Hilton Food Group Annual Report 2012

FY2012 Annual Report · Hilton Food Group
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Europe’s leading 
specialist retail meat 
packing business

Annual report and ﬁnancial statements 

2012

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Group overview

Business overview

1 Group overview

Overview 

Where we operate 

Chairman’s statement 

2 Group business review

Chief Executive’s summary 

Financial review 

Business review 

3 Governance

Board of Directors 

Directors’ report 

Statement of Directors’  
responsibilities 

Responsibility statement 

Remuneration report 

Corporate Governance statement 

Corporate and Social  
Responsibility report 

Independent auditors’ report 

4 Financial statements

Consolidated income statement 

Consolidated statement of 
comprehensive income 

Consolidated balance sheet 

Consolidated statement  
of changes in equity 

Consolidated cash ﬂow statement 

Notes to the ﬁnancial statements 

Registered ofﬁce and advisors 

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Hilton Food Group plc, Europe’s leading specialist 
retail meat packing business supplying major 
international food retailers in thirteen countries, 
announces its results for the 52 weeks ended 
30 December 2012. 
In 2012 Hilton has delivered another resilient 
performance. The Group has maintained a high 
level of investment in its meat packing facilities 
across Europe while exploring opportunities to 
progressively and proﬁtably expand its business. 
Our joint venture with Woolworths in Australia 
represents the Group’s ﬁrst expansion beyond 
its European heartland and illustrates well the 
transferability of its business model. 

 
 
Overview
Financial highlights

Key strengths
Strong relationships with major international retailers
Long track record in quality and service
Reduced risk business model
Established supply chain
High volume, efﬁcient and modern facilities
Experienced management team
Proﬁtable, cash generative business
Potential growth opportunities

How we measure our value
Consistent quality
Continuous innovation
Dedicated customer focus
Competitive pricing
Food safety assurance
Full production traceability
High service levels

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

01

Revenue (£m)

£1,031.0m 
+5.1% 

2011: £981.3m

Western  
Europe

Central 
Europe

935.4 
888.7 
776.6 
755.7 
679.7 

95.6 
92.6 
87.6 
70.4 
49.8 

Total

1,031.0
981.3
864.2
826.1
729.5

2012  
2011  
2010  
2009  
2008 

Operating proﬁt (£m)

£26.0m 
+0.3%

2011: £25.9m

Western  
Europe

Central 
Europe

23.7 
23.2 
20.8 
19.4 
18.9 

2.3 
2.7 
2.5 
2.3 
1.3 

2012  
2011  
2010  
2009  
2008 

Total

26.0
25.9
23.3
21.7
20.2

Closing net debt (£m)

£5.2m 
–72.2%

2011: £18.7m

2012  
2011  
2010  
2009  
2008 

5.2
18.7
18.0
20.6
28.6

729.5 826.1 864.2 981.3 1,031.0

2008

2009

2010

2011

2012

20.2

21.7

23.3

25.9

26.0

2008

2009

2010

2011

2012

28.6

20.6

18.0

18.7

5.2

2008

2009

2010

2011

2012

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

1 Group overview

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Where we operate

United Kingdom
Location: Huntingdon 
Customer: Tesco UK

Netherlands
Location: Zaandam 
Customer: Albert Heijn

Ireland
Location: Drogheda 
Customer: Tesco Ireland

Commenced Production

1994

Commenced Production

2000

Commenced Production

2004

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

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Sweden
Location: Vasteras 
Customer: ICA

Central Europe
Location: Tychy Poland 
Customers: 
Ahold Central Europe,  
Rimi Baltics, 
Tesco Central Europe

Denmark
Location: Aarhus 
Customer: Coop Danmark

Commenced Production

2004

Commenced Production

2006

Commenced Production

2011

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Chairman’s statement
A sound platform for growth

Our objective is to improve and grow 
our business on a consistent and 
proﬁtable basis, in order to deliver 
sustainable long term value for both 
our retail partners and shareholders. 
The Group currently supplies 
customers in thirteen countries 
across Europe and in January 2013 
entered into a joint venture with 
Woolworths in Australia. Continued 
progress was achieved in 2012, 
despite very difﬁcult economic 
conditions, and our entry into the 
faster growing Asia Paciﬁc region 
represents an exciting next step for 
the Group.

Sir David Nash DL
Non-Executive Chairman

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

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Summary of Group 
performance
In 2012 volumes of meat packed for Hilton’s 
customers increased by 5%, with revenue 
rising by a similar percentage to over £1bn. 
This reﬂected both the growth in our new 
business in Denmark and further growth 
in Central Europe.

Against the backdrop of a very challenging 
environment for the consumer, operating 
proﬁt, at £26m, and basic earnings per share, 
at 24.9p, show marginal growth over last 
year’s levels.

In these uncertain times, cash generation 
remains fundamentally important. Capital 
expenditure of £12.4m included investment 
at all our sites, to drive efﬁciency gains, 
extend product ranges, take advantage 
of advances in packing technology and 
facilitate continued volume growth. Despite 
maintaining this high level of investment, 
the Group reduced its net borrowings 
by 72% from £18.7m to £5.2m, and with 
a strong balance sheet is well positioned 
to deliver sustainable growth.

The Group’s results are considered in greater 
detail in the Chief Executive’s summary and 
the Financial review sections of this report.

Our management 
and employees
The Group currently employs over two 
thousand employees, in six European 
countries. Its business model is 
decentralised, with capable, largely 
self-sufﬁcient management teams in place 
in each country. We consider this structure 
to be important, as it achieves close working 
relationships with our customers, who 
beneﬁt from dedicated, ﬂexible and rapid 
support. The progress we have made in 
recent years in tough trading conditions has 
not been achieved by chance; credit must 
go to all our managers and employees, who 
throughout the year have displayed a high 
level of commitment and professionalism. 

The Board fully understands and appreciates 
just how much our progress relies on the 
effort, personal commitment, enthusiasm, 
enterprise and initiative of our employees and 
I would like to take this opportunity, on behalf 
of the Board, to personally thank all of them 
both for their dedicated efforts during 2012 
and continuing commitment to the Group’s 
on-going growth and development.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Chairman’s statement
continued

The Board 
The Board is responsible for the long term 
success of the Group and to achieve this 
it contains an appropriate mix of skills 
and depth of practical experience, which 
is available to support and guide our 
management teams across a progressively 
widening range of countries. After a long 
and distinguished career with Hilton, Colin 
Patten stood down from his Board role in 
2012 and we wish him well in his retirement. 
I would like to take this opportunity to thank 
my colleagues on the Board for their 
continued wise counsel and support. 

Hilton’s strategic approach
The Group’s strategy is to build long term 
customer and shareholder value by focusing 
on the following three key themes:

 – Building volumes and extending product 

ranges and services to existing customers;

 – Maintaining an uncompromising focus 
on reducing unit costs while improving 
product quality and service provision; and

 – Entering new territories with new 

customers or in partnership with existing 
customers.

We will continue to pursue measured and 
well thought out geographical expansion, 
whilst actively developing, enriching and 
expanding the scope of our existing business 
partnerships, playing a full and proactive role 
in strongly supporting our customers and the 
successful development of their brands.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

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Our dividend policy
The Board aims to maintain a dividend policy 
that provides a dividend level that grows 
broadly in line with the underlying earnings 
of the Group. I am pleased to report that the 
Board has recommended a ﬁnal dividend 
of 8.6p per ordinary share in respect of 2012. 
This, together with the interim dividend of 
3.4p per ordinary share paid in December 
2012, represents an 8.1% increase in the 
full year dividend, as compared with last 
year. The ﬁnal dividend, if approved by 
shareholders, will be paid on 28 June 2013 
to shareholders on the register on 31 May 
2013 and the shares will be ex dividend on 
29 May 2013.

The outlook
Hilton’s growth prospects are encouraging. 
The short term economic outlook in our 
European markets, however, remains 
relatively challenging, continuing to feature 
both comparatively high prices for meat and 
other key basic foodstuffs and maintained 
pressure on consumer spending.

In the early months of 2013 Hilton’s 
performance has been in line with the 
Board’s expectations, with weaker demand 
in some countries largely offset by the 
impact of favourable exchange rate 
movements. The Group’s business model 
has proved resilient in difﬁcult trading 
conditions and, although in its initial year 
income from the joint venture in Australia will 
be offset by start-up costs, Hilton remains 
well placed to make further progress.

Sir David Naish DL
Non-Executive Chairman
27 March 2013

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

2 Group business review

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Chief Executive’s summary
Continued investment on behalf 
of our customers

Our ambition is to be the most 
professional specialist meat packing 
company in Europe and in 2012 
further progress was achieved in this 
regard. Throughout last year we 
continued to invest in our facilities 
whilst also broadening the scope 
of the services we offer to our retail 
customers, with, for example, 
the successful commissioning and 
build-up of the robotic store order 
picking facility in Denmark. Our entry 
into the Asia Paciﬁc region marks a 
new phase in our development and 
we feel there is clear potential for our 
business model, which combines 
centralised meat sourcing, 
processing and packing with 
associated logistical support where 
required, beyond Europe.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

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Central Europe
Operating proﬁt of £2.3m (2011: £2.7m) 
on turnover of £95.6m (2011: £92.6m)

In Central Europe the Group’s meat packing 
business, based at Tychy in Poland, supplies 
three customer groups across Central 
Europe, from Hungary to the Baltics. This 
multi-customer business supplies Ahold 
stores in Czech Republic and Slovakia, Tesco 
stores in Hungary, Czech Republic, Poland 
and Slovakia and Rimi stores in Latvia, 
Lithuania and Estonia. Volume growth of 
5.6% was achieved in 2012, with turnover 
growth of 3.2%, the recovery of higher raw 
material meat prices again being offset by 
adverse movements in exchange rates. 

Continued growth and a rigorous focus on 
cost control remain the keys to achieving the 
very low levels of unit packing costs required 
for our customers to be able to compete 
strongly and grow in these increasingly 
competitive developing markets.

Financial overview
Our European businesses comprise 
two distinct operating segments:

Western Europe
Operating proﬁt of £23.7m (2011: £23.2m) 
on turnover of £935.4m (2011: £888.7m)

This operating segment covers the Group’s 
businesses in the UK, Ireland, Holland, 
Sweden and Denmark. Volume growth 
achieved was 4.7%, with turnover growth 
of 5.3%. This reﬂected further growth in 
Denmark and the recovery of higher raw 
material prices, partly offset by the effect 
of adverse movements in exchange rates 
and consumer downtrading to less 
expensive meat cuts. Following their 
progressive expansion into Belgium, 
we now supply a number of Albert Heijn’s 
stores in this country.

The new robotic store order picking facility 
for Coop Danmark commenced production 
in May 2012. Volumes handled, including a 
range of third party products such as poultry, 
have built up in line with our expectations. 
Services such as this, which enable us 
to manage the meat supply chain more 
efﬁciently from raw material procurement to 
store delivery, represent an important addition 
to our supply chain optimisation capability.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Chief Executive’s summary
continued

Our focus on quality, 
innovation, efﬁciency 
and food safety
To ensure our competitiveness, we seek to 
keep ourselves at the forefront of the meat 
packing industry. We are a committed 
partner with a continuing record of delivering 
value through quality products with the 
highest levels of food safety and integrity, 
whilst providing a range of services which 
enable our customers to evolve and improve 
their supply chain management. We 
constantly seek to drive further efﬁciencies 
and our modern, well invested facilities are 
considered a key factor in keeping unit packing 
costs as low as possible.

Over the nine years to December 2012, we 
have invested continuously, across all areas 
of our business, from the sourcing of raw 
materials, the design of packaging materials, 
increased efﬁciency in processing and 
storage solutions and updating our IT 
infrastructure, with capital expenditure 
over this period totalling over £150m. 
This investment, combined with continuing 
volume growth, has allowed us to partly 
offset inﬂationary pressures, including the 
progressive rise seen over recent years in 
raw material meat prices.

Our supply chain partnerships
Our customer base comprises high quality 
multiple retailers and our understanding 
of our customers’ needs together with those 
of their consumers enables us to play an 
active role in managing their meat supply 
chains providing agile responses to supply 
chain challenges as they arise. As our 
customers’ markets change and competition 
increases, we need to focus on the 
challenges they face and be able to advance 
ﬂexible solutions, together with continuing 
increases in efﬁciency and cost 
competitiveness. 

The Group’s growth has been 
generated historically by its strong long 
term relationships with its retail partners, 
with whom the Group continues to work 
very closely to deliver high service levels, 
consistent and dependable product quality, 
ongoing product innovation and dependable 
levels of food safety and product integrity 
assurance. The strength of these long term 
partnerships has been a key driver of our 
growth since the Group was formed and 
will continue to underpin the Group’s strategy.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

15

Our people and culture
During 2012 we completed a detailed review 
of all our management structures, taking 
steps to ensure very clear accountability, 
whilst both putting in place appropriate and 
readily accessible centres of excellence in 
technical and specialist areas and preserving 
the dedicated customer focus of our local 
management teams. We believe that 
successful businesses are about having the 
right people in the right positions working as 
“one team”, with local management teams 
empowered and encouraged to enable them 
to support their local customers. I would like 
to personally thank all our employees for 
their hard work, loyalty, dedication and 
professionalism over the last year and 
to welcome all of the new employees who 
joined the Hilton team in 2012. 

Diversity
We are committed to providing an inclusive 
working environment where everyone feels 
valued and respected and where people 
from different backgrounds, experiences and 
abilities can bring beneﬁts to our business. 
Our workforces are in many cases ethnically 
diverse and we fully recognise the beneﬁts 
of gender diversity.

Future growth
Hilton’s business model has been successful 
across a range of European countries, 
appropriately adapted by working in close 
collaboration with its local customers to meet 
their speciﬁc requirements. We believe it can 
be transferred over time to a number of new 
countries and aim to achieve similar levels 
of beneﬁt delivery with Woolworths 
in Australia.

Our strategy is very straightforward and at its 
core is focused on strongly supporting our 
customers’ brands and their development in 
their local markets, whilst achieving attractive 
and sustainable rates of growth and returns 
for our shareholders. This single minded and 
uncomplicated approach has generated 
continuous growth over an extended period 
and, with well invested facilities and a strong 
balance sheet, the Group remains well 
placed to achieve further progress.

Robert Watson OBE
Chief Executive 
27 March 2013

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Financial review
A strong ﬁnancial base

Hilton’s ﬁnancial performance remained 
resilient in 2012, in what continued 
to be a very challenging economic 
environment across Europe. We 
maintained a high level of investment 
to support our customers, whilst 
strengthening our balance sheet, in order 
to leave us well placed to deliver future 
growth. This Financial review covers the 
main highlights of the Group’s ﬁnancial 
performance and position in 2012, 
together with the key features of the 
Group’s treasury risk management 
policies, as well as certain required 
cautionary statements.

Nigel Majewski
Finance Director

Basis of preparation
The Group is presenting its results for the 
52 week period ended 30 December 2012, 
with comparative information for the 
52 week period ended 1 January 2012. 
The ﬁnancial statements of the Group are 
prepared in accordance with International 
Financial Reporting Standards (IFRS) as 
adopted by the European Union (EU).

2012 Financial performance 
Revenue
Volumes grew overall by 4.8% and further 
details of volume growth by business 
segment are set out in the Chief Executive’s 
summary. Revenue rose by 5.1% to 
£1,031.0m, as compared to £981.3m in 
2011, with volume increases in Denmark and 
Central Europe together with the recovery 
of higher raw material meat prices being 
partially offset by adverse exchange rates 
movements and consumer downtrading to 
less expensive meat cuts.

Operating proﬁt and margin
Operating proﬁt, at £26.0m, was marginally 
ahead of 2011. The operating proﬁt margin 
in 2012 was 2.5%, as compared with 2.6% 
in 2011, reﬂecting the impact of higher raw 
material meat prices, which were recovered 
in selling prices, but do not under all Hilton’s 
pricing arrangements give rise to a 
corresponding margin increase. Operating 
proﬁt per kilogram of packed meat sold was 
11.8p (11.8p in 2010 and 12.4p in 2011).

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

17

Net ﬁnance costs
Net ﬁnance costs, at £1.3m were 8% below 
the previous year’s level (2011: £1.4m). 
Interest costs have remained at historically 
low levels, reﬂecting continuing low LIBOR 
and EURIBOR rates which determine the 
interest rates on the Group’s principal 
borrowings and reducing levels of net debt. 
Interest cover in 2012 increased to 21 times, 
as compared with 19 times in 2011.

Proﬁt before taxation
Proﬁt before taxation, at £24.7m, (2011: 
£24.5m) was higher than last year reﬂecting 
the increased operating proﬁt and reduced 
net ﬁnance costs.

Taxation
The taxation charge for the period was 
£5.9m (2011: £5.9m). This represented 
an effective taxation rate of 23.7% 
(2011: 24.1%) reﬂecting a lower corporate 
tax rate in the UK.

Earnings per share
Basic earnings per share at 24.9p (2011: 
24.7p) were marginally higher than last year, 
reﬂecting the lower level of net ﬁnance and 
taxation charges and a decreased minority 
interest, offset by an increased number of 
shares in issue, following the exercise of 
executive and all employee share options. 
Diluted earnings per share were 24.7p 
(2011: 24.3p).

Free cash ﬂow and net 
borrowing levels
Cash ﬂow remained strong in 2012, with the 
Group generating £20.5m of free cash ﬂow 
before dividends and ﬁnancing, after capital 
expenditure of £12.4m, of which £3.4m was 
incurred on completing our new Danish 
facilities. The underlying free cash ﬂow, 
excluding the new Danish investment, was 
£23.9m (2011: £21.4m), enabling the Group 
to materially reduce its level of net debt. 
Group borrowings, net of cash balances of 
£31.4m, stood at £5.2m at the end of 2012, 
as compared with £18.7m at the end of 2011.

Our gearing ratio, as represented by net debt 
divided by earnings before interest, tax, 
depreciation and amortisation, reduced 
to 0.1 times EBITDA (as compared to 
0.4 times in 2011). At the end of 2012 the 
Group had undrawn overdraft facilities of 
£18.2m (2011: £19.8m). This strong ﬁnancial 
position gives us considerable ﬂexibility 
viewed in terms of potential future expansion.

Treasury risk 
management policies
Hilton does not engage in speculative 
trading in ﬁnancial instruments and transacts 
only in relation to its underlying business 
requirements. The Group’s policy is designed 
to ensure adequate ﬁnancial resources are 
made available as required for the continuing 
development and growth of its business 
whilst taking practical steps to reduce 
exposures to foreign exchange, interest rate 
ﬂuctuation, credit, pricing and liquidity risks, 
as described below: 

Foreign exchange rate movements 
and country speciﬁc risks
Whilst the presentational currency of the 
Group is Sterling, the majority of its revenues 
are earned in other currencies, currently 
principally the Euro, Swedish Krona and 
Danish Krone. The earnings of the Group’s 
overseas subsidiaries are translated into 
Sterling at the average exchange rates for the 
year and their assets and liabilities at the 
year-end closing rates. Changes in relevant 
currency parities are monitored on a 
continuing basis, with the timing of the 
repatriation of overseas proﬁts and the 
repayment of any intra group loans to UK 
holding companies paying due regard to 
actual and forecast exchange rate 
movements. 

The Group has to date decided not to hedge 
its foreign exchange rate exposures, the 
impact of which has been broadly favourable 
overall over recent years taken as a whole, 
but this policy is kept under continuing 
review and will be reappraised as the Group’s 
geographic spread widens. The Group’s 
overseas subsidiaries all have natural hedges 
in place as they, for the most part, buy raw 
materials, employ people, source services, 
sell products and arrange funding in their 
local currencies. As a result the Group’s 
exposure is principally limited to its equity 
investment in each overseas subsidiary.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Financial review
continued

The level of country speciﬁc risk currently 
remains material for many businesses, in 
terms of the impact of macroeconomic 
developments, including the impact of 
austerity programmes in countries currently 
facing difﬁculties with their levels of national 
debt. The Group sells high quality basic food 
products, for which there will always be 
continuing demand, to successful blue chip 
multiple retailers in developed countries. 
Hilton has not to date been materially 
adversely affected by the extended 
recessionary environments seen in some 
countries, but will keep any future identiﬁed 
country speciﬁc risks under continuing review.

