ANNUAL REPORT AND

FINANCIAL STATEMENTS 2022

EXPERTISE

PARTNERSHIP

INNOVATION

Driving sustainable long-term value

through partnership

CONTENTS LONG-TERM SUSTAINABLE GROWTH

Expertise, Partnership,

Innovation. These are just

some of the ingredients

that make us who we are.

They help to drive our

long-term sustainable

growth, making us

the international food and

supply chain services

partner of choice.

For more information on

our key ingredients for success,

see the case studies throughout

the report

OVERVIEW 1

Hilton Foods at a glance 2

2022 overview 4

STRATEGIC REPORT 6

Chairman’s introduction 8

Chief Executive’s summary 10

Our business model 12

Our value chain 14

Our strategy 16

Performance and financial review 22

Risk management and principal risks 26

Stakeholder engagement 32

Sustainability report 36

GOVERNANCE 92

Board of Directors 94

Governance at a glance 96

Corporate governance statement 98

Directors’ report 104

Report of the Audit Committee 106

Report of the Nomination Committee 109

Directors’ remuneration report 111

Statement of Directors’ responsibilities 129

Independent auditors’ report 130

FINANCIAL STATEMENTS 138

Consolidated income statement 140

Consolidated statement

of comprehensive income 140

Consolidated and Company

balance sheet 141

Consolidated and Company

statement of changes in equity 142

Consolidated and Company

cash flow statement 143

Notes to the financial statements 144

ADDITIONAL INFORMATION 180

Registered office and advisors 180

OUR INGREDIENTS FOR SUCCESS

AGILITY

DEVELOPMENT

EXPERTISE

QUALITY

INNOVATION

PARTNERSHIP

PASSION

LEADERSHIP

ACTION

ETHICS

COLLABORATION

TRANSPARENCY

STRATEGIC REPORT GOVERNANCE ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

FINANCIAL STATEMENTS

The Five Pillars of Hilton Foods:

A multi-category proposition focused on quality and innovation.

OUR PEOPLE

7,000

(2021: 6,000+)

OPERATING ACROSS

MARKETS

INTERNATIONALLY

CAPITAL INVESTMENT

£56.8

(2021: £57.4m)

WE OPERATE FROM

HIGH PERFORMANCE

FACILITIES

HIGH QUALITY,

EFFICIENTLY

PROCESSED,

EXPERTLY PACKED

MEAT SUBSTITUTE

PRODUCTS

RANGING FROM

CUTLETS TO KIEVS

RESPONSIBLY

AND SUSTAINABLY

SOURCED

SLOW COOK,

READY TO COOK

OR READY TO EAT

CONVENIENCE

CONSULTANCY

IN SUPPLY

CHAIN LOGISTICS,

AUTOMATION AND

DIGITALISATION

We were founded by entrepreneurs, way back when that

wordwas rare. The families at the root of our history operated

primary processing slaughter and deboning facilities dating

back to the 1960s. And today we have 24 facilities – and

increasing – with a turnover of over £3bn. Today, our unique

partnerships, processes and focus on innovation position

usasthe international protein partner of choice.

Our diversified food and supply

chain services business…

HILTON FOODS AT A GLANCE

Page

ME AT SALES

OF OVER

400k

tonnes in 2022

OUR SEAFOOD

100%

responsibly sourced

by 2025

SALES GROW TH

AT DALCO

17%

in 2022

FRESH FOODS

VOLUME GROWTH

47%

in 2022

NUMBER OF AIR

BRIDGE LINKS

with customers

2 Hilton Food Group PLC Annual Report and Financial Statements 2022

Local specialists supported by an international

perspective to deliver growth.

EUROPE

…well-placed to meet our

international consumer needs.

UNITED KINGDOM

IRELAND

PORTUGAL

GREECE

DENMARK

CENTRAL EUROPE

BELGIUM

SWEDEN

NETHERLANDS

APAC

NEW ZEALAND

AUSTRALIA

AGILITY

PASSION

The Foppen acquisition brings

twowell-invested, dedicated

smoked salmon facilities

inHarderwijk, the Netherlands

and Preveza, Greece, and an

experienced management team

and workforce.

For more information see

page 17

EXPERTISE

PARTNERSHIP

Working in partnership with

Countdown stores we launched

our first food park concept in

NewZealand in July 2021.

For more information see

page 20

STRATEGIC REPORT GOVERNANCE ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

FINANCIAL STATEMENTS

2022 OVERVIEW

Adjusted operating profit (£m)

£71.1m

’

48.7

54.7

67.0

73.6

71.1

Revenue (£m)

£3,847.6m

’

1,649.6

1,814.7

2,774.0

3,302

3,847.6

Net bank debt (£m)

£211.6m*

’

25.0

86.8

122.2

84.6

211.6

Financial

performance

overview

Financial

overview

£71.1m

Adjusted operating profit

down3.3% to £71.1m

(2021: £73.6m)

45.1p

Adjusted basic earnings per

share down 26.4% at 45.1p

(2021: 61.3p)

22.6p

Proposed final dividend of 22.6p,

taking total dividend for 2022

to29.7p

(2021: 29.7p)

£98.3m

Strong cash flows from

operatingactivities of £98.3m

(2021: £121.3m)

£211.6m

Net bank debt £211.6m with £83.6m

investments in acquisitions/JVs

and £56.8m capex investment

with a strong balance sheet

following refinancing

(2021: £84.6m)

£54.0m

IFRS operating profit down

14.8% to 54.0m (2021: £63.4m)

after exceptional items of £11.9m

relating predominantly to 2021

fire at Belgium site

(2021: £63.4m)

19.8p

IFRS basic earnings per share

down 56% at 19.8p

(2021: 45.0p)

£3.8bn

Group revenue up 16.5%

to£3.8bn, underpinned

bycontribution from newly

acquired businesses, first full

year of trading in New Zealand

and inflationary impact

(2021: £3.3bn)

513,816 t

Volume growth of 4.3%

to513,816 tonnes

(2021: 492,588 tonnes)

“ This has been a year of

unprecedented global and

economic challenges, but

Hilton Foods has continued to

make good strategic progress.”

Robert Watson, OBE

Chairman

Read more in the Chairman’s introduction

page 8

Adjusted results represent the

IFRS results before deduction of

acquisition intangibles amortisation

and exceptional items and also IFRS 16

lease adjustments as detailed in the

Alternative performance measures

note 33.

*Excluding lease liabilities

4 Hilton Food Group PLC Annual Report and Financial Statements 2022

Strategic

highlights

Sustainability

highlights

Launched global

Supplier Social Responsibility

Code of Conduct and

Compliance requirements

14%

reduction in absolute

Scope 3 Emissions

OUR FOUR KEY

STRATEGIC OBJECTIVES

Outstanding

protein products

– Strength and resilience in core

meat category, underpinned by

strong commercial partnerships

– Challenging seafood

performance, with robust

recovery plans in place to

restore profitability

– Further vegan and vegetarian

growth through branded

partnerships and private label

expansion

– Double digit growth in easier

meals, with launch of award-

winning new products

Growing across

international markets

– Strong performance in APAC

including first full year of trading

in New Zealand

– New partnership formed in

Singapore with Country Foods,

awholly owned subsidiary of

SATS, Asia’s leading provider

offood solutions and gateway

services

– Growth through geographical

diversification with Foppen

acquisition

Industry-leading

technology

– Increased ownership of

FoodsConnected supply chain

management platform to 65%

– Agito joint venture reinforcing

automation and engineering

capabilities

Delivered through

the Sustainable

Protein Plan

– Introduction of stretching

ESG performance metrics into

our LTIP Scheme including

targets for Scope 1 and 2 energy

efficiency, packaging recycled

content and food waste

– Progress across people, planet

and product pillars, including

exceeding 2025 target for

women in leadership positions

and A- rating from CDP on

Climate Change

PEOPLE PLANET

70%

recycled content across

all plastic packaging

A-

Achieved A- rating from

CDP for Climate Change

PRODUCT

SUPPORTING OUR PARTNERS TO BECOME

FIRST CHOICE FOR SUSTAINABLE PROTEIN

62%

of electricity

Hilton Foods purchased

in 2022 came from

renewable sources

For more information see

our sustainability report on

pages 36 to 91

48.5%

increase in sales of vegetarian

and vegan products

Published our UK Commitment

to Sourcing Deforestation

andConversion Free Soy

33%

Achieved 33% of

women in leadership,

on track to meet

our 2025 target

STRATEGIC REPORT GOVERNANCE ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

FINANCIAL STATEMENTS

ACTION

ETHICS

6 Hilton Food Group PLC Annual Report and Financial Statements 2022

STRATEGIC

REPORT

SEAFOOD PROCUREMENT

IS COMPLEX. WE MAKE IT

RESPONSIBLE.

We’re well known for our

commitment to ESG, but

also for delivering what

consumers want: a healthy,

natural product that tastes

great and is easy to prepare

and cook.

CHAIRMAN’S INTRODUCTION 8

CHIEF EXECUTIVE’S STATEMENT 10

Business development 10

2022 Performance overview 10

Sustainability 10

Segment performance 11

Past and future trends 11

OUR BUSINESS MODEL 12

OUR VALUE CHAIN 14

OUR STRATEGY 16

PERFORMANCE AND

FINANCIAL REVIEW 22

RISK MANAGEMENT

ANDPRINCIPAL RISKS 26

STAKEHOLDER ENGAGEMENT 32

SUSTAINABILITY REPORT 36

People 46

Planet 54

Product 62

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

CHAIRMAN’S INTRODUCTION

STRATEGIC PROGRESS

This has been a year of unprecedented

global and economic challenges, but

Hilton Foods has continued to make

strategic progress. We manufacture high

quality multi-protein products utilising

industry leading technology in our highly

automated facilities, including advanced

robotics. Together with leveraging our

expertise we can offer improved supply

chain efficiencies to our customers whilst

committed to our sustainable protein

plan. The depth of our partnerships is

illustrated through physical air bridges

installed in facilities in Australia and

NewZealand that link our processing

facilities directly to our customers’

distribution centres. Use of these fully

automated conveyor air bridges further

optimises the supply chain process

bringing significant logistics efficiency

savings with lower carbon emissions.

During the year we acquired Foppen,

a specialist smoked salmon business,

with facilities in the Netherlands and

Greece, which enhances our existing

fishportfolio and is an entry point

into the North American retail market.

We also agreed a joint venture with

Agito, an Australian automation and

technology solutions business with

ambitions for European expansion, which

brings together excellence in automation

and food supply chain expertise. This JV,

together with an increased stake in

Foods Connected, fits neatly into a newly

created Hilton Food Services division to

leverage supply chain solutions to meet

our customers’ needs. Additionally we

invested in Cellular Agriculture, a leading

cultivated protein tech business and

formed a new partnership with Country

Foods in Singapore.

