REG - Hilton Food Grp Plc - Interim Results
04/09/2024 07:00
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RNS Number : 7849C Hilton Food Group PLC 04 September 2024
4 September 2024
Hilton Food Group plc
Strong profit performance and like-for-like volume growth
Current trading in line with expectations
Hilton Foods today announces its interim results for the 26 weeks to 30 June
2024. The business has also published a separate announcement this morning
regarding a Board appointment.
Business highlights
· Core meat category delivering strong retail volume growth across all
operating regions
· Seafood business continues to improve, underpinning profit growth in UK
& Ireland
· Good progress in developing cross-sell opportunities
· Hilton Foods Canada remains on track for 2027 with Walmart
· Vegan and vegetarian now in single operating site
· Foods Connected wins new global contract with McDonald's
· Commitment to sustainability and progress continues across all areas,
especially packaging
Financial overview
H1 2024 represents a 26 week period and is compared with a 28 week period in
H1 2023. Variances below are presented on a reported basis and for a
comparable like-for-like 26 week constant currency basis (2).
· Volume increase of 3.2% with revenue up by 1.0% on a like-for-like
basis with volume growth offset by raw material price deflation in the APAC
region. On a statutory basis revenue down 8.4% to £1.94bn
· Adjusted operating profit (2) increased by 23.2% on a like-for-like
basis and by 12.2% on a reported basis to £46.9m. Statutory operating profit
up 42.3%
· Strong free cash flow (2) of £34.7m (2023: £18.9m); remaining a
highly cash generative business
· Net bank debt (2) of £137.0m (£139.7m at 2023 year-end) (£216.5m at
16 July 2023); period end net bank debt as a proportion of adjusted EBITDA (2)
0.9x (2023 year-end: 1.0x)
· Interim dividend of 9.6p (2023: 9.0p)
2024 2023 Change
26 weeks to 28 weeks to Reported 26 week
30 June 2024 16 July 2023 constant currency
Volume (tonnes) (1) 260,907 272,321 -4.2% 3.2%
Revenue £1,943.8m £2,123.1m -8.4% 1.0%
Adjusted operating profit (2) £46.9m £41.8m 12.2% 23.2%
Adjusted profit before tax (2) £33.5m £26.8m 25.3% 37.8%
Adjusted basic earnings per share (2) 25.8p 21.6p 19.4% 31.3%
Statutory operating profit £43.6m £30.6m 42.3%
Statutory profit before tax £25.4m £11.3m 125.7%
Statutory basic earnings per share 18.8p 7.6p 147.4%
Free cash flow (2) £34.7m £18.9m
Net bank debt (2) £137.0m £216.5m
Interim dividends 9.6p 9.0p 6.7%
Outlook
Hilton Foods is well-positioned and continues to trade in line with
expectations for the full year. The Group maintains a strong financial
position and we continue to be well placed in a large, attractive marketplace,
underpinned by long-standing customer partnerships. Hilton Foods continues to
invest in its clear strategic priorities while exploring further growth
opportunities and wider geographic expansion with existing and new customers.
Steve Murrells CBE Hilton Foods Chief Executive Officer, said:
"These results represent another step forward as Hilton Foods further improves
business performance and profitability. Our core meat category performed
particularly well, driving volume growth, while the continued positive
momentum in our seafood business has helped to underpin profit performance.
Our core product ranges remain highly attractive to both our customers and
their consumers, while the breadth of our offering make us well placed to win
across every meal, in both retail and food service.
"The hard work of all our teams, coupled with our proprietary technology and
market-leading innovation, has underpinned the strength of our relationships
with customers during the period. I would like to take this opportunity to
thank all my colleagues for their ongoing commitment.
"As I look ahead, Hilton Foods has all the right attributes in place. Our
strong financial platform, unique multi-category offer, and market-leading
technology adds to my confidence in the Group's ability to achieve further
international growth."
Notes
1 Volume includes 50% share of the Portuguese joint venture activities
2 Hilton uses Alternative Performance Measures (APMs) to monitor the
underlying performance of the Group which are detailed in note 16 and the
Glossary. Management considers that APMs, in addition to statutory metrics,
provide useful information on business performance which enables management to
monitor and manage the business day-to-day. Unless otherwise stated financial
metrics in the Business highlights, Financial overview, Review of operations
and Financial review refer to the Adjusted results.
A presentation for analysts and investors will be held this morning at 09.00,
which will also be webcast. For access to the live webcast, please register at
the following link:
https://stream.brrmedia.co.uk/broadcast/66a8dad227d380a9b7f0c665
(https://stream.brrmedia.co.uk/broadcast/66a8dad227d380a9b7f0c665) .
Enquiries:
Hilton Food Group
Tel: +44 (0) 1480 387214
Steve Murrells CBE, Chief Executive Officer
Matt Osborne, Chief Financial Officer
Headland Consultancy
Limited Tel: +44
(0) 20 3805 4822
Susanna
Voyle
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 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.
Cautionary statement
This interim management 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.
Alternative performance measures (APMs)
Hilton uses Alternative Performance Measures (APMs) to monitor the underlying
performance of the Group which are detailed in note 16. Management considers
that APMs, in addition to statutory metrics, provide useful information on
business performance which enables management to monitor and manage the
business day-to-day.
Review of operations
The Group is presenting its interim results for the 26 weeks 30 June 2024,
together with comparative information for the 28 weeks to 16 July 2023. These
interim results are prepared in accordance with UK-adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules
sourcebook of the UK Financial Conduct Authority.
Performance overview
A strong business performance in the period saw volumes increase by 3.2% on a
like-for-like basis*. Revenue decreased by 8.4% to £1.94bn but was up by 1.0%
on a like-for-like basis* with the benefits of strong volume growth in the UK
& Ireland offset by the impact of raw material price deflation in the APAC
region. The adjusted operating margin increased to 2.4% (2023: 2.0%) and the
adjusted operating margin per kg increased to 18.0p per kg (2023: 15.3p per
kg).
UK and Ireland
Adjusted operating profit of £21.1m (2023: £12.8m) on revenue of £709.6m
(2023: £701.1m)
This operating segment covers the Hilton Foods businesses and joint ventures
in the UK and Ireland including meat processing facilities in Huntingdon, fish
facilities in Grimsby as well as the Fairfax Meadow food service business.
Volumes were 2.1% higher and revenue increased by 9.3% on a like-for-like
basis* driven through core retail meat and strong performing premium tier
products. Adjusted operating margins increased to 3.0% (2023: 1.8%) reflecting
the performance of our improving seafood business and our strong core meat
category performance including positive shifts in product mix.
Europe
Adjusted operating profit of £19.2m (2023: £20.4m) on revenue of £519.7m
(2023: £553.8m)
This operating segment covers the Hilton Foods meat, fish, vegan and
vegetarian businesses and joint ventures in Holland, Belgium, Sweden, Denmark,
Central Europe, Greece and Portugal.