Interest rate ﬂuctuation risk
This risk stems from the fact that the interest 
rates on the Group’s borrowings are variable, 
being at set margins over LIBOR for sterling 
borrowings or EURIBOR for euro 
borrowings, which both ﬂuctuate over time. 
The Group’s principal borrowing is in sterling, 
with interest at an agreed margin over 
LIBOR. The Board’s policy is to have an 
interest rate cap on a proportion of this 
borrowing and the Group currently has in 
place a 2 year cap at 4.5% on 91% of its 
sterling term loan from Ulster Bank. The 
Board will review hedging costs and options 
should the current low interest rate 
environment change materially.

Customer credit and pricing risks
As Hilton’s customers comprise a small 
number of very successful and patently credit 
worthy major multiple retailers, the level of 
credit risk is considered to be insigniﬁcant. 
Historically the incidence of bad debts has 
been immaterial. Hilton’s pricing is based 
predominately either on cost plus agreements 
or agreed packing rates with its customers.

Liquidity risk
Over recent years this has for many businesses 
represented a signiﬁcant area of concern, 
given the continuing difﬁcult and uncertain 
economic environment and liquidity constraints 
across banking systems in Europe. The Hilton 
Food Group remains strongly cash generative, 
has a robust balance sheet and has committed 
banking facilities for the medium term, sufficient 
to support its existing business. All bank positions 
are monitored on a daily basis and capital 
expenditure above set levels, together with 
decisions on intra group dividends, are all 
approved at Board meetings. All long term 
debt is arranged centrally and is subject to 
Board approval.

Forward looking statements
The Chairman’s statement, Chief Executive’s 
summary, Financial review, Business review 
and other reports which together comprise 
the Enhanced Business Review, contain 
forward looking statements that are 
inevitably 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 
inherently predictive, speculative and involve 
risk and uncertainty, simply because they 
relate to events and depend on circumstances 
that will occur in the future.

Going concern basis
The Group’s bank borrowings are detailed in 
the ﬁnancial statements and the principal 
banking facilities which support the Group’s 
existing and contracted new business are 
committed, with no renewal required for four 
years. The Group is in full compliance with all 
its banking covenants. Future geographical 
expansion which is not yet contracted, and 
which is not built into internal budgets 
and forecasts, may require additional or 
extended banking facilities and such future 
geographical expansion will depend on our 
ability to negotiate appropriate additional or 
extended facilities, as and when required.

The Group’s internal budgets and forecasts, 
which incorporate all reasonably foreseeable 
changes in trading performance, are regularly 
reviewed in detail 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 going concern basis is, accordingly, 
adopted by the Board in preparing the 
ﬁnancial statements. 

On behalf of the Board

Nigel Majewski
Finance Director
27 March 2013

Business review
A strong base for future growth

Hilton’s past growth has been 
accentuated by the consumer 
trend in most countries towards 
convenience and one stop shopping 
which has led to the continuing 
growth of the large food retailers, 
together with these retailers’ 
increasing focus on private label, 
which the Group supplies exclusively.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

19

As the larger retail chains have gained a greater share of the grocery 
markets, these retail chains have increasingly turned to large scale, 
centralised meat packing plants capable of producing packed meat 
products more hygienically and cost effectively. By moving to larger 
suppliers of pre-packed meat from the optimum logistical locations 
the retailers concerned have effectively decided to rationalise their 
supply base, in order to deliver lower costs and higher food safety, 
food integrity, traceability and quality standards. This has allowed the 
retailers to focus on their core business and maximise their return on 
available retail space whilst addressing consumers’ drive for value and 
their requirement for total assurance on food integrity, traceability, 
quality and safety.

This trend is continuing across the world, although individual 
countries are at different stages of market development, resulting in 
a wide range of potential future geographical expansion opportunities, 
albeit in different timescales.

The Group’s past expansion has been based on its growing track 
record, together with its growing international reputation and 
experience and the recognised success of the close partnerships 
it has established and maintained with its successful retail partners. 
The six European countries in which the Group currently operates, 
with the dates operations commenced in each country and Hilton’s 
retail partners are set out below:

Year
1994
2000
2004
2004
2006

Country
UK
Holland
Ireland
Sweden
Poland

Location
Huntingdon
Zaandam
Drogheda
Vasteras
Tychy

2011

Denmark

Aarhus

Customers
Tesco UK
Albert Heijn
Tesco Ireland
ICA
Ahold Central Europe,
Tesco Central Europe
and Rimi Baltics
Coop Danmark

The joint venture with Woolworths in Australia, announced 
in January 2013, starts to illustrate the potential breadth of 
the future geographical expansion opportunity.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Business review
continued

Our key resources and relationships
The resources and relationships which we consider vital to 
our successful future development and which we seek to 
safeguard comprise:

Long term partnerships  
with strong retail customers

Our long term partnership arrangements with successful retail 
customers, involving close liaison, discussion and co-ordination, 
designed to ensure that the best possible outcomes are achieved 
for both parties on an ongoing basis.

Growing international reputation

Our growing international reputation built on achieved levels 
of product quality and presentation, food safety and integrity, 
product innovation, service levels, health and safety, the way 
in which we treat our employees and suppliers and our proven 
ability to adapt Hilton’s business model to differing customer and 
country requirements.

Modern, well invested meat packaging plants

Our well invested modern meat packing facilities at which we have 
invested over £150m over the last nine years to increase packing 
capacity in line with our customers’ growth and maintain them 
at state of the art levels.

Employee skill base

Our wide and progressively deepening employee skill base.

Flexible meat supply base

Our broad, diverse and ﬂexible meat supply base, based on close 
and long term relationships with our suppliers, which enables us to 
provide sufﬁcient volume of quality products in the short lead times 
required by our customers.

Focus on the environment, employees and community

Our continuing focus on the environment, employees and local 
community issues.

Committed banking facilities

Our increasing ﬁnancial strength, with low and reducing levels of 
net debt and committed banking facilities sufﬁcient to support our 
existing business for the foreseeable future.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

21

How we measure our performance
The Board monitors a range of ﬁnancial and non-ﬁnancial key performance indicators “KPI’s” to measure the Group’s performance over time 
in building shareholder value and achieving the Group’s strategic objectives. The ten “KPI’s” used by the Board for this purpose, together with 
our performance over the last two years, is set out below:

Non-ﬁnancial KPI’s
Growth in volume of 
packed meat sales
(%) 

4.8%

2011: 6.0% 

Employee and labour 
agency costs 
(pence per kilogram) 

36.5

2011: 40.0 

Customer service level 
(%) 

98.8%

2011: 98.4% 

Number of product lines

1,900

2011: 1,900

Deﬁnition, method of calculation and analysis
Year on year volume growth, expressed 
as a percentage. The 2012 growth is 
driven by further growth in Denmark and 
Central Europe. In other areas, volumes 
declined slightly overall, with weaker 
consumer demand in the face of higher 
raw material meat prices and overall 
economic pressure.

Reduction in 2012 reﬂects efﬁciency 
gains, both with the completion 
of the Danish start-up phase and 
more generally.

Packs of meat delivered as a % of the 
orders placed. Little year on year change, 
with high service levels being maintained.

Breadth of product range, in terms 
of number of stock keeping units 
supplied to customers.

Financial KPI’s
Revenue growth 
(%) 

5.1%

2011: 13.6% 

Operating proﬁt margin 
(% turnover) 

2.5%

2011: 2.6%

Operating proﬁt margin 
(pence per kilogram) 

11.8

2011: 12.4

Earnings before interest, 
taxation, depreciation and 
amortisation (EBITDA) 
(£’m) 

40.4

2011: 42.9

Free cash ﬂow before 
minorities 
(£’m) 

20.5

2011: 6.8

Gearing ratio 

0.1

2011: 0.4

Deﬁnition, method of calculation and analysis
Year on year revenue growth expressed 
as a percentage. The 2011 increase 
reﬂected the inclusion of the ﬁrst year’s 
production from the new facility in 
Denmark. Excluding the impact of 
adverse exchange rate movements, 
revenue growth in 2012 would have 
been 9.2%.

Operating proﬁt expressed as a 
percentage of turnover. The slight 
reduction in 2012 reﬂected the higher 
level of raw material meat prices 
which, whilst recovered, do not in all 
Hilton’s contractual arrangements feed 
directly through to correspondingly 
increased margins.

Operating proﬁt per kilogram sold. 
The reduction reﬂects the reduced 
operating proﬁt margin.

Operating proﬁt before depreciation, 
amortisation and government capital 
grants. The reduction in 2012 reﬂects 
reduced depreciation charges, which 
under Hilton’s cost plus arrangements 
result in correspondingly reduced 
revenues.

Cash ﬂow before dividends and 
ﬁnancing. The sharp increase in 2012 
reﬂected the completion of the capital 
expenditure on the new facilities in 
Denmark. Excluding expenditure on 
equipment for Denmark, underlying free 
cash ﬂow improved, from £21.4m to 
£23.9m, on a comparable year on 
year basis.

Year-end net debt divided by EBITDA. 
The gearing ratio improved materially 
in 2012, as a result of the net debt level 
being reduced by 72%.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Business review
continued

How we manage risk
As with all businesses, the Group is exposed to a range of risks and uncertainties which could 
have a signiﬁcant impact on its business, reputation, operating results and ﬁnancial position.

The Board believes a successful risk management framework balances risk and reward, 
and applies reasoned judgement and consideration of potential likelihood and impact in 
determining its principal risks. The Group has a well-developed structure and range of 
processes for identifying, assessing, prioritising and mitigating these key risks. 

The most signiﬁcant identiﬁed business risks the Group faces, which are unchanged from 
previous years and which will continue to affect the Group’s businesses, together with the 
measures we have adopted to mitigate these risks, are outlined in the table below. This is not 
intended to constitute an exhaustive analysis of all risks faced by the Group, but rather to 
highlight those which are the most signiﬁcant, when viewed from the standpoint of the Group 
as a whole.

Risk description 

Potential impact 

Risk mitigation 
strategies

The Group is dependent on a small number 
of customers who can exercise signiﬁcant buying 
power and inﬂuence.
The Group has a comparatively narrow, but expanding, 
customer base, with sales to subsidiary or associated 
companies of the Tesco and Ahold groups comprising the 
larger part of Hilton’s revenue in 2012. The large retail chains 
are continuing to increase their market share of meat products 
in many countries, as retail customers move away from high 
street butchers towards one stop convenience shopping in 
large supermarkets. The continuation of this trend increases 
the buying power of the Group’s customers which in turn 
increases their negotiating power with the Group, which could 
enable them to seek better terms over time.
The Group is progressively widening its customer base and 
its maintained investment in state of the art facilities, which 
together with management’s continuous focus on reducing 
costs, allow it to operate very efﬁciently at very high 
throughputs and price its products competitively, being 
particularly important in difﬁcult economic environments. 

Hilton operates a decentralised, entrepreneurial business 
structure, which enables it to work very closely, nimbly and 
ﬂexibly with its retail partner in each country, to achieve high 
service levels in terms of orders delivered, delivery times, 
compliance with product speciﬁcations and accuracy of 
documentation, all backed by an uncompromising focus on 
food safety, product integrity and traceability assurance.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

23

Risk description 

Potential impact 

Risk mitigation 
strategies

Risk description 

Potential impact 

Risk mitigation 
strategies

The Group’s growth potential is dependent on the 
success of its customers and the growth of their 
packed meat sales.
The Group’s products carry the brand labels of the customer to 
whom its products are supplied and it is therefore dependent 
on its customers’ success in maintaining or improving 
consumer perception of their own brand names and packed 
meat offerings.
The Group plays a very proactive role in enhancing its 
customers’ brand values, through providing high quality, 
competitively priced products, high service levels and 
continuing product and packaging innovation. It recognises 
that quality assurance is integral to its customers’ brands and 
works closely with its customers to ensure rigorous quality 
assurance standards are met. It is continuously measured 
by its customers across a very wide range of parameters, 
including delivery time, product speciﬁcation, product 
traceability and accuracy of documentation and targets 
demanding service levels across all these parameters. The 
Group works closely with its customers to identify continuing 
improvement opportunities across the supply chain, including 
enhancing product presentation, extending shelf life and 
reducing wastage at every stage.
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.
No business is immune to difﬁcult economic climates and the 
consequent pressure on levels of consumer spending, such as 
those seen recently across Europe. 
With a sound business model, strong retail partners and a 
single minded focus on minimising unit packing costs, whilst 
maintaining high levels of product quality and integrity, the 
Group has made sound progress over the recent difﬁcult 
economic period. It expects to be able to continue to make 
progress, even if the current difﬁcult economic conditions, as 
expected, persist in some developed countries for some time.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Business review
continued

Risk description 

Potential impact

Risk mitigation 
strategies

Risk description 

Potential impact 

Risk mitigation 
strategies

The Group’s business is reliant on a small number 
of key personnel and its ability to manage growth 
and change successfully.
The Group is critically dependent on the skills and experience 
of a small number of senior managers and specialists and as 
the business develops and expands, the Group’s success 
will inevitably depend on its ability to attract and retain the 
necessary calibre of personnel for key positions, both for 
managing and growing its existing businesses and setting 
up new ones.
To continue to manage growth successfully, the Group will 
carefully manage its skill resources and continue to invest in 
on-the-job training and career development, together with the 
cost effective management of quality information and control 
systems, whilst recruiting high quality new employees, 
as required, to facilitate the Group’s ongoing growth. The 
continuing growth of Hilton’s business, together with its 
growing reputation, is facilitating the recruitment of more top 
class specialists with the key skill sets required both to support 
our existing individual country business units and manage the 
Group’s future geographical expansion.
The Group’s business is dependent on maintaining 
a wide and ﬂexible global meat supply base.
The Group is reliant on its suppliers to provide sufﬁcient 
volume of products in the very short lead times required by its 
customers. The Group sources certain of its meat requirements 
globally. Tariffs, quotas or trade barriers imposed by countries 
where the Group procures meat, or which they may impose 
in the future, together with the progress of World Trade 
Organisation talks and other global trade developments, could 
materially affect the Group’s international procurement ability.
The Group maintains a ﬂexible global meat supply base, which 
is progressively widening as it expands, so as to have in place 
a wide range of options should any such eventualities occur.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

25

Risk description 

Potential impact 

Risk mitigation 
strategies

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.
Reports in the public domain concerning the risks of 
consuming meat can cause consumer demand for meat to 
drop signiﬁcantly in the short to medium term. A food scare 
similar to the Bovine Spongiform Encephalopathy (“BSE”) 
scare that took place in 1996 or the much more recent 
concerns with regard to horse meat substitution can affect 
public conﬁdence in red meats.
The Group sources its meat from a trusted raw material 
supply base, all components of which meet stringent national, 
international and customer standards. The Group is subject to 
demanding standards which are independently monitored in 
every country and reliable product traceability and high welfare 
standards from the farm to the consumer are integral to the 
Group’s business model. The Group ensures full traceability 
from source to packed product across all suppliers.

The Board has overall responsibility for the Group’s risk management processes and also 
for the appropriate identiﬁcation of risks and the effective application of actions to mitigate 
those risks.

All types of risk applicable to the business are regularly reviewed and a formal risk assessment 
review is carried out to highlight key risks to the business and to determine actions that can 
reasonably and cost effectively be taken to mitigate them. The Group’s Risk Register is 
compiled through a combination of business unit risk registers and Board input. The Board 
believes that in carrying out the Group’s businesses it is vital to strike the right balance 
between an appropriate and comprehensive control environment and encouraging the level 
of entrepreneurial freedom of action required to seek out and develop new business 
opportunities, but, however skilfully this balance between risk and reward is struck, the 
business will always be subject to a number of risks and uncertainties, as illustrated above.

Not all the risks listed are within the Group’s control and others may be unknown or currently 
considered immaterial, but could turn out to be material in the future. The risks set out in the 
above table, together with our risk mitigation strategies, should be considered in the context 
of the Group’s risk management and internal control framework, details of which are set out in 
the Corporate Governance statement and the cautionary statement regarding forward looking 
statements in the Financial review.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

3 Governance

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

27

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Board of Directors

Executive Directors

Robert Watson OBE
Chief Executive

Nigel Majewski
Finance Director

Robert joined the Hilton Food Group as 
Chief Executive in 2002 and has overseen 
the rapid growth of the Group. Prior to this, 
he worked for the Foyle Food Group, based 
in Northern Ireland of which he was a 
founder in 1977.

Nigel joined the Hilton Food Group as 
Finance Director in 2006. Nigel is a Chartered 
Accountant who, following 11 years in senior 
ﬁnance roles with PepsiCo between 1995 
and 2006 and prior to that ﬁve years meat 
industry experience in senior ﬁnance roles 
with Bernard Matthews plc, brings over 
10 years’ experience of operating overseas, 
in ﬁve different countries. Nigel is Chairman 
of the Risk Management Committee.

Philip Heffer
Chief Operating Ofﬁcer  
UK and Ireland

Theo Bergman
Chief Operating Ofﬁcer  
Continental Europe

Colin Patten
Commercial Director 

Philip joined the Hilton Food Group at its 
inception in 1994, as Managing Director 
of the Group’s UK subsidiary Hilton Meats 
(Retail) Limited. In 2004 Philip was appointed 
to his current role as Managing Director 
for the Hilton Food Group’s UK and Irish 
businesses. Prior to this, Philip held senior 
positions within the RWM Food Group.

Theo joined the Hilton Food Group in 2000 
as Managing Director of the Group’s Dutch 
subsidiary, Hilton Meats Zaandam BV. 
In 2003, Theo was appointed European 
Operations Director responsible for the start 
up of new operations in Europe. Prior to 
joining the Hilton Food Group, Theo held 
senior logistics and general management 
positions with Ahold between 1987 
and 2000. 

Colin joined the Hilton Food Group at its 
inception in 1994 as Commercial Director, 
responsible for procurement and business 
development, having worked previously in 
a similar role for the Group’s UK subsidiary 
Hilton Meats (Retail) Limited and prior to 
that in meat wholesaling and packing. 
Colin retired on 16 May 2012.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

29

Non-Executive Directors

Sir David Naish DL
Non-Executive Chairman

Chris Marsh
Non-Executive Director 

Colin Smith OBE
Non-Executive Director 

Member of the Remuneration Committee  
Member of the Audit Committee  
Member of the Nomination Committee  
Member of the Related Party Supply Committee

Member of the Remuneration Committee  
Member of the Audit Committee  
Member of the Nomination Committee  
Member of the Related Party Supply Committee

Member of the Remuneration Committee  
Member of the Audit Committee  
Member of the Nomination Committee  
Member of the Related Party Supply Committee

Sir David joined the Hilton Food Group in 2007 
as a Non-Executive Director after retiring from 
the Chairmanship of Arla Foods UK plc and 
was elected Chairman in 2010. He is a past 
President of the National Farmers Union and 
is currently Chairman of his family farming 
business as well as a Director of Wilson 
Insurance Broking Group Limited and Caunton 
Engineering Limited and is also a Non-
Executive Director of Produce Investments 
plc. Sir David is Chairman of the Nomination 
and Related Party Supply Committees.

Chris joined the Hilton Food Group in 2007 as 
a Non-Executive Director. Chris is a corporate 
broker by background, he joined Phillips and 
Drew in 1968 and headed the Small Cap 
Corporate broking team at UBS Limited 
(London) from 1993 until his retirement in 
1998. From 1999 to 2004 he was a member 
of a small corporate ﬁnance advisory team 
at the Benﬁeld Group. Chris is currently 
Non-Executive Chairman of Downing Income 
VCT plc and Webb Capital plc. Chris is 
Chairman of the Remuneration Committee 
and is the Senior Independent Director.

Colin joined the Hilton Food Group in 2010 as 
a Non-Executive Director and has extensive 
experience in the food and distribution 
industry. A Chartered Accountant, he was at 
Safeway plc for 20 years as Finance Director 
and for the last six years as Chief Executive. 
Colin has previously held Chairmanships at 
food and agriculture businesses Assured Food 
Standards, Masstock Group and Blueheath 
Holdings plc. He is currently a Non-Executive 
Director of Poundland Holdings Limited having 
stepped down as Chairman after ten years in 
the role. He was previously a Non-Executive 
Director of McBride plc. Colin is Chairman of 
the Audit Committee.

Chris Marsh and Colin Smith are 
considered to be independent.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Directors’ report

The Directors present their report and the 
audited consolidated ﬁnancial statements for 
the 52 weeks ended 30 December 2012.

Principal activities, business 
review and future outlook
The Group’s activities comprise specialist 
retail meat packing for international 
food retailers. 

The Companies Act 2006 requires the 
Company to set out, in this report, a fair 
review of the business of the Group during 
2012, including an analysis of the position 
of the Group at the end of this year and 
a description of the principal risks and 
uncertainties facing the Group (which taken 
together are known as an “Enhanced 
Business Review”).