We continue to explore opportunities

to develop our cross-category business

in both domestic and overseas markets

as well as applying our state-of-the-art

skills and experience to deliver value

toour customer.

GROUP PERFORMANCE

In 2022 we increased our overall volumes

maintaining a trend of continuous growth

achieved in every year since Hilton’s

flotation in 2007. However this was

overshadowed by significant challenges

in our UK Seafood business including

the impact of unprecedented inflation

levels with price recovery taking longer

than anticipated. There was also

further disruption through automation

investments which will deliver longer

term efficiency benefits.

We have taken steps to rebuild sustainable

profitability in this business and we remain

confident in the opportunities which the

seafood category will present for Hilton

Foods over the coming years, serving

a range of domestic and international

customers with market-leading salmon,

white fish, shellfish, coated fish, prawn

cocktails and other added value

fish products.

Hilton Foods generated strong operating

cash flows during 2022 enabling further

significant investment in our facilities to

increase capacity, improve operational

efficiency and offer innovative solutions

to our retailer partners. Hilton Foods

remains financially strong with significant

cash balances, undrawn committed bank

facilities and operating well within our

banking covenants.

DIVIDEND POLICY

The Group has maintained a progressive

dividend policy since flotation and

despite the impact of the challenges

faced in 2022 remain confident that this

approach continues to be appropriate.

With the proposed final dividend of

22.6pper ordinary share, total dividends

in respect of 2022 will be 29.7p per ordinary

share, maintaining the dividend compared

to last year.

Hilton continues to make

goodstrategic progress.

Wemanufacture high

quality multi-protein

products utilising industry

leading technology in our

highly automated facilities,

including advanced robotics.

Together with leveraging

our expertise wecan offer

improved supply chain

efficiencies to our customers

whilst committed to our

sustainable protein plan.

Robert Watson, OBE

Chairman

Driving long term value

duringchallenging times.

8 Hilton Food Group PLC Annual Report and Financial Statements 2022

OUR BOARD, PURPOSE

AND GOVERNANCE

The Hilton Board is responsible for

thelong-term success of the Group

andestablishing its purpose, values and

strategy aligned with its desired culture.

Our purpose is to create efficiency

and flexibility in the food supply

chain whilst maintaining high quality

through innovative and sustainable

food manufacturing and supply chain

solutions with the ambition to be the first

choice partner for food retailers seeking

excellence, insight and growth.

To achieve this the Board has an

appropriate mix of skills, depth and

diversity and a range of practical

business experience, which is available

to support and guide our management

teams across a wide range of countries

as well as having in place succession

planning and maintaining a talent

pipeline. We remain committed to

achieving good governance balanced

against our desire to preserve an agile

and entrepreneurial approach. I would

like to thank my colleagues on the

Board for their support, counsel and

expertise during the year. During the year

Patricia Dimond joined the Board as an

independent Non-Executive Director and

subsequently became Audit Committee

chair when John Worby stepped down.

Angus Porter then became the Senior

Independent Director. Nigel Majewski

also stepped down as CFO and was

replaced by Matt Osborne, formerly the

Group Financial Controller, who hasmade

astrong start in the role.

Philip Heffer advised the Board that

hewished to step down from his role

asCEO in 2023. I am delighted that Steve

Murrells, CBE has accepted our invitation

to join Hilton as its next CEO and that

Philip will remain in the business in a new

role of Co-Founder and Board Advisor.

Steve has an outstanding record as a

leader within the food industry working

in senior positions with Tesco plc and

more recently at Tulip Ltd 2009 - 2012

asCEO and Co-operative Group Ltd 2012 -

2022 as CEO Retail and from 2017 as Group

CEO. Steve was appointed Commander

ofthe Order of the British Empire

(CBE) in the 2022 New Year Honours

for services to the food supply chain.

Steve will join the Board in July 2023.

Philip has spent almost 30 years with

Hilton Foods, including the last five years

as Group CEO and will support Steve

ensuring a smooth transition. I would

like to thank Philip for everything he

has contributed to Hilton Foods. He has

been instrumental to the growth of the

business we founded together in 1994

and I am extremely pleased that we will

continue to benefit from his experience

and expertise in his new advisory role.

The Board takes its responsibilities

very seriously to promote the success

of the Company for the benefit of its

stakeholders as a whole. We take the

interests of our workforce and other

stakeholders fully into account in Board

discussions and decision making. Details

of the Group’s policies and procedures

that have been implemented to enhance

stakeholder and workforce engagement,

which explain how these interests

have influenced our decisions, are set

out in the governance section of our

Annual report.

SUSTAINABILITY

2022 marks the first full year of our

new Sustainable Protein Plan strategy.

This gives added focus and energy to the

work we are doing to make our business

more sustainable and become a core

part of the wider growth strategy for

the business. This Plan includes a range

of stretching targets aligned closely

with the UN Sustainable Development

Goals including setting Science Based

Targets on the way to achieving net zero

emissions before 2050 and net negative

thereafter.

Our position in the food supply chain

means that we have opportunities

working with partners from farm

tofork to make a positive difference

and innovate across the value chain.

We recognise the commercial benefits

of highly traceable, sustainably sourced

proteins. For us, growing our business

and supporting the planet go hand in

hand. During the year we introduced

ESG performance metrics into our

Long Term Incentive Plan including

emissions, packaging recycling and food

waste targets to align our senior leaders

with supporting the delivery of the

Sustainable Protein Plan.

OUTLOOK AND

CURRENTTRADING

Against the backdrop of a challenging

environment, with global uncertainties

impacting supply chains and inflation,

Hilton’s trading performance since

the beginning of 2023 has been in line

with the Board’s expectations and

the business is well positioned for the

year ahead. We continue to explore

opportunities with existing and new

customers for further expansion in our

domestic and overseas markets.

Our short and medium term growth

prospects are underpinned by the

acquisitions of Foppen, Dalco and

Fairfax Meadow, the new partnership

in Singapore and recovery in our UK

Seafood business as well as further

opportunities arising across our markets

by the development of our cross-category

business and the application of our

supply chain management expertise.

ANNUAL GENERAL MEETING

This year’s AGM will be held at Hilton’s

offices at 2-8 The Interchange, Latham

Road, Huntingdon, Cambridgeshire

PE296YE in a hybrid format on Tuesday

23 May 2023 at noon. Please refer to

our website at www.hiltonfoods.com/

investors/agm/ for further guidance.

Robert Watson OBE

Chairman

4 April 2023

In 2022, we saw a nine point

increase in the number of

employees who felt that

training opportunities

provided had helped them

todo their work well

For more information see

page 46

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

CHIEF EXECUTIVE’S SUMMARY

BUSINESS DEVELOPMENT

The Group’s expansion is based on

itsestablished and proven track record,

international reputation and experience

and the recognised success of the

close partnerships we have forged

and maintained with successful retail

partners over many years. Hilton’s

business model has proved successful

in Europe and APAC supplemented

by targeted acquisitions. We have

demonstrated that this business

model is capable of being successfully

applied to both new proteins and

transferred to new countries, adapted

with our local customers to meet their

specific requirements.

2022 PERFORMANCE

OVERVIEW

After the challenges we faced last

year in our seafood business, we took

a series of steps to rebuild profitability

and we are now well placed for the year

ahead. Meanwhile we have continued

to deliver on our strategic priorities and

to set the business up for long-term,

sustainable growth.

Despite the significant macro-economic

challenges, we have continued our record

of growing our volumes every year since

Hilton Foods became a publicly listed

company in 2007.

2022 saw continued year-on-year sales

growth driven by higher raw material

prices and volume growth including

through the acquisition of Foppen, full year

volumes from Fairfax Meadow and Dalco

acquired in 2021 and the NewZealand

facility which opened in 2021 where

there was strong trading. We have

demonstrated strength and resilience

in our core meat category with award

winning products across the categories in

which we operate. We continue to remain

focused on responding to consumer needs

in our development of new products and

leveraging our industry leading technology

to support our core protein business.

Overall volume increased by 4.3% to

513,816 tonnes (2021: 492,588 tonnes).

In 2022 over 75% of the Group’s volumes

were produced in countries outside

theUK. Adjusted operating profit fell by

3.3% and the overall operating margin

decreased to 1.8% (2021: 2.2%) due to

challenges in our UK Seafood business

including the impact of unprecedented

inflation levels with price recovery taking

longer than anticipated. There was also

further disruption through automation

investments which will deliver longer

term efficiency benefits.

A new leadership team is in place

inour UK Seafood business which is

performing well to implement a series

of steps to rebuild profitability in this

category. We are working in partnership

with our customers to recover inflation,

reduce costs and optimise the ranges

we produce as well as leveraging

thebenefits which will come through

our investment in industry-leading

automation and other initiatives.

The margin per kg decreased to 13.8p

(2021: 14.9p). Our customer service

level remains best in class at 95.9%

(2021: 96.4%).

The wide geographical spread

ofthe Groupincreases its resilience

byminimising its reliance on any one

individual economy. Hilton’s results

arereported in Sterling and are

thereforesensitive to changes in the

value of Sterling compared to the range

of overseas currencies in which the

Group trades. During 2022 the impact

ofaverageexchange rates on our results

compared with 2021 was marginal.

SUSTAINABILITY

Despite the current global instability

we have maintained our focus on

sustainability. Our strategy is to build

a platform to create sustainable value

over the long term, part of which is

our Sustainable Protein Plan which is

ablueprint for social and environmental

progress across three pillars being product,

planet and people. Through partnerships,

we can help to create a more circular and

sustainable food system that provides

healthy and affordable proteins for

consumers who have seen the cost

ofcooking double, and who worry about

the health of their families and the future

of our planet.

Hilton Foods today is a

completely different business

from the company we started

in 1994. Over 75% of our sales

volumes are now outside

theUK; we offer a wide range

of protein products and

categories; and we have built

atechnology services offer

which is best-in-class in the

industry. The global economy

today is more uncertain than

at any time in the past thirty

years, but Hilton Foods is well

set for long-term success.

Philip Heffer

Chief Executive Officer

2022 has been a year of

strengthand resilience.

10 Hilton Food Group PLC Annual Report and Financial Statements 2022

Through product innovation, we are

working to decarbonise cattle, deliver

zero emission factories and eliminate

deforestation. We are committed to

achieving fully recyclable retail plastic

packaging and have achieved 70%

recycled content plastic packaging

across the Group. The investment in

the meat technology business Cellular

Agriculture can help Hilton become

a leader in the emerging market

forcultured meat. I am pleased with

our progress on our planet targets.

