Annual Report and
Financial Statements 2023
Driving long-term sustainable growth
PARTNERSHIP
INNOVATION
LEADERSHIP
LONG-TERM SUSTAINABLE GROWTH
Partnership, Innovation,
Leadership. 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
andsupply chain services
partner of choice.
For more information on our
key ingredients for success, see the
case studies throughout the report.
CONTENTS
OVERVIEW 1
Hilton Foods at a glance 2
2023 overview 4
STRATEGIC REPORT 6
Chairman’s introduction 8
Chief Executives summary 10
Our business model 12
Our strategy 16
Performance and financial review 24
Risk management and principal risks 28
Stakeholder engagement (Section 172) 35
Sustainability report 40
GOVERNANCE 110
Board of Directors 112
Governance at a glance 114
Corporate governance statement 118
Directors’ report 122
Report of the Audit Committee 124
Report of the Nomination Committee 127
Directors’ remuneration report 129
Statement of Directors’ responsibilities 149
Independent auditors’ report 150
FINANCIAL STATEMENTS 156
Consolidated income statement 158
Consolidated statement
of comprehensive income 158
Consolidated and Company
balance sheet 159
Consolidated and Company
statement of changes in equity 160
Consolidated and Company
cash flow statement 161
Notes to the financial statements 162
ADDITIONAL INFORMATION 195
Registered office and advisors 195
OUR INGREDIENTS FOR SUCCESS
Page
12
We have a passion for food
and a hunger for growth and
success in all our partnerships
with the customer and their
consumers front of mind.
Our ingredients for success weave throughout our business as a golden thread
of our culture. When combined they create a sum which is greater than their
individual parts. This is what sets us apart, enabling our competitive advantage.
We collaborate within the
business and throughout
the supply chain anticipating
and responding to the needs
of our customers and their
consumers at pace.
We focus on a narrower
range of control points
throughout the supply chain
optimising expertise, with an
unwavering focus on quality,
increasing efficiency.
We turn data and trends into
insights, driving end-to-end
improvements and innovation
including product, processes
and packaging.
We provide the most
efficient supply chain to our
partners through leveraging
our industry leading
technology and international
knowledge and expertise.
We believe that all businesses
should be a force for good,
we work together with all our
partners to achieve progress in
our commitments together.
PASSION
AMBITION
PARTNERSHIP
RESPONSIBILITY
COLLABORATION
AGILITY
QUALITY
EFFICIENCY
INSIGHTS
INNOVATION
EXPERTISE
TECHNOLOGY
Page
20
Page
70
Page
18
Page
72
Page
22
Hilton Food Group PLC Annual Report and Financial Statements 2023
1
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Supply chain leadership and unique
multi-category food offer.
Our diversified food and supply
chain services business…
HILTON FOODS AT A GLANCE
OUR PEOPLE SERVING OVER CAPITAL INVESTMENT WE OPERATE FROM
7,000 20 £58.6m 24
GLOBALLY MARKETS
INTERNATIONALLY
(2022: £56.5M) HIGH PERFORMANCE
FACILITIES
THE FIVE PILLARS OF HILTON FOODS:
A multi-category proposition focused on quality and innovation.
Page
20
MEAT
HIGH QUALITY,
EFFICIENTLY
PROCESSED,
EXPERTLY PACKED
Page
63
SEAFOOD
RESPONSIBLY
AND SUSTAINABLY
SOURCED
Page
70
EASIER MEALS
SLOW COOK,
READY TO COOK
OR READY TO
EAT CONVENIENCE
Page
18
SUPPLY CHAIN
SERVICES
CONSULTANCY
IN SUPPLY
CHAIN LOGISTICS,
AUTOMATION AND
DIGITALISATION
Page
10
VEGAN AND
VEGETARIAN
MEAT SUBSTITUTE
PRODUCTS
RANGING FROM
CUTLETS TO KIEVS
Hilton Food Group PLC Annual Report and Financial Statements 2023
2
HILTON FOODS AT A GLANCE
Local specialists supported by an international
perspective to deliver growth.
…well placed to meet our
international consumer needs
IRELAND
UK AND IRELAND
APAC
UNITED KINGDOM
NEW ZEALAND
AUSTRALIA
CANADA
EUROPE
CENTRAL EUROPE
GREECE
PORTUGAL
SWEDEN
DENMARK
NETHERLANDS
COLLABORATION
AGILITY
OUR LONG-TERM PARTNERSHIP
WITHWALMART CANADA
Hilton Foods first operating facility
in North America.
Hilton Food Group PLC Annual Report and Financial Statements 2023
3
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Financial overview
2023 OVERVIEW
Performance
overview
Revenue (£m)
£3,989.5m
’
19
’
20
’
21
’
22
’
23
1,814.7
2,774.0
3,302.0
3,989.5
3,847.6
Adjusted operating profit (£m)
£95.0m
’
19
’
20
’
21
’
22
’
23
54.7
67.0
73.6
71 .1
95.0
Net bank debt (£m)
£139.7m
’
19
’
20
’
21
’
22
’
23
86.8
122.2
84.6
139.7
211.6
£4.0bn
Group revenue up 3.7%,
underpinned bygrowth in
APAC and full year volumes
at Foppen acquired in 2022
(2022: £3.8bn)
£95.0m
Adjusted operating profit
up33.5%
(2022: £71.1m)
52.8p
Adjusted basic earnings
per share up 17.1%
(2022: 45.1p)
£221.1m
Strong free cash inflow of
£112.1m remaining a highly
cash generative core business
(2022: £79.4m outflow)
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 32.
517, 347t
Volume growth of 0.7%
(2022: 513,816 tonnes)
£86.1m
IFRS operating profit up
59.4% after charging £3.9m in
exceptional costs (2022: £11.9m)
(2022: £54.0m)
40.6p
IFRS basic earnings per
share up 105.1%
(2022: 19.8p)
32.0p
Proposed final dividend of 23.0p,
taking total dividend for 2023
to32.0p
(2022: 22.6p)
£139.7m
Year-end net bank debt as
a percentage of adjusted
EBITDA reduced to 1.0 times
(2022: 1.8 times)
(2022: £211.6m)
.
Hilton Foods has continued to make good
strategic progress in a year of continuing
global and economic challenges.”
Robert Watson OBE
Chairman
Read more in the
Chairman’s introduction page 8.
Hilton Food Group PLC Annual Report and Financial Statements 2023
4
Strategic
highlights
DELIVERY AGAINST OUR FOUR
KEY STRATEGIC OBJECTIVES
Driving our multi-
category offer
– Seafood recovery delivered
ahead of plan, returning to full
year operating profitability and
supporting uplift in Group PBT
– Core meat category continued
to perform well; strong meat
volume growth in APAC and
a resilient outturn in Europe
and UK, achieved against
inflationary backdrop
– Action taken in vegan and
vegetarian to successfully
consolidate business to single
operating facility
Growing our
global footprint
– Growth of international
customer base via new deal
with Walmart in Canada;
organic growth achieved with
existing customers, such as
successful launch of Swedish
food park
Technology as
a driver of value
– Industry leading
technology continued to
provide competitive edge,
underpinning customer
partnerships and supporting
core business; further
headroom for growth
– Innovation across outstanding
food products, supporting
customers in response to
changing consumer trends.
Great value protein ranges
and healthy new pre-prepared
products launched
Delivered through the
Sustainable Protein Plan
– Progress in Sustainable Protein
Plan, a central foundation
to our commercial offer;
more ambitious validated
SBTi targets in line with
1.5°C pathway
– Food waste reduced by -42%
since 2020
– 70% of our packaging is
now recyclable
Sustainability highlights
For more information see our
Sustainability report on pages 40 to 109.
Supporting our Partners to become First Choice
for Sustainable Protein.
PEOPLE
PRODUCT
PLANET
Supporting our colleagues
with learning and development
in our manufacturing
excellence and international
leadership programmes
A-
Maintained A- rating from
CDP for Climate, improved
soy and timber to B
in Forests disclosure
-14%
Reduction in FY 2023 equivalent
Scope 1 and 2 emissions since 2020
1.5
°
C
Validated SBTi’s increased ambition
1,971
tonnes of plastic removed
from our packaging
-42%
Reduction in food waste
since 2020
ISO 50001
accreditation for energy
management system across
10 sites with further roll out
planned throughout 2024
78%
High colleague
engagement score in
our 2023 employee
engagement
survey
Hilton Food Group PLC Annual Report and Financial Statements 2023
5
OVERVIEW ADDITIONAL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
STRATEGIC
REPORT
Chairman’s introduction 8
Chief Executives summary 10
Our business model 12
Our strategy 16
Performance and financial review 24
Risk management and principal risks 28
Stakeholder engagement (Section 172) 35
SUSTAINABILITY REPORT 40
CEO introduction 41
Sustainability Committee
Chair’s statement 42
Our 2025 Sustainable Protein Plan 43
Delivering net zero 46
Importance of partnerships 48
Materiality matrix 49
Governance 50
People 52
Planet 60
Product 68
TCFD report 76
Non-financial disclosures 90
Food safety and quality 97
Supply chain integrity and traceability 98
SASB report 99
GRI report 102
Hilton Food Group PLC Annual Report and Financial Statements 2023
6
OUR INGREDIENTS FOR SUCCESS
We have a passion for food and a hunger for growth and success in all
our partnerships with the customer and their consumers front of mind.
PASSION
AMBITION
Hilton Food Group PLC Annual Report and Financial Statements 2023
7
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
CHAIRMAN’S INTRODUCTION
Driving long-term value
during challenging times
We have also worked to develop
our Greenchain Solutions business
which offers an integrated tech stack
proposition combining our existing
end-to-end supply chain, manufacturing
control and automation software
expertise together with a specialist
flexible factory wide ERP system.
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 customers.
GROUP PERFORMANCE
2023 saw a recovery in profitability with
sales and volumes increasing which
continues a trend of continuous volume
growth achieved in every year since
Hilton Foods flotation in 2007. Our UK
Seafood business recovered strongly
during the year although market
challenges in our vegetarian/vegan
business remain. We have taken steps
to consolidate this business into a single
operating facility and we are confident
in the opportunities that the category
will present for Hilton Foods over the
coming years.
Hilton Foods generated strong operating
cash flows during 2023 enabling further
significant investment in our facilities to
increase capacity, improve operational
efficiency and offer innovative solutions
to our retailer partners. Hilton Foods has
a robust balance sheet and operating
well within our banking covenants.
This enables us to continue to invest to
support the growth of the business.
DIVIDEND POLICY
The Group has maintained a progressive
dividend policy since flotation and
remain confident that this continues to
be appropriate. With the proposed final
dividend of 23.0p per ordinary share, total
dividends in respect of 2023 will be 32.0p
per ordinary share, an increase of 7.7%
compared to last year.
OUR BOARD, PURPOSE
AND GOVERNANCE
The Hilton Foods 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 partner with leading
retail and foodservice customers to
produce high quality food products at
scale that consumers desire. Our principle
of partnership extends to our suppliers,
colleagues and the communities in which
we operate. We enable success through
our passion for innovation, improving
supply chains, processes and packaging,
and continually developing our product
ranges to best meet consumer needs.
By creating efficiency and flexibility in
the food supply chain as an international
food processor and a supply chain
service specialist we deliver growth for
our stakeholders.
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, continuing to
address succession planning and maintain
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 Steve Murrells joined
the Board as CEO replacing Philip Heffer
who has remained in the business as co-
founder and Board advisor in a part time
capacity. Sarah Perry joined the Board as
an independent Non-Executive Director
replacing Christine Cross.
The Board takes its responsibilities to
promote the success of the Company for
the benefit of its stakeholders as a whole
very seriously. 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,
areset out in the governance section of
our Annual report.
Hilton Foods has continued to
make good strategic progress
in a year of continuing global
and economic challenges. We
have become 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 and we remain
on the journey to our ambition
to be the international food
and supply chain services
partner of choice.
STRATEGIC PROGRESS
We have deep retailer partnerships
with leading automation and processes
including physical automated conveyor
air bridges installed in facilities in Australia
and New Zealand that link our processing
facilities directly to our customers’
distribution centres to optimise the
supply chain process bringing significant
logistics efficiency savings with lower
carbon emissions.
During the year we signed a long-term
supply agreement with Walmart, a new
customer, and will build a green field
facility in Eastern Canada to supply a range
of protein products to include beef, lamb,
pork, seafood as well as some added-value
products. This new Hilton Foods facility will
provide robotised store order picking into
Walmart’s distribution centres.
Hilton Food Group PLC Annual Report and Financial Statements 2023
8
CHAIRMAN’S INTRODUCTION
42%
reduction in our factory
generated food waste
since 2020
For more information see
page 74.
Hilton Foods has continued to
make good strategic progress in
a year of continuing global and
economic challenges.”