Volumes were 0.8% higher and revenue increased by 2.8% on a like-for-like
basis*. Adjusted operating margins were maintained at 3.7% (2023: 3.7%) with
operating profit up 1.9% on a like-for-like* basis. The results reflect
expansion in localised convenience foods across Sweden and Central Europe
although a structural market reset in vegan and vegetarian remains challenging
and we are continuing to optimise vegan and vegetarian single operating site
performance.
The property damage and business interruption insurance claim in connection
with a fire at our facility in Belgium in 2021 has been concluded with a final
payment of £13m received since the period end. In line with accounting
standards this has not been recognised in the interim financial statements and
will be recognised in the second half of the year.
APAC
Adjusted operating profit of £14.5m (2023: £16.5m) on revenue of £714.5m
(2023: £868.2m)
In Australia, the Group operates plants in Bunbury, Western Australia,
Melbourne, Victoria and Brisbane, Queensland. We also have a facility in
Auckland, New Zealand.
Volumes during the period increased by 6.8% through strong trade and best fit
product range although revenues were 6.7% lower on a like-for-like basis*
primarily due to raw material price deflation. Adjusted operating margins
increased slightly to 2.0% (2023: 1.9%) with operating profit 0.3% lower on a
like-for-like basis*, after adjusting for the impact of a weaker Australian
Dollar and reduced interest cost recovery under our cost plus contract.
* 26 week constant currency like-for-like basis
Strategic progress
Our growth strategy will be delivered through a focus on the following four
strategic priorities;
1. We will grow our international footprint
2. We will expand our multi-category offer
3. We will build further expertise as a supply chain partner
4. We will leverage technology as a driver of value
Throughout the first half of the year, we have made significant progress
across all four of our strategic priorities.
1. Growing our international footprint: The team has been working closely
in partnership with our new customer Walmart to finalise product ranges. We
have employed our first resource in the country for closer everyday working
relations and we remain on track to launch Hilton Foods Canada in 2027, our
first operating facility in North America. In addition to this, we have put in
place an international trading team who will target expanding the reach of our
existing product portfolio into the Asian market.
2. Expanding our multi-category offer: We have unlocked growth
opportunities through cross-selling, harnessing the international reach of our
business and the opportunity within our multi-category offer, working across
our markets to sell products from one to another. For example, we have
launched coated seafood products into the New Zealand market and slow-cooked
meat products in Ireland, both produced at our facilities in the UK. The team
continues to work on a pipeline of future opportunities of a similar nature,
increasing our share of business in existing categories and entering new
categories across the markets we operate.
3. Building further expertise as a supply chain partner: Although we
specialise in the middle section of the farm-to-fork supply chain we influence
and guide throughout. Our customer teams have worked with their retail and
supplier partners to review end-to-end opportunities which has unlocked growth
opportunities in beef steaks in the UK market. Within the APAC region, we have
become further integrated into our customers in all aspects of supply chain
planning, including procurement demand planning.
4. Leveraging technology as a driver of value: Technology has supported
our improving seafood business through automation and most recently a new
white fish processing line which has been installed in the first half of the
year, improving efficiency and reducing labour reliance. We have continued in
the first half of the year with our UK automation programme in our meat
facilities, roll-out of flow wrap packaging technology for our mince products
into more European countries and Foods Connected continues to support our
business and our customers to best manage a complex supply chain. We have also
made progress in commercialising our tech stack including a global contract
between McDonald's and Foods Connected, and Agito was chosen as a supplier
partner for an automation project with Coca-Cola Europacific Partners.
These strategic priorities are underpinned by our rigorous approach to
sustainability across people, the planet and product, and our financial
ambitions. We have achieved 36% of positions of leadership held by women,
surpassing our target of 30% by the end of 2025. We have supported the
development of a standardised carbon measurement tool enabling targeted
decarbonisation of the seafood supply chain and installed Solar PV arrays at
our processing facilities in Truganina, Australia. In addition to this, in
Australia, 91% of our packaging is now recyclable, and in May we completed a
project that will remove 23 million pads from our meat trays annually.
Furthermore we will save 390 tonnes of plastic annually from our mince
packaging through further roll-out of flow wrap packaging to Denmark, Ireland
and Central Europe. We have also continued to make progress versus our
financial ambitions, notably an improvement in ROCE to 20.2% (see Glossary for
definition).
Investments in our facilities
Hilton continues to invest in all its facilities maintaining state of the art
levels required to service our customers' growth, extend the range of products
supplied to those customers and deliver both first class service levels and
further increases in production efficiency. These focused investment target
strong growth. Capital expenditure during the period was £27.1m (2023:
£27.8m) which included investment in UK factory automation, smoked salmon
efficiency improvements and the consolidation of the vegan and vegetarian
operations into a single facility.
Financial review
Adjusted results represent the IFRS results before deduction of acquisition
intangibles amortisation, other adjusting/exceptional items and IFRS 16 lease
adjustments. These adjustments are detailed in the Alternative performance
measures note 16.
Group results
Revenue reduced by 8.4% to £1,943.8m (2023: £2,123.1m) but was up 1.0% on a
like-for-like basis* reflecting higher volumes but lower raw material prices.
Further details of revenue and volume growth by segment are detailed in the
Review of operations above.
Adjusted operating profit for the first 26 weeks of 2024 was £46.9m, 12.2%
higher than in the previous year (2023: £41.8m) and 23.2% higher on a
like-for-like basis*. The adjusted operating profit margin increased to 2.4%
(2023: 2.0%). IFRS operating profit for the first 26 weeks of 2024 was £43.6m
(2023: £30.6m) after charging exceptional costs of £0.4m (2023: £7.7m).
Adjusted net finance costs excluding exceptional items and lease interest
decreased to £13.3m (2023: £15.0m) reflecting lower benchmark rates as well
as lower borrowings. Interest cover was 3.5 times (2023: 2.8 times). Similarly
IFRS net finance costs decreased to £18.1m (2023: £19.3m).
The adjusted taxation charge for the period was £9.3m (2023: £6.8m)
representing an effective adjusted tax rate of 27.9%, compared with 25.2% last
year. The IFRS taxation charge was £7.6m (2023: £3.8m) representing a lower
effective tax rate of 29.8% (2023: 34.0%) attributable to the lower
exceptional costs.
Net income represents profit for the year attributable to owners of the
parent. Adjusted net income of £23.2m was 19.8% higher than last year (2023:
£19.3m) primarily reflecting the higher operating profit and lower interest
costs. IFRS net income was £16.8m (2023: £6.8m) also reflecting lower
exceptional costs.