The information which comprises the 
requirement for an Enhanced Business 
Review can be found in the Chairman’s 
statement on pages 6 to 9, the Chief 
Executive’s summary on pages 12 to 15, 
the Financial review on pages 16 to 18, the 
Business review on pages 19 to 25, the 
Corporate Governance statement on pages 
40 to 44 and the Corporate and Social 
Responsibility report on pages 45 to 48. 
All the information detailed in these sections 
(including the KPI information set out on 
page 21) is incorporated by reference into 
this report and deemed to form part of it.

Results and dividends 
The proﬁt before taxation is £24.7m (2011: 
£24.5m). After a taxation charge of £5.8m 
(2011: £5.9m) and minority interests of 
£1.3m (2011: £1.4m) the net income for 
the period is £17.6m (2011: £17.2m). 

An interim dividend of 3.4p per ordinary 
share was paid in December 2012. 
The Directors recommend the payment 
of a ﬁnal dividend for the period, which is 
not reﬂected in these accounts, of 8.6p per 
ordinary share totalling £6.1m, which, together 
with the interim dividend, represents 12.0p 
per ordinary share. Subject to approval at the 
Annual General Meeting, the ﬁnal dividend 
will be paid on 28 June 2013 to members 
on the register at the close of business on 
31 May 2013. Shares will be ex dividend 
on 29 May 2013.

Financial instruments
The Group’s risk management objectives 
and policy are discussed in the treasury risk 
management policies section of the Financial 
review on pages 17 and 18.

Directors and their interests
The Directors of the Company in ofﬁce 
throughout 2012, together with their 
biographical details, are as set out on pages 
28 and 29. All the Directors served for the 
whole of the year under review unless 
stated. Directors are subject to re-election 

following the year in which they are 
appointed and one-third of the Board is 
subject to re-election every year. Robert 
Watson and Chris Marsh retire in accordance 
with the Articles of Association and, being 
eligible, offer themselves for re-election. 
Details of their service contracts are set 
out on pages 36 and 37.

The interests of the Directors, as deﬁned by 
the Companies Act 2006, in the voting rights 
of the Company were as follows:

On 
30 December 
2012 
ordinary shares
3,266,380
–
4,181,030
328,333
19,863
55,000
30,000
50,000

On 
1 January  
2012  
ordinary shares
3,159,850
4,640,500
4,174,500
328,333
13,333
40,000
30,000
30,000

R. Watson
C. Patten
P. Heffer
T. Bergman
N. Majewski
D. Naish
C. Marsh
C. Smith

All of the above interests are beneﬁcial, with 
the exception of 1,230,917 shares held 
by various family trusts of which R. Watson 
is a trustee. Since the year-end R. Watson 
acquired 50,000 shares through such a trust. 
There have been no other changes in the 
interests of Directors between 30 December 
2012 and the date of this report.

Substantial shareholdings
As at the date of this report, the Company is aware or has been notiﬁed of the following interests, in addition to Directors’ holdings above, 
of 3% or more of the voting rights of the Company:

Aberforth Partners
AXA Investment Managers SA
G. Heffer
R. Heffer
Fidelity Management & Research
Aviva plc & its subsidiaries
Artemis Investment Managers
F&C Asset Management

Number of 
ordinary shares
6,754,156
4,609,850
4,174,500
4,174,500
3,039,446
2,467,839
2,400,000
2,132,457

Percentage of 
issued share 
capital
9.50%
6.49%
5.87%
5.87%
4.28%
3.47%
3.38%
3.00%

Nature  
of holding
Indirect
Indirect
Direct
Direct
Indirect
Indirect
Indirect
Indirect

 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

31

Charitable and political donations
During the year the Group made charitable 
donations for the beneﬁt of local 
communities in which the Group operates 
amounting to £18,188 (2011: £19,759). 
No donations for political purposes were 
made during the year (2011: £nil).

Employment policy and involvement
The Group’s policy on employees remains 
one of adopting a very open management 
style, keeping employees informed of all 
matters affecting them as employees 
including key ﬁnancial and economic factors 
affecting the Group’s performance. This is 
achieved through meetings, newsletters and 
informal consultation at all levels. Employees 
are able to participate directly in the success 
of the business by contributing to the 
Group’s sharesave scheme.

Employment policies are designed to 
provide equal opportunities irrespective of 
employee’s nationality, sex, colour, ethnic or 
natural origin or marital status. Applications 
for employment by disabled persons are 
given full and fair consideration for all 
vacancies in accordance with their particular 
aptitudes and abilities. In the event of 
employees becoming disabled, every effort 
is made to retrain them in order that their 
employment with the Company can 
continue. It is the policy of the Group that 
training, career development and promotion 
opportunities should be available to all 
employees.

The Group’s recruitment practices involve, 
where possible, internal promotions. Where 
there is not a suitable internal candidate, 
selection of suitable individuals for vacant 
positions is made using a combination of 
industry knowledge and contacts and the 
use of external recruitment agencies. All new 
senior employees including Directors are 
given tailored induction programmes. 
The Group’s succession planning is designed 
to highlight any forthcoming vacancies well 
in advance.

The Group, in common with most 
commercial undertakings, employs external 
consultants, but, as their services could be 
contracted for with other similar parties, 
there are, in the opinion of the Board, 
no persons with contractual or other 
arrangements with the Group which 
are essential to its businesses.

Supplier payment policy
In the UK the Group follows the Better 
Payment Practice Code. The Code requires 
a company to agree the terms of payment 
with its suppliers, to ensure its suppliers are 
aware of those terms and to abide by them. 
The Group policy is also to apply the 
requirements of the Code in each of its 
subsidiaries. At the end of 2012 the Group’s 
trade creditors represented 42 days of 
purchases (2011: 44 days).

Share capital and control
The following information is given pursuant 
to Section 992 of the Companies Act 2006:

 – the Company has one class of share being 
ordinary shares of 10p each which have 
no special rights. The holders of ordinary 
shares rank equally and are entitled to 
receive dividends and return of capital as 
declared and to vote at general meetings. 
With minor exceptions, there are no 
restrictions on transfers of ordinary shares.

 – there are no restrictions on voting rights 

of ordinary shares.

 – rights over ordinary shares issued under 

employee share schemes are exercisable 
directly by the employees. The Company 
is not aware of any agreements between 
shareholders that may result in restrictions 
on the transfer of its shares or on 
voting rights.

 – the Company may appoint or remove 
a Director by an ordinary resolution of 
the shareholders. Additionally the Board 
may appoint a Director who must retire 
from ofﬁce at the following Annual 
General Meeting and if eligible then 
stand for re-election.

 – the Company’s Articles may be amended 
by a special resolution of the shareholders.

 – the Directors have general powers to 

manage the business and affairs of the 
Company. Additionally the following 
speciﬁc authorities were passed as 
resolutions at the Company’s Annual 
General Meeting held on 16 May 2012:

 – Directors have authority to purchase 
up to 10% of its own shares subject 
to certain conditions.

 – Directors have authority, within limits, 

to exercise the powers of the Company 
to allot shares and limited authority to 
disapply shareholder pre-emption rights.

 Both these authorities expire on the earlier 
of the date of the next Annual General 
Meeting or 16 August 2013.

 – the Company has signiﬁcant long-term 

supply agreements with customers which 
the customer may terminate in the event 
that ownership of the Company, following 
a takeover, passes to a third party which 
is not reasonably acceptable to that 
customer. There are no agreements 
between the Company and its Directors or 
employees providing for compensation for 
loss of ofﬁce or employment that occurs 
because of a takeover bid.

Share options
Details of all options granted but not 
exercised or lapsed are shown in note 23 
to the ﬁnancial statements on page 73.

Independent auditors
PricewaterhouseCoopers LLP have 
expressed their willingness to continue 
in ofﬁce and a resolution proposing their 
reappointment will be submitted at the 
Annual General Meeting.

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32

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Directors’ report
continued

Corporate governance
The Board has applied the provisions of the 
UK Corporate Governance Code issued in 
June 2010. The Directors consider that the 
Company has during 2012 complied with 
the requirements of the UK Corporate 
Governance Code taking into account the 
provisions for smaller companies.

Directors’ statement as to disclosure 
of information to auditors
The Directors who were members of the 
Board at the time of approving the Directors’ 
report are listed on pages 28 and 29. 
Having made enquiries of fellow Directors 
and the Company’s auditors, each of these 
Directors conﬁrm that:

The Financial Reporting Council issued a 
revised UK Corporate Governance Code 
(“Code”) in September 2012 which applies 
to accounting periods beginning on or after 
1 October 2012.

Hilton Food Group plc supports the highest 
standards of corporate governance, business 
integrity and professionalism in the way it 
conducts its activities. The Corporate 
Governance statement on pages 40 to 44 
which includes information pursuant to DTR 
7.2 and the Remuneration report on pages 
35 to 39 detail how the Board applies the 
principles of good governance and best 
practice as set out in the UK Corporate 
Governance Code.

 – to the best of each Director’s knowledge 
and belief, there is no information relevant 
to the audit of which the Company’s 
auditors are unaware; and

 – each Director has taken all the steps a 

Director might reasonably be expected to 
have taken to be aware of any relevant 
audit information and to establish that the 
Company’s auditors are aware of that 
information.

Annual General Meeting
The Notice convening the Annual General 
Meeting can be found in the separate Notice 
of Annual General Meeting accompanying 
this Annual Report and ﬁnancial statements, 
and can also be found on the Company’s 
website at www.hiltonfoodgroupplc.com/
investors/agm. Shareholders will be invited 
to approve the Remuneration report set out 
on pages 35 to 39.

By order of the Board

Neil George 
Company Secretary
27 March 2013

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

33

Statement of Directors‘ responsibilities

The Directors are responsible for keeping 
adequate accounting records that are 
sufﬁcient to show and explain the 
Company’s transactions and which disclose 
with reasonable accuracy at any time the 
ﬁnancial position of the Company and the 
Group and to enable them to ensure that the 
ﬁnancial statements and the Remuneration 
report comply with the Companies Act 
2006 and, as regards the Group ﬁnancial 
statements, Article 4 of the IAS Regulation. 
They are also responsible for safeguarding 
the assets of the Company and the Group 
and hence for taking reasonable steps for 
the prevention and detection of fraud and 
other irregularities.

The Directors are responsible for the 
maintenance and integrity of the Company’s 
website www.hiltonfoodgroupplc.com. 
Legislation in the United Kingdom governing 
the preparation and dissemination of ﬁnancial 
statements may differ from legislation in 
other jurisdictions.

The Directors are responsible for preparing 
the Annual report, the Remuneration report 
and the ﬁnancial statements in accordance 
with applicable law and regulations.

Company law requires the Directors to 
prepare ﬁnancial statements for each 
ﬁnancial year. Under that law the Directors 
have prepared the Group and parent 
company ﬁnancial statements in accordance 
with International Financial Reporting 
Standards (IFRS) as adopted by the 
European Union. Under company law the 
Directors must not approve the ﬁnancial 
statements unless they are satisﬁed that 
they give a true and fair view of the state of 
affairs of the Company and the Group and 
the proﬁt or loss of the Group for that period.

In preparing these ﬁnancial statements the 
Directors are required to:

 – select suitable accounting policies and 

then apply them consistently;

 – make judgements and accounting 

estimates that are reasonable and prudent;

 – state whether applicable IFRS as adopted 

by the European Union have been 
followed, subject to any material 
departures disclosed and explained in 
the ﬁnancial statements; and

 – prepare the ﬁnancial statements on 
the going concern basis, unless it is 
inappropriate to presume that the Group 
will continue in business.

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34

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Responsibility statement of the Directors 
in respect of the Annual report and accounts

This responsibility statement was approved 
by the Board of Directors on 27 March 2013 
and is signed on its behalf by:

Robert Watson OBE 
Chief Executive

Nigel Majewski 
Finance Director 

Each of the Directors whose names and 
functions are set out on pages 28 and 29, 
conﬁrm that to the best of their knowledge 
and belief:

 – the Group and parent company ﬁnancial 
statements, prepared in accordance with 
applicable UK law and in conformity with 
IFRS, as adopted by the EU, give a true 
and fair view of the assets, liabilities, 
ﬁnancial position and proﬁt of the Group 
and the Company; and

 – the management reports (which comprise 

the Chairman’s statement, the Chief 
Executive’s summary, the Financial review, 
the Business review and the Directors’ 
report on pages 6 to 32) include a fair 
review of the development and 
performance of the business and the 
position of the Group and the Company, 
together with a description of the principal 
risks and uncertainties they face.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

35

Remuneration report

The Remuneration Committee presents 
its report which has been adopted by the 
Board and which shareholders will be 
asked to approve at the forthcoming 
Annual General Meeting.

In accordance with the requirements of 
the Companies Act 2006 and the Listing 
Rules of the UK Listing Authority, the 
Group is required to prepare a 
Remuneration report for 2012 and to put 
that report to a shareholder vote at the 
forthcoming Annual General Meeting.

The Group’s auditors are required to 
report on part of the Remuneration report 
and to state whether in their opinion that 
part of the report has been properly 
prepared in accordance with the 
Companies Act 2006. The report has 
accordingly been divided into separate 
sections for unaudited and audited 
information.

Unaudited information 
The composition and role of 
the Remuneration Committee
The Remuneration Committee during 
2012 comprised all the Non-Executive 
Directors being Chris Marsh (Chairman), 
Sir David Naish and Colin Smith. 
The Committee invites the Chief 
Executive, Robert Watson, to participate 
in its discussions, as appropriate, in an 
advisory capacity. 

The Committee is responsible for 
determining the individual remuneration 
packages of the Company’s Executive 
Directors. It is also responsible for 
considering management 
recommendations for remuneration and 
employment terms for the Group’s senior 
staff including arrangements for bonus 
payments and the grant of share options. 

The terms of reference of the Committee 
are detailed on the Company’s website, at 
www.hiltonfoodgroupplc.com. 

Remuneration policy
The Remuneration Committee considers 
that the Group’s remuneration policies 
should encourage a strong performance 
culture and emphasise long term 
shareholder value creation, with clear links 
between executive performance targets 
and the businesses’ performance and 
strategy. The Committee also believes 
that there should be a clear reward 
structure which enables the Group to 
attract, retain and motivate its best talents 
who have and will continue to be pivotal 
to Hilton’s future progress by:

 – positioning base salaries with regard to 
the performance and responsibilities of 
the individual concerned, having regard 
to rates paid for similar roles in 
comparable companies and the pay 
structure throughout the Group; and

 – operating annual and longer term 

incentive arrangements which ensure 
that a substantial proportion of senior 
employee remuneration is subject to 
performance and aligned with the 
interests of shareholders. A signiﬁcant 
proportion of senior employee 
remuneration packages comprise 
performance related elements, including 
the grant of executive share options, 
awards under the Long Term Incentive 
Plan and mainly non-discretionary target 
driven annual bonus schemes. 
In 2012 performance related elements 
comprised 6% of the remuneration of the 
Executive Directors.

The Committee has taken independent 
advice on these matters from Aon Hewitt 
who were appointed by the Committee 
and who provide no other services to the 
Company. Reviews undertaken to date 
have included reviews of Executive 
Director remuneration packages and 
pension arrangements in comparable 
businesses. 

Remuneration packages
When applying these principles to the 
determination of the remuneration of 
Executive Directors, the Committee 
gives consideration to the following 
components of their total remuneration 
package:

Base salary and beneﬁts

Base salary is a ﬁxed cash sum payable 
monthly in arrears, with salaries reviewed 
annually on 1 January in each year. With 
effect from 1 January 2013 base salaries 
were increased by 3% which is marginally 
above the average percentage salary 
increase across the Group generally. 
Beneﬁts in kind comprise principally the 
provision of private healthcare and a 
company car and fuel.

Annual bonus

The Committee operated a cash bonus 
scheme for Executive Directors for 2012. 
This bonus scheme was based on 
achieving the Group budgeted net income 
target plus a discretionary element. 
In setting the targets for the scheme, the 
Committee considered both the Group’s 
annual budget and the need for continued 
progress to be achieved by the Group.

For 2012 the maximum potential bonus 
award level was 100% of base salary, 
structured as follows:

 – 50% subject to achieving the Group 

budgeted net income target;

 – an additional bonus of up to 40% for 
any over achievement of the Group 
budgeted net income target with 2% 
bonus paid for every 1% over 
achievement subject to a cap; and

 – up to 10% based on individual 

Director’s performance.

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36

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Remuneration report
continued

The Group did not achieve the Group 
budgeted net income target for the year and 
consequently no bonus relating to those 
elements was paid. The 10% discretionary 
bonus was paid in full as considerable 
progress was achieved during 2012 in 
positioning the Group for future growth.

The bonus arrangements detailed above 
were applied to all Executive Directors, 
as they each contribute individually to the 
management and development of each 
of the Group’s businesses. In the opinion 
of the Committee the performance of the 
Executive Directors during 2012 was strong. 
The proﬁtability measure on which the 
bonus payments are based is not dependent 
on any future forecast outcomes, in relation 
to matters which require judgemental 
quantiﬁcation at the balance sheet date in 
relation to their likely eventual outcomes, and 
there are no deferred or retention elements.

Under the 2013 bonus scheme structure 
Executive Directors will be awarded up to a 
maximum of 100% of base salary as follows:

 – up to 80% based on the achievement 

of a net income target on a sliding scale 
commencing at the level of 2012 actual 
net income earning a 21.5% bonus with 
the maximum amount payable at a net 
income level at least 15% above that 
budgeted; and

 – up to 20% based on individual Director’s 
performance against pre-determined 
targets.

The total all cash bonus is subject to a claw 
back clause in circumstances of exceptional 
misstatement or misconduct.

Executive share options

All employee sharesave scheme

Grants of executive share options with a 
maximum value of 100% of basic salary 
were awarded in 2008, 2009 and 2010. 
These executive share options are 
exercisable after three years, subject to the 
growth in the Group’s normalised earnings 
per share equalling or exceeding the growth 
in the UK Retail Price Index by an average 
of 3% per year (9.3% over three years). 
The scheme allows for options to be 
satisﬁed using new issue shares. 

With the introduction of the Company’s new 
Long Term Investment Plan, as below, the 
Committee has no plans to grant further 
options under this scheme in the foreseeable 
future although it retains the ability to do so.

Long Term Incentive Plan

The maximum individual award to any 
Director or employee is 100% of basic 
salary per year although in exceptional 
circumstances the Committee may award 
up to 200% during a ﬁnancial year. Awards 
which will vest after three years comprise 
nil cost options subject to a performance 
condition and be satisﬁed by the issue of 
new shares or transfer of existing shares. 
An Employee Beneﬁt Trust has been set 
up in connection with this plan.

A grant of executive share options with a 
maximum value of 100% of basic salary was 
awarded during the year. The Committee 
decided that the performance condition will 
be based on the Group’s compound growth 
in earnings per share over three years which 
is considered to be the most appropriate 
metric for an international business. Awards 
vest on a sliding scale with 25% of the 
maximum award applied at the minimum 
EPS compound growth target of 6% per 
year. The full award only vests where EPS 
compound growth is at least 14.5% per year.

The Group operates a sharesave scheme 
approved by HM Revenue and Customs 
which is open to eligible employees in all 
the countries in which the Group currently 
operates including the Executive Directors. 
Under this scheme employees make regular 
savings for a three year period, following 
which they have six months to exercise the 
options granted. No performance conditions 
are attached to options granted under the 
scheme, as it is an all employee scheme. 
The scheme is administered by 
Computershare.

Pension arrangements

Employer contributions for 2012 in respect 
of Executive Directors were made to money 
purchase pension schemes at the rates set 
out in their service contracts, which were 
up to 7% of basic salary for R. Watson, 
C. Patten, P. Heffer and N. Majewski and 
20% for T. Bergman. From 1 January 2013 
employer contributions have been raised to 
15% of basic salary for R. Watson, P. Heffer 
and N. Majewski and to 24% for T. Bergman. 
No pension contributions are made in 
respect of Non-Executive Directors.

Directors’ service contracts
Executive Directors

All Executive Directors have service 
agreements without expiry dates, which 
commenced on 24 April 2007 and can be 
terminated by the giving of 12 months’ notice 
by either party. 

Non-Executive Directors

D. Naish and C. Marsh entered into a letter 
of appointment with the Company dated 
24 April 2007 for an initial period of three 
years. Their appointments were extended 
for a further three years in 2010 and again on 
27 March 2013. C. Smith entered into a letter 
of appointment with the Company with effect 
from 1 October 2010 for an initial period 
of three years. All Non-Executive Directors’ 
appointments are terminable upon six 
months’ notice by either party. 