Robert Watson, OBE
Chairman
OUTLOOK AND
CURRENTTRADING
2024 trading has started in line with
Board expectations although markets
remain challenging. We are confident
the business is well placed, within a large
and attractive international market,
to continue to deliver its strategy to
create long-term value for shareholders,
through its outstanding protein
products, dedicated partnerships,
leading technology offer through
Greenchain Solutions and a robust
Sustainability Plan.
Growth prospects are underpinned by
the strength of our core meat business,
the continued recovery in seafood and in
the medium-term our recent acquisitions
and the developing relationship with
Walmart in Canada. The Group’s financial
position remains strong, with improving
leverage and headroom at comfortable
levels, and we continue to explore new
growth opportunities with existing
partners, wider geographic expansion
and complementary M and A.
ANNUAL GENERAL MEETING
This year’s AGM will be held at Hilton
Foods offices at 2-8 The Interchange,
Latham Road, Huntingdon,
Cambridgeshire PE29 6YE in a hybrid
format on Monday 20 May 2024 at
noon. Please refer to our website at
www.hiltonfoods.com/investors/agm/
for further guidance.
Robert Watson OBE
Chairman
2 April 2024
SUSTAINABILITY
Our 2025 Sustainable Protein Plan
remains at the heart of Hilton Foods
and we are encouraged by the progress
being reported across the Group.
When we developed the Plan in 2021,
weagreed a series of challenging targets,
many of them industry leading, such
as our Science-Based Targets, to halve
food waste by 2030 and having 30% of
women in leadership positions. It is a
reflection of the Hilton Foods culture and
the commitment of management that
many of these targets have now been
met. Additionally our updated, more
challenging, Science-Based Targets
wereapproved in March 2024.
The starting point for the Plan was
our point of difference as a company.
Hilton Foods operates in a privileged
position, serving customers across
multiple markets and working in
partnership with experts and leaders
across the food industry from farm
to fork and beyond. This gives us the
opportunity to help drive targeted,
practical changes and help tackle some
of the biggest problems facing the world.
Hilton Food Group PLC Annual Report and Financial Statements 2023
9
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
CHIEF EXECUTIVE’S SUMMARY
UK AND IRELAND
Adjusted operating profit of £35.5m
(2022: £13.6m) on revenue of
£1,329.3m (2022: £1,282.1m)
This operating segment covers the Hilton
Foods businesses and joint ventures in the
UK and Ireland including meat processing
facilities in the UK in Huntingdon, seafood
facilities in Grimsby, our foodservice
business Fairfax Meadow and our ROI
meat facility in Drogheda.
Volumes were 3.0% lower with revenue
increasing by 3.5% on a constant currency
basis (up 3.7% at actual fx rates) due to raw
material price inflation. Operating margins
increased to 2.7% (2022: 1.1%) reflecting a
strong performance from the core meat
businesses as well as improved profitability
of UK Seafood.
The turnaround of our UK Seafood
business recovery has been delivered
ahead of plan, returning to full year
operating profit and supporting the
increase in adjusted operating profit.
I am very proud of the performance that
the team have delivered within our UK
Seafood business over the last year, which
has been delivered through consolidating
and driving the core offer, effective
inflation recovery and profitable new
business wins supported by a sustainable
cost out plan. The foundations are strong
and momentum now builds into 2024
and beyond.
Hilton Foods is a business of
international scale, working
in long-term partnership
with leading retailers and
foodservice brands with
passionate, committed
colleagues at the heart of
ourbusiness.
Our offer is unique in providing relevant
multi-category products, cutting-edge
technology and sortation services,
which allows us to navigate and respond
at pace to evolving consumer trends
against a challenging global market
place. The barriers to entry to replicate
our business model are high and Hilton
Foods are well placed operationally and
financially, with significant opportunities
for long-term growth and success.
STRONG PERFORMANCE IN
LINE WITH EXPECTATIONS
We have delivered a strong performance
in a challenging environment through
focus on our core business and getting
back to basics. Revenue has grown 5.7% on
a constant currency basis (up 3.7% at actual
fx rates) whilst volume has remained
robust up 0.7% and adjusted profit before
tax has recovered strongly, up 19.0% from
delivery of the turnaround plan in our
seafood business.
Strong performance in line
with expectations
A year of strong operational
progress and robust
financial performance
across the business.”
Steve Murrells CBE
Group Chief Executive Officer
REVENUE
£4.0bn
+3.7%
VOLUME
517, 347t
+0.7%
ADJUSTED PBT
£66m
+19.0%
Fairfax Meadow continues to grow
revenues and win new business.
They are strategically well-placed, with
a multi-category offer to capitalise on
further opportunities.
EUROPE
Adjusted operating profit of £40.9m
(2022: £36.0m) on revenue of
£1,045.3m (2022: £972.6m)
This operating segment covers the Group’s
meat, easier meals, seafood, vegan and
vegetarian businesses and joint ventures
in Holland, Sweden, Denmark, Central
Europe, Greece and Portugal.
Volumes were 2.0% lower with revenue
increasing by 6.8% on a constant currency
basis (up 7.5% at actual fx rates) reflecting a
full year of Foppen following its acquisition
in 2022 and raw material price inflation.
Operating margins were 3.9% (2022: 3.7%).
We have delivered strong growth in
the easier meals category as shoppers
sought quicker and easier meal solutions
in Central Europe and Scandinavia.
We launched our fresh, convenience food
park in Sweden in the second half of the
year serving our local partner there as well
as in Denmark where we provide highly
localised pre-prepared products, which
arein great demand.
The business has taken decisive and timely
action consolidating Dalco, our vegan
and vegetarian business, into a single
operating facility right sizing it in response
to the structural market reset that has
taken place in this sector.
Hilton Food Group PLC Annual Report and Financial Statements 2023
10
CHIEF EXECUTIVE’S SUMMARY
APAC
Adjusted operating profit of £30.3m
(2022: £26.7m) on revenue of
£1,615.0m (2022: £1,592.9m)
In Australia, the Group operates three
plants in Bunbury in Western Australia,
Melbourne and Brisbane. We also have a
multi protein food park facility in Auckland,
New Zealand.
Volumes during the period increased
strongly by 7.2%. Revenues were 6.7%
higher on a constant currency basis (up
1.4% at actual fx rates). Operating margins
increased to 1.9% (2022: 1.7%) largely
attributable to the recovery of higher
interest costs under our cost plus contract.
We continue to see strong performance
in the APAC region delivered through
our partnership with Woolworths.
Across all our regions including APAC,
we have supported our customers
to ensure they have relevant product
ranges at affordable prices to meet the
changing needs of consumers at a time
ofeconomic uncertainty.
OUTSTANDING FOOD
PRODUCTS
Hilton Foods is a business built on a
passion for food. The food skills within
our Innovation teams have supported
our customers to have the right product
ranges on the shelf to successfully
meet the needs of their consumers.
Combined with our insight experts we
have driven growth across categories
and regions.
In Hilton Foods Australia, we have grown
sales through developing great value
products in beef, pork, lamb and poultry
including bigger, better value packs.
In the UK we have launched premium,
award winning, Christmas centre piece
products and a new range of convenient
ready to cook meals and within Europe we
have relaunched our new and improved
sandwiches and wraps, and new, healthier,
ready meals.
Throughout 2023 we have continued
totrial and roll out flow wrap packaging
for mince products in Holland, Sweden,
Central Europe, UK and Ireland.
Through working in collaboration with
our strategic supplier partners 70% of our
packaging is now recyclable, and we have
reduced overall packaging weight
by 1,971t*.
*versus base of 2020
As well as supporting our core food
business, each of our technology
businesses are unlocking opportunities to
commercialise their products and services
outside of Hilton Foods. In the year both
Foods Connected and Agito have won
new customers in new geographies, and
looking forward to 2024, our food focused
ERP system Evolve 4 will start to be rolled
out to Hilton Foods facilities.
THE SUSTAINABLE
PROTEIN PLAN
The Sustainable Protein Plan underpins
everything we do and our sustainability
commitments are crucial to our teams,
our customers and their consumers.
Our principle of operating through
partnership extends into sustainability
where we deliver positive change by
collaborating throughout the supply
chain. This year we have continued to
make progress on our commitments,
with a reduction of 14%* in Scope 1
and 2 emissions, achieving ISO 50001
accreditation for our energy management
system across 10 of our facilities, and
reducing our food waste by 42%*. We have
maintained our CDP rating of A- with
improvements in both categories of soy
and timber. We continue to raise our
standards with more ambitious Science-
Based Targets, in line with a 1.5ºC pathway,
which were validated in March 2024.
* versus base of 2020
LOOKING FORWARDS
Through our principle of being
consumer led we are well placed to
grow. The strength and the longevity of
our partnerships underpins everything
that we do. We can expand both with
existing partners and into new territories.
Our strong financial position allows
us to continue to invest in the future.
In November, we shared our medium-
term financial ambitions and strategic
capital allocation framework to support
our investment for long-term success.
I believe that Hilton Foods has all the right
ingredients to deliver long-term success.
Steve Murrells CBE
Group Chief Executive Officer
GROWING ACROSS
INTERNATIONAL MARKETS
Hilton Foods is uniquely placed to grow
its product catalogue by region and this
is a key focus for the business as we seek
to grow in our existing markets. We have
started with launching the fresh food
park in partnership with ICA in Sweden
and began working with a new retail
partner in Ireland. Work is now underway,
exploring the opportunity to increase our
presence in seafood products across the
APAC region.
In September 2023 we announced
that we have signed a new long-term
partnership with Walmart in Canada
and will be serving their needs across
meat and seafood products alongside
sortation services from our first facility
inNorth America.
Our primary focus remains on organic
growth given the significant opportunities
we have. However we will continue to
selectively explore any complementary
Mand A, with strong returns and
synergies, that arise.
INDUSTRY LEADING
TECHNOLOGY AND FACILITIES
Our industry leading technology is a key
element of our competitive edge, facing
into macro market trends including
labour availability and cost, and supply
chain traceability and transparency.
We provide highly efficient supply chains
to our partners through scalable robotics
and cloud-based infrastructure, allowing
retailers to manage their full end-to-end
value chain, from specification to product
quality and cost of production mapping.
The Foods Connected platform supports
both our business and our customers’
businesses and their supply chains,
optimising data-led decisions, driving cost
efficiency and enabling visibility of supply
chain risks.
Our integrated technology offer supports
our core food business and we have
further improved our highly automated
food processing facilities, through our
joint venture with Agito. This year we have
made investments in end of line robotic
automation in our UK meat and seafood
facilities improving efficiency and reduced
reliance on labour.
Hilton Food Group PLC Annual Report and Financial Statements 2023
11
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Our business is focused on delivering value for stakeholders through our specialisation model,
supported by our resources and relationships and competitive strengths. Our specialisation
model is difficult for others to replicate and is a key advantage, driving benefits for our
business and our customers.
We generate revenue through long-term supply and service agreements with our customers, through transparent, open book
models. These contractual agreements, combined with our long-term partnership, and total category management approach
serve to maximise achievable volume throughout whilst maintaining market competitive unit packing costs, thereby delivering
value to our customers and their consumers.
Focused on delivering
value for stakeholders
ENABLED BY OUR RESOURCES AND RELATIONSHIPS
7,000+ 24 £56.8m
PASSIONATE AND SKILLED
COLLEAGUES
STATE OF THE ART FACILITIES
ACROSS10 COUNTRIES
STRATEGIC CAPITAL
INVESTED IN 2023
OUR COMPETITIVE ADVANTAGES
OUTSTANDING FOOD PRODUCTS INTERNATIONAL REACH INDUSTRY LEADING TECHNOLOGY
Read more on
pages 20-23.
Read more on
pages 10-11.
Read more on
pages 18-19.
OUR SPECIALISATION MODEL
We source
We innovate We manufacture
Read more on
pages 48.
Hilton Food Group PLC Annual Report and Financial Statements 2023
12
OUR BUSINESS MODEL
Creating value
for all our
stakeholders
Consumers
70%
Of our packaging is now recyclable,
helping consumers make more
sustainable product choices.
Our customers
£56.8m
Strategic investment into our core
business, creating capacity and
capability to support their growth.
Our suppliers
1,971
Tonnes of plastic removed from our
packaging through collaboration
with our supplier partners.
Our people
78%
High colleague engagement
score. Developing talent through
international training programmes.
Communities
GOLD
Award from Grocery Aid for our
support of their fantastic charity.
Environment
-14%
Reduction in equivalent Scope 1
and2 emissions.
Our investors
7.7%
Dividend increase in 2023 in line
with our commitment to drive
long-term value.
Read more about our Stakeholders
on pages 35 to 39.
Long-standing
partnerships
Trusted supplier
partners
WITH MARKET LEADING
CUSTOMERSACROSS THE RETAIL
AND FOODSERVICE SECTORS
THAT SHARE OUR COMMITMENT
TOQUALITY, FOOD SAFETY, ANIMAL
WELFARE AND SUSTAINABILITY
THE SUSTAINABLE PROTEIN PLAN
Read more on
pages 41-45.