Adjusted basic earnings per share of 25.8p in the first 26 weeks of 2024 were
19.4% above 21.6p last year reflecting the higher net income. Similarly IFRS
basic earnings per share was higher at 18.8p (2023: 7.6p).
Adjusted EBITDA increased to £70.7m for the period (2023: £67.5m) and EBITDA
was £81.5m (2023: £72.3m).
Balance sheet, cash flow and funding
In the first 26 weeks the Group generated £34.7m of free cash flow (2023:
£18.9m). Net cash generated from operating activities was £64.2m (2023:
£48.1m). During the period a further £4.4m was invested in Cellular
Agriculture Ltd following the achievement of development milestones.
Return on capital employed (ROCE), calculated as adjusted operating profit
divided by average of opening and closing capital employed representing total
equity adjusted for net bank debt, leases, derivatives and deferred tax, was
20.2% (18.3% for the 2023 financial year).
Cash balances at 30 June 2024 were £95.3m (2023: £79.7m) which, net of bank
borrowings of £232.3m (2023: £296.1m), resulted in net bank debt of £137.0m
(£216.5m at 16 July 2023 and £139.7m at 31 December 2023). Net bank debt at
the end of the period as a proportion of annualised adjusted EBITDA was 0.9
times (2023 year-end: 1.0 times). Net debt including lease liabilities was
£355.2m (£442.4m at 16 July 2023 and £366.6m at 31 December 2023).
At 30 June 2024 the Group had undrawn committed facilities under its
syndicated banking facilities of £138.3m (£108.7m at 31 December 2023).
These banking facilities are subject to covenants comprising net bank debt to
EBITDA and EBITDA interest cover. There was comfortable headroom under these
covenants at 30 June 2024 for these metrics.
Dividends
The Group has maintained a progressive dividend policy since flotation. Hilton
Foods remains financially strong with significant cash balances and undrawn
loan facilities, and we continue to operate well within our banking covenants.
The Board is satisfied that the Group has adequate headroom under its existing
facilities, that it is appropriate to continue to operate and to maintain this
dividend policy and has approved the payment of an interim dividend of 9.6p
per ordinary share (2023: 9.0p). The interim dividend, representing an
increase of 6.7% on the interim dividend declared in the prior year, amounting
to £8.6m will be paid on 29 November 2024 to shareholders on the register at
close of business on 1 November 2024.
* 26 week constant currency like-for-like basis
Going concern
The Directors have performed a detailed assessment, including a review of the
Group's budget and forecasts for the 12 months from the date of this report
and its longer term plans, including consideration of the principal risks
faced by the Group. The resilience of the Group in the face of uncertain
challenges has then been assessed by applying significant downside
sensitivities to the Group's cash flow projections. Allowing for these
sensitivities and potential mitigating actions the Board is satisfied that the
Group is able to continue to operate well within its banking covenants and has
adequate headroom under its existing committed facilities which do not expire
until 2027. The Directors are satisfied that the Group has adequate resources
to continue to operate and meet its liabilities as they fall due for a period
of at least 12 months from the date of signing these interim financial
statements and therefore consider it appropriate to adopt the going concern
basis of accounting in preparing the consolidated interim financial
statements.
The Group's borrowings are detailed in note 11 to this report 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 will
depend on our ability to negotiate appropriate additional or extended
facilities, as and when they are required.
The Group's internal budgets and forward forecasts, which incorporate all
reasonably foreseeable changes in trading performance, are regularly reviewed
by the Board and show that it will be able to operate within its current
banking facilities, taking into account available cash balances, for the
foreseeable future.
The principal risks and uncertainties facing the Group's businesses
Effective risk management at Hilton Foods is essential to the delivery of our
strategic objectives and aims to safeguard the interests of all our
stakeholders in an increasingly complex world. Our proactive approach to risk
management ensures the long-term sustainable growth of all aspects of our
business and is integrated into everything we do. The most significant
business risks that Hilton Foods faces, together with the measures we have
adopted to mitigate these risks, are outlined on pages 28 to 34 of the Hilton
Food Group plc 2023 Annual report. The principal risks and uncertainties
identified in that report were:
· The progress of the Hilton Foods business is affected by the
macroeconomic and geopolitical environment and levels of consumer spending;
· The Hilton Foods growth potential may be affected by the success of
our customers and the growth of their packed foods sales;
· Hilton Foods strategy focuses on a small number of customers who can
exercise significant buying power and influence when it comes to contractual
renewal terms at 1 to 15-year intervals;
· As Hilton Foods continues to grow there is more reliance on key
personnel and their ability to manage growth, change, integration and
compliance across new legislative and regulatory environments. This
risk increases as the Group continues to expand with new customers and into
new territories either organically or through acquisition with potentially
greater reliance on stretched skilled resource and execution of simultaneous
growth projects;
· Hilton Foods business strength is affected by our ability to maintain
a wide and flexible global food supply base operating at standards that can
continuously achieve the specifications set by ourselves and our customers.
Increasing geopolitical tension has heightened this risk exposure into 2024.
· Contamination within the supply chain including outbreaks of disease
and feed contaminants affecting livestock and fish;
· Significant incidents such as fire, flood, pandemic or interruption
of supply of key utilities could impact the Group's business continuity;
· Hilton Foods IT systems could be subject to cyber-attacks, including
ransomware and fraudulent external email activity. Such attacks are rapidly
increasing in frequency and sophistication, especially with the progression of
artificial intelligence;
· A significant breach of health & safety legislation or accident
resulting from negligence or management oversight. The complexity of this risk
increases as the Group expands both geographically and into new product
groups; and
· Hilton Foods business and supply chain is affected by climate change
risks comprising both physical and transition risks. Physical risks include
long-term rises in temperature and sea levels as well as changes to the
frequency and severity of extreme weather events. Transition risks include
policy changes, reputational impacts, and shifts in market preferences and
technology.
Geopolitical Uncertainty
Geopolitical uncertainty and increasing levels of active hostilities in
multiple regions is a significant concern and increases the risk impacting our
supply chains and operations. Disruption to energy markets, global shipping
and international trade can also have far-reaching impacts. However, our
continued review of mitigations enables us to maintain resilience in our
supply chains and operations.
The macroeconomic environment
Cost-of-living pressures and economic uncertainty continue in much of the
world, amidst persistently elevated inflation and interest rates. As the level
of inflation and interest rates start to ease we expect consumer spending and
eating habits to recover but remain cautious. We recognise the effect of
higher interest costs on all businesses and we continue to focus on ways of
reducing our exposure such as the use of cash pooling and exploring working
capital financing.
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.
Changing regulatory landscape and post-Brexit trade
Hilton Foods has a strong basis of environmental, social and governance
policies and strategy. We recognise the potential disruption from growing
environmental regulations and the resourcing requirements to meet upcoming
disclosure requirements. We are actively enhancing our mitigations, including
third party risk management and supply chain due diligence.
