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Hilton Food Group PLC  -  HFG   

Interim results for the 28 weeks to 16 July 2017

Released 07:00 12-Sep-2017

RNS Number : 4140Q
Hilton Food Group PLC
12 September 2017
 

 

 

 

Tuesday 12 September 2017

Hilton Food Group plc

 

Interim results for the 28 weeks to 16 July 2017

 

Further territorial growth and strategic progress

 

Hilton Food Group plc, the leading specialist international meat packing business, is pleased to announce its interim results for the 28 weeks to 16 July 2017.

 

Financial and Strategic Highlights

 

 

28 weeks to

16 July 2017

 

28 weeks to

17 July 2016

 

Percentage growth

52 weeks to

1 January 2017

Volume * (tonnes)

 

160,848

147,985

8.7%

275,213

Revenue

 

£690.7m

£631.9m

9.3%

£1,234.5m

Operating profit

 

£18.8m

£17.3m

9.0%

£34.3m

Profit before income tax

 

£18.4m

£16.7m

10.4%

£33.2m

Cash inflow before minorities, dividends and financing

 

£16.1m

£13.9m

15.1%

£26.7m

Net cash

 

£38.9m

£21.6m

 

£32.3m

Basic earnings per share

 

19.2p

16.9p

13.6%

33.7p

Interim dividend to be paid on

1 December 2017

5.0p

4.6p

8.7%

17.1p

       

* Volume includes 50% share of the Australian and Portuguese joint venture activities (2016 restated)

 

 

 

· Volume growth driven by Australia, Ireland, Sweden and Portugal partly offset by challenging market conditions in Central Europe

 

· Turnover up 3.3% on a constant currency basis, reflecting raw material prices increases, enhanced by favourable currency translation

 

· Operating profit up 1.4% on a constant currency basis after absorbing start-up costs in Europe, initial Queensland costs and weaker trading in Central Europe,

 

· Portuguese joint venture has started well with significant volumes

 

· Agreement since the end of the half year to supply fresh food to Tesco Central Europe

 

· Continued strong cash generation and an ungeared balance sheet

 

· Interim dividend increased from 4.6p to 5.0p, an increase of 8.7%

 

Commenting on the results, Chief Executive Robert Watson OBE said:

 

"Hilton delivered strong volume and profit growth during the period. Our strategic progress continued with entry into Portugal and expansion recently announced in Central Europe where beef deboning has commenced and a fresh food factory will be developed. The initial work on our new factory in Queensland, Australia continues with the planning approvals process well advanced. We remain committed to growing our business through innovation and product development as well as exploring a range of new expansion opportunities to further our geographic reach."

 

 

Enquiries:

 

Hilton Food Group

Tel: +44 (0) 1480 387214

Robert Watson OBE, Chief Executive

 

Nigel Majewski, Chief Financial Officer

 

 

 

Citigate Dewe Rogerson

Tel: +44 (0) 207 282 2941

Angharad Couch

 

Ellen Wilton

 

 

 

 

This announcement contains inside information.

 

 

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 speculative and involve risk and uncertainty, quite simply because they relate to events and depend on circumstances that will occur in the future.

 

 

Review of operations   

 

The Group is presenting its interim results for the 28 weeks to 16 July 2017, together with comparative information for the 28 weeks to 17 July 2016 and the 52 weeks to 1 January 2017. The interim results of the Group are prepared in accordance with IAS 34 as adopted by the European Union (EU).

 

The wide geographical spread of the Group's operations across Europe and more recently into Australia has resulted in progressively reducing Hilton's dependence on any one national economy, which is a significant strength of the business model.

 

Hilton's results, as reported in Sterling, are sensitive to changes in the value of Sterling compared to the range of overseas currencies in which the Group trades. Over the 28 weeks to 16 July 2017 the average exchange rates for these overseas currencies have strengthened against Sterling compared with the corresponding period in 2016. The Euro, Danish Krone, Swedish Krona all strengthened by 7% to 10%, the Polish Zloty by 13% and Australian Dollar by 17%.