We deliver We supply
Hilton Food Group PLC Annual Report and Financial Statements 2023
13
STRATEGIC REPORT ADDITIONAL INFORMATIONFINANCIAL STATEMENTSGOVERNANCEOVERVIEW
OUR BUSINESS MODEL
Our specialisation model focuses on a range of control points throughout the
supply chain, increasing efficiency and optimising expertise. We leverage
local and global expertise in the middle three key stages from product design
through to logistics: these are the areas within our control, although we
positively influence and audit the entire supply chain.
Includes the Foods Connected data
insight platform that supports trusted
and optimised supply chains
Our integrated supply chain services deliver efficiencies through market-leading
technology and automation capability:
Full end-to-end supply chain
management solution for data-led
decision making
Provides physical material
handling solutions and automation
control software
We integrate
OUR BUSINESS MODEL continued
Leveraging our local
and global expertise
We source We innovate We manufacture
We source responsibly and in
partnership with our customers
from trusted suppliers. We utilise
high quality raw materials to
industry leading standards
and traceability.
We innovate products, processes
and packaging to create exciting
new food products and supply chain
solutions, to meet our customers
and their consumers’ needs.
Our data driven approach provides
us with market-leading insight,
which we use to drive supply chain
improvements and innovation.
We process high quality proteins
and ingredients to create high
quality, relevant product ranges,
treating our customers’ brand as
our own through transparent, open
book models.
Food products are processed in our
well invested, highly automated
facilities. We maximise efficiency
through our manufacturing
excellence programme and culture
of continuous improvement.
We source:
High quality protein
Ingredients
Processing equipment
and resources
Packaging
Hilton Food Group PLC Annual Report and Financial Statements 2023
14
Flexible factory wide Enterprise
Resource Planning system
Agnostic software solution for
control of production
line equipment
OUR BUSINESS MODEL continued
We deliver
Multi-category food products:
MEAT VEGAN AND
VEGETARIAN
SEAFOOD
EASIER MEALS
Supply chain services through our businesses
Greenchain Solutions and Hilton Services:
SUPPLY CHAIN
SERVICES
We supply
20 international markets
Leading retailers and
foodservice providers:
Brands
Co-manufactured products in line
with their brand and needs
Manufacturers
Supply chain services including
software and automation solutions
Hilton Food Group PLC Annual Report and Financial Statements 2023
15
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
OUR STRATEGY
Growth and success through partnership
We are defined by our purpose.
WE ARE AMBITIOUS
We are on the journey to our ambition ‘tobe 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 20 markets internationally. We remain focused on achieving our ambition through
allour partnerships.
OUR STRATEGIC OBJECTIVES
Our strategy continues to be to support our customers’ brands and their development
through our unique categoryoffer in their local markets. This approach combined witha strong
reputation, well-invested modern facilities andarobust balance sheet hasgenerated growth
over many years.
We are achieving long-term sustainable customer and shareholder value through our strategic
objectives and key priorities:
We partner with leading
retail and foodservice
customers to produce
high quality food products
at scale that consumers
desire. Our principle of
partnership extends to our
suppliers, colleagues and
the communities in which
we operate.
We enable success
through our passion for
innovation, improving
supply chains, processes
and packaging we use, and
continually developing our
product ranges to best
meet consumer needs.
We deliver growth
through creating efficiency
and flexibility in the
food supply chain as an
international food processor
and a supply chain
service specialist.
Hilton Food Group PLC Annual Report and Financial Statements 2023
16
OUR STRATEGY
To expand our
multi-category offer
Develop food skills and
product innovation
To continue to leverage
technology as a driver of value
To continue to recruit and develop
expert, motivated people
Build further expertise as
asupplychain partner
To be rigorous in our approach
to the ESG agenda
To continue to grow our
global footprint
Philosophy of simplicity
OUR STRATEGIC OBJECTIVES:
HOW WE WILL DELIVER:
Hilton Food Group PLC Annual Report and Financial Statements 2023
17
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
INDUSTRY LEADING INNOVATION,
CONCEPT DESIGN AND
IMPLEMENTATION.
Cutting edge technology in our factories
in Huntingdon and Grimsby, UK
The UK factory automation reflects our strategic
partnership projects where we take innovation to
reality on our factory floors.
The automation improvements in Huntingdon
and Grimsby are great examples of our physical
automation venture partnership with Agito, who
we have been working together with for over
10 years and in a joint venture with since early
2022. Agito specialise in delivering cutting edge
robotics and automation, integrating hardware and
software to deliver automation solutions across the
Warehousing, Logistics, eCommerce, Food and
Beverage industries.
REDUCING EMISSIONS
-14%
Reduction in FY 2023 equivalent
Scope 1 and 2 emissions
since 2020
INGREDIENTS FOR SUCCESS
EXPERTISE
TECHNOLOGY
OUR STRATEGY continued
FACTORY AUTOMATION:
Using leading edge technology to create some
of the most technologically advanced food
production sites in the world.
Physical robotics and automation are
transforming operations in our seafood factory
in Grimsby and our multi-category food park
in Huntingdon. The project is a collaboration
between our core Hilton Services team, the
technical experts of Hilton Foods, and our
Greenchain Solutions
platform for integrated automation and
technology solutions. This combination of
cutting edge robotics and automation ensures
that our factories are competitive on a global
stage, and fit for the future.
With a background of rising production costs
and an evolving labour supply situation
in the UK, the project aims to enhance overall
process efficiency, deliver improved
labour utilisation and better value for our
customers. This is part of the wider Hilton Foods
data-led continuous improvement
programme which is delivering significant
efficiency gains for the business.
Hilton Food Group PLC Annual Report and Financial Statements 2023
18
Progress against our strategic objectives
HILTON SEAFOOD UK, GRIMSBY
This project introduces the latest in warehouse
logistics and automation to our Grimsby site.
The project integrates technology platforms and
systems across the intake, dispatch, warehouse
storage and production areas.
Automated pallet stacking and depalletising robots
are streamlining the warehouse and production
processes. Robots retrieve pallets of raw materials
from the automated cold store and deliver them
toproduction lines, where start of line robots unstack
the pallets ready for production.
A customised warehouse control system integrates
cold storage areas with robots that move product
through the facility. Storage in the warehouse racking
system is fully automated and multi-depth, allowing
for high density, efficient storage. Operations are
further streamlined by the automation of the pallet
wrapping, label printing and application processes.
The introduction of robots to the warehouse system
means that product picking, auto replenishment
and storage sortation can occur simultaneously,
which helps to enhance the overall efficiency
ofour operations.
HILTON FOODS UK, HUNTINGDON
At our Huntingdon facility we have end-to-end
automation. When raw material arrives into the
factory, it is unloaded and moved into our automated
storage warehouse using robotic technology; stock
is then transferred to the production halls, where
it is processed, packed and then dispatched to our
customer partners, all using automation.
This is improving the efficiency of in line operation
and ultimately offers the potential to operate lines at
amuch higher capacity with less manual intervention.
Our logistics automation has focused on automating
repetitive tasks linked to pallet movements and pallet
building. The latest technology is used to optimise
crate filling and pallet building to ensure the optimal
number of packs per pallet. Autonomous mobile
robots have been introduced to move pallets from the
warehouse, ready for pallet wrapping and to dispatch
ready for distribution.
In response to customer demand for easier meals,
we have invested in specialist technology to
enhance our ready to cook capacity. This year we
have introduced new cold storage, specialist line
equipment and tumblers to make new recipes for
ourcustomer partners.
Our Hilton Seafood UK facility is based in the UK seafood capital,
Grimsby. We operate from two large production sites delivering
quality, innovation and service to our customers across chilled
fish and shellfish, coated fish, fishcakes and other added
value products.
Our Hilton Foods UK Huntingdon food park is a multi-category
food production facility, supplying beef, lamb, BBQ, ready to
cook, slow cooked, vegan and vegetarian meals. Providing over
500 million meals to UK consumers every year.
Hilton Food Group PLC Annual Report and Financial Statements 2023
19
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
OUR STRATEGY continued
FAIRFAX MEADOW
2024 marks the 50th anniversary
oftheFairfax Meadow business.
Established from a high street butcher shop in
North London, Fairfax Meadow has grown to
become the UK’s leading foodservice butcher,
supplying some of the UK’s leading brands.
ENFIELD
DERBY
EASTLEIGH
Fairfax Meadow operates from three sites
in the UK providing national distribution and
next day delivery service.
Derby – Our main production facility, a centre
of excellence for manufacturing, logistics and
new product development.
Enfield – Centre of excellence for traditional
artisan butchery. Also the location of our state of
the art maturation chillers with Himalayan salt
walls for premium dry aged beef.
Eastleigh – Centre of excellence for travel and
leisure sector supply chain expertise.
INGREDIENTS FOR SUCCESS
QUALITY
EFFICIENCY
THE HILTON FOODS UK
FOODSERVICE BUSINESS
Hilton Foods acquired Fairfax Meadow in 2021, and
since then, we have continued to strengthen our
position in the UK foodservice sector with a market-
winning success formula, channel growth and
opportunities to differentiate.
AWARD WINNING FOODSERVICE
MEAT SPECIALIST
Over the last 50 years, Fairfax Meadow has won
various prestigious awards, culminating in 2023 as the
proud recipient of the Meat Management Catering
Butcher of the Year. This prestigious award recognises
the company’s commitment to quality, innovation,
and customer service.
Our customers expect reliable quality and
consistency, trusting us to put great meat on their
menus. This is underpinned by clear UK and global
sourcing strategic alliances, streamlined processes
and efficient logistics.
CONSISTENT HIGH QUALITY PRODUCTS
Fairfax Meadow delivers a wide array of meat products
to customers across the UK, ranging from beef,
lamb and pork to poultry and game. Examples of
bespoke products that our customers love include our
creative festive ranges, Casterbridge West Country
PGI perfectly dry-aged beef, and unique burgers
and sausages.
Full product traceability is critical to our customers,
and this is underpinned by BRC certification across
our sites, full quality assurance, a rigorous audit
process for our suppliers and complete farm to fork
traceability of our British quality-assured supply
chains. Planned integration of the Foods Connected
platform will provide Fairfax Meadow with a world-
class supply chain management system, supporting
supply chain visibility and data-led decision making.
The in-house chef Development team create recipe
solutions, which have won a range of awards over the
years, most recently the Good Housekeeping Institute
award as part of their annual Christmas products
review. The Best Turkey with a Twist award was won by
the slow-cooked Two Bird Ballotine product, resulting
from collaboration between the Fairfax Meadow and
Hilton Foods UK Innovation teams.
Hilton Food Group PLC Annual Report and Financial Statements 2023
20
COMMITTED TO A SUSTAINABLE FUTURE
At Fairfax Meadow, we are leading the foodservice
sector in implementing sustainability strategies;
our agenda is aligned with the Hilton Foods three
pillars – People, Planet, Product.
ARTISAN BUTCHERY
The team of highly skilled butchers at Fairfax Meadow
work with expertly sourced meat and the latest
ingredient innovation to deliver a wide range of
traditional and innovative butchery products to meet
the fast-paced demand of our customers.
Working with industry experts, the team have
developed purpose-built, humidity-controlled
maturation chambers with Himalayan salt walls,
producing a range of perfectly dry-aged beef.
With a keen eye for following the latest food trends,
we approach product innovation with a focus on
helping customers to deliver consistency and
excellence on their menus.
LONG STANDING CUSTOMER
RELATIONSHIPS
Fairfax Meadow is the supplier of choice to a wide
range of leading brands across the UK foodservice
sector, ranging from restaurants and pubs to travel
and leisure, hotels and contract catering.
As a trusted supplier to the foodservice industry, our
long standing customer relationships are a testament
to our integrity and commitment to service. In 2023,
we proudly received the Supplier of the Year (Food)
award from our longest-serving customer.
The Fairfax Meadow team is always on hand to
support customers and go beyond just supplying
great products. We also provide dedicated account
management, market updates and trend reports, chef
training and experience days, and support in helping
our customers achieve their sustainability targets.
Fairfax Meadow is committed to being a fair, safe and
inclusive employer by engaging and empowering our
people while supporting our local communities. Our social
responsibility code of conduct safeguards the welfare and
just treatment of all people and communities engaged
with our business and supply chains. The Fairfax Meadow
wellbeing programme is focused on supporting our team.
We have, and always will, value our people, and are proud
to have a multi-generational workforce, including 9% of
people with more than 20 years of service.
As we look to the future, we are harnessing the extensive
experience across Fairfax Meadow and planning for
the future through our apprenticeship scheme and
butchery school.
As part of our commitment to developing a circular
economy, a packaging roadmap has been identified and
is actively bringing waste materials back into use across
our full value chain. In addition, we are also trialling the
replacement of cardboard cases with reusable crates across
our delivery network.
In 2024, we are launching several resource efficiency
projects, including implementing the ISO50001 Energy
Management Framework. Furthermore, we are committed
to reducing food waste and work with local charities and
food banks to reduce food waste whilst supporting our
local communities.