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

37

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circumstances including breach, criminal 
offence, misconduct or bankruptcy there 
is no such entitlement to payment in lieu 
of notice. Non-Executive Directors are 
not entitled to any compensation for loss 
of ofﬁce.

A termination payment comprising 12 
months’ basic salary was made to C. Patten 
during the year. No other termination 
payments were made during the year to any 
of the Executive or Non-Executive Directors.

The Non-Executive Directors receive the 
fees set out in their letters of appointment. 
The remuneration of the Non-Executive 
Directors is determined by the Non-
Executive Chairman and the Executive 
Directors and reﬂects the time, commitment 
and responsibility of their roles. The Non-
Executive Chairman’s remuneration is 
determined by the Executive Directors.

There is no requirement for Directors to hold 
shares in the Company.

Termination payments
On termination Executive Directors are 
entitled to receive a lump sum payment 
in lieu of notice, subject to a maximum 
of 12 months, equal to their basic salary 
plus any accrued holiday pay. However in 

Share scheme dilution limits
The Company applies restrictions over the 
issue of new shares under all its share 
schemes of 10% in 10 years and 5% 
in 10 years for discretionary schemes. 
As at 30 December 2012 the headroom 
available under these limits was 4.0% and 
0% respectively.

TSR performance graph
The graph below shows the Total 
Shareholder Return performance (share price 
movements plus reinvested dividends) of the 
Company compared against the FTSE Small 
Cap covering the ﬁve years 2008 to 2012. 
The FTSE Small Cap Index is, in the opinion 
of the Directors, the most appropriate index 
against which the TSR of the Company 
should be measured.

200

150

100

50

2008

2009

2010

2011

2012

Hilton Food Group – Total Return Index
FTSE All Small – Total Return Index

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Remuneration report
continued

Audited information
The following information has been audited by the Company’s auditors, PricewaterhouseCoopers LLP, as required by the Companies Act 2006.

Directors’ remuneration
The remuneration of Directors for the year was as follows:

Fees and basic salary
Bonuses
Beneﬁts in kind
Termination payments

Pension contributions

2012  
£’000
1,518
120
162
282
2,082
138
2,220

2011  
£’000
1,606
609
152
–
2,367
154
2,521

The remuneration of individual Directors, including pension contributions, is set out below.

Executive Directors
R. Watson
C. Patten
P. Heffer
T. Bergman
N. Majewski
Non-Executive Directors
D. Naish
C. Marsh
C. Smith
Total

Directors’  
salaries/fees  
£’000

Annual  
bonus  
£’000

Beneﬁts  
in kind  
£’000

Termination  
payments  
£’000

Total  
2012  
£’000

Total  
2011  
£’000

Pension  
2012  
£’000

Pension  
2011  
£’000

353
141
282
290
282

80
45
45
1,518

35
–
28
29
28

–
–
–
120

41
40
35
21
25

–
–
–
162

–
282
–
–
–

–
–
–
282

429
463
345
340
335

80
45
45
2,082

512
422
416
442
407

80
45
43
2,367

24
10
20
73
11

–
–
–
138

23
19
19
77
16

–
–
–
154

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

39

Share option schemes 
Options over Hilton Food Group plc ordinary shares granted under the executive and sharesave share option schemes and the Long Term 
Incentive Plan held by Directors were as follows:

Director
R. Watson

C. Patten

P. Heffer

T. Bergman

N. Majewski

At 1 January 
2012
150,376
180,258
130,610
6,530
– 
120,301
144,206
104,488
120,301
144,206
6,530
104,488

120,301
154,751
113,610

120,301
144,206
104,488
6,530

Granted
– 
– 
– 
– 
141,585
– 
– 
– 
– 
– 
– 
– 
–  113,268
– 
– 
– 
–  119,437
– 
– 
– 
– 
–  113,268

Market price 
on exercise 
(pence)
–
–
–
260.00
–
230.00
230.00
256.00
–
–
260.00
–
–
–
–
–
–
–
–
–
260.00
–

Exercised
– 
– 
– 
(6,530)
– 
(120,301)
(144,206)
(75,463)
– 
– 
(6,530)
– 
– 
– 
– 
– 
– 
– 
– 
– 
(6,530)
– 

At  
30 December 
2012
150,376
180,258
130,610
– 
141,585
– 
– 
– 
120,301
144,206
– 
104,488
113,268
120,301
154,751
113,610
119,437
120,301
144,206
104,488
– 
113,268

Lapsed
– 
– 
– 
– 
– 
– 
– 
(29,025)
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 

Exercise 
price (pence)
199.50
174.75
246.00
147.00
nil
199.50
174.75
246.00
199.50
174.75
147.00
246.00
nil
199.50
174.75
246.00
nil
199.50
174.75
246.00
147.00
nil

Latest 
Earliest 
exercise date
exercise date
12.05.18
12.05.11
01.05.12
01.05.19
10.05.13 10.05.20
19.06.12
19.12.11
26.06.15 26.06.22
12.05.18
12.05.11
01.05.19
01.05.12
10.05.13 10.05.20
12.05.18
12.05.11
01.05.19
01.05.12
19.06.12
19.12.11
10.05.13 10.05.20
26.06.15 26.06.22
12.05.18
12.05.11
01.05.19
01.05.12
10.05.13 10.05.20
26.06.15 26.06.22
12.05.18
12.05.11
01.05.12
01.05.19
10.05.13 10.05.20
19.06.12
19.12.11
26.06.15 26.06.22

Notes
1
1
1
2
3
1
1
1
1
1
2
1
3
1
1
1
3
1
1
1
2
3

1.  Executive share options are subject to a performance condition of growth in the Company’s normalised Earnings per share equalling or exceeding the growth in the UK Retail 

Prices Index by an average of 3% per annum (9.3% over three years), for the options to be exercisable.

2. Options granted under the sharesave scheme. As this is an all employee scheme, no performance conditions are attached.

3.  Nil cost options granted under the Long Term Incentive Plan are subject to a performance condition of compound growth in the Group’s earnings per share over three years. 

Awards vest on a sliding scale between 25% for 6% EPS compound growth and 100% for at least 14.5% EPS compound growth.

The closing market share price on 31 December 2012 was 275.00p and the high and low closing market share prices during 2012 were 
310.00p and 235.25p respectively.

On behalf of the Board

Chris Marsh 
Chairman of the Remuneration 
Committee
27 March 2013

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40

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Corporate Governance statement

The UK Corporate Governance Code
The Board has prepared this report with 
reference to the UK Corporate Governance 
Code issued in June 2010. The Directors 
consider that the Company has during 2012 
complied with the nine requirements of this 
Code, taking into account the provisions for 
smaller companies. 

This statement and the Remuneration report 
on pages 35 to 39, detail how the Board 
applies the principles of good governance 
and best practice as set out in this UK 
Corporate Governance Code.

The Financial Reporting Council issued a 
revised UK Corporate Governance Code in 
September 2012 which applies to accounting 
periods beginning on or after 1 October 
2012. The provisions of these Codes can be 
obtained from www.frc.org.uk/corporate/
ukcgcode.cfm.

Senior Independent Director

Chris Marsh, the Senior Independent 
Director, is available to shareholders as an 
alternative to the Non-Executive Chairman, 
Chief Executive and Finance Director. 
He ensures that he is available to meet 
shareholders, as required, and reports any 
relevant ﬁndings to the Board.

Rotation of Directors

The Company’s Articles of Association 
provide that one-third of the Directors retire 
by rotation at each Annual General Meeting 
and that all new Directors are subject to 
election by shareholders at the ﬁrst 
opportunity following their appointment. 
Robert Watson and Chris Marsh retire in 
accordance with the Articles of Association 
at the forthcoming Annual General Meeting 
and, being eligible, each offers himself for 
re-election.

Performance evaluation

The Non-Executive Chairman leads a formal 
annual performance evaluation of the Board 
and its standing Committees and meets with 
the Non-Executive Directors at least once a 
year to convey his conclusions. During 2012 
the Board completed the external evaluation 
process, which had commenced in the 
previous year, implementing its 
recommendations. Following the resignation 
of Colin Patten the Board was restructured in 
order to adopt simpler and more transparent 
responsibilities and reporting lines. A wider 
review of management structures resulted 
in the clearer establishment of centres of 
excellence in technical and specialist areas.

The Board
Membership

At the date of this report the Board consists 
of four Executive Directors and three 
Non-Executive Directors whose names, 
responsibilities, brief biographies and 
membership of Board Committees are set 
out on pages 28 and 29. The Directors bring 
strong judgement and expertise to the 
Board’s deliberations and the Board is of 
sufﬁcient size and diversity to achieve the 
balance of skills and experience appropriate 
for the requirements of the business. 

Non-Executive Directors

The Non-Executive Directors include the 
Non-Executive Chairman and the Senior 
Independent Director. With the exception 
of the Non-Executive Chairman, who is 
presumed under the Code not to be 
independent following his appointment, the 
Board considers the Non-Executive Directors 
to be independent. The Non-Executive 
Directors do not participate in any of the 
Group’s pension arrangements or in any of 
the Group’s bonus or share option schemes. 
There is a clear written division of 
responsibilities between the Non-Executive 
Chairman and the Chief Executive which has 
been agreed by the Board.

the appropriate framework of checks and 
balances are maintained in place.

The Board has speciﬁc powers reserved to it 
contained in a schedule of matters reserved 
for decision by the Board which include:

 – acquisitions and disposals;

 – major trading agreements;

 – major capital expenditure projects;

 – dividends;

 – treasury and risk management policies;

 – approval of budgets, half yearly and annual 

accounts and interim management 
statements; and

 – the giving of any guarantees or letters of 

comfort.

The Board meets not less than eight times 
a year to direct and control the strategy and 
operating performance of the Group. 
The Board also has responsibility for setting 
policy and monitoring from time to time such 
matters as ﬁnancial and risk control, health 
and safety policy, environmental issues and 
management succession and planning. The 
Board has delegated to the Chief Executive 
and the Executive Directors responsibility for 
the execution of the agreed strategy and 
budget and the day-to-day management of 
the Group’s operations. Day-to-day decisions 
in relation to procurement and supply chain 
management, factory operations and 
customer liaison are delegated to the senior 
management teams at each operational site. 

Board responsibilities

Directors’ conﬂicts of interest

The Board is collectively responsible for 
promoting the success of the Group, within 
a framework of prudent and effective 
controls that enable risk to be assessed and 
appropriately managed. It is responsible for 
setting and approving the strategy and key 
policies of the Group and monitoring the 
progress towards achieving these objectives. 
The Board aims to enhance shareholder 
value by providing entrepreneurial leadership 
for the Group, whilst simultaneously ensuring 

Under the Companies Act 2006, the Group’s 
Directors have an obligation to avoid any 
situation where they have a conﬂict of 
interests. The Group has in place procedures 
that require all Directors to notify the Group 
of any conﬂicts of interest and, for any such 
conﬂicts of interest to be authorised by 
non-interested Directors, provided the 
Company’s articles allow for this. During the 
current ﬁnancial year the Group were not 
advised of nor did the Group identify any 
such conﬂicts of interest.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

41

Information and support provided to 
Board members

Members of the Board and its Committees 
are given appropriate documentation in 
advance of each Board and Committee 
meeting. For regular Board meetings these 
include a detailed period report on current 
and forecast trading, with comparisons 
against both budget and prior years. For all 
meetings appropriate explanatory papers are 

circulated well in advance on matters which 
the Board or Committee will be required to 
approve or provide responses.

The Board operates both formally through 
Board and Committee meetings and 
informally through regular contact between 
Directors. To assist them in carrying out their 
responsibilities the Directors have, in addition 
to full and timely access to all relevant 
information from management in advance 

of Board meetings, the right to obtain 
independent professional advice at the 
Company’s expense and the advice and 
services of the Company Secretary to enable 
them to perform their duties as Directors. 
The Company Secretary is responsible 
to the Board, through the Chairman, for all 
governance matters. The appointment and 
removal of the Company Secretary 
is determined by the Board as a whole.

Meeting attendance

The following table sets out the Board and Committee meeting attendance by Board members, including the maximum number of meetings 
which could have been attended.

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Number of meetings
R. Watson
C. Patten
P. Heffer
T. Bergman
N. Majewski
D. Naish
C. Marsh
C. Smith

Audit  
Committee
4

Remuneration 
Committee
4

Nomination 
Committee
1

Related Supply 
Committee
2

Risk 
Management 
Committee
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4

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2
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Board
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10

Committees of the Board
The standing committees of the Board 
include the Nomination, Remuneration, 
Audit, Related Supply and Risk Management 
Committees. The Nomination, Remuneration 
and Audit Committees have formal 
terms of reference which can be found 
on the Company’s website at 
www.hiltonfoodgroupplc.com. 

The work of these ﬁve Committees, 
including a summary of their terms of 
reference, is summarised below and in the 
Remuneration report on pages 35 to 39.

Nomination Committee

The Nomination Committee leads the 
process for Board appointments by making 
recommendations to the Board ensuring an 
appropriate balance of skills, knowledge and 
experience having regard for diversity on the 
Board including gender. The Committee 
meets, as required, in order to propose to the 
Board new appointments of Executive and 
Non-Executive Directors. The Chairman has 
discussions with each Director to review and 
agree their training and development needs.

During 2012 the Nomination Committee 
comprised all the Non-Executive Directors 
chaired by Sir David Naish. In a continuing 
stable environment the Committee met 

once during the year but has not been 
required to consider any new appointments.

The Chairman of the Nomination Committee 
will be available at the Annual General 
Meeting to respond to any shareholder 
questions.

Remuneration Committee

During 2012 the Remuneration Committee, 
which was chaired by Chris Marsh and 
meets at least three times a year, comprised 
all the Non-Executive Directors. No Director 
attends any part of a meeting at which 
his own remuneration is discussed. 
The Non-Executive Chairman and the 
Executive Directors determine the 

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42

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Corporate Governance statement
continued

remuneration of the Non-Executive Directors 
and the remuneration of the Non-Executive 
Chairman is determined by the Executive 
Directors. The Committee determines, 
within a framework agreed by the Board, 
Executive Director’s individual remuneration 
packages and terms and conditions of 
service, and determines the performance 
conditions for bonus and incentive schemes 
and the issue of executive share options. 
It also recommends and monitors the level 
and structure of senior management 
remuneration immediately below Board level. 
The Committee has access to advice from 
the Company Secretary and such external 
surveys of remuneration in comparable 
companies as it requires.

The Remuneration report on pages 35 to 
39 provides fuller details of the Company’s 
executive remuneration policy and practice, 
and the working of the Committee. 
The Chairman of the Remuneration 
Committee will be available at the Annual 
General Meeting to respond to any 
shareholder questions.

Audit Committee

The Audit Committee plays a key role in 
reviewing the Group’s ﬁnancial controls 
and reporting. It manages the Group’s 
relationships with internal and external 
auditors and assists with the Group risk 
ﬁnancial control procedures and regulatory 
compliance.

During 2012 the Audit Committee, which 
was chaired by Colin Smith and meets at 
least three times a year, comprised all the 
Non-Executive Directors, who between 
them have a wide experience of industry 
and commerce. 

The Finance Director and the Group Financial 
Controller, together with the external auditors 
and the Group Internal Auditor, attend the 
Audit Committee meetings, as appropriate. 
The external auditors and the Group Internal 
Auditor have the opportunity for direct 
access to the Committee, without the 
Executive Directors being present.

The Committee reviews the Group’s 
accounting policies and internal accounting 
and control reports, together with the results 
of the work undertaken by Hilton’s internal 
audit function and all reports from the external 
auditors. The Committee has overall 
responsibility for monitoring the integrity 
of ﬁnancial statements and related 
announcements, together with all aspects 
of internal control.

The Committee reviews the Group’s interim 
and full year ﬁnancial statements, the scope, 
results and effectiveness of the work of 
the internal audit function, the internal and 
external audit plans, reports from the internal 
and external auditors and monitors 
the external auditor’s independence. 
The Committee is responsible for 
recommending the appointment or removal 
of the external auditors and for monitoring 
their effectiveness, remuneration and terms 
of engagement, including the nature and 
level of non-audit services. The Board 
reviews annually the Group’s systems 
of internal control on the basis of a report 
by the Audit Committee.

Hilton has implemented a policy on the use 
of external auditors for non-audit services 
designed to preserve the independence of 
the external auditors. This policy categorises 
non-audit services into (i) continuing services 
which the Committee permits external 
auditors to undertake subject to a price cap, 
(ii) irregular or signiﬁcant services requiring 
Committee approval on a case by case basis 
and (iii) non-permitted services.

A whistle-blowing policy is in place in 
accordance with which staff can, in 
conﬁdence, raise any concerns about any 
actual or potential improprieties in relation to 
matters of ﬁnancial reporting or any other 
aspect of the Group’s businesses. The Group 
has also implemented an anti-bribery and 
anti-corruption policy to comply with the 
Bribery Act 2010.

The Chairman of the Audit Committee will 
be available at the Annual General Meeting to 
respond to any shareholder questions.

Related Supply Committee

The Related Supply Committee during 2012 
comprised all the Non-Executive Directors 
and is chaired by Sir David Naish. The 
Committee’s principal responsibility is to 
ensure that all commercial arrangements 
between the Group and shareholder owned 
supplies are conducted on a strictly arm’s 
length basis and in accordance with the 
terms of the supply agreements agreed 
between the Group and those parties. 
This avoids any situations which could 
give rise to a conﬂict of interests for some 
Directors, in line with the Group’s conﬂict 
authorisation procedures. 

The Committee monitors the quantity and 
terms of orders placed with shareholder 
suppliers and the shareholder suppliers’ 
performance across a range of key 
performance indicators, and is authorised to 
seek any information it requires, whether 
from employees of the Group or externally. 
The Committee reports to the Board on 
issues, recommendations and decisions it 
has made. 

During 2012 the last remaining shareholder 
owned supplier ceased to be a related party 
supplier following C. Patten’s resignation as a 
Board Director in May 2012. Accordingly the 
Board has approved the disbandment of this 
specialist Board Committee as there are no 

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

43

longer any related party suppliers requiring 
oversight. However the Committee will be 
reconvened should any new related party 
suppliers be identiﬁed in the future.

The Chairman of the Related Supply 
Committee will be available at the Annual 
General Meeting to respond to any 
shareholder questions.

Risk Management Committee

The Risk Management Committee is chaired 
by the Finance Director, Nigel Majewski, 
and comprises the six operating subsidiary 
company operations managers and the 
Group Internal Auditor, together with other 
personnel throughout the Group as required. 
The Committee meets regularly and at least 
six times a year. Its principal functions are 
to raise the level of management awareness 
of and accountability for business risks faced, 
embed risk management into the Group 
culture, provide a mechanism for risk 
management issues to be discussed and 
disseminated, and to provide advice on and 
co-ordinate risk management strategies 
across the Group ensuring they receive the 
appropriate level of sponsorship and support. 
The Committee is authorised to seek any  
information it requires from Group 
employees as well as any external legal 
or professional advice it requires and reports 
to the Board following each meeting.

The work of the Committee in 2012 
continued the development of disaster 
recovery plans including sister site support 
and progress towards BS 25999 Business 
Continuity Management. Hilton’s Dutch 
subsidiary received BS 25999 accreditation 
during the year.

The Chairman of the Risk Management 
Committee will be available at the Annual 
General Meeting to respond to any 
shareholder questions.

Information and support provided to 
Committee members

The Committees are provided with sufﬁcient 
resources to undertake their duties through 
access to the Company Secretary and the 
ability to obtain such independent 
professional advice, at the Company’s 
expense, as they deem necessary.

Shareholder communications
The Board promotes open communication 
with shareholders. The Chief Executive and 
Finance Director meet regularly and have 
dialogue with institutional shareholders both 
to discuss the Group’s performance and 
prospects and to develop an understanding 
of their views which are relayed back to the 
Board. The Board’s current assessment of 
the Group’s position and prospects are set 
out in the Chairman’s statement, the Chief 
Executive’s summary, the Financial review 
and the Business review on pages 6 to 25. 
Twice a year general presentations are given 
to analysts covering the annual and half year 
results and other reports and forecasts, 
together with relevant articles in the ﬁnancial 
press, are circulated to the Board.