Hilton Foods was awarded a score of

A- in this year’s climate assessment by

the Carbon Disclosure Project, achieving

recognition as a Supplier Engagement

Leader. However we need to go further.

We will, during 2023, submit even more

ambitious targets to the Science Based

Targets initiative. These will be consistent

with achieving 1.5°C and see us commit to

reach net zero well before our current 2050

target. The third part of our plan is about

our people. Our commitment is to protect

human rights, employee wellbeing and

support career development and we are

participants inthe UN Global Compact.

SEGMENT PERFORMANCE

Europe

Adjusted operating profit of

£49.7m(2021: £61.8m) on turnover

of£2,254.7m (2021: £1,987.4m)

This operating segment covers the

Group’s businesses and joint ventures

in the UK, Ireland, Holland, Belgium,

Sweden, Denmark, Portugal and

CentralEurope. Our products are sold

in 14 countries across Europe. Our food

service business Fairfax Meadow and

our vegan/vegetarian business Dalco

were acquired in 2021. During 2022 we

acquired Foppen which completed in

March as well as increasing our stake in

Foods Connected from 50% to 65% and

in Hilton Food Solutions from 55% to 65%.

Volumes increased by 4.1% attributable

to the newly acquired businesses and

there was good growth in convenience

volumes in Central Europe and at Dalco.

Sales grew by 13.4% due to raw material

price inflation and the higher volumes.

However adjusted operating profit

fell by 19.6% due to the impact of the

performance in our UK Seafood business.

Operating margins decreased to 2.2%

(2021: 3.1%) and operating profit margin

per kg decreased to 13.4p (2021: 18.5p).

COMMITMENT

RESPONSIBILITY

It’s our mission to make

nutritious protein more

sustainable. And to create

value for customers in a way

that supports people, ethics,

equity and science-led

environmental impacts.

For more information see

our Sustainable Protein Plan on

pages 38 to 45

APAC

Adjusted operating profit of

£26.7m(2021: £22.4m) on turnover

of£1,592.9m (2021: £1,314.6m)

In Australia the Group operates facilities

inBunbury, Western Australia, Melbourne,

Victoria and Brisbane, Queensland. A new

food park facility in New Zealand opened

in July 2021 to supply beef, lamb, pork,

chicken, seafood and added-value products.

Volumes for the year increased by 4.7%

through the full year of trading at the

NewZealand facility. Sales increased

by 21.2% driven by inflation in Australia

and the new facility in New Zealand.

Adjusted operating profit increased

by19.4% given the higher volumes as well

as benefiting from recovery of increased

interest costs. Operating margins were

steady at 1.7% (2021: 1.7%) and the operating

profit margin per kg increased to 16.1p

(2021: 14.1p).

PAST AND FUTURE TRENDS

Over recent decades major retailers

have progressively rationalised their

supply base through large scale,

centralised packing solutions capable

of producing private label packed fresh

food products. This achieves lower

costs with consistent high food safety,

food integrity, traceability and quality

standards allowing supermarket groups

to focus on their core retail business

whilst addressing consumers’ continuing

requirement forquality and value.

This trend towards increased use of

centralised packing solutions is likely to

continue, albeit at different speeds across

the world, representing potential future

geographical expansion opportunities

for Hilton. In addition consumer buying

patterns are evolving with more seafood

and vegetarian proteins being eaten.

Through Hilton’s diversification into

these proteins we are well placed to

growour business.

Philip Heffer

Chief Executive Officer

4 April 2023

£49.7m

Europe 2022 adjusted operating profit

£26.7m

APAC 2022 adjusted operating profit

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

The Hilton Foods business model

is well proven and sustainable.

7,000+

passionate and skilled people

well-invested, state-of-the-art facilities

markets internationally, operating

acrossdiverse cultures

£56.8m

capital invested in 2022

Long-standing partnerships

with market-leading customers operating

inan open book, transparent model, with

ourpeople and with the communities in

which we operate

For more information see our strategy on

pages 16-21

Consumer and the customer

atthe heart

of decision making underpinned by

aninsight-driven approach which is

consumer-led and customer focused

OUR BUSINESS MODEL

We build and operate large scale,

highly automated food processing,

manufacturing and logistics services

for leading international retail and food

service customers through long-term

partnership agreements in transparent

open-book models. These contractual

arrangements combined with our

long-term partnership, and total

category management approach

serve to maximise achievable volume

throughout whilst maintaining market

competitive unit packing costs and

thereby delivering value to our customers

and their consumers. Under the long-

term supply and service agreements

wehave in place with our customers,

theparameters of our revenue are clearly

defined within our transparent open-

book costing models.

The Hilton Foods business model has

beenproven in many geographies and

partnerships across Europe and APAC.

We also have a joint venture partnership

in Portugal in which we share the profits.

This has been supplemented by strategic

acquisitions in diversified food categories

and further integration in the supply

chain service sector.

Within our supply chain services

pillarwe own 65% of Foods Connected,

an award-winning end to end supply

chain management software platform,

a joint venture with Agito Group offering

automation solutions and investment

in Cellular Agriculture Ltd, developing

next generation, scalable solutions to

alternative protein production.

We have demonstrated our business

model is capable of being successfully

transferred into new countries as an

approach which is then tailored to

bestmeet the local customers’ specific

requirements. Our operating facilities

are run by a local management team

which is enhanced by a regional and

central strategic leadership, expertise,

and governance.

Our business is based on a partnership

approach with customers and suppliers

which are forged over many years.

The international spread of our business

operations are a significant strength,

creating scale, a network of expertise

and opportunity to accelerate innovation

principles from market to market with

a local best fit placement applied for

our customers.

Our resources

and relationships

Why

we do it

Our purpose

Growth and

success through

partnership

Our values

Collaborative

Innovative

Agile

Ambitious

Responsible

Our ambition

To be the

international

food and supply

chain services

partner of choice

12 Hilton Food Group PLC Annual Report and Financial Statements 2022

Consumers

Launched 334 new products and

improved 966 products to better

meet consumer needs in 2022.

Our customers

Serving our customers with high

quality products every day.

Our suppliers

Working collaboratively to deliver

consumer and customer expectations,

we have removed 240tns of plastic

and 9m absorbent pads from our

packaging through innovation.

Our people

Being safe and inclusive employers

byempowering our people, we saw

a 6% increase in employees ‘feeling

Ican be myself at work’.

Communities

Many of our employees have been

impacted by events in Ukraine.

Employees across our European

siteshave fundraised, collected goods,

and provided practical support to

refugees.

Environment

Recognised as a supplier engagement

leader for Climate Change for the

second year running by the Climate

Disclosure Project (CDP).

Our investors

We want our shareholders to believe

in our purpose, values and strategy.

We believe in engaging with our

shareholders to help create value

andensure the long-term success

ofour business strategy.

Outstanding

protein products

Award winning food products across

ourfour categories of meat, seafood,

vegan and vegetarian, and easier meals.

Our expert multi-category food business

is agile and responsive to consumer

trends with a focus on quality, value

andinnovation at scale.

Growing across

internationalmarkets

A diverse, well-resourced, international

business with expertise, operating as local

specialists in the markets we serve. We

have an ambition for growth and success

inall our current and future markets.

Industry leading technology

An end-to-end approach enabling

effectivebusiness decision making through

technology platforms. Highly automated

facilities unlocking efficiency and optimised

supply chain services better meeting our

customers’ needs.

For more information see our strategy

on pages 16 to 21

Delivered through the

Sustainable Protein Plan

We are committed to make progress

through our pillars of people, planet

andproduct.

For more information

see pages 38-45

How we create

long-term

sustainable value

1. We leverage innovation

and expertise to bring

new food products and

supply chain solutions

to market to meet our

customers and their

consumers’ needs.

2. In partnership we

responsibly source high

quality raw materials at

scale with industry leading

standards and traceability.

3. We manufacture high

quality food products

every day, treating our

customer’s brand as our

own through transparent,

open-book models.

4. Our supply chain services

and products support

effective business

decision making and

improved efficiency

through technology and

automation solutions.

What

we do

The value we

create for our

stakeholders

For more information on

stakeholder engagement

see pages 32-35

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

OUR VALUE CHAIN

We supply

We produceWe partner

United

Kingdom

Ireland

Netherlands

Denmark

Belgium

Poland

Hungary

Czech

Republic

Slovakia

Latvia

Estonia

Lithuania

Australia

Steak Roast Chops

Strips Mince Pulled Sausages Burgers Balls Schnitzel

Sandwiches Wraps Baguettes

Burgers Pizza Garlic bread

Supply chain

Insight

Food service channel

Trading company

Food for now

Food for later

Cloud-based end-to-end

supply chain management platform

Consumer

insight

Shanks

Gammon Schnitzel

Steak Sausages Chops BaconMince

Roast

Diced

Chicken

Kebab

Chicken

Drumsticks

Chicken

Thigh

Chicken

Wings

Half

Chicken

Duck

Leg

Duck

Half

Hummus

Soup

Ready

meals

Pasta

sauce

Meal

kits

Slow

cooked

Ready to

cook

Salad

Salmon White fish

Nuggets

Diced

Shellfish Fish cakes Smoked salmonCoated

Whole/half/

quarter carcass

MinceDiced

Pulled belly Rib rack Smoked loinMeatballs Meatloaf

Steak Roast Sausages Burgers Meatballs

Meatloaf

Mince

Diced

Ribs

We source

responsibly

Sweden

Portugal

Well invested,

highly automated,

efficient facilities

Supply chain

services including

software and

automation solutions

Traceability

Specifications

and NPD

Supplier

compliance

Procurement

and supply chain

Leading

solutions

Retail packing

New Zealand

USA

We also supply

to countries

throughout Asia

Canada

Depot

Store

order

picking

Low margin

operation

Economics

of scale

Full traceability

CSR

Beef

Pork

Lamb

Poultry

Seafood

Vegan &

vegetarian

Easier

meals

Reporting

and analytics

CSR

Food safety

and quality

Raw materials are

sourced both locally and

internationally from trusted

suppliers. They are then

processed and packed

in large scale, highly

automated facilities using

advanced robotics, before

being delivered either

to retailers’ distribution

centres or direct to stores.

Hilton Foods operate through partnership in an industry leading value chain

which is underpinned by traceability and standards from farm to fork through

anapproach of control, audit, guide and influence.

