 10 Consolidated financial statements

IFRS 10, 12 and IAS 27 (amendments): Consolidation for investment entities

IFRS 11 Joint arrangements

IFRS 12 Disclosure of interests in other entities

IFRIC 21 Levies

4       Segment information

Management has determined the operating segments based on the reports reviewed by the Executive Directors that are used to make strategic decisions.

The Executive Directors have considered the business from both a geographic and product perspective.

From a geographic perspective, the Executive Directors consider that the group has seven operating segments: i) United Kingdom; ii) Netherlands; iii) Republic of Ireland; iv) Sweden; v) Denmark, vi) Central Europe including Poland, Czech Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia and vii) Central costs and other including the share of profit from the joint venture in Australia. The United Kingdom, Netherlands, Republic of Ireland, Sweden and Denmark have been aggregated into one reportable segment "Western Europe" as they have similar economic characteristics as identified in IFRS 8. Central Europe and Central costs and other comprise the other reportable segments.

From a product perspective the Executive Directors consider that the Group has only one identifiable product, wholesaling of meat. The Executive Directors consider that no further segmentation is appropriate, as all of the Group's operations are subject to similar risks and returns and exhibit similar long-term financial performance.

The segment information provided to the Executive Directors for the reportable segments is as follows:

	Total segment revenue	Operating profit/(loss) segment result
	£'000	£'000
28 weeks ended 13 July 2014
Western Europe	545,780	14,825
Central Europe	46,525	1,214
Central costs and other	-	(2,469)
Total	592,305	13,570
28 weeks ended 14 July 2013
Western Europe	543,509	14,595
Central Europe	50,312	1,360
Central costs and other	-	(2,534)
Total	593,821	13,421

	13 July 2014	14 July 2013	29 December 2013
	£'000	£'000	£'000
Total assets
Western Europe	200,746	211,969	223,027
Central Europe	22,216	24,545	18,495
Central costs and other	3,084	2,355	3,254
Total segment assets	226,046	238,869	244,776
Current income tax assets	2,882	1,247	745
Deferred income tax assets	1,199	1,110	1,313
Total assets per balance sheet	230,127	241,226	246,834

There are no significant seasonal fluctuations.

The comparative information for the 28 weeks ended 14 July 2013 has been restated in order to separate central costs and other and be consistent with the current period.

5       Income tax expense

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the 52 weeks to 28 December 2014 is 22.2%. The estimated average annual tax rate for the 28 weeks ended 14 July 2013 was 22.6%.

6       Dividends

	28 weeks ended 13 July 2014	28 weeks ended 14 July 2013
	£'000	£'000
Final dividend paid 9.1p (2013: 8.6p) per ordinary share	6,590	6,139
Total dividends paid	6,590	6,139

The Directors will declare an interim dividend of 3.8 pence per share payable on 28 November 2014 to shareholders who are on the register at 31 October 2014. This interim dividend, amounting to £2.8m has not been recognised as a liability in this interim financial information. It will be recognised in shareholders' equity in the 52 weeks to 28 December 2014.

7       Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company 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 Company has share options for which a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

		28 weeks ended 13 July 2014		28 weeks ended 14 July 2013
		Basic	Diluted	Basic	Diluted
Profit attributable to equity holders of the company	(£'000)	9,463	9,463	9,270	9,270
Weighted average number of ordinary shares in issue	(thousands)	72,309	72,309	71,181	71,181
Adjustment for share options	(thousands)	-	623	-	798
Adjusted weighted average number of ordinary shares	(thousands)	72,309	72,932	71,181	71,979
Basic and diluted earnings per share	(pence)	13.1	13.0	13.0	12.9

8       Property, plant and equipment and intangible assets

	Property, plant and equipment	Intangible assets
	£'000	£'000
28 weeks ended 14 July 2013
Opening net book amount as at 31 December 2012	56,162	1,857
Exchange adjustments	2,254	57
Additions	5,973	1,241
Disposals	(62)	-
Depreciation and amortisation	(8,037)	(192)
Closing net book amount as at 14 July 2013	56,290	2,963
28 weeks ended 13 July 2014
Opening net book amount as at 30 December 2013	58,876	2,660
Exchange adjustments	(2,209)	(138)
Additions	14,354	6,974
Disposals	(146)	-
Depreciation and amortisation	(7,592)	(580)
Closing net book amount as at 13 July 2014	63,283	8,916