The other Executive Directors are available 
to meet the Company’s major shareholders 
if required and the Senior Independent 
Director is available to listen to the views 
of shareholders, should they have concerns 
which have not been previously resolved 
or which it was inappropriate to voice 
at prior meetings. All shareholders have 
the opportunity to ask questions at the 
Company’s Annual General Meeting, which 
all Directors and the Chairmen of every Board 
Committee attend. In addition the Group’s 
website containing published information 
and press releases can be found at 
www.hiltonfoodgroupplc.com.

Internal control
The Board of Directors has overall 
responsibility for the Group’s systems 
of internal control including ﬁnancial, 
operational and compliance controls and risk 
management which operate to safeguard the 
shareholders’ investments and the Group’s 
assets and for reviewing their continuing 
effectiveness. Such an internal control 
system can only provide reasonable and not 
absolute assurance against material 
misstatement or loss as it is designed to 
manage rather than eliminate risk and failure 
to meet business objectives.

The Group operates within a clearly deﬁned 
organisational structure with established 
responsibilities, authorities and reporting lines 
to the Board. The organisational structure is 
designed to plan, execute, monitor and 
control the Group’s objectives effectively and 
ensure internal control becomes integral to all 
the Group’s operations. The Board conﬁrms 
that the Group’s internal risk based control 
systems have been fully operative up to the 
date of the Annual report being approved, 
key ongoing processes and features of which 
are set out below:

 – appropriate mechanisms to identify and 

evaluate business risk;

 – a Group internal audit function which is 
involved in the review and testing of the 
internal control systems and of key risks 
across the Group in accordance with an 
annual programme agreed with the Audit 
Committee;

 – a strong control environment;

 – an information and communication 

process; and

 – a monitoring system and regular Board 

reviews for effectiveness.

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44

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Corporate Governance statement
continued

Auditor independence
The Board is satisﬁed that 
PricewaterhouseCoopers LLP has adequate 
policies, processes and safeguards in place, 
including partner rotation designed to ensure 
that auditor objectivity and independence is 
maintained. The Company meets its 
obligations for maintaining the appropriate 
relationship with the external auditors 
through the Audit Committee whose terms 
of reference include an obligation to consider 
and keep under continuing review the degree 
of work undertaken by the external auditors, 
other than the statutory audit, so as to ensure 
such objectivity and independence is 
safeguarded. Details of fees for non-audit 
work are set out in note 6 on page 65 of the 
ﬁnancial statements.

By order of the Board

Neil George 
Company Secretary
27 March 2013

The Group’s planning and ﬁnancial reporting 
procedures include detailed budgets and a 
three year strategic plan which are approved 
by the Board. Periodic management 
accounts report performance compared 
to the budget and additionally forecasts 
are updated through the year. These 
management accounts together with 
half-yearly and annual accounts produced 
by the Group’s subsidiary companies are 
reviewed together with the methodology 
used for consolidating these into the 
periodical, half-yearly and annual accounts. 
All ﬁnancial information published by the 
Group is approved by the Board and Audit 
Committee.

The Finance Director and Group Financial 
Controller are responsible for overseeing the 
Group’s internal controls. The management 
of the Group’s businesses have identiﬁed the 
key business risks within their operations, 
considered their ﬁnancial implications and 
assessed the effectiveness of the control 
processes in place to mitigate these risks. 
The Board has reviewed a summary of these 
ﬁndings and this, together with its direct 
involvement in the strategies of the business, 
investment appraisal and budgeting 
processes, has enabled the Board to report 
on the effectiveness of the Group’s internal 
control systems, which comply with the 
Turnbull Guidance.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

45

Corporate and Social Responsibility report
Taking care of our stakeholders 
and the environment

Hilton Food Group recognises its social, 
ethical and environmental responsibilities 
arising from its operations and to the welfare 
of employees, customers, suppliers and the 
communities in which we operate. The 
Group is committed to working in an ethical, 
open and honest manner to produce 
products of the highest quality, responsibly 
and sustainably. The philosophies which 
underpin our policies for the environment, 
regulatory compliance, health and safety, 
product quality, and integrity and ethical 
conduct are summarised below.

Complete food assurance from 
farm to fork
It is essential that consumers have complete 
conﬁdence in the meat products they 
purchase and correct product label 
information is key to gaining consumer trust. 
Hilton has a pivotal role in managing a supply 
chain which starts on the farm. Our oversight 
of farm and abattoir standards ensures that 
the meat products we produce are of the 
highest quality and that the label correctly 
describes its provenance including species 
and country of origin.

Hilton strives, in partnership with our retail 
customers, to successfully deliver safe, 
consistently high quality, convenient and 
ready to use retail packs of beef, lamb, pork 
and added value meat products to ensure the 
highest level of consumer satisfaction. Our 
products are governed by EU legislation and 
food safety standards throughout the meat 
supply chain. Additionally our retail partners, 
who support the Global Food Safety 
Initiative, demand the best animal welfare 
standards, food factory standards and 
quality systems to enhance their levels of 
brand integrity.

A short and transparent supply chain 
with full traceability

Hilton is committed to ensuring that the 
supply chain in which we play a signiﬁcant 

part is as short as possible. Farm reared 
animals are slaughtered at abattoirs from 
where Hilton sources its meats and our food 
products are delivered directly to our retail 
customers for sale in their stores. Our quality 
systems provide full traceability of all meat 
that we use.

Where our meat comes from

As specialist retail meat packers, Hilton can 
source its requirements for primal meat from 
the most advanced abattoir plants, to 
exacting speciﬁcations, ensuring cost 
effectiveness. Most of our meat is sourced 
locally within the EU and also from other 
regions such as New Zealand and 
South America. 

Science and technology plays a large part in 
the consistent achievement of meat quality 
and inﬂuences Hilton’s procurement of meat 
from large and small suppliers. Together with 
our retail partners we ensure that consumers 
have the best choice and can select on the 
basis of provenance, quality and price. For 
example, Hilton is able to focus its meat 
sourcing strategy on high quality pasture fed 
beef from Ireland and good welfare produced 
pork from the Netherlands, UK, Germany 
and Denmark where efﬁcient production 
methods enable competitive prices.

Farm standards 

Good quality meat can only be produced 
from animals reared and handled to the best 
animal welfare standards, as freedom from 
stress is a fundamental requirement not only 
for ethical and sustainable reasons but also to 
achieve consistent meat quality for 
consumers. In addition farmers give a lot of 
thought to animal nutrition, not only to 
achieve efﬁcient weight gain but also to 
meet consumer demands on ﬂavour and fat 
content. Hilton works closely with its 
suppliers and the farming community to 
continually improve the cleanliness of 

animals presented for slaughter as this has a 
direct effect on the reduction of any 
pathogen risks associated with fresh meat.

Abattoir standards

It is well established in science that abattoir 
standards contribute signiﬁcantly to the 
achievement of consistent meat quality. 
Hilton works closely with our retail partners 
to set best in class speciﬁcations, ensuring 
humane and effective stunning and control 
of microbial contamination. Also pH and 
temperature drop is controlled according to 
best scientiﬁc practice. Meat is matured and 
boned according to clear and enforced primal 
speciﬁcations that are agreed between 
Hilton, its retail customers and abattoir 
suppliers. Hilton develops long term trading 
partnerships with our suppliers by facilitating 
achievement of our retail customer 
requirements through auditing by third party 
experts and development of sustainable 
corrective action plans where any 
non-conformances are identiﬁed. We 
support our suppliers in applying abattoir 
standards covering factory structure, animal 
welfare standards, control of contamination 
through cleaning and disinfection, 
temperature controls, carcass dressing, 
boning, and packing standards and 
traceability. Auditing as a means of 
challenging standards is now expected by 
consumers together with well established 
procedures throughout the food chain.

Hilton continually develops and reﬁnes data 
collection and reporting particularly in the key 
area of meat raw material. Samples collected 
from each delivery are assessed for 
compliance to microbiological standards and 
compliance to agreed quality speciﬁcations. 
Results are used to assess the performance 
of suppliers and achieve continuous 
improvement.

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46

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Corporate and Social Responsibility report
continued

Environment
The Group takes all practicable steps to 
carefully manage its impact on the natural 
environment. We believe improvements to 
our environmental performance can make a 
difference to society and are committed to 
assessing the impacts of our operations on 
land, water, air and biodiversity, and to 
managing our waste, in all its forms, by 
reusing or recycling it, where practicable.

In the context of the total carbon footprint of 
retail packed meat, the proportion which can 
be inﬂuenced by the Group’s packing activity 
is very small indeed, as the Group is not 
involved in the breeding, growing and 
slaughtering of animals, and the packaging 
formats used for its products are selected by 
our customers. The Group is nevertheless 
committed, working closely with its 
customers to minimising its environmental 
impact.

Regulatory compliance

The Group is in full compliance with all 
environmental regulations, permits and 
consent limits which apply to each of its 
packing plants in each country of operation 
and views such compliance as a high priority, 
looking to make continuing improvements 
with respect to the environment in all its 
operations whilst ensuring that we manage 
our environmental performance in 
accordance with evolving legal and regulatory 
requirements and international standards.

Retail packing at Hilton

We are proud of our modern specialised 
meat processing and packing facilities which 
use state of the art production equipment, 
including a high degree of automation and 
use of robotic equipment which minimises 
handling. 

Our well trained production operatives are 
responsible for the quality of Hilton’s retail 
partners’ products and they are supported 
by highly qualiﬁed and experienced quality 
assurance and technical teams at each site. 
Hilton maintains annual third party 
accreditation through FSSC (Food Safety 
System Certiﬁcation) using ISO 22000 and 
PAS 220 or BRC (British Retail Consortium) 
Issue 6 and we constantly challenge 
ourselves through cross auditing of hygiene 
and quality system standards by technical 
and quality managers from other Hilton sites. 
In addition we welcome the constant 
attention of our retail customers who make 
frequent visits to our sites, some of which 
are unannounced. This level of attention is 
a valuable part of our partnership with our 
retail customers and gives consumers 
conﬁdence that Hilton can consistently 
meet their expectations.

Temperature control throughout our storage 
and production departments is fundamental 
to the quality of our products and this is 
centrally controlled with alarm alerts if 
there is any deviation from speciﬁed 
temperature requirements. 

Specialised highly trained hygiene teams 
deep clean our factories every day using the 
latest technology and these clearly speciﬁed 
procedures are veriﬁed using not only trained 
auditors but also the latest monitoring 
equipment. Top quality meat from our 
suppliers, temperature control and high class 
standards of hygiene ensure that Hilton’s 
retail partners receive product that 
consistently achieves agreed shelf life and 

meets customer expectations. All staff and 
visitors can only enter Hilton production 
facilities wearing speciﬁed personal 
protective clothing and by passing through 
barrier protected hand washing and sanitising 
facilities. The effectiveness of these entrance 
procedures are routinely veriﬁed using hand 
swabbing checks.

New product development is carried out in 
partnership with our retail customers and we 
pride ourselves on the kitchen facilities that 
Hilton has to facilitate this process of 
innovation and development. It is a 
fundamental strength of the Hilton team that 
a culture of sharing best practice is 
encouraged and developed. Technical 
managers from all our sites meet regularly to 
share experiences, agree innovation 
initiatives and develop processes and 
systems to ensure that Hilton remains at the 
forefront of our industry. 

Graduate recruitment is fundamental to 
Hilton’s future and our training programme 
includes completion of a Food Science 
masters degree at Bristol University, 
following which our trained graduates are 
placed into key management roles. We 
maintain strong links with academia and 
technological advances through Campden 
BRI, Bristol University and attendance at the 
annual International Conference of Meat 
Science and Technology.

Awards

Hilton takes great pride in its products and 
we are delighted when the quality and 
innovation of these products is recognised. 
During 2012 in Ireland we received a number 
of awards in the Guild of Fine Food Great 
Taste Awards and Irish Food Awards. In the 
Netherlands our extra lean mince won an 
Allerhande Award for best innovation. In 
Denmark we were awarded a green idea 
prize by our customer for developing a 
minced beef product including vegetables.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

47

Carbon footprint and greenhouse gases

The Group’s carbon footprint has been 
estimated using emissions factors published 
by Defra. In addition to carbon dioxide Hilton 
uses some refrigerants but has extremely 
low or no emissions of the other greenhouse 
gases listed in the Kyoto Protocol. Hilton 
recognises the environmental impact of 
business travel in addition to the 
consequential decrease in productive 
working and during the year invested in 
enhanced video conferencing technology 
across all its sites so as to minimise the 
amount of required travel by its employees.

Tonnes of CO2 per 
tonne of product
 0.13
 0.14
 0.13

2012
2011
2010

Energy usage

Our processing and packing operations 
consume electricity, gas, water and industrial 
gases and at all our sites our management 
teams work to identify areas for further 
efﬁciency gains in terms of energy usage. 
The Group invests heavily in maintaining 
state of the art high speed packing facilities 
which progressively reduce energy costs per 
unit packed. Over time the development of 
packing technology means that any given 
volume of meat can be packed with fewer 
high speed lines. Performance on energy 
usage, the cost of which has been affected 
by recent sharp rises in utility costs, is 
shown below:

2012 – £’000
2011 – £’000
2010 – £’000
2012 – Cost 
per kg (pence)
2011 – Cost 
per kg (pence)
2010 – Cost 
per kg (pence)

Electricity 
and gas
4,404
4,147
3,060

Liquid CO2 
and O2
 819
880
979

Water
 586
512
260

 2.1

 0.28

 0.39

 2.0

 0.24

 0.42

1.6

0.13

0.50

Costs per kilogram shown above are per 
kilogram of packed meat sold. Costs per unit 
of energy consumed will always be subject 
to external factors entirely beyond the 
Group’s control.

employees. Two members of the Board, 
Philip Heffer and Theo Bergman, have been 
assigned responsibility for health and safety 
and environmental matters across the 
Group’s operational sites. 

We monitor and review all incidents and 
accidents in the workplace so that we can 
take appropriate action to improve working 
conditions whilst remaining focused on 
reducing both the absolute number of 
accidents and the number of serious 
accidents. Formal reporting procedures are in 
place at every site so that the Group can 
monitor safety performance at a local level. 
There is a full time safety ofﬁcer at each site 
who monitors the key measures for safety 
performance, which include the number of 
serious and non-serious accidents and the 
number of working days lost through injury, 
together with short and long term sickness 
levels, key statistics which are shown below 
for 2012:

Average 
number of 
employees
2,266
2,181
1,909

Serious 
accidents
26
10
30

2012
2011
2010

Recorded 
accidents 
per 
100,000 
hours 
worked
5.5
6.0
9.0

Sickness 
rate (%)
5.3%
5.2%
5.6%

Waste and packaging

A degree of wastage is unavoidable in our 
businesses, as we have to ensure that our 
products continually meet stringent 
standards for quality and presentation. 
We work actively to reduce our usage of 
materials and the reduction of product and 
packaging waste has a very high priority 
across the Group. The yield losses incurred in 
processing and packing meat and packaging 
wastage are monitored throughout each day 
across the entire product range, at every 
Hilton site. Performance on meat yields, 
being the percentage by which the weight of 
meat purchased as raw material compares 
with that incorporated in ﬁnished packed 
meat products, is minimised by, where 
possible, using off-cuts in mince, burgers and 
other part processed meat products and by 
ensuring that meat purchased meets tight 
speciﬁcations. 

Packaging is useful as it protects our 
products and prolongs shelf life thus reducing 
food waste and this beneﬁt offsets the 
environmental impact of the materials and 
energy used in its manufacture. Hilton is 
committed with its retail partners to reducing 
packaging through use of lightweight and 
recyclable materials from sustainable sources. 

Workplace
Health and safety

One of Hilton’s top priorities is to achieve 
continual improvements in health and safety. 
The Group requires all its subsidiaries to 
achieve high health and safety standards 
within their individual operations. All 
subsidiaries conduct regular formal health 
and safety reviews. Managers and 
employees review policies, processes and 
procedures in order to ensure that risks are 
properly assessed, with appropriate actions 
taken in order to protect the safety of 

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48

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Corporate and Social Responsibility report
continued

Our people

We recognise that driving our future growth 
and development will continue to depend on 
our ability to attract, grow, train and retain the 
very best managers and staff and to build 
progressively stronger teams at each 
location. We believe that a key to our future 
success lies in the promotion of properly 
trained, knowledgeable and capable 
management from within our organisation 
together with the ongoing motivation of our 
teams in each country.

The Group provides equal opportunity for 
employment, training and career 
development and promotion regardless of 
age, sex, colour, race, religion, ethnic origin or 
other minority groupings. The Group 
encourages the employment of disabled 
people when suitable vacancies are available 
and wherever possible retrains employees 
who become disabled to enable them to do 
work consistent with their aptitudes and 
abilities. Where practicable a ﬂexible 
approach is adopted to assist employees to 
manage a successful work life balance.

Hilton operates to high standards of 
employment practice. The Group has 
ethnically diverse workforces who at each 
location receive the same terms and 
conditions for comparable jobs. Given the 
geographical spread of the Group’s 
operations it is both inappropriate and 
impractical to apply standard employee 
consultation and communication procedures 
across the Group. Each subsidiary is 
accordingly responsible for achieving and 
maintaining appropriate consultation and 
communication with its employees which 
include at all production sites joint 
management and employee committee 
meetings on health and safety, and meetings 
with employees and union representatives to 
discuss issues affecting them.

Trading relationships with partners 
and suppliers

Community
Supporting our local communities

Strong and fair long term relationships with 
partners and suppliers are very important for 
Hilton. The Group’s approach to corporate 
social responsibility is reﬂected in the way 
we behave with our suppliers which is open, 
consistent and honest. In the UK the Group 
follows the Better Payment Practice Code 
which requires a company to agree the 
terms of payment with its suppliers, to 
ensure its suppliers are aware of those terms 
and to abide by them. The Group policy is 
also to apply the requirements of the Code in 
each of its subsidiaries.

Ethical standards

Hilton is committed to integrity. Ethical 
standards are very important in relation to the 
way we conduct our businesses and all the 
Group’s employees are expected to behave 
ethically in their work and adhere to the 
Group’s ethical standards. As an international 
group of companies we are fully aware of the 
broad spread of our responsibilities in all the 
countries in which we operate from 
protecting the environment to safeguarding 
the health and safety of our employees, 
ensuring honesty, integrity and fairness in all 
our business dealings and operating our 
businesses in a safe and responsible manner.

A whistle-blowing policy is in place, in 
accordance with which staff can in 
conﬁdence raise any concerns about any 
actual or potential improprieties in relation to 
matters of ﬁnancial reporting or any other 
aspect of the Group’s businesses. The Group 
has also implemented an anti-bribery and 
anti-corruption policy to comply with the 
Bribery Act 2010.

Hilton’s policy is to recruit locally based 
employees wherever possible in order to 
beneﬁt the communities within which our 
plants are located. Hilton aims to play a 
positive role in all the communities in which it 
operates and we encourage employees to 
become involved with and support the local 
communities around our sites. We recognise 
the social impacts of our business and 
believe in consultation with local 
communities about our activities and about 
the safety and environmental impact of our 
operations. During 2012, in addition to small 
but regular donations made to local 
institutions and sponsorship of personal 
charitable initiatives and cultural events, 
Hilton supported a number of sports and 
musical events and made food bank 
contributions.

The Group seeks to be a good neighbour in 
all its locations. We are committed to social 
responsibility and believe that the success of 
our businesses will reﬂect the quality of the 
relationships we build with our communities 
and legitimate public interest groups.

Social, ethical and environmental risks

The Board carries out a broad review of all 
business risks as highlighted in the Corporate 
Governance statement on pages 40 to 44. 
The scope of this review covers social, 
environmental and ethical matters and is 
aimed at identifying signiﬁcant risks to 
shareholder value whilst providing the 
Board with an opportunity to manage any 
risks identiﬁed.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

49

Independent auditors’ report to the members 
of Hilton Food Group plc

We have audited the ﬁnancial statements 
of Hilton Food Group plc for the 52 weeks 
to 30 December 2012 which comprise the 
Consolidated income statement, the 
Consolidated statement of comprehensive 
income, the Consolidated and Company 
balance sheets, the Consolidated and 
Company statement of changes in equity, 
the Consolidated and Company cash ﬂow 
statements and the related notes. The 
ﬁnancial reporting framework that has been 
applied in their preparation is applicable law 
and International Financial Reporting 
Standards (IFRSs) as adopted by the 
European Union and, as regards the parent 
company ﬁnancial statements, as applied 
in accordance with the provisions of the 
Companies Act 2006.
Respective responsibilities 
of Directors and auditors
As explained more fully in the Statement of 
Directors’ responsibilities set out on page 33, 
the Directors are responsible for the 
preparation of the ﬁnancial statements and 
for being satisﬁed that they give a true and 
fair view. Our responsibility is to audit and 
express an opinion on the ﬁnancial 
statements in accordance with applicable 
law and International Standards on Auditing 
(UK and Ireland). Those standards require 
us to comply with the Auditing Practices 
Board’s Ethical Standards for Auditors.