14 Hilton Food Group PLC Annual Report and Financial Statements 2022

We supply

We produceWe partner

United

Kingdom

Ireland

Netherlands

Denmark

Belgium

Poland

Hungary

Czech

Republic

Slovakia

Latvia

Estonia

Lithuania

Australia

Steak Roast Chops

Strips Mince Pulled Sausages Burgers Balls Schnitzel

Sandwiches Wraps Baguettes

Burgers Pizza Garlic bread

Supply chain

Insight

Food service channel

Trading company

Food for now

Food for later

Cloud-based end-to-end

supply chain management platform

Consumer

insight

Shanks

Gammon Schnitzel

Steak Sausages Chops BaconMince

Roast

Diced

Chicken

Kebab

Chicken

Drumsticks

Chicken

Thigh

Chicken

Wings

Half

Chicken

Duck

Leg

Duck

Half

Hummus

Soup

Ready

meals

Pasta

sauce

Meal

kits

Slow

cooked

Ready to

cook

Salad

Salmon White fish

Nuggets

Diced

Shellfish Fish cakes Smoked salmonCoated

Whole/half/

quarter carcass

MinceDiced

Pulled belly Rib rack Smoked loinMeatballs Meatloaf

Steak Roast Sausages Burgers Meatballs

Meatloaf

Mince

Diced

Ribs

We source

responsibly

Sweden

Portugal

Well invested,

highly automated,

efficient facilities

Supply chain

services including

software and

automation solutions

Traceability

Specifications

and NPD

Supplier

compliance

Procurement

and supply chain

Leading

solutions

Retail packing

New Zealand

USA

We also supply

to countries

throughout Asia

Canada

Depot

Store

order

picking

Low margin

operation

Economics

of scale

Full traceability

CSR

Beef

Pork

Lamb

Poultry

Seafood

Vegan &

vegetarian

Easier

meals

Reporting

and analytics

CSR

Food safety

and quality

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

Growing volumes andextending product

ranges supplied – and services provided to

ourexisting customers

Optimising use of assets andinvesting in new

technology to deliver competitive advantage

toour customers

Maintaining a vigilant focuson food safety and

integrity and reducing unit costs while improving

product quality and service provision

Entering new territories andmarkets either

with new customers orinpartnership with

ourexisting customers

OUR STRATEGY

WE ARE AMBITIOUS

We are on the journey to our ambition

‘tobe the international food and supply

chain services partner of choice’. We have

grown into a multi-category and multi-

channel business, constantly and rapidly

building our expertise, breadth and scale

in all four food categories and in our

supply chain services offer.

For more information see

our Five Pillars on page 2

We have operating businesses across

Europe and Australasia who serve our

partners across 19 markets internationally.

We remain focused on achieving our

ambition through allour partnerships.

OUR STRATEGIC OBJECTIVES

Our strategy continues to be to support our customers’ brands and their development

through our unique categoryoffer in their local markets. This approach combined

witha strong reputation, well-invested modern facilities andarobust balance sheet

hasgenerated growth over many years.

We are achieving long-term sustainable customer and shareholder value through:

Our purpose: ‘growth and success through partnership’ clearly states what

drives us. It impacts the way we interact and operate with all our partners: our

customers, our suppliers, our people and the communities in which we operate.

Through our partnership approach we have built our business to the success

and scale that it is today. As a business we offer the opportunity for growth

andsuccess for all our partners.

We are defined

by ourpurpose.

16 Hilton Food Group PLC Annual Report and Financial Statements 2022

AGILITY

PASSION

Progress against our strategic objectives

EXPERTS IN SMOKED SALMON

Foppen only use the very best wood for smoking their

fish: a special Foppen blend of oak and beech wood.

The result is a delicious characteristic smoky taste

and texture.

Unique Foppen products include both hot smoked

and cold smoked salmon processes. The traditional

hot-smoked salmon is smoked at higher temperatures

(66°C to 85°C) using oak and beech wood smoke

giving the salmon a rich, yet subtle and refined

smoky flavour.

Exciting flavour twists to enhance the traditional

flavours of smoked salmon are popular products with

customers in both hot and cold dishes.

QUALITY

Foppen’s number one focus is always on quality.

Foppen’s craftsmanship and expertise, combined with

the latest state-of-the-art technology, ensure that every

product is made to the highest quality standards.

Only the very best salmon is used in Foppen products.

They search the best locations worldwide, from the

cold waters of Norway to Alaska.

SUSTAINABILITY

Foppen are committed to preventing the depletion

of resources and protecting marine life. All their fish

is sourced from either ASC certified farms or MSC

certified fisheries in Norway and Alaska.

GLOBAL EXPANSION

The inclusion of Foppen into the Hilton Foods

business opens up new customers and markets to the

Group. With customer partners in North and Central

America, Asia and Europe this brings exciting new

opportunities to Hilton Foods. Foppen’s ambition is to

continue expanding its strong position in Europe and

the United States and to gain market share in Asia,

theMiddle East and South America.

Foppen is planning further global expansion for 2023,

establishing a sales and marketing office in Japan and

partnerships with retailers in South Korea and Taiwan.

In 2023 we will start an e-commerce project in China

with team Foppen Shanghai and plan for market

entry into Australia.

THE FUTURE

The Foppen acquisition creates a complete seafood

product portfolio for Hilton Foods, ranging across

sixcategories. We are excited about the opportunities

from cross sales and geographical expansion through

the Foppen product portfolio.

FOPPEN – OUTSTANDING

PROTEIN PRODUCTS

In the first half of 2022 Hilton Foods

acquired smoked salmon producer

Foppen, bringing an exciting range

ofnew products to our portfolio.

Foppen started out in 1918 selling

smoked eel in the Dutch town of

Harderwijk. Today it is a market leader

in premium smoked salmon and

specialty value added smoked salmon

products. It maintains a leading

position in markets in both the USA

and Europe. This position is based

onlongstanding relationships with

key customers, built on quality

andservice.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

“A single robot can move

the same maximum

pallet weight as our

existing pallet trucks, but

with route optimisation,

reduced downtime and

software integration we

will be able to economise

processes throughout

the cold-store and

productionfacilities.”

STREAMLINING OPERATIONS

The new system separates inbound and outbound

logistic processes, improving workflows and boosting

site capacity. It uses a customised warehouse control

system to integrate automated multi-depth warehouse

racking systems with end of line stacking and start

of line unstacking systems. Automated palletising

and depalletising robots streamline the process from

delivery of raw materials to the start of production

all the way through to the end of the production

linesystems which pack pallets of finished products.

Operations are further streamlined by theautomation

of the pallet wrapping, label printing and application

processes.

The robots facilitate the pallet transfer process to

our on-site 4,000 pallet storage facility. The project

integrates technology platforms and systems

across the intake, dispatch, warehouse storage and

production areas.

Integrating AMRs with the warehouse system means

that product picking, auto replenishment and storage

sortation can occur simultaneously, significantly

improving the overall efficiency of our operations.

It also reduces the risk of accident by limiting the

movement of personnel operated pallet trucks within

the confined space of the warehouse.

BENEFITS

The project is a showcase of how the technology and

automation solutions provided by Hilton Services can

increase site capability, boost efficiency and deliver

savings to our customers through:

– Increased capacity

– Improved operating efficiencies

– Labour retention and optimisation

– Better availability and application of higher quality

data to drive continuous improvements

– Improved workplace safety

– High return on investment

– Increased energy efficiency

– Part of our transition to net zero emissions by 2050

A GREEN FUTURE

58,792 kg

of CO

e* saved every year by using

AMRs as opposed to a traditional

conveyor system

* Based on 0.233KG of CO

e for each kWh.

Progress against our strategic objectives

UNLOCKING TECHNOLOGY

POTENTIAL AT OUR

HILTONSEAFOOD SITE

INGRIMSBY

Our partnership with Agito brings

industryleading expertise in supply chain

automation to our Hilton Seafood site

inGrimsby, UK.

This project introduces the latest in warehouse

logistics and automation to the warehousing

and dispatch areas of our Grimsby site.

Thenewtechnology is transforming our

operations in Grimsby, boosting their value,

sustainability and capability whilst

demonstrating how Autonomous Mobile

Robots (AMR) technology can revolutionise

food manufacture.

AUTOMATION

TRANSPARENCY

18 Hilton Food Group PLC Annual Report and Financial Statements 2022

DRIVING OPERATIONAL EFFICIENCY

Moving from a manual pallet handling system to

the robot system drives efficiency and enhances

processing capacity as it allows for 24/7 operation of

the warehousing. It reduces factory downtime as the

use of multiple robots allows operations to continue

throughout the factory and warehousing facilities

during maintenance periods.

We have researched how AMRs can optimise the

movement of goods within our warehouse, to make

the system as efficient as possible. Machine learning

will use the latest in software and technology so

thatthe product finds the most efficient route from

Ato B. As the system gets older it can develop neural

pathways from monitoring trends and patterns in the

data, learning what is the most optimised route for

certain tasks. This means that the system will continue

to evolve after implementation, driving further

efficiencies within our operations into the future.

PLANNING FOR THE FUTURE

The transition to automation and robot technology

inour warehousing and production processes enables

us to future-proof the system for subsequent growth

in capacity and changes to production methods.

This new infrastructure means that our Hilton Seafood

site will continue to deliver the highest service level

toour customers, long into the future.

This is a success story for all stakeholders – putting

Hilton Foods at the forefront of the automation

curve, and delivering significant savings for us

andour customers.

Looking forward to 2023, the summer will see the

project go live.

A single robot can move

the same maximum pallet

weight as our existing

pallet trucks, but with

route optimisation, reduced

downtime and software

integration we will be able

to economise processes

throughout the cold-store

and productionfacilities.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

EXPERTISE

PARTNERSHIP

ACTION

RESPONSIBILITY

GROWING ACROSS INTERNATIONAL

MARKETS – OUR FIRST FULL YEAR

INNEWZEALAND

Working in partnership with Countdown stores we

launched our first food park concept in NewZealand

inJuly 2021. The purpose-built site in Auckland isthe first

and largest of its kind in New Zealand. This partnership

leverages the latest automation technology to deliver

amulti-category solution.

2022 was the first full year of production at this state-of-

the-art facility, which is now running at full speed supplying

Countdown customers and their families withthe highest

quality protein products.

The New Zealand site is a showcase for the Hilton Foods

food park concept. Hilton Foods New Zealand harnesses

our cross-category expertise, supplying a complete set of

product ranges that demonstrate our high quality poultry,

seafood and red meat products.

The Hilton Foods New Zealand site combines supply chain

management platforms with Hilton’s manufacturing and

operational expertise and Agito Group’s highly automated

logistics solutions to deliver the best possible and most

efficient solution for our retail partners.

Our Auckland facility demonstrates our expertise in

thelatest technology and automation, and the solutions

our Hilton Services team deliver. It has a fully automated

warehouse system and is connected via a state of the

art conveyor air bridge to an adjacent Countdown

distribution centre.

The site delivers efficiencies for our retail partner through

manufacturing, logistics and services solutions. Hilton Foods

New Zealand optimises the entire supply chain process from

the sourcing of raw material, to the manufacture of great

consumer products and efficient distribution through to

ourcustomers and consumers.