We continue to monitor the UK and EU regulatory and trade environments as they
evolve and amend processes and operations as required. We work closely with
our customers and supply chains to adapt to further revisions to Border
processes.
Cyber Risk
The risk of cyber attacks a are an increasing threat to businesses and we are
aware that specific sectors including manufacturing and logistics are
increasingly a focus of such attacks. We continue to enhance our risk
mitigation activities focussing on both the direct threat to our operations
and the wider supply chain.
The risks and uncertainties outlined above had no material adverse impact on
the results for the 26 weeks to 30 June 2024 and are expected to remain
virtually unchanged for the remainder of the 2024 financial year.
Steve Murrells CBE
Chief Executive Officer
Matt Osborne
Chief Financial Officer
3 September 2024
Statement of Directors' responsibilities
The Directors confirm that the condensed consolidated interim financial
statements have been prepared in accordance with UK-adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and that the interim management report includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
(a) an indication of important events that have occurred during the first 26
weeks and their impact on the condensed set of financial statements, and a
description of principal risks and uncertainties for the remaining 26 weeks of
the financial year; and
(b) material related party transactions in the first 26 weeks and any material
changes in the related party transactions described in the last annual report.
The maintenance and integrity of the Hilton Food Group plc website is the
responsibility of the Directors; the work carried out by the authors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that might have occurred to the interim
financial statements since they were initially presented on the website.
The Directors of Hilton Food Group plc are listed in the 2023 Hilton Food
Group plc Annual report and financial statements. There have been no changes
in Directors since 31 December 2023. A list of current Directors is maintained
on the Hilton Food Group plc website at https://www.hiltonfoods.com/.
On behalf of the Board
Robert Watson OBE
Chairman
Matt Osborne
Chief Financial Officer
Condensed Consolidated Income statement
26 weeks 28 weeks
ended ended
30 June 2024 16 July 2023
Continuing operations Note £'000 £'000
Revenue 4 1,943,766 2,123,139
Cost of sales (1,727,140) (1,901,347)
Gross profit 216,626 221,792
Distribution costs (22,606) (24,224)
Administrative expenses (150,284) (167,723)
Share of profit in joint ventures and associates (174) 772
Operating profit 4,16 43,562 30,617
Finance costs (18,121) (19,343)
Profit before income tax 25,441 11,274
Income tax expense 5 (7,575) (3,834)
Profit for the period 17,866 7,440
Profit attributable to:
Owners of the parent 16,823 6,770
Non-controlling interests 1,043 670
17,866 7,440
Earnings per share for profit attributable to owners of the parent
- Basic (pence) 7 18.8 7.6
- Diluted (pence) 7 18.6 7.5
The above condensed consolidated income statement should be read in
conjunction with the accompanying notes.
Condensed Consolidated Statement of comprehensive income
26 weeks ended 28 weeks ended
30 June 2024 16 July 2023
£'000 £'000
Profit for the period 17,866 7,440
Other comprehensive expense
Items that may be subsequently reclassified to the income statement
Currency translation differences (2,784) (1,498)
Loss on cash flow hedges (2,830) (3,252)
Other comprehensive expense for the period net of tax (5,614) (4,750)
Total comprehensive income for the period 12,252 2,690
Total comprehensive income attributable to:
Owners of the parent 11,248 2,201
Non-controlling interests 1,004 489
12,252 2,690
The above condensed consolidated statement of comprehensive income should be
read in conjunction with the accompanying notes.
Condensed Consolidated Balance sheet
30 June 2024 16 July 2023 31 December 2023
Note £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 8 321,406 314,266 324,135
Lease: Right-of-use assets 8 184,211 195,869 194,083
Intangible assets 8 152,256 155,558 156,122
Investments 9 11,541 8,485 7,939
Deferred income tax assets 15,302 12,765 19,136
684,716 686,943 701,415
Current assets
Inventories 189,057 191,386 179,741
Trade and other receivables 211,748 261,209 277,754
Current tax assets - 7,137 -
Financial assets at fair value through OCI 14 762 - 3,625
Cash and cash equivalents 95,317 79,676 126,715
496,884 539,408 587,835
Total assets 1,181,600 1,226,351 1,289,250
Equity and liabilities
Equity
Ordinary shares 12 8,970 8,960 8,960
Share premium 144,926 144,926 144,926
Employee share schemes reserve 8,583 5,901 6,793
Foreign currency translation reserve (5,656) (3,696) (2,992)
Cashflow hedging reserve 4,531 (2,466) 7,442
Other reserves (30,781) (30,781) (30,781)
Retained earnings 172,165 154,411 175,963
302,738 277,255 310,311
Non-controlling interests 10,675 9,891 11,167
Total equity 313,413 287,146 321,478
Liabilities
Non-current liabilities
Borrowings 11 205,251 268,159 237,792
Lease liabilities 202,778 211,848 211,585
Deferred income tax liabilities 10,754 14,166 14,743
418,783 494,173 464,120
Current liabilities
Borrowings 11 27,053 27,971 28,641
Lease liabilities 15,454 14,048 15,276
Trade and other payables 404,207 396,364 458,787
Financial liabilities at fair value through OCI 14 212 6,649 244
Current income tax liabilities 2,478 - 704
449,404 445,032 503,652
Total liabilities 868,187 939,205 967,772
Total equity and liabilities 1,181,600 1,226,351 1,289,250
The above condensed consolidated balance sheet should be read in conjunction
with the accompanying notes.
Condensed Consolidated Statement of changes in equity
Attributable to owners of the parent
Share capital Share premium Employee share schemes reserve Foreign currency translation reserve Cashflow hedge reserve Other reserve Retained earnings Total Non-controlling interests Total equity
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 2 January 2023 8,943 144,926 5,004 (2,379) 786 (30,781) 167,862 294,361 10,956 305,317
Comprehensive income
Profit for the period - - - - - - 6,770 6,770 670 7,440
Currency translation differences - - - (1,317) - - - (1,317) (181) (1,498)
Loss on cash flow hedging - - - - (3,252) - - (3,252) - (3,252)
Total comprehensive income for the period - - - (1,317) (3,252) - 6,770 2,201 489 2,690
Issue of new shares 12 17 - - - - - - 17 - 17
Employee share schemes - value of employee services - - 897 - - - - 897 - 897
Dividends paid 6 - - - - - - (20,221) (20,221) (1,554) (21,775)
Total transactions with owners 17 - 897 - - - (20,221) (19,307) (1,554) (20,861)
Balance at 16 July 2023 8,960 144,926 5,901 (3,696) (2,466) (30,781) 154,411 277,255 9,891 287,146
Balance at 1 January 2024 8,960 144,926 6,793 (2,992) 7,442 (30,781) 175,963 310,311 11,167 321,478
Comprehensive income
Profit for the period - - - - - - 16,823 16,823 1,043 17,866
Currency translation differences - - - (2,664) - - - (2,664) (120) (2,784)
Loss on cash flow hedging - - - - (2,911) - - (2,911) 81 (2,830)
Total comprehensive income for the period - - - (2,664) (2,911) - 16,823 11,248 1,004 12,252
Issue of new shares 12 10 - - - - - - 10 - 10
Employee share schemes - value of employee services - - 1,790 - - - - 1,790 - 1,790
Dividends paid 6 - - - - - - (20,621) (20,621) (1,496) (22,117)
Total transactions with owners 10 - 1,790 - - - (20,621) (18,821) (1,496) (20,317)
Balance at 30 June 2024 8,970 144,926 8,583 (5,656) 4,531 (30,781) 172,165 302,738 10,675 313,413
The above condensed consolidated statement of changes in equity should be read
in conjunction with the accompanying notes.