PEOPLE
PRODUCT
Fairfax Meadow is targeting net negative emissions across
our sites and value chains. Our decarbonisation roadmap
is aligned with the 1.5°C pathway, and we have already
measured our Scope 1, 2 and 3 emissions. Progress on our
decarbonisation pathway so far includes 100% of our energy
now coming from renewable sources and the introduction
of electric vehicles.
We are also working
towards verified
deforestation and
conversion free
supply chains through
collaboration with our
supplier partners.
PLANET
Progress against our strategic objectives
Hilton Food Group PLC Annual Report and Financial Statements 2023
21
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
HILTON FOODS NEW ZEALAND
Our purpose-built food park located
in Wiri, Auckland opened in July 2021.
The site provides a full pre-packed product
portfolio across meat, poultry and seafood
proteins, with more than 250 products.
Wiri has a fully automated warehouse
store order picking daily exclusively
for 150 Countdown stores.
NEW ZEALAND
OVER 500 PRODUCTS REVIEWED
Our expert team from Hilton Foods and Woolworths New
Zealand comprised of food scientists, butchers, nutritionists,
consumer data analysts and food experts reviewed over
500 products across 10 categories. Using their combined
expertise and knowledge they analysed each product to
assess current performance, consumer appeal, taste, quality,
appearance and cooking experience.
NEW DESIGNS
The overall look and feel of the entire range was refreshed in
a modern, easy to read style which was standardised across
the category to help consumers identify our high quality,
fresh products.
INTERNATIONAL EXPERTISE
Using our international experience we identified winning
formulas for packaging design and product descriptions.
We used best practice examples from around the world
and from our Hilton Foods sister sites to simplify branding
and improve product messaging. To help consumers with
at home recycling, we also enhanced the recyclability
messaging of the packaging and reduced and removed
packaging where possible.
ROAD MAP DEVELOPMENT
The ambitious plan started with a complete repositioning of
products, packaging and range and design. The launch of
newly designed products to supplement and enhance the
range was phased through 2023 and onwards to coincide
with seasonal demand. Hearty cold weather products like
roasting joints were launched in April ahead of the winter
whilst sausages, burgers and BBQ products were launched
in October ready for the summer holidays.
RANGE RESET IN
NEW ZEALAND
Consumer Led, Customer Focused.
During 2023 we harnessed our partnership
with Woolworths New Zealand to revitalise
the range of products we supply to consumers,
from our Wiri based food park.
Our mission was to be the chosen protein
destination for New Zealand consumers,
offering inspiring products that exceed our
customers’ expectations on quality, value,
taste and convenience.
COLLABORATION
AGILITY
OUR STRATEGY continued
INGREDIENTS FOR SUCCESS
Hilton Food Group PLC Annual Report and Financial Statements 2023
22
Hilton Foods creates
multi-category food
products for retail,
foodservice and wholesale.
New product launches
in APAC meet affordable
everyday product needs.
Progress against our strategic objectives
COMMUNICATING OUR FRESH STORY
Keen to communicate our fresh credentials to
consumers, we used both online and in store channels
to deliver our new messaging. To improve the in store
experience for consumers buying fresh meat, fish
and seafood products, we worked together with the
Woolworths team to improve the in store facings and
cold chain capability.
Our communications continue to evolve as we bring
more new products to the market.
TRUST
With a short timeline and huge project scope, a key to
success was working with Woolworths in total trust,
focusing on the best outcome for our consumers.
Working as one team across Hilton Foods and
Woolworths ensured that we developed the best
possible products for our customers.
FUTURE
Projects are ongoing across the business, working
with Woolworths so we can continue to be the chosen
protein destination, focusing on market leading
quality and innovation.
Hilton Food Group PLC Annual Report and Financial Statements 2023
23
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
PERFORMANCE AND FINANCIAL REVIEW
Robust results, delivered
through operational progress
in all aspects of the business.
This performance and financial
review covers the Group’s
financial performance and
position in 2023. Hilton Foods
overall financial performance
saw strong profit growth
reflecting the recovery in our
UK Seafood business combined
with volumes and sales
growth. Cash flow generation
was strong, supporting our
ongoing significant investment
in facilities.
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:
In addition, a much wider range
of financial and operating KPIs
arecontinuously tracked at
business unit level.
We have delivered a robust financial
performance making significant
progress towards our medium-term
financial ambitions.”
Matt Osborne
Chief Financial Officer
VOLUME (tonnes)
+0.7%
’
19
’
20
’
21
’
22
’
23
371,715
460,259
492,588
517,347
513,816
BASIS OF PREPARATION
The Group is presenting its results for
the 52 week period ended 31 December
2023, with comparative information for
the 52 week period ended 1 January 2023.
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 Foods 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.
Hilton Food Group PLC Annual Report and Financial Statements 2023
24
FINANCIAL KPIs
Revenue growth
(%)
3.7%
2022: 16.5%
Year on year revenue growth
expressed as a percentage.
The 2023 increase reflects
volume growth and higher raw
material prices.
Adjusted operating profit
margin (pence per kg)
18.4p
2022: 13.8p
Adjusted operating profit per
kilogram processed and sold in
pence. The increase in 2023 mainly
reflects the recovery in our
Seafood business.
Return on capital employed
(ROCE) (%)
18.3%
2022: 14.8%
Adjusted operating profit divided
by average of opening and closing
capital employed representing
total equity adjusted for net bank
cash/debt, leases, derivatives
and deferred tax. The increase
in 2023 is primarily driven by
higher profitability.
Adjusted operating profit
margin (%)
2.4%
2022: 1.8%
Adjusted operating profit expressed
as a percentage of turnover.
The improvement in 2023 mainly
reflects the recovery in our
Seafood business.
Adjusted earnings before
interest,taxation, depreciation
andamortisation (EBITDA) (£m)
£144.0m
2022: £119.9m
Adjusted operating profit before
depreciation and amortisation.
The increase in 2023 mainly
reflects the recovery in our
Seafood business.
Free cash flow
(£m)
£112.1m
2022: £(79.4)m
IFRS cash inflow/(outflow) before
minorities, dividends and financing.
The increase in 2023 is primarily
attributable to i) improved
operating cash flows driven by
higher profits and favourable
working capital movements and
ii) the absence of acquisitions.
NON FINANCIAL KPIs
Net debt/EBITDA ratio (times)
1.0
2022: 1.8
Year-end net bank debt as a
percentage of adjusted EBITDA.
The improvement in 2023 is due to
strong profit and cash generation.
Growth in sales volumes (%)
0.7%
2022: 4.3%
Year on year volume growth.
Lower volume growth in 2023
reflected growth in APAC and full
year volumes at Foppen acquired
in 2022.
Customer service level (%)
94.1%
2022: 95.9%
Packs of product delivered as a %
of the orders placed. The customer
service level remains best in class.
Hilton Food Group PLC Annual Report and Financial Statements 2023
25
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Volume and revenue
Volumes grew by 0.7% in the year
reflecting growth in APAC and full year
volumes at Foppen acquired in 2022.
Additional details of volume growth by
business segment are set out in the Chief
Executive’s summary. Revenue increased
3.7% (5.7% on a constant currency basis)
reflecting higher raw material prices and
volume growth.
Operating profit and margin
Adjusted operating profit of £95.0m
(2022: £71.1m) was 33.5% higher than
last year and 34.7% higher on a constant
currency basis reflecting the recovery
in our Seafood business. IFRS operating
profit was £86.1m (2022: £54.0m) after
charging £3.9m in exceptional costs
(2022: £11.9m). The operating profit margin
in 2023 increased to 2.4% (2022: 1.8%)
and the operating profit per kilogram
of packed food sold increased to 18.4p
(2022: 13.8p) mainly reflecting the recovery
in our Seafood business.
Net finance costs
Adjusted net finance costs, excluding
exceptional items and lease interest,
increased to £28.9m (2022: £15.7m)
reflecting the impact of higher market
interest rates and supply chain financing
costs. Interest cover as a proportion of
adjusted operating profit in 2023 reduced
to 2.3 times (2022: 4.5 times). IFRS net
finance costs were £37.5m (2022: £24.4m).
Taxation
The adjusted taxation charge for the
period was £17.2m (2022: £13.5m).
The effective tax rate was 26.0%
(2022: 24.3%). The IFRS taxation charge was
£10.6m (2022: £10.1m) with an effective tax
rate of 21.9% (2022: 34.2%).
Net income
Adjusted net income, representing profit
for the year attributable to owners of the
parent, of £47.2m (2022: £40.2m) was 17.4%
higher than last year and 18.3% higher on a
constant currency basis. IFRS net income
was £36.4m (2022: £17.7m).
Earnings per share
Adjusted basic earnings per share 52.8p
(2022: 45.1p) was 17.1% higher than last year
and 17.9% on a constant currency basis.
IFRS basic earnings per share were 40.6p
(2022: 19.8p). Diluted earnings per share
were 40.2p (2022: 19.7p).
Earnings before interest, taxation,
depreciation and amortisation
(EBITDA)
Adjusted EBITDA, which is used by the
Group as an indicator of cash generation,
increased to £144.0m (2022: £119.9m).
IFRS EBITDA was £165.6m (2022: £131.8m).
Return on capital employed (ROCE)
ROCE, calculated as adjusted operating
profit divided by average of opening and
closing capital employed representing
total equity adjusted for net bank cash/
debt, leases, derivatives and deferred tax,
was 18.3% (2022: 14.8%).
Free cash flow and net debt position
Operating cash flow was strong in 2023
with cash flows from operating activities
of £216.1m (2022: £98.3m) reflecting higher
profits and favourable working capital
movements. IFRS free cash inflow, after
capital expenditure of £58.6m but before
dividends and financing, was £112.1m
(2022: outflow £79.4m).
The Group closing net bank debt
comprising borrowings less cash and cash
equivalents excluding lease liabilities,
reduced to £139.7m (2022: £211.6m)
reflecting bank borrowings of £266.4m
net of cash balances of £126.7m. Net debt
including lease liabilities was £366.6m
(2022: £457.7m). Year-end net bank debt
as a ratio of adjusted EBITDA reduced to
1.0 times (2022: 1.8 times).
At the end of 2023 the Group had undrawn
committed bank facilities under its
syndicated banking facilities of £108.7m
(2022: £106.4m). These banking facilities
are subject to covenants comprising net
bank debt to EBITDA and EBITDA interest
cover. There was comfortable headroom
under these covenants at the end of the
year for these metrics.
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 23.0p
per ordinary share in respect of 2023. This,
together with the interim dividend of
9.0p per ordinary share paid in December
2023, represents an increase of 7.7%
compared to last year at 29.7p per ordinary
share. The final dividend, if approved by
shareholders, will be paid on 28 June 2024
to shareholders on the register on 31 May
2024 and the shares will be ex dividend on
30 May 2024.
KEY PERFORMANCE
INDICATORS
See our KPIs on the previous page.
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, a significant
proportion 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.
2023 Financial performance
PERFORMANCE AND FINANCIAL REVIEW continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
26
PERFORMANCE AND FINANCIAL REVIEW continued
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
ANDPRICING 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 Foods 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:
https://www.oecd.org/tax/beps/about/.
Our tax strategy can be found on our
website: https://www.hiltonfoods.com/
investors/corporate-governance/
GOING CONCERN STATEMENT
The Directors have performed a detailed
assessment, including a review of the
Group’s budget for the 2024 financial
year and its longer term plans, including
consideration of the principal risks faced
by the Group. The resilience of the Group
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. The Group
renewed its banking facilities in 2022 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 2026. 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 the changing geopolitical
and macroeconomic environment, 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 the Group’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
2 April 2024
Hilton Food Group PLC Annual Report and Financial Statements 2023
27
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
RISK MANAGEMENT AND PRINCIPAL RISKS
The Audit Committee reports to the Board on the substance of the risk assessment andany
changes to the nature, likelihood or materiality of those risks. The Group Internal Audit and Risk Director
presents at every Audit Committee meeting on the internal controls andriskmanagement systems.
Audit Committee
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 business unit risk registers supplemented by formal
interviews with senior executives and Directors of the Group.
Group Internal Audit and Risk Director and Site Managing Directors
4th Line of Defence
External Audit,
regulators
Provide third party and
independent review
of all business units.
Review of the viability
and going concern
ofthe business.
2nd Line of Defence
Oversight and key
assurance functions
Our key oversight and
assurance functions
ensure the effective
management of critical
risks. This includes policies,
procedures and training.
3rd Line of Defence
Internal Audit,
consultants
Provide independent
review over the
completeness and
effectiveness of our
internal controls and risk
management systems.
1st 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.
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.
Business unit risk registers
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 thescenario-based business continuity management exercises.
Group Internal
Audit and Risk Director
Key international leaders
across the business
Representatives from
Executive Leadership team
Risk Management Committee
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.
Chairman, Non-Executive Directors
Chief Executive Officer Chief Financial Officer
Board
Who is responsible for risk at Hilton?