Our automated store order picking is increasing

theefficiency of our customer supply chain logistics through

delivery of protein products on the same vehicle, reducing

labour requirements and the number of deliveries to store.

The New Zealand food park is a great example of the

automation and technology solutions that Hilton Services

can offer to our retailers and the wider supply chain.

It demonstrates our expertise in designing and bringing

online food packaging solutions to meet retail partners’

needs in new territories.

FOODS CONNECTED –

LEADING TECHNOLOGY

In 2022 Hilton Foods increased its

ownership of Foods Connected, taking

a65% share in the cloud based data

analytics and supply chain management

platform. It is part of our Hilton

Servicesdivision.

Winners of the Food and Drink Federation

Award for Digital Transformation 2022

CSR Management

Animal welfare

Supplier sustainability ranking

Packaging management

Scope 3 emissions

Sustainable farming groups

Responsible and

sustainable sourcing

Progress against our strategic objectives

4 million

crates dispatched in Year 1

Hilton Food Group PLC Annual Report and Financial Statements 2022

Progress against our strategic objectives

END-TO-END SUPPLY CHAIN

DIGITALISATION

The Foods Connected platform is a cloud-

based solution that gives a 360° view

over supply chains, including compliance,

procurement, food safety, quality, NPD and

CSR. Real-time data enables agile decision

making to minimise risks and maximise

profitability. Over 300 manufacturing

facilities and several leading retailers

globally already rely on it.

TRANSPARENCY

The software platform offers customers

effective real-time traceability. The Foods

Connected Traceability solution combines

blockchain style traceability, recall

management, real-time farm to fork

data and traceability testing to connect

all parties in the supply chain. It enables

companies to map back to farm or

trawler within minutes, helping them to

quickly identify risk and make evidence-

based decisions.

COMPLETE CSR MANAGEMENT

Foods Connected offers a CSR

Management solution for companies

to control CSR initiatives both internally

within their own business and externally

within their supply chain. It centralises CSR

activities in a single platform making it

easier for users to streamline management

and monitor results.

The platform enables users to manage

CSR-based questionnaires and audits

bygathering data from the supply chain

via an offline audit app or the remote audit

tool. This improves the speed and quality

ofdata capture.

It enables the ability to connect data

from multiple points across the supply

chain through their Supply Chain

Mapping capability.

Users are able to link supplier data with

third party information in areas such

aspackaging, Scope 3 emissions, waste

management and certification bodies.

The reports and analysis generated

help users to accurately track figures,

benchmark performance and minimise

the need for manual data capture.

SUPPLIER COMPLIANCE

The Foods Connected Supplier

Compliance solution simplifies supplier

data capture and compliance checks

through a clear and user-friendly

format. The solution centralises supplier

approval lists, questionnaires, approval

and compliancy tracking and supplier

documentation. In one central location,

users can manage supplier compliance

through supply chain mapping and

risk assessments, supplier ranking and

KPIs. The platform provides dashboard

reporting, audit schedules and automated

notifications to help users manage the

supplier compliance process.

GROWTH

Foods Connected are continuing to

expand into new territories and sectors.

In 2022 they added 20 new customers

across Europe, APAC and the USA with

customers now ranging across protein,

fresh produce, ready meals, tea, dairy,

bakery, cereals, pet food and much more,

with this across mainstream retailers,

manufacturers, restaurant chains and

online meal delivery providers.

They recently expanded their supply chain

offering to include a Recipe Manager that

complements the Specification & New

Product Development Workflow modules

which help customers with their product

development activity.

In 2022 they launched Racing Connected

with their first customer in the UK and

commenced their first customer project

on the Clothing Connected platform

highlighting the cross-industry capability

ofthe platform.

In 2023 Foods Connected will complete the

first phase of their system modernisation,

launching several new tools with updated

infrastructure and UI/UX interfacing to

ensure future business scalability.

A new Scheduling Manager will also be

launched in 2023 which will help customers

better plan product inspections and internal

and supplier audits with increased efficiency

and risk focus.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

PERFORMANCE AND FINANCIAL REVIEW

SUMMARY OF GROUP

PERFORMANCE

This performance and financial review

covers the Group’s financial performance

and position in 2022. Hilton’s overall

financial performance saw continued

strong growth in volumes and sales

although profitability and basic earnings

per share on an adjusted basis were

adversely impacted by the challenges

faced in our UK Seafood business.

Cash flow generation was strong,

supporting our ongoing significant

investment in facilities.

BASIS OF PREPARATION

The Group is presenting its results for

the52 week period ended 1 January 2023,

with comparative information for the

52 week period ended 2 January 2022.

The financial statements of the Group are

prepared in accordance with international

accounting standards in conformity

with the requirements of the Companies

Act 2006 and UK adopted International

Accounting Standards.

Hilton uses Alternative Performance

Measures (APMs) to monitor the

underlying performance of the Group.

Management use these APMs to monitor

and manage the business’s performance

day-to-day and therefore believe they

provide useful additional information

to shareholders and wider users of the

financial statements.

2022 FINANCIAL

PERFORMANCE

Volume and revenue

Volumes grew by 4.3% in the year

reflecting the acquisition of Foppen, full

year volumes from Fairfax Meadow and

Dalco which were acquired in 2021 and the

New Zealand facility which opened in 2021.

Additional details of volume growth by

business segment are set out in the Chief

Executive’s summary. Revenue increased

16.5% and by 16.0% on a constant currency

basis reflecting higher raw material prices

and volume growth.

Operating profit and margin

Adjusted operating profit of £71.1m

(2021: £73.6m) was 3.3% lower than

last year and 3.2% lower on a constant

currency basis due to challenges in our

Seafood business. IFRS operating profit

was £54.0m (2021: £63.4m) after charging

£11.9m in exceptional costs (2021: £7.1m)

reflecting costs relating to the Belgium

fire, acquisition and reorganisation costs

offset by a gain on the acquisition of 100%

of Foods Connected.

The operating profit margin in 2022 declined

to 1.8% (2021: 2.2%) and the operating profit

per kilogram of packed food sold fell to 13.8p

(2021: 14.9p) attributable to the Seafood

business challenges.

Net finance costs

Adjusted net finance costs excluding

exceptional items and lease interest

increased to £15.7m (2021: £6.4m)

reflectinghigher borrowings that financed

our acquisition and expansion programme

and the impact of higher market interest

rates. Interest cover as a proportion of

adjusted operating profit in 2022 reduced

to 4.5times (2021: 11 times). IFRS net finance

costs were £24.4m (2021: £16.0m).

Taxation

The adjusted taxation charge for the

periodwas £13.5m (2021: £14.5m). The

effective tax rate was 24.3.% (2021: 21.6%).

The IFRS taxation charge was £10.1m

(2021: £8.1m) with an effective tax rate

of34.2% (2021: 17.1%).

Net income

Adjusted net income, representing profit

for the year attributable to owners of the

parent, of £40.2m (2021: £50.5m) was 20.4%

lower than last year and 20.0% lower on

aconstant currency basis. IFRS net income

was £17.7m (2021: £37.1m).

Earnings per share

Adjusted basic earnings per share 45.1p

(2021: 61.3p) was 26.4% lower than last year

and 26.3% on a constant currency basis.

IFRS basic earnings per share were 19.8p

(2021: 45.0p). Diluted earnings per share

were 19.7p (2021: 44.5p).

Earnings before interest, taxation,

depreciation and amortisation

(EBITDA)

Adjusted EBITDA, which is used by the Group

as an indicator of cash generation, increased

marginally to £119.9m (2021: £119.5m).

IFRS EBITDA was £131.8m (2021: £139.0m).

Free cash flow and net debt position

Operating cash flow was strong in 2022

with cash flows from operating activities

of£98.3m (2021: £121.3m) reflecting

plannedinventory increases. IFRS free

cashoutflow, after capital expenditure

of£56.8m and investments in acquisitions

and joint ventures £83.6m but before

dividends and financing, was £79.4m

(2021:outflow £8.1m restated).

VOLUME

+4.3%

REVENUE

+16.5%

OPERATING PROFIT

-3.3%

Volumes grew by 4.3% in the

year reflecting the acquisition

of Foppen, full year volumes

from Fairfax Meadow and

Dalco which were acquired

in2021 and the New Zealand

facility which opened in 2021.

Matt Osborne

Chief Financial Officer

Higher revenues reflect

volume growth and inflation.

22 Hilton Food Group PLC Annual Report and Financial Statements 2022

PERFORMANCE AND FINANCIAL REVIEW

The Group closing net bank debt

comprising borrowings less cash

and cash equivalents excluding lease

liabilities, was £211.6m (2021: £84.6m)

reflecting bank borrowings of £298.8m

net of cash balances of £87.2m. Net bank

debt increased following investments

in acquisitions/JVs £83.6m and capex

investment £56.8m. Net debt including

lease liabilities was £457.7m (2021: £328.0m).

At the end of 2022 the Group had

undrawncommitted bank facilities under

its syndicated banking facilities of £106.4m

(2021: £96.8m). These banking facilities are

subject to covenants comprising net bank

debt to EBITDA and EBITDA interest cover.

Headroom under these covenants at the

end of the year was at least 66% for these

metrics. During the year the Group renewed

its banking facilities with a £424m five

year revolving credit and term loan facility

agreedwith a syndicate of lenders which

isdue to expire in January 2027.

The resilience of the Group has been

assessed by applying significant downside

sensitivities to the Group’s cash flow

projections. Allowing for these sensitivities

and potential mitigating actions the Board

is satisfied that the Group has adequate

headroom under its existing committed

facilities and will be able to continue to

operate well within its banking covenants.

Dividends

The Group has maintained a progressive

dividend policy since flotation and has

recommended a final dividend of 22.6p

per ordinary share in respect of 2022.

This,together with the interim dividend

of7.1p per ordinary share paid in December

2022, maintains the full year dividend,

as compared with last year at 29.7p

perordinary share. The final dividend,

ifapproved by shareholders, will be paid

on 30 June 2023 to shareholders on the

willbe ex dividend on 1 June 2023.

KEY PERFORMANCE

INDICATORS

See our KPIs on the following spread.

TREASURY MANAGEMENT

Hilton Foods does not engage in

any speculative trading in financial

instruments and transacts only in relation

to its underlying business requirements.

The Group’s treasury policy is designed

to ensure adequate financial resources

are made available as required for the

continuing development and growth of

itsbusinesses, 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, most of its earnings

aregenerated in other currencies,

principally the Euro and Australian Dollar.

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 by dividend

payments and the repayment of any intra

group loans to UK holding companies

paying due regard to actual and forecast

exchange rate movements.