 

The overall performance was good with an improved performance in Western Europe aided by Portuguese joint venture partly offset by weaker trading in Central Europe and start-up costs.

 

Western Europe

 

Operating profit of £20.0m (2016: £18.1m) on turnover of £643.6m (2016: £586.6m)

 

This operating segment covers the Group's businesses in the UK, Ireland, Holland, Sweden, Denmark and the new Portuguese joint venture. Volume growth of 12.8% included an excellent start by the Sohi Food Solutions joint venture in Portugal as well as higher volumes in Ireland and Sweden although market conditions in Holland remain challenging.

 

Turnover increased by 4.1% on a constant currency basis boosted by higher raw material prices increases and favourable mix.

 

Hilton has continued to grow volume and profit despite consumer spending remaining subdued across Europe and competitive retail markets. In this environment we have continued to concentrate on product and packaging innovation and development with our customers, extending the range of products supplied and maintaining our unremitting focus on product quality, integrity and traceability. The higher volumes and favourable currency translation increased segment profitability.

 

Central Europe

 

Operating profit of £0.4m (2016: £1.3m) on turnover of £47.1m (2016: £45.3m)

 

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. 

 

As anticipated the business continued to be challenged by a highly competitive and price sensitive landscape. Volumes fell 20.6% compared to last year with turnover as reported in Sterling down by 7.9% on a constant currency basis. Operating profit was correspondingly lower and additionally there were also start-up costs as the business continues to expand its product range including the launch of a beef deboning operation.

 

Central costs and other

 

Net operating cost £1.6m (2016: £2.1m)

 

This segment includes the service fee income from our Australian joint venture of £2.3m (2016: £1.5m), Australian start-up and support costs of £0.6m (2016: £0.2m) and central costs of £3.3m (2016: £3.4m).

 

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

 

Volumes in Australia grew by 15.1% across the plants in Bunbury, Western Australia and Melbourne Victoria in line with the agreed plan. Service fee income increased by 33.1% over 2016 on a constant currency basis reflecting the higher volumes and incentives. Higher start-up and support costs relate to the development of a new plant in Queensland which we will build and operate.

 

Strategic progress

 

The Group continued to make good strategic progress in the first half during which the joint venture in Portugal commenced production and a beef deboning operation started in Central Europe. Work on our new factory in Queensland, Australia continues with the planning approvals process well advanced. We also invested in a 50% stake in Foods Connected Limited, a software company that develops tools to help companies in the food and retail sectors. Since the end of our half year we announced expansion in Central Europe where a fresh food factory will be developed to produce sandwiches, pizza, ready meals and soups.

 

Investment in our existing facilities

 

Hilton continues to invest in all its European facilities maintaining 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 higher levels of production throughput. Capital expenditure in the period was £4.4m (2016: £6.5m).

 

Outlook

 

Hilton continues to develop its business and deliver year on year volume growth through focusing on quality and value for money for the consumer. With new projects in Portugal and Queensland, Australia, well invested facilities, a broad geographic customer spread, and flexible procurement capabilities the Group is well equipped and expects results for the full year to be in line with the Board's expectations.

 

Hilton continues to explore further opportunities for expansion and is well placed to capture those opportunities as they arise. The Group's financial position remains strong and we remain committed to maintaining a strong balance sheet in line with our stated strategy as we invest in these opportunities to grow the business in both domestic and overseas markets.

 

 

Financial review

 

Hilton's overall underlying trading performance remained strong, despite competitive retail grocery markets and uncertain macroeconomic conditions. Volumes increased by 8.7% reflecting growth in Ireland, Sweden and Australia and also the start of the Portuguese joint venture. Turnover increased by 9.3% to £690.7m (2016: £631.9m) and by 3.2% on a constant currency basis. Further details of turnover and volume growth by segment are detailed in the Review of operations above.