Hilton Food Group PLC Annual Report and Financial Statements 2023
28
RISK MANAGEMENT AND PRINCIPAL RISKS
OVERVIEW
Effective risk management
at Hilton Foods is essential to
the delivery of our strategic
objectives and aims to
safeguard the interests of
all ourstakeholders in an
increasingly complex world.
Our proactive approach to
riskmanagement ensures the
long-term sustainable growth
of all aspects of our business
and is integrated into
everything we do.
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 Hilton Foods
that might impede the achievement of
its strategic and operational objectives
or affect performance and cash position.
As a leading international food and supply
chain services provider in a fast-moving
environment it is critical that Hilton
Foods identifies, assesses and prioritises
its risks. The result of this assessment is
a statement of principal risks 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
mitigating actions, enables us to monitor,
minimise and control both the probability
and potential impact of these risks.
HOW WE MANAGE RISK
Hilton Foods 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 Internal Audit function provides
independent assurance that Hilton Foods
risk management, governance and
internal control processes are operating
effectively. The Audit Committee are
regularly updated on the risk based
assurance plan by the Internal Audit
function who maintain and review
processes for risk identification and
assessment, measurement, control,
monitoring and reporting. For more detail
please see: Who is responsible for risk
at Hilton?
RISK MANAGEMENT PROCESS
AND RISK APPETITE
The Board believes that 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.
At Hilton Foods we nurture a culture
where everyone is required to be aware
of the risks facing the business and their
responsibilities for managing them.
To support this we maintain and create
an environment where employees feel
comfortable speaking up. Our processes
for identifying existing and emerging risks
and responding collaboratively to them is
managed by the Internal Audit function.
Identified risks are measured and assessed
for likelihood and impact allowing for the
correct risk responses to be developed.
Policies, procedures, controls and other
measures are put in place to mitigate risks.
We use a suite of preventative, detective
and corrective controls.
Risk ownership is assigned to key leaders.
This ownership is reviewed as part of
the ongoing risk management process.
Mitigation plans and controls are agreed in
conjunction with the risk owner.
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 our
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 2023
Increasing geopolitical uncertainty
Escalating tensions in the Middle East,
the ongoing conflict in Ukraine and the
prospect of disruption resulting from
major political elections in 2024, increase
the risk impacting our supply chains and
operations. Disruption to energy markets,
global shipping and international trade can
have far-reaching impacts. Learnings from
the Covid-19 pandemic have helped us
to build resilience in our supply chains
and operations.
The macroeconomic environment
Although we expect energy price volatility
and the acute cost of living crisis to ease
as the rate of food price inflation slows,
consumer spending and eating habits
have been impacted. We recognise the
effect of increasing interest costs on all
businesses and we continue to focus on
ways of reducing our exposure such as the
use of cash pooling and exploring working
capital financing.
Our continued focus on cost control,
innovation and factory efficiency is
enabling us to manage the inflationary
pressures the industry is currently facing.
Through our strong customer relationships
we are able to support consumers to
navigate through these challenging times.
Post-Brexit trade and
regulatory landscape
We continue to monitor the UK and EU
regulatory and trade environments as
they evolve and amend processes and
operations as required. We are working
closely with our customers and supply
chains to ensure preparation for the
implementation of changes to the UK
Border processes through 2024. Our focus
on technology and automation further
reduces our risk exposure in this area.
PRINCIPAL RISKS
The most significant business risks that
Hilton Foods faces, together with the
measures we have adopted to mitigate
these risks, are outlined in the following
tables. This is not intended to constitute
an exhaustive analysis of all risks faced by
Hilton Foods, but rather to highlight those
which are the most significant.
Hilton Food Group PLC Annual Report and Financial Statements 2023
29
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
RISK MANAGEMENT AND PRINCIPAL RISKS continued
RISK 1
No movement
Description: The progress of Hilton Foods business is affected by the
macroeconomic and geopolitical environment and levels of consumer spending.
ITS POTENTIAL IMPACT
No business is immune to difficult economic climates.
The macroeconomic and geopolitical landscape,
exacerbated by the Ukrainian war, geopolitical tension in
the Red Sea region and current interest rates, is placing
extraordinary financial pressures on our supply chains,
operations, consumers and customers.
The risk of energy price volatility and the ongoing cost
of living crisis is impacting consumer spending and
eating habits. As a result, our retail customers are under
immense pressure to deliver value and are sharing that
pressure with supplier partners.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Our strong growth model, based on successful diversification across
different proteins and expanding as a technology-led supply chain
partner is built on our strong ESG credentials which underpin 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.
Hilton Foods 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.
We recognise the impact of increasing interest costs on all
businesses and we continue to focus on ways of reducing our
exposure such as the use of cash pooling and exploring working
capital financing.
RISK 2
No movement
Description: Hilton Foods growth potential may be affected by the success
of our customers and the growth of their packed food sales.
ITS POTENTIAL IMPACT
Hilton Foods products predominantly carry the brand
labels of our customers so our sales are dependent on the
success of our customers and their consumer perception
which is increasingly influenced by environmental, social
and governance (ESG) considerations.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Hilton Foods plays a very proactive role in enhancing its customers’
brand values, by providing high quality, competitively priced
products, high service levels, ongoing product and packaging
innovation and category management support. We recognise that
quality and traceability assurance are integral to our customers’
brands and we work closely with customers to ensure rigorous
quality assurance standards are met. Our customers continuously
measure performance across a very wide range of parameters,
including delivery time, product specification, product traceability
and accuracy of documentation. We work closely with our customers
to identify continuing improvement opportunities across the supply
chain, including enhanced product presentation, extended shelf life
and reduced 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.
Hilton Food Group PLC Annual Report and Financial Statements 2023
30
RISK MANAGEMENT AND PRINCIPAL RISKS continued
RISK 3
No movement
Description: Hilton Foods strategy focuses on a small number of customers who can exercise significant
buying power and influence when it comes to contractual renewal terms at 1 to 15-year intervals.
ITS POTENTIAL IMPACT
Although Hilton Foods has historically relied on a few,
influential retailers for a larger part of our revenue, this
has diversified in recent years. 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 and negotiating power of
our customers, 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.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Hilton Foods is progressively widening its customer base,
with the recent announcement of a partnership with Walmart
Canada bringing further diversification to the customer portfolio.
We maintain a high level of investment in state-of-the-art facilities,
which together with management’s continuous focus on reducing
costs, allows us to operate very efficiently at very high throughputs
and price our products competitively.
Hilton Foods operates an entrepreneurial business structure, which
enables us to work very closely and flexibly with retail partners, 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 Foods 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 Foods
continues to evolve and respond to changing market conditions.
The provision of added value services in distribution and logistics
deepens the relationships we have with our retailer partners.
Greenchain Solutions, our technology and services business offers
an industry leading technology platform providing end-to-end
supply chain and integrated automation solutions. Investment in
these services means that we are able to develop and maintain a
technology advantage within our industry.
RISK 4
Up movement
Description: As Hilton Foods continues to grow there is more reliance on key personnel and their ability to manage growth,
change, integration and compliance across new legislative and regulatory environments. This risk increases as the Group
continues to expand with new customers and into new territories either organically or through acquisition with potentially
greater reliance on stretched skilled resource and execution of simultaneous growth projects.
ITS POTENTIAL IMPACT
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.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
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 Foods
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 Foods leadership continues to
develop its organisational structures to ensure as close a relationship
with our retail partners as possible.
Hilton Food Group PLC Annual Report and Financial Statements 2023
31
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
RISK 5
Up movement
Description: Hilton Foods business strength is affected by our ability to maintain a wide and flexible global food supply
base operating at standards that can continuously achieve the specifications set by ourselves and our customers.
Increasing geopolitical tension has heightened this risk exposure into 2024.
ITS POTENTIAL IMPACT
Hilton Foods is reliant on its suppliers to provide sufficient
volume of products, to the agreed specifications, in
the very short lead times required by 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.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Hilton Foods 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
awide range of options should supply disruptions occur.
We have also developed partnerships with key strategic suppliers
who share our commitment to quality, food safety, animal welfare
and sustainability.
We engage with our suppliers through our supplier management
platform, Foods Connected where we track supply chain compliance,
internal quality procedures and manage the buying, planning and
selling of our raw materials. This provides further assurance through
strengthening supply chain robustness and transparency.
Further detail on supplier engagement can be found in the
Stakeholder Engagement section.
RISK 6
No movement
Description: Contamination within the supply chain including outbreaks
of disease and feed contaminants affecting livestock and fish.
ITS POTENTIAL IMPACT
This will potentially affect Hilton Foods ability to procure
sufficient quantities of safe raw material.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Hilton Foods sources its food from a trusted raw material supply
base, all components of which meet stringent national, international
and customer standards. We are 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 our business model. Full traceability from
source to packed product is ensured across our 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 MANAGEMENT AND PRINCIPAL RISKS continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
32
RISK 7
No movement
Description: Significant incidents such as fire, flood, pandemic or interruption
of supply of key utilities could impact the Group’s business continuity.
ITS POTENTIAL IMPACT
Such incidents could result in systems or manufacturing
process stoppages with consequent disruption and loss
of efficiency which could impact the Group’s sales.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Hilton Foods 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.
RISK 8
Up movement
Description: Hilton Foods IT systems could be subject to cyber attacks, including ransomware and fraudulent external
email activity. Such attacks are rapidly increasing in frequency and sophistication, especially with the progression of
artificial intelligence.
ITS POTENTIAL IMPACT
Hilton Foods 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
disrupt our operations and affect our sales and reputation.
Unauthorised access to systems, both within our own
network and in our supply chains, could lead to loss of
sensitive information.
The risk of cyber attack is exacerbated by increasing
geopolitical uncertainties.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Our robust IT control framework, including our Information
Security Program is aligned with the National Institute of Standards
and Technology (NIST) Cybersecurity and ISO Frameworks.
We proactively identify and assess vulnerabilities in our systems
through simulated attacks, annual penetration testing and weekly
vulnerability scans. Remediation procedures allow us to correct
potential weaknesses promptly. Testing is conducted by both internal
staff and specialist external bodies. We continuously improve our
IT control framework which is applied consistently throughout the
business and ensures that our defences remain resilient in the face of
evolving cyber threats.
Our Information Security Program places a strong emphasis on
Incident Reporting and Response. We are establishing a process
for employees to promptly report any potential security incidents,
fostering a culture of transparency and accountability. In the event
of an incident, our response protocols enable us to swiftly and
effectively contain, eradicate, and recover from security breaches.
Cyber awareness training plays a vital role in empowering
our workforce to recognise and report potential incidents.
Frequent testing and simulations help bolster the resilience of
the organisation.
The Board and Risk Management Committee are regularly updated
on cyber security risk and mitigations. IT risk is considered when
assessing new ventures, new sites are required to comply with
our minimum standards and operating models. IT forms part of
site business continuity exercises which test and help develop the
capacity to respond to possible crises or incidents. There are regular
IT security reviews to ensure compliance with expected levels of
updates to applications, servers and data centres.
RISK MANAGEMENT AND PRINCIPAL RISKS continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
RISK MANAGEMENT AND PRINCIPAL RISKS continued
RISK 9
No movement
Description: A significant breach of health and safety legislation or accident resulting from negligence or management
oversight. The complexity of this risk increases as the Group expands both geographically and into new product groups.
ITS POTENTIAL IMPACT
Such a situation could lead to reputational damage and
regulatory penalties, including restrictions on operations,
fines or personal litigation claims, or worst case a fatality.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
Hilton Foods 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.
We are in the process of rolling out a health and safety auditing
platform to support the strengthening of our current health and
safety framework.
RISK 10
No movement
Description: Hilton Foods business and supply chain is affected by climate change risks comprising both physical and
transition risks. Physical risks include long-term rises in temperature and sea levels as well as changes to the frequency
and severity of extreme weather events. Transition risks include policy changes, reputational impacts, and shifts in market
preferences and technology.
ITS POTENTIAL IMPACT
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.
RISK MITIGATION MEASURES AND STRATEGIES ADOPTED
We continue to develop our approach to climate change risk
mitigation. We have submitted more ambitious Science-Based
Targets across Scope 1, 2 and 3 emissions aligned to the 1.5°C
pathway, 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 have targets in place to deliver net zero
emissions from our operations and supply chain 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.
Hilton Food Group PLC Annual Report and Financial Statements 2023
34
STAKEHOLDER ENGAGEMENT (SECTION 172)
Our People
Why we engage Our people are at the heart of our success and the delivery of our strategy. A business that is built
around people needs to help every colleague develop to the best of their potential.
Engagement activities
and outcomes
– Engagement: Our employees experience of work is important to us, so we use annual surveys and employee
representative groups such as “Your Voice Committees” to engage our colleagues in our business operations.
In 2023, 91% of our employees contributed to the annual survey. Our whistleblowing mechanism enables our
employees and others to raise concerns anonymously.
– Support and wellbeing: Employees took part in mental health and wellbeing awareness campaigns in 2023
and the majority of our sites have mental health first aiders. In 2023 we enhanced our family leave policy in
the UK, to include 18 weeks full pay for maternity leave, and three weeks full pay for paternity leave.