The Group’s policy is only to use forward

currency exchange rate contracts for the

purpose of mitigating commodity risk

occurring in the normal course of business.

At no time will the Group take positions

in derivative instruments for the purpose

of earning a stand-alone profit from such

instruments. The majority of Hilton Foods’

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, Hilton

Foods main foreign exchange exposure

is in the main limited to its equity/major

capital expenditure investment in each

overseas subsidiary and its joint ventures,

and in thetranslation of overseas earnings.

The level of country specific risk currently

remains material for many businesses,

interms of the impact of macroeconomic

developments and commodity price

movements. The Group sells high quality

basic food products, for which there

will always be continuing demand,

tosuccessful blue-chip retailers in

developed countries.

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

SONIA and other interbank rates which

fluctuate over time. The Board will

continue reviewing hedging costs and

options as it is expected global interest

rates may increase materially beyond

current levels.

CUSTOMER CREDIT

ANDPRICING RISKS

As Hilton Foods’ customers comprise a

small number of successful and 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 either on a cost plus, packing

rate or volume based reward basis with

its customers.

LIQUIDITY RISK

Hilton Foods 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.

TAX STRATEGY

Hilton Foods is committed to paying

the right amount of tax at the right time

and complying with all relevant laws

and regulations.

We have a low-risk appetite toward

tax planning, with a simple corporate

structure based around our commercial

operations. We do not engage in planning

schemes or arrangements that could be

considered aggressive or artificial in nature.

We recognise the importance of the

tax contributions that we make in the

countries in which our profits originate,

and we consider the needs of all

our stakeholders.

The Group’s approach to transfer pricing

is to ensure that transactions reflect the

underlying commercial arrangements,

and therefore the use of transfer pricing

toartificially avoid tax is prohibited.

We also fully endorse the aims of the

OECD/G20 Inclusive Framework on Base

Erosion and Profit Shifting (BEPS) and its

related package of Actions www.oecd.org/

tax/beps/about/

Our tax strategy can be found on our

website www.hiltonfoods.com/media/

dyrlgni3/hilton-tax-strategy-2022.pdf

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

PERFORMANCE AND FINANCIAL REVIEW continued

KEY PERFORMANCE

INDICATORS

How we measure our performance

against our strategic objectives

The Board monitors a range of

financial and non-financial key

performance indicators (KPIs) to

measure the Group’s performance

over time in building shareholder

value and achieving the Group’s

strategic priorities. The nine headline

KPI metrics used by the Board for

this purpose, together with our

performance over the past two years,

isset out on the right:

Financial KPIs

Revenue growth

(%)

16.5%

2021: 19.0%

Year on year revenue growth

expressed as a percentage. The 2022

increase reflected higher raw material

prices and volume growth.

Adjusted operating profit margin

(%)

1.8%

2021: 2.2%

Adjusted operating profit expressed

asa percentage of turnover. The

operating profit margin % in 2022

was lower due to challenges in our

Seafood business.

Adjusted operating profit margin

(pence per kg)

13.8p

2021: 14.9p

Adjusted operating profit

perkilogram processed and sold

in pence.The decrease in 2022

compared with 2021 reflects the

challenges in our Seafood business.

Adjusted earnings before

interest,taxation, depreciation

andamortisation (EBITDA) (£m)

£119.9m

2021: £119.5m

Adjusted operating profit before

depreciation and amortisation which

increased marginally year on year.

Free cash flow

(£m)

£(79.4)m

2021: £(8.1)m restated

IFRS cash (outflow) before

minorities, dividends and financing.

Operating cash flow generation

in2022 was higher due to increased

investments in acquisitions and

joint ventures, adverse working

capital movements and higher

interest payments.

Net debt/EBITDA ratio

(times)

1.8

2021: 0.7

Year end net bank debt as a

percentageof adjusted EBITDA.

The increase is due to the Foppen

acquisition which completed during

theyear and the distorting impact

ofthe related equity raise £75m

in 2021.

In addition, a much wider range of financial

and operating KPIs arecontinuously tracked

atbusiness unit level.

24 Hilton Food Group PLC Annual Report and Financial Statements 2022

PERFORMANCE AND FINANCIAL REVIEW continued

Non-Financial KPIs

Growth in sales volumes

(%)

4.3%

2021: 5.0%

Year on year volume growth.

Volume growth in 2022 comprised

Foppen acquired in the year and

fullyear volumes from Fairfax

Meadow and Dalco acquired in

2021and the New Zealand facility

opened in 2021.

Employee and labour

agencycosts (pence per kg)

65.7p

2021: 60.9p

Labour cost of producing food

products as a proportion of volume.

The increase reflects relatively

greater labour complexity in

therecently acquired businesses

including Foppen, Fairfax Meadow

and Dalco.

Customer service level

(%)

95.9%

2021: 96.4%

Packs of product delivered as a %

of the orders placed. The customer

service level remains best in class.

GOING CONCERN STATEMENT

The Directors have performed a detailed

assessment, including a review of the

Group’s budget for the 2023 financial

year and its longer term plans, including

consideration of the principal risks faced

by the Group. The resilience of the Group

has been assessed by applying significant

downside sensitivities to the Group’s

cash flow projections. Allowing for these

sensitivities and potential mitigating

actions the Board is satisfied that the

Group is able to continue to operate

well within its banking covenants and

has adequate headroom under its new

committed facilities which do not expire

until 2027. The Directors are satisfied

that the Company and the Group have

adequate resources to continue to operate

and meet its liabilities as they fall due for

the foreseeable future, a period considered

to be at least 12 months from the date

of signing these financial statements.

For this reason they continue to adopt

the going concern basis for preparing

thefinancial statements.

The Group’s bank borrowings as detailed

in the financial statements and the

principal banking facilities, which support

the Group’s existing and contracted new

business, are committed. The Group is

in full compliance with all its banking

covenants and based on forecasts and

sensitised projections is expected to

remain in compliance. Future geographical

expansion which is not yet contracted, and

which is not built into our internal budgets

and forecasts, may require additional

or extended banking facilities and such

futuregeographical expansion will depend

on our ability to negotiate appropriate

additional or extended facilities, as and

when they are required. During the year

the Group renewed its banking facilities

with a £424m five year revolving credit

andterm loan facility.

The Group’s internal budgets and

forward forecasts, which incorporate all

reasonably foreseeable changes in trading

performance, are regularly reviewed by

the Board and show that it will be able to

operate within its current banking facilities,

taking into account available cash balances,

for the foreseeable future.

VIABILITY STATEMENT

In accordance with provision 31 of the

2018 UK Corporate Governance Code,

the Directors confirm that they have a

reasonable expectation that the Group will

continue to operate and meet its liabilities,

as they fall due, for the three years ending

in December 2025. A period of three years

has been chosen for the purpose of this

viability statement as it is aligned with

theGroup’s three year plan, which is based

on the Group’s current customers and

does not incorporate the benefits from

any potential new contract gains over

this period.

The Directors’ assessment has been made

with reference to the Group’s current

position and strategy taking into account

the Group’s principal risks, including those

in relation to Covid-19, and how these are

managed. The strategy and associated

principal risks, which the Directors review

at least annually, are incorporated in the

three year plan and such related scenario

testing as is required. The three year plan

makes reasoned assumptions in relation

to volume growth based on the position

of our customers and expected changes

in the macroeconomic environment and

retail market conditions, expected changes

in food raw material, packaging and other

costs, together with the anticipated level

of capital investment required to maintain

our facilities at state-of-the-art levels.

CAUTIONARY STATEMENT

This Strategic report contains forward-

looking statements. Such statements

are based on current expectations and

assumptions and are subject to risk factors

and uncertainties which we believe are

reasonable. Accordingly Hilton’s actual

future results may differ materially from

the results expressed or implied in these

forward-looking statements. We do

not undertake to update or revise any

forward-looking statements, whether as

a result of new information, future events

or otherwise.

Matt Osborne

Chief Financial Officer

4 April 2023

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

RISK MANAGEMENT AND PRINCIPAL RISKS

Line of Defence

External Audit,

regulators

Provide third party and

independent review

of all business units.

Review of the viability

and going concern

ofthe business.

Line of Defence

Oversight functions

Provided by functions

including Finance,

Quality, People and

Culture, IT, Health

and Safety, Risk and

Compliance. These

functions provide

the tools, systems

and internal controls

necessary to support

the identification,

management and

monitoring of risk.

This includes policies,

procedures and training.

Line of Defence

Internal Audit,

consultants

Provide independent

review over the

completeness and

effectiveness of our

internal controls and

risk management

systems.

Line of Defence

Business operations

“Management

Controls”

Local business units

carry out effective risk

management activities

in order to identify,

monitor, mitigate and

report on risks that

impact on operations.

WHO IS RESPONSIBLE FOR RISK AT HILTON

Business units and functions manage and monitor their own key risks through regular review, ensuring

the risk registers and risk mitigations are accurate. The Group’s risk register is compiled through

combining the set of of business unit risk registers supplemented by formal interviews with senior

executives and Directors of the Group.

We believe that a successful risk management framework carefully balances risk and reward,

andappliesreasoned judgement and consideration of potential likelihood and impact

in determining itsprincipal risks.

The Audit Committee reports to the Board on the substance of the risk assessment andanychanges

to the nature, likelihood or materiality of those risks. The Group Internal Audit & Risk Director presents

at every Audit Committee meeting on the internal controls andriskmanagement systems.

Audit Committee

Business unit risk registers

Group Internal Audit & Risk Director and Site Managing Directors

The Risk Management Committee reports regularly to the Audit Committee on the risk assessment and

any changes to the nature, likelihood or materiality of those risks. The Risk Management Committee

also considers the risk appetite and reviews in progress in the development of internal controls and their

implementation aligned to principal risks. The Chair of the Risk Management Committee also oversees

thescenario-based business continuity management exercises.

Risk Management Committee

Group Internal

Audit& Risk Director

Key international leaders

across the business

Representatives from

Executive Leadership Team

Responsibility for risk management including the appropriate identification of risks and the effective

application of actions designed to mitigate those risks, resides with the Board. TheBoard also sets

therisk appetite and considers how best to minimise and control the probability and potential

impactof identified risks if they were to crystallise.

Board

Chairman, Non-Executive Directors

Chief Executive Officer Chief Financial Officer

26 Hilton Food Group PLC Annual Report and Financial Statements 2022

RISK MANAGEMENT AND PRINCIPAL RISKS

RISKS AND RISK

MANAGEMENT

In accordance with provision 28 of

the2018 UK Corporate Governance

Code, the Directors confirm that they

have carried out a robust assessment

of theemerging and principal risks

facingtheGroup that might impede

the achievement of its strategic and

operational objectives as well as

affectperformance or cash position.