This report, including the opinions, has been 
prepared for and only for the Company’s 
members as a body in accordance with 
Chapter 3 of Part 16 of the Companies Act 
2006 and for no other purpose. We do not, 
in giving these opinions, 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.
Scope of the audit of the 
ﬁnancial statements 
An audit involves obtaining evidence about 
the amounts and disclosures in the ﬁnancial 
statements sufﬁcient to give reasonable 
assurance that the ﬁnancial statements are 
free from material misstatement, whether 
caused by fraud or error. This includes an 
assessment of: whether the accounting 

policies are appropriate to the Group’s and 
the parent company’s circumstances and 
have been consistently applied and 
adequately disclosed; the reasonableness of 
signiﬁcant accounting estimates made by the 
Directors; and the overall presentation of the 
ﬁnancial statements. In addition, we read all 
the ﬁnancial and non-ﬁnancial information 
in the Annual report and ﬁnancial statements 
to identify material inconsistencies with 
the audited ﬁnancial statements. If we 
become aware of any apparent material 
misstatements or inconsistencies we 
consider the implications for our report.
Opinion on ﬁnancial statements 
In our opinion: 

 – the ﬁnancial statements give a true and 
fair view of the state of the Group’s and 
of the parent company’s affairs as at 
30 December 2012 and of the Group’s 
proﬁt and Group’s and parent company’s 
cash ﬂows for the 52 weeks then ended;

 – the Group ﬁnancial statements have been 
properly prepared in accordance with 
IFRSs as adopted by the European Union; 

 – the parent company ﬁnancial statements 

have been properly prepared in accordance 
with IFRSs as adopted by the European 
Union and as applied in accordance with 
the provisions of the Companies Act 2006; 
and

 – the ﬁnancial statements have been 
prepared in accordance with the 
requirements of the Companies Act 2006 
and, as regards the Group ﬁnancial 
statements, Article 4 of the lAS 
Regulation. 

Opinion on other matters prescribed 
by the Companies Act 2006 
In our opinion:

 – the part of the Remuneration report to 

be audited has been properly prepared in 
accordance with the Companies Act 2006; 
and

 – the information given in the Directors’ 
report for the ﬁnancial year for which 
the ﬁnancial statements are prepared is 
consistent with the ﬁnancial statements.

Matters on which we are required 
to report by exception 
We have nothing to report in respect of the 
following: 

Under the Companies Act 2006 we are 
required to report to you if, in our opinion: 

 – adequate accounting records have not 
been kept by the parent company, or 
returns adequate for our audit have not 
been received from branches not visited 
by us; or 

 – the parent company ﬁnancial statements 
and the part of the Remuneration report 
to be audited are not in agreement with 
the accounting records and returns; or 

 – certain disclosures of Directors’ 

remuneration speciﬁed by law are not 
made; or 

 – we have not received all the information 
and explanations we require for our audit.

Under the Listing Rules we are required 
to review: 

 – the Directors’ statement, set out on 
page 18 in relation to going concern; 

 – the parts of the Corporate Governance 
statement relating to the Company’s 
compliance with the nine provisions of the 
UK Corporate Governance Code speciﬁed 
for our review; and

 – certain elements of the report to 

shareholders by the Board on Directors’ 
remuneration.

Martin Pitt
(Senior Statutory Auditor)
for and on behalf of 
PricewaterhouseCoopers LLP 
Chartered Accountants and 
Statutory Auditors

Belfast
27 March 2013
The maintenance and integrity of the Hilton Food Group 
plc website is the responsibility of the Directors; the work 
carried out by the auditors does not involve consideration 
of these matters and, accordingly, the auditors accept 
no responsibility for any changes that may have occurred 
to the 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.

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50

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

4 Financial statements

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

51

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52

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Consolidated income statement

Continuing operations
Revenue
Cost of sales
Gross proﬁt
Distribution costs
Administrative expenses
Operating proﬁt
Finance income
Finance costs
Finance costs – net
Proﬁt before income tax
Income tax expense
Proﬁt for the year

Attributable to:
Owners of the parent
Non-controlling interests

Earnings per share attributable to owners of the parent during the year
Basic (pence)
Diluted (pence)

Notes

5

9
9
9

10

11
11

Consolidated statement of comprehensive income

Proﬁt for the year
Other comprehensive income
Currency translation differences
Other comprehensive income for the year net of tax
Total comprehensive income for the year

Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests

The notes on pages 56 to 76 are an integral part of these consolidated ﬁnancial statements.

2012 
52 weeks 
£’000

1,031,004
(904,755)
126,249
(9,149)
(91,133)
25,967
199
(1,454)
(1,255)
24,712
(5,807)
18,905

17,584
1,321
18,905

24.9
24.7

2012 
52 weeks 
£’000
18,905

(275)
(275)
18,630

17,392
1,238
18,630

2011 
52 weeks 
£’000

981,345
(850,893)
130,452
(9,720)
(94,850)
25,882
258
(1,627)
(1,369)
24,513
(5,915)
18,598

17,199
1,399
18,598

24.7
24.3

2011 
52 weeks 
£’000
18,598

(1,553)
(1,553)
17,045

15,732
1,313
17,045

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated balance sheet

Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiary undertakings
Deferred income tax assets

Current assets
Inventories
Trade and other receivables
Current income tax assets
Cash and cash equivalents

Total assets

Equity
Equity attributable to owners of the parent
Ordinary shares
Share premium
Employee share schemes reserve
Foreign currency translation reserve
Retained earnings

Reverse acquisition reserve
Merger reserve

Non-controlling interests
Total equity

Liabilities
Non-current liabilities
Borrowings
Deferred income tax liabilities

Current liabilities
Borrowings
Trade and other payables
Current income tax liabilities

Total liabilities
Total equity and liabilities

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

53

Notes

2012 
£’000

Group 
2011 
£’000

2012 
£’000

Company 
2011 
£’000

13
14
15
21

16
17

18

22

19
21

19
20

56,162
1,857
– 
1,111
59,130

21,885
107,811
699
31,428
161,823
220,953

7,087
2,562
1,238
2,099
54,932
67,918
(31,700)
919
37,137
3,835
40,972

25,133
1,579
26,712

11,497
141,772
– 
153,269
179,981
220,953

59,179
1,907
– 
1,134
62,220

22,466
104,033
– 
27,345
153,844
216,064

6,985
372
1,558
2,291
45,392
56,598
(31,700)
919
25,817
3,452
29,269

35,615
641
36,256

10,440
138,998
1,101
150,539
186,795
216,064

– 
– 
102,985
– 
102,985

– 
115
87
30
232
103,217

7,087
2,562
– 
– 
11,148
20,797
– 
71,019
91,816
– 
91,816

– 
– 
– 

– 
11,401
– 
11,401
11,401
103,217

– 
– 
102,985
– 
102,985

– 
156
133
14
303
103,288

6,985
372
– 
– 
9,970
17,327
– 
71,019
88,346
– 
88,346

– 
– 
– 

– 
14,942
– 
14,942
14,942
103,288

The notes on pages 56 to 76 are an integral part of these consolidated ﬁnancial statements.

The ﬁnancial statements on pages 52 to 76 were approved by the Board on 27 March 2013 and were signed on its behalf by:

R. Watson 
Director 

N. Majewski  
Director

Hilton Food Group plc – Registered number: 06165540 

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54

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Consolidated statement of changes in equity

Group
Balance at 3 January 2011
Proﬁt for the year
Other comprehensive income
Currency translation differences
Total comprehensive income for 
the year
Issue of new shares
Adjustment in respect of 
employee share schemes
Tax on employee share schemes
Dividends paid
Total transactions with owners
Balance at 1 January 2012

Proﬁt for the year
Other comprehensive income
Currency translation differences
Total comprehensive income  
for the year
Issue of new shares
Adjustment in respect of 
employee share schemes
Tax on employee share schemes
Dividends paid
Total transactions with owners
Balance at 30 December 2012

Company
Balance at 3 January 2011
Proﬁt for the year
Total comprehensive income 
for the year
Issue of new shares
Tax on employee share schemes
Dividends paid
Total transactions with owners
Balance at 1 January 2012

Proﬁt for the year
Total comprehensive income 
for the year
Issue of new shares
Adjustment in respect of 
employee share schemes
Tax on employee share schemes
Dividends paid
Total transactions with owners
Balance at 30 December 2012

Attributable to owners of the parent 

 Notes

Share 
capital 
£’000
6,966
– 

Share 
premium 
£’000
– 
– 

Employee 
share 
schemes 
reserve 
£’000
1,071
– 

Foreign 
currency 
translation 
reserve 
£’000
3,758
– 

Retained 
earnings 
£’000

Reverse 
acquisition 
reserve 
£’000
35,518 (31,700)
– 
17,199

Merger  
reserve 
£’000
919
– 

Total 
£’000
16,532
17,199

Non-
controlling 
interests 
£’000
2,613
1,399

Total equity 
£’000
19,145
18,598

– 

– 

– 

(1,467)

– 

–
– 

(1,467)
– 

17,199
– 

– 

– 
– 

– 

(1,467)

(86)

(1,553)

–  15,732
382
– 

1,313
– 

17,045
382

–
19

– 
– 
– 
19
6,985

– 

– 

–
363

– 
9
– 
372
372

– 

– 

– 
102

– 
1,678

408
79
– 
487
1,558

– 
– 
– 
– 

– 
– 
– 
– 
– 
(7,325)
(7,325)
– 
2,291 45,392 (31,700)

– 
– 
– 
– 
919

408
88
(7,325)
(6,447)
25,817

– 
– 
(474)
(474)
3,452

408
88
(7,799)
(6,921)
29,269

– 

– 

– 
– 

–  17,584

(192)

– 

(192) 17,584
– 

– 

– 

– 

– 
– 

–  17,584

1,321

18,905

– 

(192)

(83)

(275)

–  17,392
1,780
– 

1,238
– 

18,630
1,780

– 
– 
– 
102
7,087

453
59
– 
2,190
2,562

(168)
(152)
– 
(320)
1,238

– 
– 
– 
– 

– 
– 
– 
– 
– 
(8,044)
– 
(8,044)
2,099 54,932 (31,700)

– 
– 
– 
– 
919

285
(93)
(8,044)
(6,072)
37,137

– 
– 
(855)
(855)
3,835

285
(93)
(8,899)
(6,927)
40,972

6,966
– 

– 
19
– 
– 
19
6,985

– 
– 

– 
363
9
– 
372
372

– 

– 

– 
102

– 
1,678

– 
– 
– 
102
7,087

453
59
– 
2,190
2,562

– 
– 

– 
– 
– 
– 
– 
– 

– 

– 
– 

– 
– 
– 
– 
– 

– 
– 

– 
– 
– 
– 
– 
– 

– 

– 
– 

– 
– 
– 
– 
– 

8,104
9,191

9,191
– 
– 
(7,325)
(7,325)
9,970

9,222

9,222
– 

– 
– 
(8,044)
(8,044)
11,148

–  71,019 86,089
9,191
– 
– 

9,191
– 
– 
382
– 
– 
9
– 
– 
(7,325)
– 
– 
– 
(6,934)
– 
–  71,019 88,346

– 

– 
– 

– 

– 
– 

9,222

9,222
1,780

– 
– 
– 
– 
– 
– 
– 
– 
–  71,019

453
59
(8,044)
(5,752)
91,816

12

12

12

12

The notes on pages 56 to 76 are an integral part of these consolidated ﬁnancial statements.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

55

2012 
52 weeks 
£’000

Company  
2011 
52 weeks 
£’000

Consolidated cash ﬂow statement

Notes

24

Cash ﬂows from operating activities
Cash generated from operations
Interest paid
Income tax (paid)/received
Net cash generated from/(used in) operating activities

Cash ﬂows from investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchases of intangible assets
Interest received
Dividends received
Net cash (used in)/generated from investing activities

Cash ﬂows from ﬁnancing activities
Proceeds from borrowings
Repayments of borrowings
Repayment of inter-company loan
Issue of ordinary shares
Dividends paid to owners of the parent
Dividends paid to non-controlling interests
Net cash used in ﬁnancing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange losses on cash and cash equivalents 
Cash and cash equivalents at end of the year

18

2012 
52 weeks 
£’000

40,682
(1,454)
(6,804)
32,424

(12,131)
329
(295)
199
– 
(11,898)

1,230
(10,224)
– 
1,780
(8,044)
(855)
(16,113)

4,413
27,345
(330)
31,428

Group 
2011 
52 weeks 
£’000

41,688
(1,627)
(8,341)
31,720

(24,350)
21
(873)
258
– 
(24,944)

9,309
(6,935)
– 
382
(7,325)
(474)
(5,043)

1,733
26,141
(529)
27,345

The notes on pages 56 to 76 are an integral part of these consolidated ﬁnancial statements.

– 
(366)
156
(210)

– 
– 
– 
– 
9,500
9,500

– 
– 
(3,010)
1,780
(8,044)
– 
(9,274)

16
14
– 
30

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(435)
195
(240)

– 
– 
– 
– 
9,500
9,500

– 
– 
(2,304)
382
(7,325)
– 
(9,247)

13
1
– 
14

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56

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements

1 General information
Hilton Food Group plc (“the Company”) and its subsidiaries (together “the Group”) is a specialist retail meat packing business 
supplying major international food retailers in thirteen countries. The Company’s subsidiaries are listed in note 26.

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.

The ﬁnancial year represents the 52 weeks to 30 December 2012 (prior ﬁnancial year 52 weeks to 1 January 2012).

These consolidated ﬁnancial statements were approved for issue on 27 March 2013.

The Company has taken advantage of the exemption in Section 408 Companies Act 2006 not to publish its individual income statement, 
statement of comprehensive income and related notes. Proﬁt for the year dealt with in the income statement of Hilton Food Group plc 
amounted to £9,222,000 (2011: £9,191,000).
2 Summary of signiﬁcant accounting policies
The principal accounting policies applied in the preparation of these consolidated ﬁnancial statements are set out below. These policies 
have been consistently applied to all of the years presented, unless otherwise stated.

Basis of preparation
The consolidated ﬁnancial statements of Hilton Food Group plc have been prepared in accordance with International Financial Reporting 
Standards as adopted by the European Union (IFRS), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting 
under IFRS. The consolidated ﬁnancial statements have been prepared on the going concern basis under the historical cost convention. 

The ﬁnancial statements are presented in Sterling and all values are rounded to the nearest thousand (£’000) except when 
otherwise indicated.

The preparation of ﬁnancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires 
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree 
of judgement or complexity, or areas where assumptions and estimates are signiﬁcant to the consolidated ﬁnancial statements are 
disclosed in note 4.

Basis of consolidation
These consolidated ﬁnancial statements comprise the ﬁnancial statements of Hilton Food Group plc (“the Company”) and its 
subsidiaries, together, (“the Group”) drawn up to 30 December 2012. Accounting policies of subsidiaries have been changed where 
necessary to ensure consistency with the policies adopted by the Group.

A subsidiary is an entity controlled, either directly or indirectly, by the Company, where control is the power to govern the ﬁnancial 
and operating policies of the entity.

All inter-company balances and transactions, including unrealised proﬁts arising from inter-group transactions, are eliminated 
on consolidation.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition 
is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. 
Acquisition costs are expensed as incurred. Identiﬁable assets acquired and liabilities and contingent liabilities assumed in a business 
combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value 
of the Group’s share of the identiﬁable net assets acquired is recorded as goodwill.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

57

2 Summary of signiﬁcant accounting policies (continued)
International Financial Reporting Standards
(a) New standards, amendments and interpretations effective in 2012
There are no IFRS or IFRIC interpretations that are effective for the ﬁrst time for the ﬁnancial year beginning on or after 1 January 2011 
that would be expected to have a material impact on the Group.

(b) New standards, amendments and interpretations issued but not yet effective, are subject to EU endorsement and not 
early adopted
Amendment to IAS 12 ’Income taxes’ on deferred tax (effective 1 January 2014). This amendment introduces a presumption that 
recovery of the carrying amount of an asset will, normally be, through sale.

Amendment to IAS 1 ‘Presentation of ﬁnancial statements’ (effective 1 July 2012). This amendment revises the way other 
comprehensive income is presented in the statement of comprehensive income. This standard is not expected to have a material 
impact on the Group or Company.

IAS 19 (revised 2011) ‘Employee beneﬁts’ (effective 1 January 2013). This amendment makes signiﬁcant changes to the recognition 
and measurement of deﬁned beneﬁt pension expense and termination beneﬁts, and to the disclosures for all employee beneﬁts. 

IAS 28 (revised 2011) ‘Associates and joint ventures’ (effective 1 January 2014). This standard includes the requirements for joint 
ventures, as well as associates, to be equity accounted following the issue of IFRS 11. 

Amendment to IAS 32 ‘Financial instruments: Presentation on offsetting ﬁnancial assets and ﬁnancial liabilities’ (effective 1 January 2014). 
This along with the IFRS 7 amendment clariﬁes some of requirements for offsetting ﬁnancial assets and ﬁnancial liabilities on the 
balance sheet. 

IFRS 10 ‘Consolidated ﬁnancial statements’ (effective 1 January 2014). This standard identiﬁes the concept of control as the determining 
factor in whether an entity should be included within the consolidated ﬁnancial statements.

IFRS 11 ‘Joint arrangements’ (effective 1 January 2014). This standard focuses on the rights and obligations of the arrangement, 
rather than its legal form with two types of joint arrangements being joint operations and joint ventures.

IFRS 12 ‘Disclosures of interests in other entities’ (effective 1 January 2014). This standard includes the disclosure requirements 
for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance 
sheet vehicles. 

IFRS 13 ‘Fair value measurement’ (effective 1 January 2012). This standard provides guidance to improve consistency and reduce 
complexity across IFRS. This standard is not expected to have a material impact on the Group or Company.

There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the 
Group or Company.

Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group’s 
activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic beneﬁts will 
ﬂow to the Group and the criteria set out in the following paragraph have been met.

The Group sells meat in the wholesale market. Sales of goods are recognised when a Group entity has delivered products to the 
customer and there is no unfulﬁlled obligation that could affect the customer’s acceptance of the products. Delivery does not occur until 
the products have been shipped to the location speciﬁed by the customer, the risks of obsolescence and loss have been transferred to 
the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have 
lapsed, or the Group has objective evidence that all criteria for acceptance have been satisﬁed.

Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. 
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of operating segments, 
has been identiﬁed as the Group’s Executive Directors.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

2 Summary of signiﬁcant accounting policies (continued)
Foreign currency translation
(a) Functional and presentation currency
Items included in the ﬁnancial statements of each of the Group’s entities are measured using the currency of the primary economic 
environment in which the entity operates (“the functional currency”). The consolidated ﬁnancial statements are presented in Sterling, 
which is the Company’s functional and the Group’s presentation currency.

(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the 
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end 
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

(c) Group companies
The results and ﬁnancial position of all the Group entities (none of which has the currency of a hyperinﬂationary economy) that have 
a functional currency different from the presentation currency are translated into the presentation currency as follows:

 – assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

 – income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable 
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are 
translated at the rate on the dates of the transactions); and

 – all resulting currency translation differences are recognised in other comprehensive income and disclosed as a separate component 

of equity in a foreign currency translation reserve.

When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the 
income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity 
are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment in value. Historical cost 
includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying 
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic beneﬁts associated with the 
item will ﬂow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. 
All other repairs and maintenance are charged to the income statement during the ﬁnancial period in which they are incurred.

Depreciation is calculated using the straight line method to allocate the cost of property, plant and equipment to their residual values 
over their estimated useful lives, as follows:

Buildings – Held under ﬁnance lease
Buildings – Leasehold improvements
Plant and machinery
Fixtures and ﬁttings
Motor vehicles

Annual rate
5%
10%
14% – 33%
14% – 33%
25%

Land is not depreciated. Assets in the course of construction are not depreciated until commissioned.

The residual value and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate, at each balance sheet 
date. An asset’s carrying value is written down to its recoverable amount if the asset’s carrying amount is greater than its estimated 
recoverable amount. These impairment losses are recognised in the income statement. Following the recognition of an impairment loss, 
the depreciation charge applicable to the asset is adjusted prospectively in order to systematically allocate the revised carrying amount, 
net of any residual value, over the remaining useful life.