Condensed Consolidated Cash flow statement
26 weeks ended 28 weeks ended
30 June 2024 16 July 2023
£'000 £'000
Cash flows from operating activities
Cash generated from operations 88,903 73,654
Interest paid (18,624) (19,386)
Income tax paid (6,081) (6,195)
Net cash generated from operating activities 64,198 48,073
Cash flows from investing activities
Acquisition of investments in joint ventures and associates (4,374) (1,635)
Purchases of property, plant and equipment (25,578) (26,151)
Proceeds from sale of property, plant and equipment 900 266
Purchases of intangible assets (1,522) (1,689)
Interest received 503 43
Dividends received from joint venture 546 -
Net cash used in investing activities (29,525) (29,166)
Cash flows from financing activities
Proceeds from borrowings 33,376 18,312
Repayments of borrowings (67,006) (13,743)
Payment of lease liability (8,749) (6,871)
Dividends paid to owners of the parent (20,621) (20,221)
Dividends paid to non-controlling interests (1,496) (1,554)
Net cash used in financing activities (64,496) (24,077)
Net decrease in cash and cash equivalents (29,823) (5,170)
Cash and cash equivalents at beginning of the period 126,715 87,224
Exchange losses on cash and cash equivalents (1,575) (2,378)
Cash and cash equivalents at end of the period 95,317 79,676
The above condensed consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
Notes to the interim financial statements
1 General information
Hilton Food Group plc ("the Company") and its subsidiaries (together "the
Group") is a leading international multi-protein food business.
The Company is a public company limited by shares 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.
These interim financial statements were approved for issue on 3 September
2024.
These interim financial statements do not comprise statutory accounts within
the meaning of Section 434 of the Companies Act 2006. Statutory accounts for
the 52 weeks ended 31 December 2023 were approved by the Board of Directors on
2 April 2024 delivered to the Registrar of Companies. The report of the
predecessor auditor 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.
These interim financial statements have been reviewed, not audited.
2 Basis of preparation
This consolidated interim financial report for the 26 weeks ended 30 June 2024
(prior financial period 28 weeks ended 16 July 2023) has been prepared in
accordance with the UK-adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the UK Financial Conduct Authority. In 2024, the Group changed
its accounting period to harmonise its subsidiaries with parent company
reporting cycle.
Going concern
The consolidated interim financial statements have been prepared on the going
concern basis as the Directors consider that adequate resources exist for the
Company to continue in operation for the foreseeable future, being 12 months
from the date of this report (the relevant period). There is significant
liquidity/financing headroom on 30 June 2024 (£138.3m) and throughout the
going concern forecast period. Forecast covenant compliance is considered
further below.
The Group's banking facility has two financial covenants being a net debt to
adjusted EBITDA (leverage) covenant and interest cover covenant, both of which
are tested half yearly in June and December.
The financial covenants for the going concern period as follows:
30 June 2024 29 December 2024 29 June 2025
Net bank debt to adjusted EBITDA 3.0x 3.0x 3.0x
Interest cover 4.0x 4.0x 4.0x
The Group has undertaken a detailed going concern assessment, including a
review of its budget and forecasts for the 2024 financial year and its
longer-term plans, including consideration of the principal risks faced by the
Group. The resilience of the Group in the face of uncertain challenges has
then been assessed by applying significant downside sensitivities to the
Group's cash flow projections. Allowing for these sensitivities and potential
mitigating actions the Board is satisfied that the Group is able to continue
to operate well within its banking covenants and has adequate headroom under
its existing committed facilities. The Directors are satisfied that the Group
has adequate resources to continue to operate and meet its liabilities as they
fall due for a period of at least 12 months from the date of signing these
interim financial statements and therefore consider it appropriate to adopt
the going concern basis of accounting in preparing the consolidated interim
financial statements.
Estimates and judgements
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.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current
reporting period. The Group did not have to change its accounting policies or
make retrospective adjustments as a result of adopting these standards.
3 Accounting policies
The accounting policies adopted in the preparation of these interim results
are consistent with those applied in the preparation of the Group's annual
report for the year ended 31 December 2023 and corresponding interim reporting
period.
The Group has recognised exceptional items during the period, the accounting
policy in respect of these is summarised below.
Alternative performance measure
The Group's performance is assessed using a number of alternative performance
measures (APMs).
The Group's alternative profitability measures are presented before other
adjusting/exceptional items, amortisation of certain intangible assets and
depreciation of fair value adjustments made to property, plant and equipment
acquired through business combinations and the impact of IFRS 16 - Leases.
The measures are presented on this basis, as management believe they provide
useful additional information about the Group's performance and aids a more
effective comparison of the underlying Group's trading performance from one
period to the next.
Other adjusting/exceptional items are not defined under IFRS. However, the
Group classifies other adjusting/exceptional items as those that are
separately identifiable by virtue of their size, nature or expected frequency
and that therefore warrant separate presentation.
As detailed in note 16 during the period to 30 June 2024 the Group has
recognised other adjusting/exceptional items in respect of costs associated
with the fire at its facility in Belgium and re-organisation programs. The
operating profit reconciliations between statutory and adjusted measures used
by the Group is presented in note 16. Presentation of these other
adjusting/exceptional items and the reconciliations between adjusted and
statutory measures is not intended to be a substitute for or intended to
promote the adjusted measures above statutory measures.
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.
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 are considered to be the Chief Operating Decisions
Makers in the Group.
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 four operating segments: i) UK & Ireland which comprises the Group's
operations in United Kingdom and Republic of Ireland; ii) Europe which
includes the Group's operations in the Netherlands, Sweden, Denmark, Central
Europe and Portugal; iii) APAC comprising the Group's operations in Australia
and New Zealand; and iv) Central costs.