As aleading food processor in a fast-

moving environment it is critical that

the Group identifies, assesses and

prioritises its risks. The result of this

assessment is a statement of the

principal risks facing the Group

together with a description of the

maincontrols and mitigations that

reduce the effect of those risks were

they to crystallise. This, together

withthe adoption of appropriate

mitigation actions, enables us to

monitor, minimise and control both

theprobability and potential impact

ofthese risks.

HOW WE MANAGE RISK

The Group takes a proactive approach

torisk management with well-developed

structures and a range of processes for

identifying, assessing, prioritising and

mitigating its key risks, as the delivery

of our strategy depends on our ability

to make sound risk informed decisions.

The Group’s internal audit function

derives its risk-based assurance plan

onthe controls after considering the risk

assessment and reports its findings to the

Audit Committee. For more detail please

see Who is responsible for risk at Hilton?

RISK MANAGEMENT PROCESS

AND RISK APPETITE

The Board believes that in carrying

out theGroup’s businesses it is vital

tostrike the right balance between an

appropriate and comprehensive control

environment and encouraging the level of

entrepreneurial freedom of action required

to seek out and develop new business

opportunities; but, however skilfully

this balance between risk and reward is

struck,the business will always be subject

to a number of risks and uncertainties,

asoutlined below.

All types of risk applicable to the business

are regularly reviewed and a formal risk

assessment is carried out to highlight key

risks to the business and to determine

actions that can reasonably and cost

effectively be taken to mitigate them.

Not all the risks listed are within the Group’s

control and others may be unknown or

currently considered immaterial, but could

turn out to be material in the future. These

risks, together with our risk mitigation

strategies, should be considered in the

context of the Group’s risk management and

internal control framework, details of which

are set out in the Corporate governance

statement. It must be recognised that

systems of internal control are designed

tomanage rather than completely

eliminate any identified risks.

RISK MANAGEMENT

DURING2022

Cost of living crisis and the

Russia-Ukraine War

The macroeconomic and geopolitical

landscape, exacerbated by the Ukrainian

war, is having an unprecedented impact on

our supply chains, operations, consumers

and customers. Energy price volatility and

an acute cost of living crisis is impacting

consumer spending and eating habits.

This has resulted in high- profile food price

inflation and extreme cost volatility.

Our continued focus on cost control,

innovation and factory efficiency is

enabling us to manage the inflationary

pressures the industry is currently facing.

Through our strong customer relationships

we are able to support consumers to

navigate through these challenging times.

Brexit

Hilton’s exposure is generally mitigated

through our predominantly local sourcing

and operating model. Impacts are likely

to continue through 2023 as the UK and

EU regulatory and trade environments

evolve. The Group is ensuring compliance

through ongoing engagement with the

appropriate authorities and regulatory

forums. We continue to monitor policy

changes and amend processes and

operations as required. Our labour

recruitment and retention strategies

are evolving in line with this changing

landscape and our continued focus on

technology and automation further reduce

risk exposure in this area.

PRINCIPAL RISKS

The most significant business risks

that the Group faces, together with the

measures we have adopted to mitigate

these risks, are outlined in the table below.

This is not intended to constitute an

exhaustive analysis of all risks faced by the

Group, but rather to highlight those which

are the most significant, as viewed from

the standpoint of the Group as a whole.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

RISK MANAGEMENT AND PRINCIPAL RISKS continued

Description of risk Its potential impact Risk mitigation measures and strategies adopted

Risk 1

The progress of the

Group’s business

is affected by the

macroeconomic

and geopolitical

environment and

levels of consumer

spending.

Movement

No business is immune to difficult

economic climates. The current

macroeconomic environment is placing

extraordinary financial pressures on

businesses and consumers. The inflationary

pressures resulting from the Covid-19

pandemic, the Ukrainian war and wider

economic and political instability are

exacerbating the challenging market

conditions.

Consumers are changing their shopping

and eating habits and our retail customers

are under immense pressure to deliver

value and are therefore sharing that

pressure with supplier partners.

Our strong and diversifying growth model, based

onsuccessful diversification across different proteins,

expanding as a technology-led supply chain partner and

built on our strong ESG credentials underpins our business

resilience.

We continue to broaden product ranges with our strong

retail partners, maintaining a single-minded focus on

minimising unit packing costs, whilst continuing to deliver

high levels of product quality and integrity.

The Group is able to harness its innovative and agile

approach with its class-leading technology and systems

to respond quickly and effectively to macroeconomic

challenges and opportunities.

Risk 2

The Group’s

growthpotential

may be affected

bythe success of

its customers and

the growth of their

packedfood sales.

No movement

The Group’s products predominantly carry

the brand labels of the customer to whom

packed food is supplied and it is accordingly

dependent on its customers’ success

in maintaining or improving consumer

perception of their own brand names

and packed food offerings. Consumer

perception is increasingly influenced

byenvironmental, social and governance

(ESG)considerations.

The Group plays a very proactive role in enhancing

its customers’ brand values, through providing high

quality, competitively priced products, high service

levels, continuing product and packaging innovation

and category management support. It recognises that

quality and traceability assurance are 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 in the supply chain.

Our ESG strategy underpins the growth of our product

sectors for our customers, and supports them to reach

their goals. Our ambitious 2025 Sustainable Protein Plan

is in partnership with our customers and suppliers as

we engage in the key collaborative initiatives that drive

sustainability for our sectors and raise the bar together.

We have set stretching goals that drive impactful

actions that become integrated into our core business

practices. Our data collection platform, Foods Connected,

demonstrates the assurance of standards across our

supply chains, and allows us to measure progress towards

our 2025 targets.

The detail of our strategy and its impact are described

within the Sustainability section of this report.

28 Hilton Food Group PLC Annual Report and Financial Statements 2022

RISK MANAGEMENT AND PRINCIPAL RISKS continued

Description of risk Its potential impact Risk mitigation measures and strategies adopted

Risk 3

The Group strategy

focuses on a small

number of customers

who can exercise

significant buying

power and influence

when it comes to

contractual renewal

terms at 5 to 15-year

intervals.

Movement

The Group has a relatively narrow, but

expanding, customer base, with sales

tosubsidiary or associated companies of

the Tesco, Ahold and Woolworths groups

still comprising the larger part of Hilton’s

revenue. The larger retail chains continue

to focus on strengthening their market

share of protein products in the countries in

which we operate, creating an increasingly

competitive retail environment. This has

increased 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.

During periods of unprecedented

inflationary pressure, misalignment

between production costs and agreed

operational packing rates may occur,

potentially impacting profitability.

The Group is progressively widening its customer base

and maintaining a high level of 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.

Hilton operates a decentralised, entrepreneurial business

structure, which enables it to work very closely and

flexibly with its retail partners in each country, in order

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 has long-term supply agreements in place with

its major customers, with pricing either on a cost plus

oragreed packing rate basis.

The Group maintains an ongoing focus on cost control,

innovation and factory efficiency to manage inflationary

pressures. Hilton continues to evolve and respond to

changing market conditions.

The provision of added value services deepens the

relationships Hilton has with its retailer partners and

investment in these services means that we are able

todevelop and maintain a technology advantage within

ourindustry.

Risk 4

As Hilton continues

to grow there is

more reliance on key

personnel and their

ability to manage

growth, change,

integration and

compliance across

new legislative

and regulatory

environments. This

riskincreases as the

Group continues to

expand with new

customers and into

new territories either

organically or through

acquisition with

potentially greater

reliance on stretched

skilled resource

and execution of

simultaneous growth

projects.

No movement

The Group may struggle to meet key

strategic objectives and projects and fail

to adhere to regulatory and legislative

requirements, which in turn detracts from

our performance delivery for our customers.

The Group carefully manages its skilled resources

including succession planning and maintaining a talent

pipeline. The Group is evolving its people capability

balanced with an appropriate management structure

within the overall organisation. Hilton continues to invest

in on-the-job training and career development, whilst

recruiting high quality new employees, as required to

facilitate the Group’s ongoing growth. Appointment of

additional key resources and alignment of structures have

supported the enhancement of project management

control and oversight. Control systems embedded in

project management enable the risks of growth to be

appropriately highlighted and managed. To underscore

our efforts, we have active relationships with strong

industry experts across all areas of business growth.

In the current climate, strong partnership and proximity

to our customers are fundamental. Hilton’s leadership

continues to develop its organisational structures to

ensure as close a relationship with our retail partners

aspossible.

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

Description of risk Its potential impact Risk mitigation measures and strategies adopted

Risk 5

The Group’s business

strength is affected by

its ability to maintain

a wide and flexible

global food supply

base operating at

standards that can

continuously achieve

the specifications

set by Hilton and its

customers.

No movement

The Group is reliant on its suppliers to

provide sufficient volume of products, to

the agreed specifications, in the very short

lead times required by its customers, with

efficient supply chain management being

a key business attribute. The Group has

both local and global sourcing models.

Current or future tariffs, quotas or trade

barriers imposed by supplier countries and

other global trade developments, could

materially affect the Group’s international

procurement ability and therefore potentially

impact our ability to meet agreed customer

service levels.

The Group maintains a flexible global and local food supply

base, which is progressively widening as it expands and is

continuously audited to ensure standards are maintained,

so as to have in place a wide range of options should supply

disruptions occur.

Further assurance is provided through the supply chain

control and transparency the Group has enabled by its

supplier management platform, Foods Connected, which

facilitates robust supplier relationships.

Risk 6

Contamination

withinthe supply

chain including

outbreaks of

disease and feed

contaminants

affecting livestock

andfish.

No movement

This will potentially affect the Group’s

abilityto procure sufficient quantities

ofsaferaw material.

The Group sources its food 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, supported by a

comprehensive ongoing audit programme. Within our

factories, Global Food Safety Initiative (GFSI) benchmarked

food safety standards and our own factory standard

assessments drive the enhancement of the processes

and controls that are necessary to ensure that the risks

ofcontaminants throughout the processing, packing and

distribution stages are mitigated and traceable should

arisk ever materialise.

Risk 7

Significant incidents

such as fire, flood,

pandemic or

interruption of supply

of key utilities could

impact the Group’s

business continuity.

The legacy of the

Covid-19 pandemic

continues to present

challenges across

theglobe.

No movement

Such incidents could result in systems

ormanufacturing process stoppages with

consequent disruption and loss of efficiency

which could impact the Group’s sales.

The Group has robust business continuity plans in place

including sister site support protocols enabling other

sites to step in with manufacturing and distribution of key

product lines where necessary. Continuity management

systems and plans are suitably maintained and adequately

tested including building risk assessments and emergency

power solutions. There are appropriate insurance

arrangements in place to mitigate against any associated

financial loss.