 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

59

2 Summary of signiﬁcant accounting policies (continued)
Intangible assets 
(a) Goodwill
Goodwill on acquisitions of subsidiaries and purchase of non-controlling interests is included in ‘intangible assets’, tested annually for 
impairment and carried at cost less accumulated impairment losses. Goodwill represents the excess of the cost of the acquisition or 
purchase over the fair value of the Group’s share of the net identiﬁable assets of the acquired subsidiary or non-controlling interest at 
the date of acquisition. 

(b) Computer software
Acquired software licences are stated at cost less accumulated amortisation and are capitalised on the basis of the costs incurred to 
acquire and bring to use the speciﬁc software. These costs are amortised on a straight line basis over their useful economic lives of 
three to seven years. 

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. 

(c) Product licences
The costs of acquiring product licences are capitalised and amortised on a straight line basis over their expected useful economic lives 
of ﬁve to ten years.

Investments
Investments in subsidiary undertakings are carried at cost less provision for impairment.

Impairment of non-ﬁnancial assets
Assets that have an indeﬁnite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment.

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the 
carrying value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds 
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use. For the 
purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identiﬁable cash ﬂows 
(cash generating units). Non-ﬁnancial assets other than goodwill that have suffered impairment are reviewed for possible reversal 
of the impairment at each reporting date.

Financial assets
(a) Classiﬁcation
The Group classiﬁes all of its ﬁnancial assets as loans and receivables. Loans and receivables are non-derivative ﬁnancial assets with 
ﬁxed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities 
greater than 12 months after the end of the reporting period. These are classiﬁed as non-current assets. The Group’s loans and 
receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance sheet. 

(b) Recognition and measurement 
Loans and receivables are recognised initially at fair value and subsequently carried at amortised cost using the effective 
interest method. 

(c) Impairment of ﬁnancial assets
The Group assesses at the end of each reporting period whether there is objective evidence that a ﬁnancial asset or group of ﬁnancial 
assets is impaired. A ﬁnancial asset or a group of ﬁnancial assets is impaired and impairment losses are incurred only if there is objective 
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that 
loss event (or events) has an impact on the estimated future cash ﬂows of the ﬁnancial asset or group of ﬁnancial assets that can be 
reliably estimated. For loans and receivables category, the amount of the loss is measured as the difference between the asset’s 
carrying amount and the present value of estimated future cash ﬂows (excluding future credit losses that have not been incurred) 
discounted at the ﬁnancial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss 
is recognised in the consolidated income statement.

Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is either determined on the ﬁrst in ﬁrst out basis or by the ‘retail 
method’ depending on the subsidiary. The ‘retail method’ computes cost on the basis of selling price less the appropriate trading 
margin. Cost comprises material costs, direct wages and other direct production costs together with a proportion of production 
overheads relevant to the stage of completion of work in progress and ﬁnished goods and excludes borrowing costs. Net realisable 
value represents the estimated selling price less costs to completion and appropriate selling and distribution costs. Provision is made, 
where necessary, for slow moving, obsolete and defective inventories.

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60

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

2 Summary of signiﬁcant accounting policies (continued)
Trade and other receivables 
Trade receivables represent amounts due from customers for goods sold or services performed in the ordinary course of business. 
If collection is expected in one year or less they are classiﬁed as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method 
less provision for impairment.

Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity of three months or less. 
Bank overdrafts are shown on the balance sheet within borrowings in current liabilities.

Share capital and reserves
Ordinary shares are classiﬁed as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

The share premium and employee share schemes reserve represents the premium on new shares issued in connection with and the 
fair value of share options outstanding under the Group’s share schemes respectively.

The foreign currency translation reserve represents the cumulative currency differences arising on the translation of the Group’s 
overseas subsidiaries.

The merger and reverse acquisition reserves arose during 2007 following the restructuring of the Group.

Trade and other payables
Trade payables represent obligations to pay for goods or services that have been acquired in the ordinary course of business 
from suppliers. Accounts payable are classiﬁed as current liabilities if payment is due within one year. If not, they are presented 
as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective 
interest method.

Borrowings
All borrowings are recognised initially at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortised 
cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement 
over the period of the borrowings using the effective interest method. 

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that 
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no 
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services 
and amortised over the period of the facility to which it relates.

Borrowings are classiﬁed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 
12 months after the balance sheet date.

Borrowing costs directly attributable to an acquisition, construction or production of a qualifying asset are capitalised as part of the cost 
of that asset. All other borrowing costs are recognised in the income statement in the period in which they are incurred.

Leases
Assets acquired under a lease which transfers substantially all of the risks and rewards of ownership to the Group, are capitalised as 
property, plant and equipment at the lower of their fair value and the present value of the minimum lease payments and are depreciated 
over the shorter of their useful economic lives and their lease term with any impairment being recognised in accumulated depreciation. 
Amounts payable under such leases (ﬁnance leases), net of transaction costs, are classiﬁed as current and non-current liabilities based 
on the lease payment dates. Lease payments are treated as consisting of capital and interest elements and the interest is charged to the 
income statement in proportion to the reducing capital element outstanding.

Leases where the lessor retains substantially all of the risks and rewards of ownership are classiﬁed as operating leases. The annual 
rentals under operating leases are charged to the income statement as incurred on a straight line basis over the period of the lease.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

61

2 Summary of signiﬁcant accounting policies (continued)
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that 
it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other 
comprehensive income or directly in equity, respectively.

The current income tax charge represents the expected tax payable or recoverable on the taxable proﬁt for the year using tax laws 
enacted or substantively enacted at the balance sheet date.

Deferred income tax is recognised, using the liability method, on all temporary differences arising between the tax bases of assets and 
liabilities and their carrying amounts in the consolidated ﬁnancial statements. However, the deferred income tax is not accounted for if it 
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction 
affects neither accounting nor taxable proﬁt or loss. Deferred income tax is determined using tax rates (and laws) that have been 
enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset 
is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable proﬁt will be available against which the 
temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the 
reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the 
foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current 
tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on 
either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Pensions and other post-employment beneﬁts 
The Group operates deﬁned contribution schemes for certain employees in the UK, Ireland, the Netherlands and Denmark and 
contributes to a state administered money purchase scheme in Poland. The Group pays contributions to publicly or privately 
administered pension insurance plans and has no further payment obligations once the contributions have been made. The contributions 
are recognised as an employee beneﬁt expense when they are due. 

In the Netherlands and Sweden the Group contributes to industry-wide pension schemes for its employees. Although having some 
deﬁned beneﬁt features, the Group’s liability to these schemes is limited to the ﬁxed contributions which are recognised as an expense 
when they are due. Accordingly the Group has accounted for these schemes as deﬁned contribution schemes.

Share-based payments
The Group operates a number of equity settled share-based compensation plans. The fair value of the employee services received 
in exchange for the grant of options is recognised as an expense with a corresponding adjustment to equity. The total amount to be 
expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any 
non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are 
expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest based 
on non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, 
with a corresponding adjustment to equity. All adjustments to equity are recognised as a separate component of equity in an employee 
share scheme reserve. When the options are exercised, the Company issues new shares. The proceeds received net of any directly 
attributable transaction costs are credited to share capital (nominal value) and share premium.

Grants
Grants are recognised at their fair value when there is a reasonable assurance that the grant will be received and all attaching conditions 
have been complied with.

Capital grants received and receivable by the Group are credited to deferred income and are amortised to the income statement 
on a straight line basis over the expected useful economic lives of the assets to which they relate.

Revenue grants are recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is 
intended to compensate.

Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the consolidated ﬁnancial statements in the period 
in which the dividends are approved by the Company’s shareholders.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

3 Financial risk management
Financial risk factors
The Group’s activities expose it to a variety of ﬁnancial risks: market risk including price risk, foreign exchange risk and cash ﬂow interest 
rate risk, credit risk and liquidity risk. The Group has in place a risk management programme that seeks to limit the adverse effects on 
the ﬁnancial performance of the Group by monitoring the foregoing risks. 

(a) Market risk
(i) Price risk 
 The Group is not exposed to equity securities price risk as it holds no listed or other equity investments. The Group is exposed 
to commodity price risk which is signiﬁcantly mitigated through its customer agreements which are on a cost plus or agreed packing 
rate basis.

(ii) Foreign exchange risk 
 The Group is exposed to foreign exchange risk in the normal course of business in its overseas operations, principally on transactions 
in Euros, Swedish Krona, Danish Krone and the Polish Zloty although such risk is mitigated as natural hedges exist in each operation 
through matching local currency cash ﬂows. The Group regularly monitors foreign exchange exposure and to date has deemed it not 
appropriate to hedge its foreign exchange position.

(iii) Cash ﬂow interest rate risk 
 The Group’s interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose the Group to cash ﬂow 
interest rate risk. The Group seeks to manage exposure to interest rate risk through interest rate caps over the majority of its long 
term borrowings.

(iv) Sensitivity analysis

Group
Annual effect of a change in Group-wide interest rates by 0.5%

Annual effect of a change in exchange rates to the GBP £ by 10%

Income
statement
£’000
126
–126
2,165
–1,788

2012
Equity
£’000
126
–126
5,442
–4,469

Income
statement
£’000
142
–142
2,260
–1,883

2011
Equity
£’000
142
–142
5,043
–4,160

(b) Credit risk
The Group is exposed to credit risk in respect of credit exposures to its retail customer partners and banking arrangements. The Group, 
whose only customers comprise blue chip international supermarket retailers, has implemented policies that require appropriate credit 
checks on potential customers before sales are made and in relation to its banking partners. The Group’s maximum exposure to credit 
risk is £97.1m (2011: £95.1m) as stated in note 17.

(c) Liquidity risk
The Group monitors regular cash forecasts to ensure that it has sufﬁcient cash to meet operational needs whilst maintaining sufﬁcient 
headroom on its undrawn committed borrowing facilities and without breaching its banking covenants. The Group held signiﬁcant cash 
and cash equivalents of £31.4m (2011: £27.3m) and maintains a mix of long term and short term debt ﬁnance.

 
 
 
 
 
 
 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

63

3 Financial risk management (continued)
The Group’s ﬁnancial liabilities measured as the contractual undiscounted cash ﬂows mature as follows:

Less than one year
Between one and two years
Between two and ﬁve years
Over ﬁve years

Borrowings
£’000
12,178
10,966
12,493
–

Finance leases
£’000
327
335
1,057
2,191

2012
Trade and other 
payables
£’000
136,691
–
–
–

Borrowings
£’000
11,686
12,353
21,911
–

Finance leases
£’000
333
334
1,050
2,998

2011
Trade and other 
payables
£’000
133,940
–
–
–

Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide 
returns for shareholders and beneﬁts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital 
to shareholders, issue new shares or sell assets to reduce debt.

The Group monitors capital on the basis of a gearing ratio. This ratio is calculated as net debt divided by EBITDA. Net debt is calculated 
as total borrowings (including ‘current and non-current borrowings’ as shown on the consolidated balance sheet) less cash and cash 
equivalents. EBITDA is calculated as operating proﬁt before signiﬁcant non-recurring items, interest, tax, depreciation and amortisation. 
The gearing ratio continues to improve ending the year at 0.1 (2011: 0.4) such that no further action has been required.

Fair value estimation 
The carrying value of trade receivables (less impairment provisions) and trade payables are assumed to approximate their fair values. 
The fair value of ﬁnancial liabilities for disclosure purposes is estimated by discounting the future contractual cash ﬂows at the current 
market interest rate that is available to the Group for similar ﬁnancial instruments. The Directors consider that there is a single level of fair 
value measurement hierarchy for disclosure purposes.
4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations 
of future events that are believed to be reasonable under the circumstances. 

During 2012 and 2011 there were no critical accounting estimates or judgements in relation to the application of the Group’s 
accounting policies.
5 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 six operating segments: i) United Kingdom; 
ii) Netherlands; iii) Republic of Ireland; iv) Sweden; v) Denmark and vi) Central Europe including Poland, Czech Republic, Hungary, 
Slovakia, Latvia, Lithuania and Estonia. The United Kingdom, Netherlands, Republic of Ireland, Sweden and Denmark have been 
aggregated into one reportable segment ‘Western Europe’ as they have similar economic characteristics as identiﬁed in IFRS 8. 
Central Europe comprises the other reportable segment.

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.

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64

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

5 Segment information (continued)
The segment information provided to the Executive Directors for the reportable segments is as follows:

Total segment revenue
Inter-segment revenue
Revenue from external customers
Operating proﬁt/segment result
Finance income 
Finance costs
Income tax expense
Proﬁt for the year

Depreciation and amortisation
Additions to non-current assets

Segment assets
Current income tax assets
Deferred income tax assets
Total assets

Segment liabilities
Borrowings
Current income tax liabilities
Deferred income tax liabilities
Total liabilities

Western
Europe
£’000
937,405
(1,953)
935,452
23,649
121
(1,434)
(5,340)
16,996

13,242
11,572

Central
Europe
£’000
95,552
– 
95,552
2,318
78
(20)
(467)
1,909

1,135
854

198,113

21,030

147,056

12,636

2012
Total
£’000
1,032,957
(1,953)
1,031,004
25,967
199
(1,454)
(5,807)
18,905

14,377
12,426

219,143
699
1,111
220,953

159,692
18,710
– 
1,579
179,981

Western
Europe
£’000
891,453
(2,708)
888,745
23,152
204
(1,432)
(5,388)
16,536

15,064
19,673

Central
Europe
£’000
92,600
– 
92,600
2,730
54
(195)
(527)
2,062

1,839
279

194,376

20,554

146,867

13,475

2011
Total
£’000
984,053
(2,708)
981,345
25,882
258
(1,627)
(5,915)
18,598

16,903
19,952

214,930
– 
1,134
216,064

160,342
24,711
1,101
641
186,795

Sales between segments are carried out at arm’s length. Revenue from external customers reported to the Executive Directors is 
measured in a manner consistent with that in the income statement.

The Executive Directors assess the performance of each operating segment based on its operating proﬁt. Operating proﬁt is measured 
in a manner consistent with that in the income statement.

The amounts provided to the Executive Directors with respect to total assets and liabilities are measured in a manner consistent with 
that of the ﬁnancial statements. The assets are allocated based on the operations of the segment and their physical location. The 
liabilities are allocated based on the operations of the segment. The Group interest bearing reorganisation loan is not considered to be 
a segment liability.

The Group has three principal customers (comprising groups of entities known to be under common control), Tesco, Ahold and 
Coop Danmark. These customers are located in the United Kingdom, Netherlands, Republic of Ireland, Sweden, Denmark and 
Central Europe including Poland, Czech Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia.

Analysis of revenues from external customers and non-current assets are as follows:

Analysis by geographical area
United Kingdom – country of domicile
Netherlands
Sweden
Republic of Ireland
Denmark
Central Europe

Analysis by principal customer
Customer 1
Customer 2
Customer 3
Other

Revenues from  
external customers
2011
£’000

2012
£’000

Non-current assets  
excluding deferred tax assets
2011
2012
£’000
£’000

9,797
11,477
4,374
6,420
20,681
5,270
58,019

10,201
11,874
4,973
7,419
21,258
5,361
61,086

278,945
254,476
211,109
78,976
111,946
95,552
1,031,004

533,302
380,290
111,245
6,167
1,031,004

259,462
263,384
213,363
82,574
69,962
92,600
981,345

543,575
361,723
69,743
6,304
981,345

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

65

6 Auditors’ remuneration
Services provided by the Company’s auditor and its associates
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditor and its 
associates:

Group
Fees payable to the Company’s auditors for the audit of the parent company and 
consolidated ﬁnancial statements
The auditing of ﬁnancial statements of any associate of the Company
Services relating to taxation
All other non-audit services
Total fees payable to the Company’s auditors and its associates

Fees payable to other auditors in respect of services provided to subsidiary undertakings

7 Expenses by nature

Group
Changes in inventories of ﬁnished goods and goods for resale
Raw materials and consumables used
Employee beneﬁt expense (note 8)
Depreciation and amortisation – owned assets
Depreciation and amortisation – leased assets
Repairs and maintenance expenditure on property, plant and equipment
Trade receivables – impairment
Hire of plant and machinery
Transportation expenses
Operating lease payments
Foreign exchange losses
Other expenses
Total cost of sales, distribution costs and administrative expenses

2012 
£’000

128
146
80
52
406

52

2012 
£’000
899
848,848
66,727
14,198
179
12,185
5
667
9,513
7,774
213
43,829
1,005,037

2011 
£’000

128
143
68
54
393

50

2011 
£’000
(783)
794,123
67,932
16,703
200
12,364
(15)
916
10,341
6,980
476
46,226
955,463

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66

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

8 Employee beneﬁt expense

Group
Staff costs during the year
Wages and salaries
Social security costs
Share options granted to Directors and employees
Other pension costs

Group
Average number of persons employed (including Executive Directors) during the year by activity
Production
Administration

Group
Key management compensation (including Directors)
Salaries and short term employee beneﬁts
Termination payments
Post-employment beneﬁts
Share-based payments

Group
Directors’ emoluments
Aggregate emoluments including termination payments
Company contribution to money purchase pension scheme

Further details of Directors’ emoluments and share interests are given in the Remuneration report.

There are no other employees of the Company other than the Directors. Employee expense of the Company amounted to £nil 
(2011: £nil).
9 Finance income and costs

Group
Finance income
Interest income on short term bank deposits
Interest on income taxes
Finance income
Finance costs
Bank borrowings
Finance leases
Exchange losses on foreign currency borrowings
Other interest expense
Finance costs
Finance costs – net

2012 
£’000

198
1
199

(1,035)
(207)
(97)
(115)
(1,454)
(1,255)

2012 
£’000

2011 
£’000

56,030
7,647
285
2,765
66,727

2012
Number

1,894
319
2,213

2012 
£’000

3,013
282
210
199
3,704

2012 
£’000

2,082
138
2,220

57,161
7,891
408
2,472
67,932

2011
Number

1,817
364
2,181

2011 
£’000

3,600
–
222
286
4,108

2011 
£’000

2,367
154
2,521

2011 
£’000

257
1
258

(1,206)
(229)
(38)
(154)
(1,627)
(1,369)

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

67

2012 
£’000

5,068
(79)
4,989

862
(44)
818
5,807

2011 
£’000

6,437
(47)
6,390

(427)
(48)
(475)
5,915

10 Income tax expense

Group
Current income tax
Current tax on proﬁts for the year
Adjustments to tax in respect of previous years
Total current tax
Deferred income tax
Origination and reversal of temporary differences
Adjustments to tax in respect of previous years
Total deferred tax
Income tax expense

Deferred tax debited directly to equity during the year in respect of employee share schemes amounted to £152,000 (2011: credit of 
£79,000).

The tax on the Group’s proﬁt before income tax differs from the theoretical amount that would arise using the standard rate of 
UK Corporation Tax of 24.5% (2011: 26.5%) applied to proﬁts of the consolidated entities as follows:

Proﬁt before income tax
Tax calculated at the standard rate of UK Corporation Tax 24.5% (2011: 26.5%)
Expenses not deductible for tax purposes
Adjustments to tax in respect of previous years
Proﬁts taxed at rates other than 24.5% (2011: 26.5%)
Other
Income tax expense

2012 
£’000
24,712
6,054
87
(123)
(286)
75
5,807

2011 
£’000
24,513
6,496
67
(95)
(706)
153
5,915

There is no tax impact relating to components of other comprehensive income.
11 Earnings per share
Basic earnings per share are calculated by dividing the proﬁt attributable to owners of the parent by the weighted average number 
of ordinary shares in issue during the year.

Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume 
conversion of all dilutive potential ordinary shares. The Company has share options for which a calculation is done to determine the 
number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s 
shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated 
as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Group
Proﬁt attributable to owners of the parent (£’000)
Weighted average number of ordinary shares in issue (thousands)
Adjustment for share options (thousands)
Adjusted weighted average number of ordinary shares (thousands)
Basic and diluted earnings per share (pence)

Basic
17,584
70,538
–
70,538
24.9

2012
Diluted
17,584
70,538
738
71,276
24.7

12 Dividends

Group
Final dividend in respect of 2011 paid 8.0p per ordinary share (2011: 7.4p)
Interim dividend in respect of 2012 paid 3.4p per ordinary share (2011: 3.1p)
Total dividends paid

Basic
17,199
69,747
–
69,747
24.7

2012 
£’000
5,635
2,409
8,044

2011
Diluted
17,199
69,747
1,082
70,829
24.3

2011 
£’000
5,160
2,165
7,325

The Directors propose a ﬁnal dividend of 8.6p per share payable on 28 June 2013 to shareholders who are on the register 
at 31 May 2013. This dividend totalling £6.1m has not been recognised as a liability in these consolidated ﬁnancial statements.