Additions comprise continuing investments in PPE and product licences to maintain our facilities at state of the art levels, extend the range of products supplied and continuously deliver first class service and increases in production efficiency. At 13 July 2014 commitments for the purchase of property, plant and equipment totalled £17,916,000 and £4,902,000 for the purchase of intangible assets.

9       Borrowings

		13 July 2014	14 July 2013	29 December 2013
		£'000	£'000	£'000
Current		7,168	10,958	11,104
Non-Current		18,035	20,430	18,616
Total borrowings		25,203	31,388	29,720

Current borrowings includes £704,000 of bank overdrafts.

Movements in borrowings is analysed as follows:

		28 weeks ended 13 July 2014	28 weeks ended 14 July 2013	52 weeks ended 29 December 2013
		£'000	£'000	£'000
Opening amount		29,720	36,630	36,630
Exchange adjustments		(563)	950	359
New borrowings		15,473	-	3,845
Increase in bank overdrafts		704	-	-
Repayment of borrowings		(20,131)	(6,192)	(11,114)
Closing amount		25,203	31,388	29,720

 

 

10     Share capital

	Number of shares	Ordinary shares	Total
	(thousands)	£'000	£'000
At 31 December 2012	70,866	7,087	7,087
Issue of new shares on exercise of employee share options	707	70	70
At 14 July 2013	71,568	7,157	7,157
At 30 December 2013	72,157	7,216	7,216
Issue of new shares on exercise of employee share options	280	28	28
At 13 July 2014	72,437	7,244	7,244

11     Cash, cash equivalents and bank overdrafts

For the purpose of the interim condensed cash flow statement, cash, cash equivalents and bank overdrafts comprise of the following:

	28 weeks ended 13 July 2014	28 weeks ended 14 July 2013
	£'000	£'000
Cash and cash equivalents	19,586	29,764
Bank overdrafts	(704)	-
Cash, cash equivalents and bank overdrafts	18,882	29,764

12     Related party transactions

The Directors do not consider there to be one ultimate controlling party. The company noted below is deemed to be a related party by way of a joint venture agreement. 

Sales and purchases made on an arm's length basis on normal credit terms to related parties were as follows:

	28 weeks ended 13 July 2014	28 weeks ended 14 July 2013	52 weeks ended  29 December 2013
	£'000	£'000	£'000
Woolworths Limited and subsidiaries - recharge of joint venture costs	964	560	1,794

Amounts owing from related parties were as follows:

	13 July 2014	14 July 2013	29 December 2013
	£'000	£'000	£'000
Amounts owing from related parties
Woolworths Limited and subsidiaries	942	349	387

13     Financial instruments

The fair value of the financial assets and liabilities approximate their carrying amounts.

Auditors' review report

Independent review report to Hilton Food Group plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed the condensed consolidated interim financial statements, defined below, in the interim results of Hilton Food Group plc for the 28 weeks to 13 July 2014. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed consolidated interim financial statements, which are prepared by Hilton Food Group plc, comprise:

• the Balance sheet as at 13 July 2014

• the income statement and statement of comprehensive income for the period then ended;

• the cash flow statement for the period then ended;

• the statement of changes in equity for the period then ended; and

• the explanatory notes to the condensed consolidated interim financial statements.

As disclosed in note 2, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The condensed consolidated interim financial statements included in the interim results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed consolidated financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

Responsibilities for the condensed consolidated interim financial statements and the review

Our responsibilities and those of the Directors

The interim results including the condensed consolidated interim financial statements, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim results in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial information in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers LLP

Chartered Accountants

Belfast

8 September 2014

The maintenance and integrity of the Hilton Food Group plc website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since it was initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions

 

END

 

 

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