 

Operating profit for the first 28 weeks of 2017 was 9.0% higher at £18.8m (2016: £17.3m) and 1.4% higher on a constant currency basis including new product start-up and support costs in Europe and initial Queensland costs as well as weaker trading across Central Europe. The operating profit margin at 2.7% was unchanged compared to last year.

 

Net finance costs, at £0.4m, were lower than last year (2016: £0.6m) due to reduced borrowings with Sterling and European inter-bank offered rates remaining close to historically low levels. Interest cover was 43 times (2016: 29 times).

 

The taxation charge for the period was £3.2m (2016: £3.3m), representing an effective underlying rate of tax of 17.6%, as compared with 19.7% last year predominantly due to higher joint venture income which is reported within operating profit on a post-tax basis under the equity method.

 

Profit after taxation, at £15.2m, was £1.8m or 13.4% above last year (2016: £13.4m) reflecting higher operating profit and the lower effective rate of taxation.

 

Basic earnings per share in the first 28 weeks of 2017, at 19.2p, were 13.6% above last year's level.

 

The Directors have approved the payment of an interim dividend of 5.0 pence per share, amounting to £3.7m (compared with an interim dividend of 4.6 pence per share in 2016) to be paid on 1 December 2017, to shareholders on the register at close of business on 3 November 2017.

 

In the first 28 weeks the Group generated £16.1m of cash inflow, before minorities, dividends and financing (2016: £13.9m). Cash balances at 16 July 2017 were £60.4m which, net of borrowings of £21.5m, resulted in a net cash position of £38.9m (£32.3m net cash at 1 January 2017).

 

At 16 July 2017 the Group had undrawn overdraft and loan borrowing facilities of £101.0m (£99.2m at 1 January 2017).

 

Going concern

 

The Group's bank borrowings are detailed in note 10 to the condensed consolidated interim financial information and the principal banking facilities which support the Group's existing and contracted new business are committed, with no renewal required 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, above. As at the date of this report the Directors have a reasonable expectation that the Group has adequate resources and, having reassessed the principal risks, consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial information.

 

The principal risks and uncertainties facing the Group's businesses

 

Hilton has well developed processes and structures for identifying and subsequently 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 23 to 25 of the Hilton Food Group plc 2016 Annual report and financial statements. 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 when it comes to contractual renewal terms at 5 to 10 year intervals;

·   

The Group's growth potential is dependent on the success of its customers and the future growth of their packed meat sales;

·   

The progress of 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 operating at standards that can continuously achieve the specifications set by Hilton and its customers;

·   

Outbreaks of disease and feed contamination affecting livestock and media concerns relating to these and

instances of product adulteration can impact the Group's sales;

·   

Significant incidents such as fire, flood or interruption of supply of key utilities could impact the Group's

business continuity; and

·   

The Group's IT systems could be subject to cyber attacks including fraudulent external email activity.

These kinds of attacks are generally increasing in frequency and sophistication.

 

These risks and uncertainties are expected to remain unchanged for the remainder of the 2017 financial year. The UK's decision to leave the European Union is not considered a material risk as it will logically only affect product flows between EU countries and those outside the EU, which in the Hilton context are fairly limited, with most of Hilton's sales in each country made to its retail partner in that country.  The risks and uncertainties outlined above had no material adverse impact on the results for the 28 weeks to 16 July 2017.

 

Colin Smith OBE

Robert Watson OBE

Non-Executive Chairman

Chief Executive

 

 

11 September 2017

 

Statement of Directors' responsibilities

 

The Directors confirm that to the best of their knowledge:

 

(a)  the 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 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 2016 on pages 34 and 35 and there have been no changes in Directors since 1 January 2017, a list is also maintained on the Hilton Food Group plc website at www.hiltonfoodgroupplc.com.