– Diversity and inclusion: We are committed to our diversity, equity and inclusion agenda. In 2023, 78% of our
employees agreed with the statement ‘I feel I can be myself at work’, a 4% increase since 2021.
– Health and safety: A safety first culture is at the core of our operations so we have programmes and
initiatives to ensure this is upheld at all times. As part of our Global Health and Safety framework we support
colleagues to undertake tasks in the safest manner, using technology to proactively identify risks and
prevent accidents. Through 2023 our Health and Safety team developed new KPIs to measure safety across
all our facilities and implemented training programmes to further enhance workplace safety.
– Training and development: Over the past two years we have invested in a range of new training
programmes, projects and management initiatives to support all our colleagues and are rolling out Learning
Management Systems across our operations to facilitate this. The “work conversations” initiative we launched
in 2022 continues to be impactful, providing everyone the chance to discuss 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 sits
alongside study assistance, a buddy programme for new joiners, English classes for those wishing to improve
their English literacy skills, and leadership skills training for team leaders. Our Manufacturing Excellence
Programme builds the skills needed to run large and complex manufacturing businesses and is helping
to improve employee engagement scores. We introduced the Emerging Leaders Programme to our UK
business in 2023, to support key talent in progressing to the next level and to become inclusive leaders.
Areas of focus for
our stakeholders
– Engagement – the opportunity to share ideas and opinions
– Recognition and reward
– Opportunity for skills and career development
– Wellbeing
– Health and safety
– Equity and respect
How the Board
has oversight
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 Group key personnel to ensure our employee
engagement practices are appropriately monitored. Angus reports back to the Board on his findings and
interactions. Angus attends key employee events during the year, including the Hilton Foods Management
conference. He also has regular meetings with our Chief People and Culture Officer and is engaged in the
development of the employee engagement survey.
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 our Hilton Foods Holland and Foppen sites in the Netherlands in 2023 where they had
the opportunity to meet with employees and see our operations first hand.
Townhall meetings and presentations were held at all Hilton Foods sites in 2023 and attended by members
of the Executive team to update colleagues on Group strategy and performance and provide engagement
opportunities through Q&A sessions.
Find out more
Further detail on how we engage with our people can be found on pages 52 to 59.
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.
Hilton Food Group PLC Annual Report and Financial Statements 2023
35
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Our Communities
Why we engage 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.
Engagement activities
and outcomes
– Responsible global citizens: We are full participants in the UN Global Compact, a global initiative that aligns
companies with universal principles on environment, society and governance.
– Protecting our planet: We are committed to tackling some of the biggest challenges facing our planet by
reducing emissions, enhancing animal welfare and progressing a Nature Positive agenda. We aim to be a net
zero business by 2050, and are implementing decarbonisation plans for our own operations and key supply
chains. 100% of the timber products, palm oil and directly purchased soy we buy are certified as deforestation
free and we are working to ensure our supply chain is free from deforestation.
– Responsible packaging: Hilton Foods has a commitment to responsibly package all of its products
which is whywehave a target to reduce the weight of plastic packaging whilst ensuring it is fully reusable,
recyclableor compostable. Our recently launched flow wrap packaging has saved 840 tonnes of plastic
inHolland and Sweden.
– Promoting human rights: We believe in our responsibility to protect the internationally recognised human
rights of workers throughput our value chain. As such, we 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. We run a supplier due diligence programme which assesses ethical performance at
a site level across our protein supply chains and where issues are detected we address these collaboratively with
our suppliers. In 2023 we collaborated with Slave-Free Alliance to raise awareness of human rights throughout
our value chain and to enhance protection of workers. We also supported the piloting of a ‘Gender Transformative
Tracker’ within our Vietnamese prawn supply chain with Oxfam, looking at how to promote women into relevant
leadership positions and undertook a project to raise awareness of core human rights for migrant fishers in the UK.
– Supporting our local communities: We are actively involved in all of our local communities. We recruit local
people and support local charities and community groups.
– Funding research and innovation: At Hilton Foods we believe in investing in the future and in projects to
promote sustainable communities. In 2023 we supported:
– A PhD at Heriot-Watt University to map the social responsibility tools available to the fishing industry and
improve its human rights performance.
– A DPhil with Oxford University looking at how livestock production emissions and sustainable land usage
should be measured.
– At University of Lincoln project to evaluate technologies to reduce emissions from cattle and sheep.
– Chirrup.AI, a small eco-start-up that is using AI to track birdsong to measure biodiversity, helping farmers
and communities to understand the health of their local ecosystems.
Areas of focus for
our stakeholders
– Sustainability
– Social value
– Opportunities and careers for local people
How the Board
has oversight
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 from local sites.
Find out more
More detail available in our Sustainability report on pages 41 to 109.
STAKEHOLDER ENGAGEMENT (SECTION 172) continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
36
Our Customers and Consumers
Why we engage Our customers and consumers expect us to deliver safe, high quality, competitively priced products.
We want to help consumers make ethical and sustainable choices for both their health and the health
of the planet.
Engagement activities
and outcomes
– Partnership: We create long-term partnerships with our retailers which enable us to deliver the highest level
of customer satisfaction through collaborative working. We communicate with our customers every day to
gain an in depth understanding of their, and their consumers’, needs and expectations, and the markets
within which they operate.
– Integrity: Hilton Foods is committed to workingin an ethical, open and honest manner to produce products
of the highest food safety and quality. This is underpinned by our Group Quality Policy. By maintaining a
high level of transparency through our supply chains we are able to inform our consumers about the origin,
production methods and human rights credentials of our products.
– Health and nutrition: Hilton Foods believes in helping our consumers to make healthy dietary choices. We
are using innovation to provide consumers with healthy food choices in line with dietary recommendations,
including the reformulation of products to reduce the total salt and fat in food, and increase fibre in line with
customer health targets. Ensuring we continue to provide access to high quality nutrition has become more
challenging in the last year due to global inflationary pressures and the cost of living crisis. We are working
to tackle this through continuously improving the efficiency of our facilities and through innovation and
product development activities.
– Sustainability: Our Sustainable Protein Plan underpins our strategy to become the first choice for
sustainable protein for our customers and consumers. The Plan has targets under our three pillars of People,
Plant and Product. Our Nature Positive Plan promotes biodiversity through setting stretching targets to
eliminate deforestation and protect water and soils across our value chain. This year, our Sustainability
and New Product Development teams developed a tool to estimate the carbon footprint of new products
enabling us to change product composition to help our customers and consumers to reduce their
carbon footprints.
– Product quality: Colleague training through our Manufacturing Excellence Programme has helped us to
boost key quality indicators, as recognised in the award we received for the best Quality Supplier from Tesco.
Areas of focus for
our stakeholders
– Product quality
– Product sustainability
– Social responsibility
– Healthy and balanced diets
How the Board
has oversight
The Board and senior management engage with our customers through an established total partnership
strategy todiscuss and reach agreements on product quality and payment terms, address concerns, identify
risks, suggest solutions and demonstrate best practice.
Understanding what is important to our customers and consumers is essential to our business strategy, so the
Board receives regular updates on market developments, trends and opportunities. These are reported to the
Board by the Executive Leadership Team through reports and presentations.
The Board also receives updates on Hilton Foods customer and consumer engagement on sustainability
issues via the Sustainability and Risk Committees.
Find out more
See pages 43 to 45 For more detail on our Sustainable Protein Plan.
STAKEHOLDER ENGAGEMENT (SECTION 172) continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
37
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
STAKEHOLDER ENGAGEMENT (SECTION 172) continued
Our Suppliers
Why we engage Our integrated food supply chain enables us to deliver consumer and customer expectations
supported by the supply of high quality, safe, sustainable and innovative raw materials.
Engagement activities
and outcomes
– Partnership: Our suppliers share our commitment to quality, food safety, animal welfare and sustainability
and we collaborate on governance and compliance matters including food safety standards, human rights
and modern slavery. This year we have partnered with the University of Stirling, CIEL and IDH to collect
primary data from our partner farms on direct methane emissions from pangasius farming.
– Transparency: We engage with our suppliers through the Foods Connected platform to track supply chain
compliance, internal quality procedures and manage the buying, planning and selling of our raw materials.
This forms part of our supplier approval process that gives us full transparency on the safety, quality, and
provenance of the raw materials we use against the Hilton Foods Supplier standards. We audit suppliers at
afrequency determined by risk assessment.
– Sustainability: We are working closely with our supply chains to deliver on the ambitious targets within
our 2025 Sustainable Protein Plan. To address the environmental footprint of our supply chains, we are
building decarbonisation and water stewardship plans with our key suppliers. As part of our commitment to
developing carbon negative animal feed for our global supply chain we are founding members of the UK Soy
Manifesto and the Soy Transparency Coalition and we are working as part of an industry collaborative project
to develop a new and potentially carbon negative form of animal feed derived from insects. In 2023, Hilton
Foods founded the Seafood Carbon Collaboration to bring together the major UK seafood processors with
government and academia to provide a unified approach to emissions measurement and decarbonisation
inthe seafood sector.
– Responsibility: We are in the process of rolling out increased ethical due diligence in the supply chain, with
the aim of auditing 100% of labour and service providers against our own Agency Labour Standard and
screening 100% of new primary suppliers using social criteria by 2025. Our Supplier Social Responsibility
Code of Conduct sets out the behaviours and standards we expect from our suppliers. We actively assess
human rights impacts in our supply chains, take appropriate action, monitor implementation and report
annually. This work is built on our Business Code of Conduct and associated Supplier Social Code of Conduct,
together with our worldwide system of audits, inspections, assurance schemes and appraisals. We are
collaborating with workers groups and the largest ship-visiting network in the world to provide fishing crew
with information on rights and how to raise grievances, and to provide employers with information on their
responsibilities to combat labour exploitation in the fishing sector.
– Stewardship: Our seafood sourcing standards are aligned to the Sustainable Seafood Coalition code and
BSI PAS 1550. We disclose all of the fisheries and fish farming areas that we buy from on the Ocean
Disclosure Project website.
– Animal welfare: We are consistently striving to adopt new innovations to improve the lives of animals and
further industry understanding. We are involved in a number of industry working groups to influence the
progression of animal welfare including the European Roundtable on Sustainable Beef, the Animal Welfare
Research Network and we hold the co-chair of the Global GAP Aquaculture Committee. We run dedicated
animal welfare audits for beef, pigs and lamb at abattoir level, and we have developed a beef and lamb
farming standard as an option for additional assurances to our customers. We work together with suppliers
to resolve any non-conformances and support them in continuous improvements.
Areas of focus for
our stakeholders
– Quality
– Continuous improvement
– Partnership
– Transparency and efficiency
How the Board
has oversight
The Board and senior management engage with our suppliers through our established total
partnership strategy.
We have regular dialogue with suppliers on product quality and payment terms.
The Board and senior management collaborate with suppliers to address any concerns, to identify supply
chain risks and work together to find solutions, mitigate risks and demonstrate best practice.
The Board is updated on supply chain risks, initiatives and opportunities through regional updates and
reports from the Risk Management and Sustainability Committees.
Find out more
Further details on how we engage with suppliers can be found in the Sustainability report
on pages 41 to 109.
Hilton Food Group PLC Annual Report and Financial Statements 2023
38
STAKEHOLDER ENGAGEMENT (SECTION 172) continued
Our Shareholders
Why we engage We focus on sharing factual, clear and balanced information with our shareholders, we want to
enable our shareholders to yield sustainable returns over the long-term and for them to make
informed decisions.
We seek to enable them to understand our business better through clear and balanced
communication about our purpose, performance, strategy and outlook.
Engagement activities
and outcomes
– Annual and Interim Reports and presentations: We deliver twice yearly investor presentations on our
annual and half year results which are webcast live and recordings and supporting slides are accessible via
our corporate website.
– Regular news and press releases: Other reports and trading updates, together with relevant articles in
the financial press, are reviewed by the Board and available to our shareholders. Regulatory news services
update our investors on business and financial performance andother matters such as new partnership
announcements and strategic updates.
– Visits and meetings: We arrange visits to our facilities for key shareholders and analysts. In November 2023
we hosted an Investor Day at our facility in Huntingdon UK, where investors attended dedicated sessions on
our strategic priorities, our Greenchain Solutions technology stack and our sustainability strategy as wells as
a product showcase and tour of our state of the art facilities. Throughout the day, shareholders and analysts
had the opportunity to meet with the Board and Executive Leadership Team.
– The Annual General Meeting: All shareholders have the opportunity to ask questions, which all Directors
and the Chair of every Board Committee usually attend.
– Interface and accessibility: We have a dedicated senior role focussed on investor relations and
communications. Our Committee Chairs are available to engage with major shareholders regarding their
areas of responsibility. The Remuneration Committee Chair meets with shareholders and analysts to answer
queries and discuss remuneration matters.