From a product perspective the Executive Directors consider that the Group has
only one identifiable product, wholesaling of food protein products including
meat, fish and vegetarian. The Executive Directors consider that no further
segmentation is appropriate, as all of the Group's operations are subject to
similar risks and returns and exhibit similar long term financial performance.
The segment information provided to the Executive Directors for the reportable
segments is as follows:
Operating
Total segment profit/(loss)
revenue segment result
£'000 £'000
26 weeks ended 30 June 2024
UK & Ireland 709,550 18,679
Europe 519,719 16,636
APAC 714,497 16,152
Central - (7,905)
Total 1,943,766 43,562
28 weeks ended 16 July 2023
UK & Ireland 701,097 9,018
Europe 553,846 12,339
APAC 868,196 17,266
Central - (8,006)
Total 2,123,139 30,617
The Group uses a number of alternative performance measures to assess
underlying performance, these are explained and reconciled to the segmental
results presented above in note 16. There is no inter-segment revenue included
in the figures above.
30 June 16 July 31 December
2024 2023 2023
£'000 £'000 £'000
Total assets
UK & Ireland 392,022 381,643 404,751
Europe 332,827 360,432 397,551
APAC 400,231 431,999 431,684
Central 41,218 32,375 36,128
Total segment assets 1,166,298 1,206,449 1,270,114
Current income tax assets - 7,137 -
Deferred income tax assets 15,302 12,765 19,136
Total assets per balance sheet 1,181,600 1,226,351 1,289,250
30 June 16 July 31 December
2024 2023 2023
£'000 £'000 £'000
Total liabilities
UK & Ireland 177,797 166,084 187,225
Europe 152,720 178,953 199,881
APAC 359,481 379,749 380,598
Central 164,957 200,253 184,621
Total segment liabilities 854,955 925,039 952,325
Current income tax liabilities 2,478 - 704
Deferred income tax liabilities 10,754 14,166 14,743
Total liabilities per balance sheet 868,187 939,205 967,772
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 26 weeks to 30 June 2024 is
29.8%. The estimated average annual effective tax rate for the 28 weeks ended
16 July 2023 was 34.0%.
6 Dividends
26 weeks ended 28 weeks ended
30 June 2024 16 July 2023
£'000 £'000
Final dividend paid 23p per ordinary share (2023: 22.6p) 20,621 20,221
Total dividends paid 20,621 20,221
The Directors have approved the payment of an interim dividend of 9.6p per
share payable on 29 November 2024 to shareholders who are on the register at 1
November 2024. This interim dividend, amounting to £8.6m has not been
recognised as a liability in these interim financial statements. It will be
recognised in shareholders' equity in the 52 weeks to 29 December 2024.
Dividends paid to non-controlling interests in the period totalled £1,496,000
(2023: £1,554,000).
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 performed 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 below is compared with the number of shares that would have been issued
assuming the exercise of the share options.
26 weeks ended 28 weeks ended
30 June 2024 16 July 2023
Basic Diluted Basic Diluted
Profit attributable to equity holders of the Company (£'000) 16,823 16,823 6,770 6,770
Weighted average number of ordinary shares in issue (thousands) 89,678 89,678 89,525 89,525
Adjustment for share options (thousands) - 839 - 942
Adjusted weighted average number of ordinary shares (thousands) 89,678 90,517 89,525 90,467
Basic and diluted earnings per share (pence) 18.8 18.6 7.6 7.5
8 Property, plant and equipment, right-of-use and intangible assets
Property, plant and equipment Lease: Right-of-use assets Intangible assets
£'000 £'000 £'000
28 weeks ended 16 July 2023
Opening net book amount as at 2 January 2023 327,611 216,578 160,480
Exchange adjustments (12,563) (13,558) (191)
Additions 26,151 2,348 1,689
Disposals (340) (86) (760)
Lease modifications - 46 -
Transfers to/from intangibles (46) - 46
Reclassification to right of use asset (94) 94 -
Depreciation and amortisation (25,253) (9,553) (5,706)
Impairment (1,200) - -
Closing net book amount as at 16 July 2023 314,266 195,869 155,558
26 weeks ended 30 June 2024
Opening net book amount as at 1 January 2024 324,135 194,083 156,122
Exchange adjustments (4,357) (3,730) (82)
Additions 25,578 1,932 1,522
Disposals (900) (943) -
Lease modifications - 2,494 -
Depreciation and amortisation (22,984) (9,625) (5,372)
Transfers to/from intangibles (66) - 66
Closing net book amount as at 30 June 2024 321,406 184,211 152,256
The Group has commitments to purchase property, plant and equipment of
£16,042,000 (2023: £5,555,000).
Goodwill impairment testing
Given the current challenges in the alternative proteins market impacting
volumes, an indicator of impairment was considered to exist at the interim
balance sheet date, and therefore, an impairment assessment was performed in
respect of the carrying value of the Dalco cash-generating unit. The
assessment included a review of Dalco's goodwill, recognised at £10,168,000,
as well as its customer and brand relationships, recognised at £7,585,000.
The assumptions used to derive operating profit margins takes into account an
increase from returning sale volumes in addition to normal cost saving
activities and a significant contribution from committed reorganisation
activity. The combination of these results in operating margins aligned to
business plans for the medium-term, albeit risk adjusted in the discounted
cash flow models.
The recoverable amount of the Dalco cash generating unit, calculated on a
value in use basis, exceeded its carrying value by £3,900,000 and therefore
no impairment was required. Key assumptions applied in the calculations of the
recoverable amount were forecast EBITDA, a pre-tax discount rate of 11.2% and
a long-term growth rate of 2%.
Sensitivity analysis has been carried out on Dalco and a reasonably possible
change in key assumptions in isolation or in combination may lead to a
material impairment. A change in the pre-tax discount rate and long-term
growth rate from 11.2% to 11.95% or from 2% to 1% respectively would reduce
headroom to £nil. A reduction in the risk adjusted terminal operating margin
of 1.0 ppts would also reduce headroom to £nil. A 5% reduction in volume
growth rate would give rise to an impairment of goodwill.
No indicators for impairment of any of the other CGUs have been identified. As
a result, management has not updated any other impairment assessments at the
interim date.
9 Investments
Investments in joint ventures and associates
26 weeks ended 28 weeks ended 52 weeks ended
30 June 16 July 31 December
2024 2023 2023
£'000 £'000 £'000
At the beginning of the period 7,939 6,208 6,208
Additions 4,374 1,635 1,685
Profit/(Loss) for the period (174) 772 585
Dividends received (546) - (468)
Effect of movements in foreign exchange (52) (130) (71)
At the end of the period 11,541 8,485 7,939
The Group made additional investments of £4,374,000 (2023: £1,635,000) in
Cellular Agriculture Limited.