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Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

13 Property, plant and equipment

Group
Cost
At 3 January 2011
Exchange adjustments
Additions
Disposals
At 1 January 2012
Accumulated depreciation
At 3 January 2011
Exchange adjustments
Charge for the year
Disposals
At 1 January 2012
Net book amount
At 3 January 2011
At 1 January 2012

Cost
At 2 January 2012
Exchange adjustments
Additions
Disposals
At 30 December 2012
Accumulated depreciation
At 2 January 2012
Exchange adjustments
Charge for the year
Disposals
At 30 December 2012
Net book amount
At 30 December 2012

Land and  
buildings  
(including  
leasehold 
improvements)
£’000

24,737
(330)
342
(12)
24,737

10,480
44
2,126
–
12,650

14,257
12,087

24,737
(281)
449
–
24,905

12,650
(290)
1,905
–
14,265

Plant and  
machinery
£’000

116,170
(3,089)
16,969
(1,739)
128,311

74,536
(1,816)
12,642
(1,624)
83,738

41,634
44,573

128,311
(940)
10,887
(451)
137,807

83,738
(256)
11,355
(155)
94,682

10,640

43,125

Fixtures  
and  
ﬁttings
£’000

10,213
(299)
1,754
(605)
11,063

8,517
(283)
1,074
(591)
8,717

1,696
2,346

11,063
81
679
(1,164)
10,659

8,717
145
712
(1,164)
8,410

2,249

Motor  
vehicles
£’000

379
(7)
14
(35)
351

130
(5)
81
(28)
178

249
173

351
3
116
(192)
278

178
2
69
(119)
130

148

Total
£’000

151,499
(3,725)
19,079
(2,391)
164,462

93,663
(2,060)
15,923
(2,243)
105,283

57,836
59,179

164,462
(1,137)
12,131
(1,807)
173,649

105,283
(399)
14,041
(1,438)
117,487

56,162

Land and buildings are held under short leaseholds. Details of bank borrowings secured on assets of the Group are given in note 19. 
Depreciation charges are included within administrative expenses in the income statement.

The cost and net book amount of property plant and equipment in the course of its construction included above comprise plant and 
machinery £668,000 (2011: £3,668,000).

Property, plant and equipment include the following amounts where the Group is a lessee under a ﬁnance lease:

Cost – capitalised ﬁnance leases
Accumulated depreciation
Net book amount

2012 
£’000
3,357
(1,492)
1,865

2011 
£’000
3,517
(1,395)
2,122

Included in assets held under ﬁnance leases are land and buildings with a net book amount of £1,858,000 (2011: £2,078,000) and plant 
and machinery with a net book amount of £7,000 (2011: £44,000).

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

69

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Total
£’000

12,055
(400)
873
12,528

9,992
(351)
980
10,621

2,063
1,907

12,528
(111)
295
12,712

10,621
(102)
336
10,855

Product  
licences
£’000

Computer  
software
£’000

Goodwill
£’000

7,866
(163)
– 
7,703

7,445
(166)
386
7,665

421
38

7,703
(189)
35
7,549

7,665
(189)
12
7,488

61

3,353
(237)
873
3,989

2,547
(185)
594
2,956

806
1,033

3,989
78
260
4,327

2,956
87
324
3,367

960

836
– 
– 
836

– 
– 
– 
– 

836
836

836
– 
– 
836

– 
– 
– 
– 

14 Intangible assets

Group
Cost
At 3 January 2011
Exchange adjustments
Additions
At 1 January 2012
Accumulated amortisation
At 3 January 2011
Exchange adjustments
Charge for the year
At 1 January 2012
Net book amount
At 3 January 2011
At 1 January 2012

Cost
At 2 January 2012
Exchange adjustments
Additions
At 30 December 2012
Accumulated amortisation
At 2 January 2012
Exchange adjustments
Charge for the year
At 30 December 2012
Net book amount
At 30 December 2012

836

1,857

Amortisation charges are included within administrative expenses in the income statement.
15 Investments in subsidiary undertakings
Details of subsidiary undertakings are shown in note 26. Investments in subsidiary undertakings are recorded at cost, which is the fair 
value of consideration paid.

Company
At 1 January 2012 and 30 December 2012

2012 
£’000
102,985

2011 
£’000
102,985

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70

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

16 Inventories

Group
Raw materials and consumables
Finished goods and goods for resale

2012 
£’000
17,796
4,089
21,885

2011 
£’000
17,478
4,988
22,466

The cost of inventories recognised as an expense and included in cost of sales amounted to £849,747,000 (2011: £793,340,000). 
The Group charged £150,000 in respect of inventory write-downs (2011: £962,000). The amount charged has been included in cost of 
sales in the income statement. 
17 Trade and other receivables

Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Amounts owed by Group undertakings
Amounts owed by related parties (see note 27)
Other receivables
Prepayments 

2012
£’000
97,190
(51)
97,139
– 
326
5,146
5,200
107,811

Group
2011
£’000
95,153
(46)
95,107
– 
133
4,277
4,516
104,033

The carrying amount of trade and other receivables are denominated in the following currencies:

Currency
UK Pound
Euro
Swedish Krona
Danish Krone
Polish Zloty

2012
£’000
22,413
43,883
21,616
13,830
6,069
107,811

Group
2011
£’000
17,479
42,168
20,098
17,412
6,876
104,033

2012
£’000
– 
– 
– 
115
– 
– 
– 
115

2012
£’000
115
– 
– 
–
– 
115

Company
2011
£’000
– 
– 
– 
156
– 
– 
– 
156

Company
2011
£’000
156
– 
– 
– 
– 
156

The fair values of trade and other receivables are the same as their carrying value. The maximum exposure to credit risk is the fair value 
of each class of receivable mentioned above.

Trade receivables impaired and the amount of the impairment provision was £51,000 (2011: £46,000). The individually impaired 
receivables mainly relate to invoices which are in dispute. It was assessed that a portion of the receivables is expected to be recovered. 
The trade receivables that were impaired were all overdue by more than six months. There were no other trade receivables which were 
overdue. The other classes within trade and other receivables do not contain impaired assets. The trade receivables which are not 
impaired or overdue are all less than 30 days old.

Movements on the provision for impairment of trade receivables are as follows:

Group
At 1 January 2012
Provision for receivables impairment
Receivables written off during the year as uncollectable 
Exchange differences
At 30 December 2012

2012 
£’000
46
147
(141)
(1)
51

2011 
£’000
63
151
(166)
(2)
46

 
 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

71

18 Cash and cash equivalents

 Cash at bank and on hand

19 Borrowings

Group
Current
Bank borrowings
Finance lease liabilities

Non-current
Bank borrowings
Finance lease liabilities

Total borrowings

2012
£’000
31,428

Group
2011
£’000
27,345

2012
£’000
30

Company
2011
£’000
14

2012 
£’000

2011 
£’000

11,369
128
11,497

22,456
2,677
25,133
36,630

10,318
122
10,440

32,740
2,875
35,615
46,055

Due to the frequent re-pricing dates of the Group’s loans, the fair value of current and non-current borrowings is approximate to their 
carrying amount.

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

Currency
UK Pound
Euro

2012 
£’000
18,711
17,919
36,630

2011 
£’000
24,720
21,335
46,055

The Group reorganisation loan of £18,710,000 (2011: £24,711,000) is repayable in quarterly instalments by 28 February 2017. Interest 
is charged at LIBOR plus 1.75% subject to interest rate caps over £17m of borrowings where LIBOR is capped at 4.5%. Other bank 
borrowings are repayable by 2013 to 2017 with interest charged at EURIBOR plus 1.75%.

Bank borrowings totalling £33,825,000 (2011: £43,058,000) are secured by ﬁxed and ﬂoating charges over the assets of the individual 
Group borrowers and through joint and several guarantees from each active Group undertaking.

The Group has undrawn overdraft borrowing facilities of £18.2m (2011: £19.8m) which expire after one year.

The undiscounted contractual maturity proﬁle of the Group’s borrowings is described in note 3.

The minimum lease payments and present value of ﬁnance lease liabilities is as follows:

Group
No later than one year
Later than one year and no later than ﬁve years
Later than ﬁve years

Future ﬁnance charges on ﬁnance leases
Present value of ﬁnance lease liabilities

Minimum lease payments

Present value

2012
£’000
328
1,393
2,562
4,283
(1,478)
2,805

2011
£’000
336
1,394
2,997
4,727
(1,730)
2,997

2012
£’000
128
2,677
– 
2,805
–
2,805

2011
£’000
122
2,875
– 
2,997
– 
2,997

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. The fair value of the 
Group’s ﬁnance lease liabilities is £4,028,000 (2011: £4,406,000). The fair values are based on cash ﬂows discounted using the 
European Central Bank benchmark main reﬁnancing operations ﬁxed interest rate of 0.75% (2011: 1.0%).

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72

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

20 Trade and other payables

Trade payables
Amounts owed to Group undertakings
Amounts owed to related parties (see note 27)
Social security and other taxes
Accruals and deferred income

2012
£’000
120,393
–
6
5,081
16,292
141,772

The fair value of trade and other payables are the same as their carrying value. 
21 Deferred income tax

Group
At 3 January 2011
Exchange differences
Income statement (charge)/credit
Adjustment in respect of employee share schemes
At 1 January 2012
Exchange differences
Income statement credit/(charge)
Adjustment in respect of employee share schemes
At 30 December 2012

Accelerated  
capital 
allowances
£’000
989
– 
(380)
– 
609
21
161
– 
791

Group
2011
£’000
112,984
–
5,662
5,058
15,294
138,998

Other 
timing 
differences
£’000
32
– 
413
80
525
– 
(53)
(152)
320

2012
£’000
–
11,399
–
–
2
11,401

Deferred  
income tax 
assets total
£’000
1,021
– 
33
80
1,134
21
108
(152)
1,111

Company
2011
£’000
–
14,940
–
–
2
14,942

Deferred  
income tax  
liabilities:  
Accelerated  
capital  
allowances
£’000
(1,037)
(46)
442
– 
(641)
(12)
(926)
– 
(1,579)

Other timing differences principally relate to share-based payments. The deferred income tax liability above includes £400,000 
(2011: £400,000) which is estimated to reverse within 12 months. The deferred income tax asset above is not expected to reverse 
within 12 months. 
22 Ordinary shares

Issued and fully paid ordinary shares of 10p each
At 1 January 2012
Issue of new shares relating to employee 
incentive schemes
At 30 December 2012

Number of 
shares
(thousands)

69,849

1,017
70,866

2012
£’000

6,985

102
7,087

Group
2011
£’000

6,966

19
6,985

2012
£’000

6,985

102
7,087

Company
2011
£’000

6,966

19
6,985

All ordinary shares of 10p each have equal rights in respect of voting, receipt of dividends and repayment of capital.

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

73

23 Share-based payment 
Executive share option scheme
Under the Group’s executive share option scheme share options are granted to Executive Directors and to selected senior employees. 
The exercise price of the granted options is equal to the market price of the shares on the date of the grant. The options are exercisable 
starting three years from the grant date subject to the Group achieving its target growth in earnings per share over the period plus 3%. 
The options have a contractual option term of 10 years. The Group has no legal or constructive obligation to repurchase or settle the 
options in cash.

All employee sharesave scheme
This scheme is open to all eligible employees of the Group (including the Executive Directors) who make regular savings over a three 
year period. The exercise price of the granted options is equal to the market price of the shares on the date of the grant. The options are 
exercisable starting three years from the grant date and must be exercised within six months thereafter. No performance conditions are 
attached to the options granted under the scheme.

Long Term Incentive Plan (LTIP)
Under the Group’s Long Term Incentive Plan nil cost share options are granted to Executive Directors and to selected senior employees. 
The options are exercisable starting three years from the grant date subject to the Group achieving a minimum earnings per share 
compound growth target. Awards will vest on a sliding scale with 25% of the maximum award applied at the minimum EPS growth 
target of 6% per year with the full award vesting where EPS growth is at least 14.5% per year. The options have a contractual option 
term of 10 years. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Movements in the number of share options outstanding and their related exercise prices are as follows:

At 3 January 2011
Exercised
Forfeited
At 1 January 2012
Granted
Exercised
Forfeited
At 30 December 2012

Executive share option

Options
(’000)
3,752
(192)
(100)
3,460
– 
(640)
(46)
2,774

Exercise price
(pence)
203.34
 198.77
207.61
203.47
– 
191.54
 234.55
205.70

Options
(’000)
 665
 – 
 – 
 665
– 
(377)
(110)
 178

Sharesave

Exercise price
(pence)
 173.57
 – 
 – 
 173.57
– 
147.00
 147.00
 246.00

Share options outstanding at the end of the year have the following expiry date and exercise prices:

Expiry date
June 2012
December 2013
May 2018
May 2019
May 2020
June 2022

Type of scheme
Sharesave
Sharesave
Executive share option
Executive share option
Executive share option
Long Term Investment Plan

Status
Exercisable
Not exercisable
Exercisable
Exercisable
Not exercisable
Not exercisable

Exercise  
price
(pence)
147.00
246.00
199.50
174.75
246.00
nil cost

Long Term Incentive

Exercise price
(pence)
– 
 – 
 – 
 – 
 – 
– 
– 
 – 

Number 
options
2011
(‘000)
487
178
979
1,426
1,055
– 

Options
(’000)
– 
 – 
 – 
 – 
 1,147
– 
– 
 1,147

2012
(‘000)
–
178
762
1,072
940
1,147

The fair value of options granted during 2012 determined using the Black-Scholes valuation model was 228p per option. The signiﬁcant 
inputs into the model were the exercise price shown above, volatility of 31% based on a comparison of similar listed companies, 
dividend yield of 4%, an expected option life of four years, and an annual risk-free interest rate of 1.69%. See note 8 for the total 
expense recognised in the income statement for share options granted to Directors and employees.

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74

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

24 Cash generated from operations

Group
Proﬁt before income tax
Finance costs – net
Operating proﬁt
Adjustments for non-cash items:
Depreciation
Amortisation of intangible assets
Loss on disposal of property, plant and equipment
Adjustment in respect of employee share schemes
Changes in working capital:
Inventories
Trade and other receivables
Prepaid expenses
Trade and other payables
Accrued expenses
Cash generated from operations

2012 
£’000
24,712
1,255
25,967

14,041
336
39
285

549
(3,653)
(718)
2,650
1,186
40,682

2011 
£’000
24,513
1,369
25,882

15,923
980
128
408

(2,670)
(19,762)
(1,339)
22,734
(596)
41,688

The parent company has no operating cash ﬂows. 
25 Commitments
(a) Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

Property, plant and equipment

2012
£’000
451

Group
2011
£’000
3,433

2012
£’000
– 

Company
2011
£’000
– 

(b) Operating lease commitments 
The Group leases various properties under non-cancellable operating lease arrangements.  

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Group
No later than one year
Later than one year and no later than ﬁve years
Later than ﬁve years expiring 2018 to 2023

Land and buildings

Plant and equipment

2012
£’000
7,189
15,641
5,925
28,755

2011
£’000
6,752
16,742
8,018
31,512

2012
£’000
883
1,792
23
2,698

2011
£’000
933
1,928
50
2,911

  
  
  
 
  
 
Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

75

26 Subsidiary undertakings 
The principal subsidiary undertakings of the Group are:

Subsidiary undertakings
Hilton Meats (Retail) Limited
Hilton Meats Zaandam BV
Hilton Foods (Ireland) Limited
HFG Sverige AB
Hilton Foods Danmark A/S
Hilton Foods Ltd Sp zoo
Hilton Foods Limited
Hilton Meats Holland Limited
Hilton Food Group (Europe) Limited

Country of incorporation  
or registration
Northern Ireland
Netherlands
Republic of Ireland
Sweden
Denmark
Poland
Northern Ireland
Northern Ireland
Northern Ireland

Nature of business
Specialist meat packing 
Specialist meat packing 
Specialist meat packing 
Specialist meat packing 
Specialist meat packing
Specialist meat packing 
Holding company
Holding company
Holding company 

(%) Proportion of ordinary shares held by

Parent
–
–
–
–
–
–
100
–
–

Group
100
80
100
100
100
100
–
80
100

All subsidiary undertakings are included in the consolidation. The Company’s voting rights in its subsidiary undertakings are the same 
as its effective interest in its subsidiary undertakings.
27 Related party transactions and ultimate controlling party
The Directors do not consider there to be one ultimate controlling party. The companies noted below are all deemed to be related 
parties by way of common Directors. 

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

Group
Hilton Meats (International) Limited
Romford Wholesale Meats Limited
RWM Dorset Limited

Amounts owing from and to related parties at the year end were as follows:

Group
Hilton Meats (International) Limited
Romford Wholesale Meats Limited
RWM Dorset Limited

2012
£’000
1,673
–
–

Sales
2011
£’000
2,435
–
–

2012
£’000
61,724
–
–

Purchases
2011
£’000
55,500
47,104
15,795

Owed from related parties

Owed to related parties

2012
£’000
326
–
–
326

2011
£’000
133
–
–
133

2012
£’000
6
–
–
6

2011
£’000
2,911
1,930
821
5,662

The ultimate shareholders of all of the above companies have an interest in the share capital of the Company.

Hilton Meats (International) Limited ceased to be a related party during the year. Romford Wholesale Meats Limited and RWM Dorset 
Limited ceased to be related parties during 2011.

The Company’s related party transactions with other Group companies during the year were as follows:

Company
Hilton Foods Limited – dividend received
Hilton Foods Limited – interest expense
Hilton Meats (Retail) Limited – payment for group relief

2012 
£’000
9,500
356
115

2011 
£’000
9,500
432
156

At the year-end £11,399,000 (2011: £14,940,000) was owed to Hilton Foods Limited and £115,000 (2011: £156,000) was owed by 
Hilton Meats (Retail) Limited. 

Details of key management compensation are given in note 8.

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76

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

Notes to the ﬁnancial statements
continued

28 Events after the reporting period
In January 2013 the Group entered into a joint venture agreement with Woolworths Limited, the largest supermarket retailer in Australia. 
Hilton and Woolworths each own 50% in a new joint venture company which will operate a meat processing plant supplying beef, lamb 
and pork products in Western Australia. An estimate of the ﬁnancial effect of this collaboration cannot yet be made.
29 Financial instruments by category
The accounting policies for ﬁnancial instruments have been applied to the line items below:

Group
Assets as per balance sheet
Trade and other receivables
Cash and cash equivalents

Group
Liabilities as per balance sheet
Trade and other payables
Borrowings

Loans and receivables

2012 
£’000

2011 
£’000

102,611
31,428
134,039

99,517
27,345
126,862

Other ﬁnancial liabilities at amortised cost

2012 
£’000

2011 
£’000

136,691
36,630
173,321

133,940
46,055
179,995

In addition to the above, amounts owed to the Company by Group undertakings of £115,000 (2011: £156,000) are classiﬁed as ‘loans 
and receivables’ and amounts owed by the Company to Group undertakings of £11,399,000 (2011: £14,940,000) are classiﬁed as ‘other 
ﬁnancial liabilities at amortised cost’. 

Hilton Food Group plc 
Annual report and ﬁnancial statements 2012

77

Registered ofﬁce and advisors

Registered ofﬁce
2–8 The Interchange 
Latham Road 
Huntingdon 
Cambridgeshire 
PE29 6YE

Advisors 

Corporate brokers 
Panmure Gordon (UK) Limited 
One New Change 
London 
EC4M 9AF

Numis Securities Limited 
The London Stock Exchange 
Building 
10 Paternoster Square 
London 
EC4M 7LT

Legal advisor 
Taylor Wessing LLP 
5 New Street Square 
London 
EC4A 3TW

Independent auditors 
PricewaterhouseCoopers LLP 
Statutory Auditors and Chartered 
Accountants 
Waterfront Plaza 
8 Laganbank Road 
Belfast 
BT1 3LR

Registrar 
Equiniti Limited 
Aspect House 
Spencer Road 
Lancing 
West Sussex 
BN99 6DA

Financial Public Relations 
Citigate Dewe Rogerson Limited 
3 London Wall Buildings 
London 
EC2M 5SY

Bankers 
Ulster Bank Limited 
Donegall Square East 
Belfast 
BT1 5UB

Hilton Food Group plc
2–8 The Interchange 
Latham Road 
Huntingdon 
Cambridgeshire 
PE29 6YE

www.hiltonfoodgroupplc.com