 

On behalf of the Board

 

 

Robert Watson OBE

Chief Executive

 

Nigel Majewski

Chief Financial Officer

 

Income Statement

 

 

28 weeks ended

28 weeks ended

 

 

16 July 2017

17 July 2016

Continuing operations

Notes

£'000

£'000

Revenue

4

690,737

631,863

Cost of sales

 

(608,566)

(554,654)

Gross profit

 

82,171

77,209

Distribution costs

 

(5,939)

(5,800)

Administrative expenses

 

(61,274)

(55,613)

Share of profit in joint venture

 

3,880

1,480

Operating profit

4

18,838

17,276

Finance income

 

17

47

Finance costs

 

(448)

(650)

Finance costs - net

 

(431)

(603)

Profit before income tax

 

18,407

16,673

Income tax expense

5

(3,232)

(3,286)

Profit for the period

 

15,175

13,387

 

 

 

 

Profit attributable to:

 

 

 

Owners of the parent

 

14,144

12,338

Non-controlling interests

 

1,031

1,049

 

 

15,175

13,387

 

 

 

 

Earnings per share for profit attributable to owners of the parent

 

 

 

- Basic (pence)

7

19.2

16.9

- Diluted (pence)

7

19.0

16.6

 

 

 

 

 

 

 

 

 

 

 

Statement of comprehensive income

 

 

 

 

 

 

28 weeks ended

28 weeks ended

 

 

16 July 2017

17 July 2016

 

 

£'000

£'000

Profit for the period

 

15,175

13,387

Other comprehensive income

 

 

 

Currency translation differences

 

2,138

7,046

Other comprehensive income for the period net of tax

 

2,138

7,046

Total comprehensive income for the period

 

17,313

20,433

 

 

 

 

Total comprehensive income attributable to:

 

 

 

Owners of the parent

 

16,161

18,732

Non-controlling interests

 

1,152

1,701

 

 

17,313

20,433

 

 

 

 

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

Balance Sheet

 

 

 

16 July 2017

17 July 2016

1 January 2017

 

Notes

£'000

£'000

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

8

65,378

68,770

70,396

Intangible assets

8

8,348

9,245

8,584

Investments

9

9,827

3,204

4,847

Deferred income tax assets

 

1,019

1,003

1,058

 

 

84,572

82,222

84,885

Current assets

 

 

 

 

Inventories

 

23,754

21,920

24,382

Trade and other receivables

 

121,627

124,133

118,608

Current income tax assets

 

1,567

1,881

33

Cash and cash equivalents

 

60,376

56,223

59,304

 

 

207,324

204,157

202,327

Total assets

 

291,896

286,379

287,212

 

 

 

 

 

Equity and liabilities

 

 

 

 

Equity

 

 

 

 

Share capital

11

7,399

7,317

7,355

Share premium

 

8,795

8,869

7,273

Employee share schemes reserve

 

5,245

1,561

5,250

Foreign currency translation reserve

 

4,983

1,905

2,966

Retained earnings

 

101,314

87,491

96,419

Reverse acquisition reserve

 

(31,700)

(31,700)

(31,700)

Merger reserve

 

919

919

919

Equity attributable to owners of the parent

 

96,955

76,362

88,482

Non-controlling interests

 

5,186

5,549

6,613

Total equity

 

102,141

81,911

95,095

 

 

 

 

 

Liabilities

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

10

10,062

22,512

17,409

Deferred income tax liabilities

 

1,549

1,840

1,505

 

 

11,611

24,352

18,914

Current liabilities

 

 

 

 

Borrowings

10

11,432

12,125

9,567

Trade and other payables

 

166,712

167,991

163,636

 

 

178,144

180,116

173,203

Total liabilities

 

189,755

204,468

192,117

Total equity and liabilities

 

291,896

286,379

287,212

 

 

 

 

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 4 January 2016

 

7,286

8,191

901

(4,489)

82,829

(31,700)

919

63,937

4,938

68,875

Comprehensive income

 

 

 

 

 

 

 

 

 

         

 

Profit for the period

 