10 Business Combinations
2024
On 29(th) August 2023 the Group acquired 80% of the share capital of Evolve 4
Group Limited a software provider of ERP systems for the food and drink
manufacturing industry. Due to the timing of the acquisition by the Group in
2023, the assessment of the fair value of assets and liabilities acquired, and
Goodwill was treated as provisional in the 2023 accounts.
Evolve 4 Group Limited
Consideration for the acquisition of the 80% interest in Evolve 4 Group
Limited totalled £598,000. The acquisition of Evolve 4 Group provides an
opportunity to deliver growth through new agreements with manufacturers in the
foods and drinks industry across Europe and Australia, but also provides HFG a
flexible and tailored ERP system to support increasing efficiencies of the
core HFG operations.
Goodwill of £857,000 has been recognised in 2024 compared to £1,325,000 in
2023. Residual goodwill relates to the strategic benefits for Hilton of
diversifying its business and the know-how of Evolve 4 employees.
The fair value of the technology acquired was established at £812,000. We
have utilised the income approach based on the Relief from Royalty method,
with the value derived reflecting the present value of future royalty savings
due to owning the assets.
The value of other assets and liabilities reflect the amounts expected to be
realised or paid, respectively.
Evolve 4 Group Limited
Group £'000
Property, plant and equipment 5
Intangibles-Computer Software 812
Trade and other receivables 294
Cash and cash equivalents 42
Trade and other payables (1,315)
Deferred tax 53
Goodwill 857
Fair value of assets acquired 748
Consideration
Paid on completion 455
Deferred Payment 143
Non-controlling interest 150
748
11 Borrowings
30 June 16 July 31 December
2024 2023 2023
£'000 £'000 £'000
Current 27,053 27,971 28,641
Non-current 205,251 268,159 237,792
Total borrowings 232,304 296,130 266,433
Movements in borrowings is analysed as follows:
26 weeks ended 28 weeks ended 52 weeks ended
30 June 16 July 31 December
2024 2023 2023
£'000 £'000 £'000
Opening amount 266,433 298,789 298,789
Exchange adjustments (499) (7,228) (5,415)
Proceeds from borrowings 33,376 18,312 11,372
Repayment of borrowings (67,006) (13,743) (38,313)
Closing amount 232,304 296,130 266,433
12 Ordinary shares
Number of Ordinary
shares shares Total
(thousands) £'000 £'000
At 2 January 2023 89,433 8,943 8,943
Issue of new shares on exercise of employee share options 169 17 17
At 16 July 2023 89,602 8,960 8,960
At 1 January 2024 89,602 8,960 8,960
Issue of new shares on exercise of employee share options 100 10 10
At 30 June 2024 89,702 8,970 8,970
All ordinary shares of 10p each have equal rights in respect of voting,
receipt of dividends and repayment of capital.
13 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 made on an arm's length basis were as
follows:
26 weeks ended 28 weeks ended 52 weeks ended
30 June 16 July 31 December
2024 2023 2023
Group sales: £'000 £'000 £'000
Sohi Meat Solutions Distribuicao de Carnes SA -
Fee for services 1,830 1,690 3,426
Sohi Meat Solutions Distribuicao de Carnes SA -
Recharge of joint venture costs 84 225 467
Agito Holdings Limited - - 211
Group purchases:
Agito Holdings Limited 1,216 2,840 6,203
Amounts owing from related parties were as follows:
30 June 16 July 31 December
2024 2023 2023
£'000 £'000 £'000
Agito Holdings Limited 3,092 484 1,855
Sohi Meat Solutions Distribuicao de Carnes SA 277 263 1,631
Sphere Design Limited 199 - 189
Cellular Agriculture Ltd 1,433 - 406
Amounts owing to related parties were as follows:
30 June 16 July 31 December
2024 2023 2023
£'000 £'000 £'000
Agito Holdings Limited 184 - 401
Sohi Meat Solutions Distribuicao de Carnes SA 505 439 117
14 Financial instruments
The Group holds a number of financial instruments which are carried at cost
which is the equivalent of their fair value unless otherwise stated below.
The Group has derivative financial instruments amounting to £212,000
liability and £762,000 asset (16 July 2023: £6,649,000 liability). The
derivative financial instruments are plain vanilla derivatives including
foreign currency options/forwards. The instruments that have a fair value
where specific valuation techniques are used to arrive at the carrying value
which include for foreign currency forwards - present value of future cash
flows based on the forward exchange rates at the balance sheet date and for
foreign currency options - option pricing models. These derivative financial
instruments are classified as Level 2.
The fair values have been classified into three categories depending on the
inputs used in the valuation technique.
The categories are as follows:
Level 1: quoted prices for identical instruments;
Level 2: directly or indirectly observable market inputs, other than Level 1
inputs; and
Level 3: inputs which are not based on observable market data.
Specific valuation techniques used to value financial instruments include:
· the use of quoted market prices or dealer quotes for similar
instruments
· for foreign currency forwards - the present value of future cash
flows based on the forward exchange rates at the reporting date
· for foreign currency options - option pricing models (e.g.
Black-Scholes model), and
· for other financial instruments - discounted cash flow analysis.
15 Post balance sheet event
Since the half-year end the Group has received a final insurance payment of
£13m in respect of property damage and business interruption following the
fire at its facility in Belgium in 2021. 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
these claims to be remote.
16 Alternative Performance Measures
The Group's performance is assessed using a number of alternative performance
measures (APMs) that are not required or defined under IFRS.
The Group considers adjusted results to be an important measure used to
monitor how the Group is performing as they achieve consistency and
comparability between reporting periods and management believe they provide
useful additional information about the Group's performance and trends to
stakeholders.
These measures are consistent with those used internally and are considered
important to understanding the financial performance and financial health of
the Group.
The Group's alternative profitability measures are presented before other
adjusting/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.
Adjusted profitability measures are reconciled to unadjusted IFRS results on
the face of the income statement below with other APMs used by the Group
defined in the subsequent glossary.