– Governance: The Company Secretary provides a key point of contact throughout the year for
communications on corporate governance matters and particularly around shareholder meetings.
– Website: Includes a comprehensive overview of the business and includes a dedicated investors and
sustainability section and can be found at www.hiltonfoods.com.
Areas of focus for
our stakeholders
– Business performance
– Forecast and outlook
– Strategy and strategic priorities
– Business model and value chain
– Areas of expertise and competitive advantage
– ESG
– Financial ambitions
– Capital allocation
– Remuneration
How the Board
has oversight
The Board promotes open communication with its shareholders
The CEO and CFO meet regularly and have dialogue with institutional shareholders both to discuss the
Group’s performance and prospects and to develop an understanding of their views which are relayed back
to the Board.
The Executive Directors are available to meet the Company’s major shareholders if required and, together with
the Chairman and Senior Independent Director, are available to listen to the views of shareholders, should they
have concerns which have not been previously resolved or which it was inappropriate to voice at prior meetings.
Find out more
The Board’s current assessment of the Group’s position and prospects are set out in the Strategic report
on pages 6 to 109.
Hilton Food Group PLC Annual Report and Financial Statements 2023
39
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
SUSTAINABILITY
REPORT
CEO introduction 41
Sustainability Committee Chair’s statement 42
Our 2025 Sustainable Protein Plan 43
Delivering net zero 46
Importance of partnerships 48
Materiality matrix 49
Governance 50
People 52
Planet 60
Product 68
TCFD report 76
Non-financial disclosures 90
Food safety and quality 97
Supply chain integrity and traceability 98
SASB report 99
GRI report 101
PILLARS FOR SUCCESS
Innovating through partnership to make
nutritious protein more sustainable.
PEOPLE
PLANET
PRODUCT
Hilton Food Group PLC Annual Report and Financial Statements 2023
40
CEO INTRODUCTION
This is my first year as Chief
Executive, but my connection
to Hilton Foods now dates
back almost thirty years. All
through that time, the purpose
and values of the company
have always stood out. Lots
of peopletalk about making
a difference, but this is a
businessthat delivers.
Nowhere is that clearer than in the
Sustainable Protein Plan. The environment
and the future of our planet are
commercial priorities for all our partners,
and questions about our role and our
sustainability strategy always come up in
any negotiation. Consumers around the
world now expect the products they buy to
be sourced responsibly and it’s our role to
help cement this responsibility across the
supply chain.
So we need to lean in and play our part –
and that’s where this Plan comes in.
As you can see from this report, the Plan
is working. We’ve achieved 42% reduction
in food waste, removed 1,971 tonnes
of plastic packaging and reduced our
emissions by 14%, all since 2020. We’ve
continued to uphold high standards for
our people, rolling out new guidelines to
protect human rights and upskilling our
colleagues too. Alongside this, we’ve made
sure we meet industry accreditations –
achieving an A- rating from the Carbon
Disclosure Project for climate change and
new Science-Based Targets to help limit
global warming to 1.5
º
C.
But the Plan isn’t working fast enough.
Every day, our teams run into setbacks and
new challenges. We are the first to say that
food supply chains are never perfect and
as we get bigger, we are ever more aware
of these issues. But what is important
about the team across Hilton Foods is that
we are serious about the way we track
and monitor these issues. Thanks to the
tools we have through Foods Connected
An Introduction from the CEO
and the delivery-focused culture of people
across our business, we are able to hold
our feet to the fire and make sure we are
really making progress across all parts of
the Sustainable Protein Plan.
Since I joined the business last year, I
have been incredibly impressed by the
expertise and dedication which has been
developed by Lorna Schneider and the
Sustainability team she has built. I can say
confidently this is the most impressive
and balanced Sustainability team I have
encountered during my career. But more
important than the team is the way we
are hardwiring sustainability across our
business. From the boardroom to our
buyers, from our Operations team through
to Risk and Audit, every corner of this
company now has sustainable policies
and processes built into the way we do
business. We remain committed to a
holistic understanding of sustainability,
covering environmental and social
performance with robust governance, as
demonstrated through our commitment
to the United Nations Global Compact
10 Principles.
Our goal now is to bring all that capability
to bear in accelerating our work and
developing a new set of stretching targets
as we look to 2030 and beyond. The case
studies shared in this report paint a
picture of the impact we are having.
We need to put our foot on the pedal
and do even more to help make protein
more sustainable as well as affordable for
consumers around the world.
42%
reduction in food waste
since2020
14%
reduction of our Scope 1, 2 and 3
emissions in the same period
As you can see from this report,
the plan is working… but we want
and need to go faster.”
Steve Murrells CBE
Group Chief Executive Officer
Hilton Food Group PLC Annual Report and Financial Statements 2023
41
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Delivering on our 2025
Sustainable Protein Plan
SUSTAINABILITY COMMITTEE CHAIR’S STATEMENT
The starting point for the Plan was
our point of difference as a company.
Hilton Foods operates in a privileged
position, serving customers across
over 20 markets and working in
partnership with experts and leaders
from across the food industry, from
farm to fork and beyond. This gives us
the opportunity to help drive targeted,
practical changes and help tackle
some of the biggest problems facing
the world.
I am particularly pleased that we not
only maintained an A- in climate change
disclosures from the Climate Disclosure
Project (CDP) this year, but we also
improved both our Soy and Timber
scores to B. I am proud to say that these
place us ahead of the industry average
for the food and drink sector.
But this is just the start. The past year has
been another 12 months of global strife
and instability. Across the world, many of
the biggest problems are deteriorating.
Two issues in particular have been front
of mind for the Sustainable Protein Plan.
First, the continuing strain of inflation.
Our goal as a business is to help
more people enjoy more sustainable,
affordable proteins – and rising global
prices are a major challenge for that
ambition. The second major concern
is climate change. The degradation of
our natural habitat is increasingly clear.
Climate change today is a direct threat to
the entire food system.
Against this backdrop, it is significant
that the team at Hilton Foods have
accelerated and expanded their
environmental strategy. A big part of this
has been submitting new targets
to the Science-Based Targets initiative
(SBTi) for validation. These recently
validated targets commit us to 1.5°C in line
with the Paris Agreement.
We have also continued to innovate and
find new ways of supporting customers
and communities. Our new flow wrap
mince packaging has been a big step
forward in reducing plastic packaging.
Additionally, with convenience being a
priority for many consumers, we created
our ready to cook lines, for products
that help boost both accessibility and
sustainability in households across
the globe.
At the same time, our partnership with
the Slave-Free Alliance demonstrates our
commitment to eradicating any form
of exploitation within our operations
– a commitment which is increasingly
important in the current climate of
international conflict.
But there is far more to do. Over the
next two years, we will develop the next
phase of our Plan, with new targets set
for 2030. Meanwhile we will continue to
share regular updates and engage with
experts and campaigners. My committee
colleagues and I are always grateful for
feedback and recommendations, and
we would encourage all our stakeholders
within and outside the business to get in
touch directly.
Three years into the 2025
Sustainable Protein Plan,
and the Sustainability
Committee are encouraged by
the progress being reported
right across Hilton Foods.
We always knew that the
business had the power to
make a significant difference
and this report gives a glimpse
of the impact we are starting
tosee.
My colleagues and I on the Sustainability
Committee take our role in scrutinising
the Sustainable Protein Plan very seriously.
When we developed the Plan in 2021, we
agreed a series of challenging targets,
many of them industry leading, such as
having 30% of women in leadership, our
Science-Based Targets and our target to
halve food waste by 2030. It is a reflection
of our culture and the commitment of
management, that so many of these
targets have already been met.
When we developed the Plan,
we agreed a series of challenging
targets, many of them industry
leading. It is a reflection of our
culture that so many have already
been met.”
Rebecca Shelley
Non-Executive Director and
Chair ofSustainability Committee
Hilton Food Group PLC Annual Report and Financial Statements 2023
42
In 2021, we set ambitious targets across the three core pillars of our 2025 Sustainable Protein Plan.
Anupdate towards our progress so far can be seen below:
PILLAR 2025 TARGETS STATUS PROGRESS
VALUING
PEOPLE
Being a fair, safe
andinclusive
employer byengaging
and empowering our
people and supporting
our localcommunities
– Reduce Lost Time Incidents (LTIs) by
10% (against 2020 baseline across
Hilton Foods)
Behind – 16% reduction against 5-year
median target, rebaselined
following business expansion for
further detail see page 96
– Establish Global Wellbeing Framework
tosupport employee wellbeing
Achieved – Successfully introduced
free sanitary products in all
female bathrooms
– 30% of all leadership roles filled
by women
Achieved – 36% of leadership roles
now held by women
– Employee consultative forums
or works councils at all Hilton
Foods sites
On track – Employee consultative forums or
works councils operational at
20 Hilton Sites
RESPECTING
HUMAN RIGHTS
Safeguarding
the welfare and
just treatment of
all workers and
communities engaged
with our business and
supply chains
– Functioning governance structure
in place
Achieved – Integration into key risk
processes is shown on page 50
– Train all Hilton Foods employees
onhuman rights
On track – Global induction video on key
rights at work to be delivered
in 2024
– Modern slavery awareness training
extended to all managerial colleagues
On track – Began our partnership with
Slave-Free Alliance to
accelerate our progress in
protecting human rights in
our supply chain
– 100% of labour and service providers
audited to Hilton Foods Agency
Labour Standard
On track – Annual audit schedule for all
labour providers now in place
– 100% of primary suppliers signed up
toHilton Foods Supplier Social Code
ofConduct
On track – Hilton Foods sites in process of
onboarding their suppliers
– 100% of new primary suppliers
screened using Hilton Foods
Social Criteria
On track – Fully integrated into new supplier
approval in 2024
– 100% of high risk primary
suppliers audited
On track – 100% of currently identified high
risk suppliers hold valid audit
DEVELOPING
POTENTIAL
Growing and
developing our people
to be the bestthey
can be, ensuring our
business is ready
forthe future
– All production colleagues offered the
opportunity to participate in ‘work
conversations’ with their manager to
discuss performance, development,
career aspirations, wellbeing, ideas
and feedback
On track – Framework developed and
training materials provided
to all sites
– Development opportunities for all
management talent identified as ready
for succession through annual review
of leadership capability and succession
On track – 36,829 hours of training
across the business
– 150 colleagues to go through
leadership development programmes
by 2025
On track – 149 employees have completed
leadership development
programmes since 2020
PEOPLE
At a glance
OUR 2025 SUSTAINABLE PROTEIN PLAN
Hilton Food Group PLC Annual Report and Financial Statements 2023
43
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
PLANET
PILLAR 2025 TARGETS STATUS PROGRESS
REDUCING
EMISSIONS
Going further than
addressing our
footprint by achieving
net negative emissions
across our sitesand
value chains
– 100% renewable electricity across all
own operations in Europe by end of
2025 and globally by 2027
On track – 76% renewable electricity
in Europe
– 64% renewable
electricity globally
– Achieve our Science-Based Targets
across Scope 1, 2 and 3 and publish
updated ambitions
On track – Validated updated SBTi targets in
line with 1.5°C
– Intensity reduction of 15% in emissions
of cattle in Europe by 2025 (aligned to
the ERBS Sustainability objectives)
On track – Completed projects with Lincoln
University on reducing emissions
from manure and digestion
ENHANCING
ANIMAL
WELLBEING
Driving standards
and innovation in the
care ofanimals that
enhances theirlives
and reduces
antibiotic use
– More than 90% of livestock from
farms in assurance schemes
On track – Actively working with farm
assurance schemes to
improve standards
– 100% humane slaughter of
animals across all our products
including aquaculture
On track – Increasing skill set across the
business, expanding our training
to our Commercial colleagues
– Responsible antibiotic use throughout
our supply chain
On track – Board members of the
Food Industry Initiative
on Antimicrobials
NATURE
POSITIVE
Collaborating
to improve our
stewardship of land
andsea, promoting
biodiversity,
addressing
deforestation and
protecting water
and soils
– Eliminate deforestation from the
conversion of natural forests to
agriculture or livestock production in
our supply chains
On track – 100% directly purchased palm oil
and soy is certified and working
towards meeting European
Deforestation Regulation
– Maintain 100% of paper and board
from certified sources
Achieved – Maintained 100% certification of
paper and board
– Planning and reporting tools
provided to all farmers to support
regenerative farming
On track – Developed tools to calculate
emissions in seafood with Seafish
– 100% of seafood responsibly sourced
to Hilton Foods standards (aligned to
the Sustainable Seafood Coalition code
and PAS 1550), and openly reporting
supply chains through Ocean
Disclosure Project
On track – 76% of seafood was sourced
to our Hilton Foods Seafood
Supplier Standard and openly
reporting through the Oceans
Disclosure Project
– Hilton Seafood UK directly sourced wild
caught seafood 100% certified to the
MSC standard or equivalent (by 2025)
On track – 98% of wild caught UK
seafood in Hilton Seafood UK
was either MSC certified or
in a comprehensive Fishery
Improvement Project
OUR 2025 SUSTAINABLE PROTEIN PLAN continued
At a glance
Hilton Food Group PLC Annual Report and Financial Statements 2023
44
PRODUCT
PILLAR 2025 TARGETS STATUS PROGRESS
BALANCED
HEALTHY DIETS
Efficient regenerative
foodsystems
producing more
accessible and
nutritious proteins
– Double sales of plant-based, vegetarian
and flexitarian products (compared to
a 2020 baseline)
Behind – Developed tools to assess
environmental and nutritional
impacts of ingredients
for insight during new
product development
– Assess health and sustainability
attributes of all Hilton Foods
proteins to provide consumers with
information on their role in healthy,
sustainable diets
On track – We have upskilled our colleagues
on the health and sustainability
of our products, to give them
the capability to include
health and sustainability in our
commercial strategy
CIRCULAR
PACKAGING
Developing a
circular economy
for packaging and
actively bringing
waste materials back
intouse across our
full value chain
– Reduce direct packaging waste by 30%
(compared to 2020 baseline)
On track – Building initiatives on waste
across the group regionally and
with individual sites
– Drive demand for circular tray-to-tray
recycling and actively prioritise the use
of circular material
On track – Tray-to-tray has been introduced
at all our sites, in the majority of
our European sites this includes
20% tray to tray content
– All Hilton Foods retail packaging fully
reusable, recyclable or compostable
Behind – We have been working hard to
ensure that all our packaging is
recycle ready but the meeting
of this target is dependent on
national infrastructure in each of
the countries we operate in
– Achieve minimum of 50%
average recycled content across
all plastic packaging
Achieved – Achieved 64% recycled content in
our plastic packaging
– Reduce the weight of plastic
packaging while ensuring it remains
fit for purpose
On track – 840 tonnes of plastic reduced
through our flow wrap
mince packaging at Hilton
Foods Holland and Hilton
Foods Sweden
RESOURCE
EFFICIENCY
Optimising food
waste and use of
packaging, energy
and water across
sites, supply chains
and inconsumers’
homes
– Improve energy efficiency in Hilton
Foods facilities by at least 10%
(compared to 2020 baseline)
On track – 10 sites certified with a ISO50001
standard, globally regarded
as best practice in energy
management, where we received
zero non-conformances
– Improve water efficiency in Hilton
Foods facilities by at least 10%
(compared to a 2020 baseline)
On track – At Hilton Foods Ireland we
halved our water consumption
compared to the 2020 baseline
and reduced water consumption
by 13% at Hilton Foods Holland in
the same period
– Halve Hilton Foods factory generated
food waste by 2030 compared to 2019
(in line with the Champions 12.3
commitment to deliver UN SDG 12.3)
On track – 42% reduction in food waste
since 2020
OUR 2025 SUSTAINABLE PROTEIN PLAN continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
45
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
DELIVERING NET ZERO
The following pages break down our roadmap to achieving net zero by 2048, looking at the
actions we’ve taken so far and our upcoming projects that ensure we meet this target.