-

-

-

-

12,338

-

-

12,338

1,049

13,387

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Currency translation differences

 

-

-

-

6,394

-

-

-

6,394

652

7,046

Total comprehensive income

 

-

-

-

6,394

12,338

-

-

18,732

1,701

20,433

Transactions with owners

 

 

 

 

 

 

 

 

 

 

 

Issue of new shares

11

31

678

-

-

-

-

-

709

-

709

Adjustment in respect of employee share schemes

 

-

-

660

-

-

-

-

660

-

660

Dividends paid

6

-

-

-

-

(7,676)

-

-

(7,676)

(1,090)

(8,766)

Total transactions with owners, recognised directly in equity

 

31

678

660

-

(7,676)

-

-

(6,307)

(1,090)

(7,397)

Balance at 17 July 2016

 

7,317

8,869

1,561

1,905

87,491

(31,700)

919

76,362

5,549

81,911

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 2 January 2017

 

7,355

7,273

5,250

2,966

96,419

(31,700)

919

88,482

6,613

95,095

Comprehensive income

 

 

 

 

 

 

 

 

 

         

 

Profit for the period

 

-

-

-

-

14,144

-

-

14,144

1,031

15,175

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Currency translation differences

 

-

-

-

2,017

-

-

-

2,017

121

2,138

Total comprehensive income

 

-

-

-

2,017

14,144

-

-

16,161

1,152

17,313

Transactions with owners

 

 

 

 

 

 

 

 

 

 

 

Issue of new shares

11

44

1,522

-

-

-

-

-

1,566

-

1,566

Adjustment in respect of employee share schemes

 

-

-

(5)

-

-

-

-

(5)

-

(5)

Dividends paid

6

-

-

-

-

(9,249)

-

-

(9,249)

(2,579)

(11,828)

Total transactions with owners, recognised directly in equity

 

44

1,522

(5)

-

(9,249)

-

-

(7,688)

(2,579)

(10,267)

Balance at 16 July 2017

 

7,399

8,795

5,245

4,983

101,314

(31,700)

919

96,955

5,186

102,141

 

 

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

Cash flow statement

 

 

28 weeks ended

28 weeks ended

 

 

16 July 2017

17 July 2016

 

 

£'000

£'000

Cash flows from operating activities

 

 

 

Cash generated from operations

 

26,511

25,625

Interest paid

 

(448)

(650)

Income tax paid

 

(4,677)

(5,690)

Net cash generated from operating activities

 

21,386

19,285

 

 

 

 

Cash flows from investing activities

 

 

 

Dividends received from joint venture

 

2,023

1,105

Investment in joint venture

 

(3,007)

-

Purchases of property, plant and equipment

 

(3,494)

(6,482)

Proceeds from sale of property, plant and equipment

 

53

19

Purchases of intangible assets

 

(927)

(30)

Interest received

 

17

47

Net cash used in investing activities

 

(5,335)

(5,341)

 

 

 

 

Cash flows from financing activities

 

 

 

Repayments of borrowings

 

(5,814)

(7,075)

Issue of new shares

 

1,566

709

Dividends paid to owners of the parent

 

(9,249)

(7,676)

Dividends paid to non-controlling interests

 

(2,579)

(1,090)

Net cash used in financing activities

 

(16,076)

(15,132)

 

 

 

 

Net decrease in cash and cash equivalents

 

(25)

(1,188)

Cash and cash equivalents at beginning of the period

 

59,304

52,806

Exchange gains on cash and cash equivalents

 

1,097

4,605

Cash and cash equivalents at end of the period

 

60,376

56,223

 

 

 

 

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

 

1 General information

 

Hilton Food Group plc ("the Company") and its subsidiaries (together "the Group") is the leading specialist international meat packing business.

 

The Company is a public limited 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 11 September 2017.

 

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 1 January 2017 were approved by the Board of Directors on 30 March 2017 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 16 July 2017 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 1 January 2017 which have been prepared in accordance with IFRS as adopted by the European Union.