26 weeks ended 28 weeks ended
30 June 16 July
2024 2023
£'000 £'000
Operating profit 43,562 30,617
Add back IFRS 16 depreciation 9,599 9,459
Less: IAS 17 lease accounting (11,280) (11,301)
Add back: Amortisation of acquired intangibles and fair value adjustments 4,591 5,252
Other adjusting/exceptional items:
Costs related to the Belgium fire(1) 148 5,239
Reorganisation costs(2) 239 1,304
Dalco impairment(3) - 1,200
Adjusting items 3,297 11,153
Adjusted operating profit 46,859 41,770
Profit before tax 25,441 11,274
Adjustment to operating profit as above 3,297 11,153
Add back: IFRS 16 interest 4,118 4,330
Other adjusting/exceptional items:
Costs relating to the Belgium fire(1) 678 -
Adjusting items 8,093 15,483
Adjusted PBT 33,534 26,757
26 weeks ended 28 weeks ended
30 June 16 July
2024 2023
£'000 £'000
Profit attributable to share holders 16,823 6,770
Adjustments to PBT 8,093 15,483
Tax effect of adjustments to PBT (1,770) (2,916)
Impact on non-controlling interest of adjustments to PBT 6 (19)
Adjusting items 6,329 12,548
Adjusted profit attributable to members of the parent 23,152 19,318
Adjusted earnings per share
Basic 25.8 21.6
Diluted 25.6 21.4
26 weeks ended 28 weeks ended
30 June 16 July
2024 2023
£'000 £'000
Operating profit 43,562 30,617
Add back: Depreciation, amortisation and impairment 37,981 41,656
EBITDA 81,543 72,273
Add back: IFRS 16 lease accounting 20 -
Less: IAS 17 lease accounting (11,280) (11,301)
Other adjusting/exceptional items:
Costs related to the Belgium fire(1) 148 5,239
Reorganisation costs(2) 239 1,304
Adjusting items (10,873) (4,758)
Adjusted EBITDA 70,670 67,515
Segmental operating profit reconciles to adjusted segmental operating profit
as follows:
UK&I Europe APAC Central Total
26 weeks end 30 June 2024 £'000 £'000 £'000 £'000 £'000
Operating profit 18,679 16,636 16,152 (7,905) 43,562
Add back IFRS 16 depreciation 1,661 2,263 5,617 58 9,599
Less: IAS 17 lease accounting (1,956) (1,965) (7,296) (63) (11,280)
Add back: Amortisation of acquired intangibles and fair value adjustments 2,490 2,101 - - 4,591
Other adjusting/exceptional items:
Costs related to the Belgium fire(1) - 148 - - 148
Reorganisation costs(2) 239 - - - 239
Adjusting items 2,434 2,547 (1,679) (5) 3,297
Adjusted operating profit 21,113 19,183 14,473 (7,910) 46,859
UK&I Europe APAC Central Total
28 weeks end 16 July 2023 £'000 £'000 £'000 £'000 £'000
Operating profit 9,018 12,339 17,266 (8,006) 30,617
Add back IFRS 16 depreciation 1,508 1,900 5,992 59 9,459
Less: IAS 17 lease accounting (2,009) (2,511) (6,781) - (11,301)
Add back: Amortisation of acquired intangibles and fair value adjustments 3,039 2,213 - - 5,252
Other adjusting/exceptional items:
Costs related to the Belgium fire(1) - 5,239 - - 5,239
Reorganisation costs(2) 1,242 - - 62 1,304
Dalco Impairment(3) - 1,200 - - 1,200
Adjusting items 3,780 8,041 (789) 121 11,153
Adjusted operating profit 12,798 20,380 16,477 (7,885) 41,770
Other adjusting/exceptional items
(1)Fire in Belgium
In June 2021, the Group's facility in Belgium suffered an extensive fire. The
results for the period to 30 June 2024 do not include potential income that
may be received in respect of the insurance claims. Finance Costs of £678,000
and cost related to the insurance claim of £148,000 have been recognised in
the period relating to additional costs incurred in continuing to operate in
Belgium pending receipt of the insurance proceeds.
In the prior period other adjusting/exceptional items totalling £5,239,000
were recognised relating to additional costs incurred in continuing to operate
in Belgium.
In December 2023 the Group received an interim insurance payment of
£9,776,000 related to the fire insurance claim. Post half-year end the Group
has received a final insurance payment of £13,000,000 in respect of property
damage and business interruption. The additional insurance payment of
£13,000,000 has not been recognised in the results for the period to 30 June
2024.
(2)Reorganisation Costs
During the period other adjusting/exceptional reorganisation costs of
£239,000 (2023: £1,304,000) 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.
(3)Dalco Impairment of Property, Plant and Equipment
The closure of one of the sites operated by our Dalco business allows us to
optimise production and drive efficiencies at a single site centre of
excellence for our vegan and vegetarian products. In 2023, an exceptional
impairment charge of £1.2m has been recognised in respect of property, plant
and equipment that the Group does not expect to be able to re-purpose for use
in its other facilities.
Glossary
Alternative Performance Measures
In the reporting of financial information, the Group uses certain measures
that are not required under IFRS. These additional measures (commonly referred
to as APMs) provide additional information on the performance of the business
and trends to stakeholders. These measures are consistent with those used
internally and are considered important to understanding the financial
performance and financial health of the Group. APMs are considered to be an
important measure to monitor how the businesses are performing because this
provides a meaningful comparison of how the business is managed and measured
on a day-to-day basis and achieves consistency and comparability between
reporting periods.
These APMs may not be directly comparable with similarly titled measures
reported by other companies and they are not intended to be a substitute for,
or superior to, IFRS measures.
APM Definition and purpose
Constant currency The Group uses GBP based constant currency models to measure performance.
These are calculated by applying 2023 26 weeks average exchange rates to local
currency reported results for the current and prior periods. This gives a GBP
denominated Income Statement which excludes any variances attributable to
foreign exchange rate movements.
Free cash flow Free cash flow represents cash generated from operating activities less cash
flows from investing activities.
This measure provides additional useful information in respect of cash
generation and is consistent with how business performance is measured
internally.
Net bank debt Net bank debt represents borrowings excluding lease liabilities less cash
equivalents.
Net bank debt is one measure that could be used to indicate the strength of
the Group's Balance Sheet position and is a useful measure of the indebtedness
of the Group.
Adjusted net finance costs Adjusted net finance costs represents finance costs excluding exceptional
items and lease interest.
Net finance costs is borrowing costs and other costs that are incurred in
connection with the borrowing of funds less interest received from banks for
the deposit of funds.
Adjusted taxation charge Taxation charge excluding adjusting items. Adjusting measures are reconciled
to statutory measures by removing adjusting items, the nature of which are
disclosed in note 16.
Effective adjusted tax rate The income tax charge for the Group excluding adjusting tax items, and the tax
impact of adjusting items, divided by adjusted profit before tax. This measure
is a useful indicator of the ongoing tax rate for the Group.
Return on capital employed (ROCE) Annualised 12 month adjusted operating profit divided by average opening and
closing capital employed representing total equity adjusted for net bank
cash/debt, leases, derivatives and deferred tax.
Independent review report to Hilton Food Group plc
Report on the condensed consolidated interim financial statements
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the Condensed Consolidated Income Statement, the
Condensed Consolidated Statement of Comprehensive Income, Condensed
Consolidated Balance Sheet, the Condensed Consolidated Statement of changes in
equity, the Condensed Consolidated Cash Flow Statement, and related notes 1 to
16.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, 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
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.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Cambridge, United Kingdom
3 September 2024
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