We continue to mitigate against the legacy impact of the

Covid-19 pandemic.

RISK MANAGEMENT AND PRINCIPAL RISKS continued

30 Hilton Food Group PLC Annual Report and Financial Statements 2022

Description of risk Its potential impact Risk mitigation measures and strategies adopted

Risk 8

The Group’s IT

systems could be

subject to cyber-

attacks, including

ransomware and

fraudulent external

email activity. These

kinds of attacks are

generally increasing

in frequency and

sophistication.

No movement

The Group’s operations are underpinned

bya variety of IT systems. Loss or disruption

to those IT systems or extended times to

recover data or functionality could impact

the Group’s ability to effectively operate its

facilities and affect its sales and reputation.

The Group has a robust IT control framework, minimum

operating standards, including working towards National

Institute of Technology requirements, all of which are

tested frequently by internal staff and by specialist external

bodies. This framework is established as the key control to

mitigate cyber risk and is applied consistently throughout

the Group. The increased prominence of IT risk is mitigated

by investments in IT infrastructure and now forms a regular

part of the Group Risk Management Committee agenda

and presentations to the Board. In accordance with Group

strategy IT risk is considered when looking at new ventures

and control measures implemented in new sites follow

the Group common standards. There is internal training

and resources available with emphasis on prevention, user

awareness and recovery. Increasingly, IT forms part of site

business continuity exercises which test and help develop

the capacity to respond to possible crises or incidents.

Thetechnical infrastructure to prevent attacks, safeguard

data and the resilience to recover are continuously

developed including yearly assessments to meet emerging

threats. IT systems including financial and banking systems

are configured to prevent fraudulent payments. There are

monthly IT security reviews to ensure compliance with

expected levels of applications updates, andof server and

data centres together with yearly penetration testing.

Risk 9

A significant

breachof health and

safety legislation as

complexity increases

in managing sites

across different

product groups

andgeographies.

No movement

Such breach in health and safety

legislationcould lead to reputational

damage and regulatory penalties, including

restrictionson operations, fines or personal

litigation claims.

The Group has established robust health and safety

processes and procedures across its operations, including

a Group oversight function which provides key guidance

and support necessary to strengthen monitoring, best

practice and compliance. The Group has also rolled out

an enhanced standardised safety framework. Health and

safety performance is reviewed regularly by the Board.

Risk 10

The Group’s business

and supply chain

is affected by

climate change risks

comprising both

physical and transition

risks. Physical risks

include long-term

rises in temperature

and sea levels as well

as changes to the

frequency and severity

of extreme weather

events. Transition

risks include policy

changes, reputational

impacts, and shifts in

market preferences

andtechnology.

No movement

Potential physical impacts from climate

change could include a higher incidence

ofextreme weather events such as flooding,

drought, and forest fires that could disrupt

our supply chains and potentially impact

production capabilities, increase costs and

add complexity. Action taken by societies

could reduce the severity of these impacts.

Governmental efforts to mitigate climate

change may lead to policy and regulatory

changes as well as shifts in consumer

demand. The potential transitional impacts

include additional costs of low greenhouse

gas emission farming systems, and the

potential of carbon price regulation aimed

at shifting consumers to lower carbon

foods, which may reduce the profitability

of some of our products. Additionally there

is increased stakeholder focus on climate

change issues. Our reputation could be

impacted if we are not active in reducing

the climate impacts of our operations and

supply chains, resulting in lower demand

forour products.

We continue to develop our approach to climate change

risk mitigation. We have committed to set a science-

based target through the Science Based Targets initiative

and signed the Business Ambition for 1.5°C pledge to

decarbonise our own operations and supply chains. We

have set energy and water efficiency targets for our sites

and continue to engage in global collaborative action for

decarbonisation of our key raw materials. We are directing

our efforts towards a net zero carbon footprint before 2050.

Shifts in consumer demand are an opportunity for growth

in our portfolio of plant based and seafood products.

Additionally, we are ensuring we have the flexibility to adapt

our supply chains over time to mitigate physical disruption.

We continue to review and develop our assessment of the

key physical and transition risks impacting our business

in line with the Task Force on Climate-related Financial

Disclosures (TCFD) recommendations. Our full assessment

of climate risks and opportunities in line with the TCFD

framework is described within the Sustainability section

ofthis report.

RISK MANAGEMENT AND PRINCIPAL RISKS continued

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION

OVERVIEW

Hilton Food Group PLC Annual Report and Financial Statements 2022

The following disclosure describes how the directors of the company have had

regardtothe matters under Section 172 of the Companies Act 2006 which requires

company directors to act in the way they consider, in good faith, would be most likely

topromote thelong-term success of the company for the benefit of its members

asawhole and otherstakeholders.

STAKEHOLDER ENGAGEMENT

Our People

Why we engage How we engage Areas of focus for our stakeholders How the Board has oversight Find out more

Our people are at the heart

ofour success and the

delivery of our strategy.

– In 2022 we launched a new ‘Speak Up’ Policy at Hilton Foods UK. In line with the UN Guiding Principles on

Business and Human Rights, we redesigned how our employees discuss their concerns and raise grievances

through a series of workshops, where the design process is led by the employees who will use the new

policy and procedure.

– We have grown our Women’s Network with sessions such as: Being Yourself at Work, How to Network,

Building Your Confidence at Work and Dealing with Change.

– Our employees experience of work is important to us, that’s why we use annual surveys where all sites

respond to employee feedback through tailored action plans. In 2022, 91% of our employees contributed

tothe annual survey.

– Employees took part in mental health and wellbeing awareness campaigns in 2022 and the majority

ofoursites have at least two mental health first aiders.

– Our Global Health and Safety Framework was successfully extended to all sites in 2022, with our new

acquisition Foppen transitioning in January 2023.

– This year we have developed a new set of ‘core behaviours’ alongside our refreshed Strategic Compass

which brings a new focus on development and inclusion. The core behaviours inform the actions, attitude,

and care all our employees bring to work, to ensure that everyone feels a sense of belonging and inclusion

and are based on the output from 18 focus groups across our worldwide geographies.

– We are accelerating the progress of our diversity, equity and inclusion agenda. In 2022, 80% of our

employees agreed with the statement ‘I feel I can be myself at work’, a 6% increase on the previous year.

– Through employee representative groups such as “Your Voice Committees,” our colleagues can engage

andcontribute meaningfully to the operation of our business.

– A whistleblowing mechanism through which employees and others can raise concerns about suspected

business misconduct, wrongdoing including in financial reporting or other matters or dangers at work.

– Our Accelerated Development Programmes nurture internal talent through personalised training

programmes that include development modules, individual coaching sessions, and two live Executive

sponsored business projects.

– We reviewed and transformed our Target Operating Model through collaboration and engagement with

oursenior leaders, ELT and Board to ensure that we are fully set to deliver our ambition.

– We launched our ‘work conversations’ programme in 2022 as we believe that everyone in every role deserves

the chance to have a good quality ‘Work Conversation’ about themselves and their work with their manager

or someone else who can support them.

– Our Industry Recognised Qualifications programme in APAC gives colleagues the opportunity to develop

their careers by gaining industry recognised qualifications. This gives our employees who may not previously

have had access to formal qualifications the opportunity to complete training during work time.

– We continue to invest in learning and development as we roll out Learning Management Systems across

our operations. Since the introduction of the system to our APAC sites, our engagement scores have risen

significantly.

– Engagement – the opportunity

toshare ideas and opinions

– Recognition and reward

– Opportunity for skills

and career development

– Wellbeing

– Health and safety

– Equity and respect

– The Board recognises the value its employees contribute to

theCompany’s sustainable long-term success, which is why the

Group is committed to engaging with its workforce to discuss

employee interests and concerns, as well as to identify and

develop talent within the Group.

– Angus Porter is the designated Non-Executive Director appointed

by the Board to head the Group’s workforce engagement

procedures. Angus works closely with key Group personnel to

ensure our employee engagement practices are appropriately

monitored. Angus reports back to the Board on his findings

and interactions. This year, Angus attended the Hilton Foods

management conference where he presented. He also has

regular meetings with our Chief People and Culture Officer.

Angus also contributed to and attended one of our Accelerated

Development Programmes in 2022.

– All reports to our whistleblower service are reviewed by the Board.

– The Board oversees the continued investment and prioritisation

ofemployee training and development.

– The Board travelled to Hilton Foods sites in Australia and New

Zealand in 2022 where they had the opportunity to meet with

employees and see our operations first hand.

– Townhall meetings and presentations were held at all Hilton

sites in 2022 and attended by members of the Executive team

to update colleagues on Group strategy and performance and

provide engagement opportunities through Q&A sessions.

Further detail on how we

engage with our people

can be found on pages 46-53

Our Communities

Why we engage How we engage Areas of focus for our stakeholders How the Board has oversight Find out more

We believe in supporting

ourlocal communities

astheirlong-term success

is linked to our long-term

success. Webelieve in

building afairer society

andfood system for all and

seek to bea good neighbour

in all ofourlocations.

– We are actively involved in all of our local communities. We recruit local people and support local charities

and community groups. In 2022 we donated £153,327 to charities.

– Employees across our European sites have fundraised, collected goods, and provided practical support

torefugees impacted by the war in Ukraine through 2022.

– We are part-funding a PhD at Heriot-Watt University, which aims to map the social responsibility tools

available to the fishing industry and improve its human rights performance.

– We are sponsoring a DPhil with Oxford University looking at sustainability metrics and policy in agriculture.

– Hilton has a commitment to responsibly package all of its products which is why we have a target to reduce

the weight of plastic packaging whilst ensuring it is fully reusable, recyclable or compostable. In 2022 we

launched fish packaging made from coastal recovered plastic, removing 240 tonnes of plastic from the

environment.

– We are full participants in the UN Global Compact, a global initiative that aligns companies with universal

principles on environment, society and governance.

– We have committed to being a net zero business by 2050, and are now implementing detailed

decarbonisation plans for our own operations.

– We believe in our responsibility to protect the internationally recognised human rights of workers both

within our business and our global supply chains. In 2022 we established a multi-function Modern Slavery

Working Group for our businesses in the UK and the Republic of Ireland. The focus of this group is to

facilitate candid conversations about the challenges of detecting and disrupting modern slavery and offer

opportunities to drive best practice through the creation and provision of shared resources.

– Sustainability

– Social value

– Opportunities and careers

forlocal people

– The Board works to build relationships with our communities

andlegitimate public interest groups.

– The Board is kept informed of our engagement with our local

communities through regular updates from the Sustainability

Committee and local site updates.

More detail available in

our Sustainability Report

on pages 36-91

32 Hilton Food Group PLC Annual Report and Financial Statements 2022