 

Estimates

The preparation of condensed consolidated interim financial information 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 consolidated interim financial information, 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 1 January 2017, 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 1 January 2017, 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

There are no Standards, amendments or interpretations effective in 2017 that are relevant to the Group's operations.

 

4 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 eight 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; vii) share of profit from the joint venture in Portugal and viii) Central costs and other including the share of profit from the joint venture in Australia. The United Kingdom, Netherlands, Republic of Ireland, Sweden, Denmark and share of profit from the joint venture in Portugal 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:

 

 

 

Operating

 

 

Total segment

profit/(loss)

 

 

revenue

segment result

 

 

£'000

£'000

28 weeks ended 16 July 2017

 

 

 

Western Europe

 

643,602

20,014

Central Europe

 

47,135

354

Central costs and other

 

-

(1,530)

Total

 

690,737

18,838

 

 

 

 

28 weeks ended 17 July 2016

 

 

 

Western Europe

 

586,576

18,114

Central Europe

 

45,287

1,307

Central costs and other

 

-

(2,145)

Total

 

631,863

17,276

 

 

 

 

 

16 July

17 July

1 January

 

2017

2016

2017

 

£'000

£'000

£'000

Total assets

 

 

 

Western Europe

241,757

252,328

259,355

Central Europe

23,608

23,643

18,477

Central costs and other

23,945

7,524

8,289

Total segment assets

289,310

283,495

286,121

Current income tax assets

1,567

1,881

33

Deferred income tax assets

1,019

1,003

1,058

Total assets per balance sheet

291,896

286,379

287,212

 

 

 

 

There are no significant seasonal fluctuations.

 

 

 

 

 

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 31 December 2017 is 17.6%. The estimated average annual effective tax rate for the 28 weeks ended 17 July 2016 was 19.7%.

 

6 Dividends

 

 

 

28 weeks ended

28 weeks ended

 

16 July 2017

17 July 2016

 

£'000

£'000

Second interim dividend paid nil (2016: 9.2p)

-

6,725

Final dividend paid 12.5p per ordinary share (2016: 1.3p)

9,249

951

Total dividends paid

9,249

7,676

 

The Directors have approved the payment of an interim dividend of 5.0 pence per share payable on 1 December 2017 to shareholders who are on the register at 3 November 2017. This interim dividend, amounting to £3.7m has not been recognised as a liability in this condensed consolidated interim financial information. It will be recognised in shareholders' equity in the 52 weeks to 31 December 2017.

 

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

28 weeks ended

 

 

16 July 2017

17 July 2016

 

 

Basic

Diluted

Basic

Diluted

Profit attributable to equity holders of the Company

(£'000)

14,144

14,144

12,338

12,338

Weighted average number of ordinary shares in issue

(thousands)

73,757

73,757

73,104

73,104

Adjustment for share options

(thousands)

-

755

-

1,005

Adjusted weighted average number of ordinary shares

(thousands)

73,757

74,512

73,104

74,109

Basic and diluted earnings per share

(pence)

19.2

19.0

16.9

16.6

 

 

 

 

8 Property, plant and equipment and intangible assets

 

Property, plant

Intangible

 

and equipment

assets

 

£'000

£'000

28 weeks ended 17 July 2016

 

 

Opening net book amount as at 1 January 2016

67,230

10,073

Exchange adjustments

4,210

463

Additions

6,482

30

Disposals

(12)

-

Depreciation and amortisation

(9,140)

(1,321)

Closing net book amount as at 17 July 2016

68,770

9,245

 

 

 

28 weeks ended 16 July 2017

 

 

Opening net book amount as at 2 January 2017

70,396

8,584

Exchange adjustments

1,067

110

Additions

3,494

927

Disposals

(14)

-

Depreciation and amortisation

(9,565)

(1,273)

Closing net book amount as at 16 July 2017

65,378

8,348

 

Additions comprise continuing investments 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 16 July 2017 commitments for the purchase of property, plant and equipment totalled £nil (2016: £nil).

 

9 Investments

 

 

 

 

 

 

 

 

 

Investments in joint ventures

 

 

 

 

 

 

28 weeks ended

28 weeks ended

52 weeks ended

 

 

16 July

17 July

1 January

 

 

2017

2016

2016

 

 

£'000

£'000

£'000

At the beginning of the year

 

4,847

2,396

2,396

Acquisitions

 

3,007

-

-

Profit for the period

 

3,880

1,480

3,056

Dividends received

 

(2,023)

(1,105)

(1,184)

Effect of movements in foreign exchange

116

433

579

At the end of the year

 

9,827

3,204

4,847

 

10 Borrowings

 

 

 

 

16 July

17 July

1 January

 

2017

2016

2017

 

£'000

£'000

            £'000

Current

11,432

12,125

9,567

Non-current

10,062

22,512

17,409

Total borrowings

21,494

34,637

26,976

 

 

 

 

Movements in borrowings is analysed as follows:

 

 

 

 

28 weeks ended

28 weeks ended

52 weeks ended

 

16 July

17 July

1 January

 

2017

2016

2017

 

£'000

£'000

£'000

Opening amount

26,976

40,133

40,133

Exchange adjustments

332

1,579

1,713

Repayment of borrowings

(5,814)

(7,075)

(14,870)

Closing amount

21,494

34,637

26,976

 

 

 

 

 

11 Ordinary shares

 

 

 

 

 

Number of

Ordinary

 

 

 

shares

shares

Total

 

 

(thousands)

£'000

£'000

 

At 1 January 2016

72,863

7,286

7,286

 

Issue of new shares on exercise of employee share options

307

31

31

 

At 17 July 2016

73,170

7,317

7,317

 

 

 

 

 

 

At 2 January 2017

73,552

7,355

7,355

 

Issue of new shares on exercise of employee share options

438

44

44

 

At 16 July 2017

73,990

7,399

7,399

 

               

 

12 Related party transactions

 

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.

 

Transactions between related parties on an arm's length basis were as follows:

 

28 weeks ended

28 weeks ended

52 weeks ended

 

16 July

17 July

1 January

 

2017

2016

2017

 

£'000

£'000

£'000

Hilton Food Solutions Limited - Sales

4,746

-

5,564

Woolworths Limited and subsidiaries -

 

 

 

   Recharge of joint venture costs

304

907

1,010

Sohi Meat Solutions Distribuicao de Carnes SA -

 

 

 

   Recharge of joint venture costs

113

-

-

 

 

 

 

Amounts owing from related parties were as follows:

 

16 July

17 July

1 January

 

2017

2016

2017

 

£'000

£'000

£'000

Hilton Food Solutions Limited

1,934

-

978

Woolworths Limited and subsidiaries

339

436

69

Sohi Meat Solutions Distribuicao de Carnes SA

113

-

-

 

13 Financial instruments

 

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

 

 

Independent review report

 

Independent review report to Hilton Food Group plc

 

Report on the condensed consolidated interim financial statements

 

Our conclusion

We have reviewed Hilton Food Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the half year report of Hilton Food Group plc for the 28 week period ended 16 July 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

What we have reviewed

The interim financial statements comprise:

·

the Balance sheet as at 16 July 2017;

·

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 interim financial statements.

 

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

 

As disclosed in note 2 to the interim financial statements, 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.

 

Responsibilities for the interim financial statements and the review

 

Our responsibilities and those of the Directors

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

 

Our responsibility is to express a conclusion on the interim financial statements in the half year report 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 Guidance and Transparency Rules sourcebook of the United Kingdom's 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.

 

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.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

Belfast

 

11 September 2017

 

The maintenance and integrity of the Hilton Food Group 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 financial statements since they were 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.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Interim results for the 28 weeks to 16 July 2017 - RNS