SCOPE 1 AND 2
90%
80%
70%
60%
50%
40%
30%
20%
10%
Emission reduction
100% 2020 2023
0%
Installed EV
charging at the
majority of Hilton
Foods sites and
taken delivery
of first electric
delivery vans
Implementing
energy efficiency
programmes
across sites
Phasing out
CO
2
discharge
mince cooling
across sites
Implement site level
decarbonisation
roadmaps in line
with ISO50001
at all 24 sites
Deliver
fluorinated
gas phase
out programmes
across all sites
Solar generation
implemented
across our global
production sites
where appropriate
Solar generation
opportunity
evaluated at all
sites and solar
arrays installed
in Portugal
and Australia
Partnering
with Schneider
Electric to roll out
renewable energy
contracts at more
than half our
production sites
Proportion of
renewable energy
generated has
increased in every
country we operate
since 2020
Implementing
renewable energy
purchasing across
all European sites
by 2025 and
globally by 2027
Convert fleet to
zero carbon
alternatives
Implement heat
pumps for water
heating and lower
carbon cooking
processes on site
Partnered with
Future By insects
to develop carbon
negative feed
100% of our paper
and board is from
certified sources
Researching the
best way to
consider land
and short lived
greenhouse gases
in decision
making with
University of
Oxford
Implementing
climate-related
clauses and
reporting
requirements
with suppliers
100% of directly
purchased soy
and palm oil from
deforestation
free systems
Partnered with
IDH to improve
measurement
of and reduce
emissions in our
tropical aquaculture
supply chain
Partnered with
University of
Lincoln to research
methods to
reduce emissions
from digestion
and manure
Improving
packaging to
reduce food waste
in customer homes,
ensuring more
product reaches
its desired use
Continuous
improvement
projects to reduce
the amount of
virgin material
used in
packaging
We are committed
to phasing out
deforestation in
our supply chain
by the end
of 2025
Installed EV
charging at the
majority of Hilton
sites to make it
easier for colleagues
to make lower
carbon choices
Partnership
between Hilton
Food Solutions and
Hilton Seafood UK
has reduced food
waste by over 50%
SCOPE 3
Hilton Food Group PLC Annual Report and Financial Statements 2023
46
SCOPE 1 AND 2 SCOPE 3
DELIVERING NET ZERO
PREVIOUS TARGETS NEAR-TERM TARGETS LONG-TERM TARGETS
2030 2048
Partnering
with retailers
and suppliers
to implement
renewable energy
in their farms
and factories
Support farmers
to implement best
practice
genetics and
animal health in
line with our
species level
decarbonisation
roadmaps
Partnering with
hauliers, retailers
and government to
transition vehicle
powertrains and
continue installing
charging in
delivery bays
Work with suppliers
to commercialise
enteric emissions
inhibitors and
implement in our
supply chain
Development of
tools, changes to
formulation and
implementation of
new technologies
to deliver lower
carbon products
Partnering with
supply chain
and providing
clear guidance to
transition to net
zero machinery
Support supply
chain to shift to low
carbon fertiliser
production in
feed production
Industrial
decarbonisation
in material
production sectors
Implement
livestock farming
practices which
actively enhance
carbon
sequestration
Reduce absolute
Scope 1 and 2 emissions
25%
by 2030
from a 2020 base year
Reduce absolute
Scope 3 emissions
12.3%
by 2030
from a 2020 base year
Net zero before
2050
Reduce absolute
Scope 1 and 2 emissions
95%
by 2030
from a 2020 base year
Reduce absolute
Scope 3 emissions
45%
by 2030
from a 2020 base year
Reduce absolute
Scope 3 emissions from
forestry, land and agriculture
45%
by 2030
from a 2020 base year
Reduce absolute
Scope 1 and 2 emissions
98%
by 2048
from a 2020 base year
Reduce absolute
Scope 3 emissions
90%
by 2048
from a 2020 base year
Reduce absolute
Scope 3 emissions from forestry,
land and agriculture
100%
by 2048
from a 2020 base year
Hilton Food Group PLC Annual Report and Financial Statements 2023
47
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
IMPORTANCE OF PARTNERSHIPS
At Hilton Foods, our
partnerships hold the key to
our impact. We have a crucial
position at the centre of the
food value chain with the
freedom to influence and
innovate across each stage
ofthe supply chain.
Our partnerships hold the key to our impact
How we work through the value chain
Base traceability
The movement and transformation of a product across different parties in the supply chain
Value added traceability
Additional information that can be captured at different stages in the base traceability process
pesticide
usage
animal
welfare
human
rights
antibiotic
usage
carbon
emissions
packaging
recyclability
food safety
andquality
sustainable
sourcing
Audit
Guide
Influence Influence
Guide
Control
1
Raw
materials
Raw
materials
Raw
materials
Finished
goods
Finished
goods
ConsumerRetail customerHilton FoodsAbattoirFarm/VesselFeed
2 3 4 5 6
HILTON FOODS AND FOODS CONNECTED – SUPPLY CHAIN TRANSPARENCY
It is the depth of our commercial
partnerships that help to maximise
our impact.
We partner with Foods Connected, a
supply chain software company, in which
we hold a significant investment, to share
our commitments with our suppliers on
quality, safety, animal welfare, human
rights and sustainability. This helps
manage our suppliers’ performance
to ensure we deliver our own and
customers’ priorities, using technology
to inform consumers.
Hilton Food Group PLC Annual Report and Financial Statements 2023
48
MATERIALITY MATRIX
The materiality matrix maps
the most crucial aspects of
sustainability by pinpointing
what really matters to our
business and the world
around us. These issues
are not just checkboxes;
they guide our strategic
decisions, demonstrating our
commitment to sustainable
growth and responsible
business practices.
The matrix undergoes an annual
review, allowing for adaptations to
emerging challenges and evolving
priorities. Every three years, an in depth
reassessment is carried out, supported by
engagement from our key stakeholders.
This collaborative approach ensures a
holistic and nuanced understanding
of the issues that matter most to our
stakeholders, spanning from within
our organisational framework to the
communities and environment we
engage with. The materiality matrix will
undergo an in depth review in 2024 and
will be adjusted to implement a double
materiality scope.
As part of the changing global
landscape and to ensure alignment to
upcoming legislation and emerging
challenges, we have made the decision
to split ‘sustainability and biodiversity of
agriculture, fisheries and aquaculture’
into three components: ‘deforestation’,
‘biodiversity’ and ‘sustainable
management of fisheries, aquaculture
and agriculture’. Additionally, based on
feedback from the Executive Leadership
Team, we have added a risk highlighting
the importance of our sites as a
responsible neighbour.
Our five most material issues are:
Product safety, quality and integrity
The safety of our products is our first
priority and everyone’s responsibility at
Hilton Foods. We ensure our factories
adhere to rigorous quality standards and
we are ever-vigilant to ensure we maintain
these standards. As we continue to expand
into new markets and grow our customer
base, this remains a growing risk for us.
Deforestation
Although 100% of timber products, palm
oil and directly purchased soy we buy are
certified as deforestation free, we are still
working to ensure our entire supply chain
is deforestation free. We are engaging
with emerging legislation in the EU
and have updated ambitions to align
our Science-Based Targets to 1.5°C to
contribute to eliminating deforestation
from our supply chain.
Climate change
It is increasingly clear that the global food
system contributes to climate change,
so we have further increased our internal
focus on tackling climate change and
mitigating its effects. Whilst we are
continuing to improve measurement
of our impact both in our operations
and throughout the value chain, we
are now very much into the delivery of
those targets with significant progress
being made.
Human rights
Ensuring communities and workers across
our value chain receive fair treatment and
are safeguarded is a moral, regulatory and
strategic imperative.
Around the world, governments are
introducing additional legislation to
protect these rights; complying with
and where possible, exceeding these
legal requirements, is a core part of the
Sustainable Protein Plan.
Health and safety
A safety-first culture is at the heart of our
operations and we recognise that there are
risks for our colleagues who work across
the sites. We have programmes at all site
locations to ensure a safe environment
is maintained at all times and through
our audit programme, we are working to
mitigate any risks that occur and reduce
accident incidents in our supply chain.
Areas of biggest impacts and risks
Impact on our business
Importance to external stakeholders
Product safety,
quality and integrity
Deforestation
Accessible, healthy and nutritious food
Transparent supply chains
Ethical business
Human rights
Biodiversity
Sustainable management
of Fisheries, Aquaculture
and Agriculture
Animal health and welfare
Health and safety
Energy and water
efficiency in factories
Packaging circularity
and plastic reduction
Talent development
and availability
Emergence of more sustainable products
Wellbeing, diversity and inclusion
Responsible neighbour
Contamination and bioaccumulation in
the food system
Responsible recruitment
Antimicrobial resistance
Supporting our communities
Food waste across value chain
Effluent and general waste management
Climate change
Hilton Food Group PLC Annual Report and Financial Statements 2023
49
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
The performance conditions covering the three financial years 2022-2024 are as follows:
Metric Weighting Threshold 10% vesting Maximum 100% vesting
EPS 60% 5% growth per annum 12% growth per annum
Relative TSR compared with the constituents of the
FTSE 250 (excluding investment trusts)
25% Median Upper quartile
Sustainability
i. Scope 1 and 2 energy efficiency
5% 35% reduction over 3 years 52% reduction over 3 years
ii. Scope 3 5% 21% reduction over 3 years 33% reduction over 3 years
iii. Women in leadership roles 1.5% 0% increase over 3 years 5% increase over 3 years
iv. Employees who ‘feel included’ 1.5% 2% increase over 3 years 5% increase over 3 years
v. 100% of high risk suppliers
with SMETA audit
2%
80% of higher risk suppliers
with valid SMETA audit
100% of higher risk suppliers
with valid SMETA audit
Metric Weighting Threshold 10% vesting Maximum 100% vesting
EPS 60% 5% growth per annum 12% growth per annum
Relative TSR compared with the constituents of the
FTSE 250 (excluding investment trusts)
25% Median Upper quartile
Sustainability
i. Scope 1 and 2 energy efficiency
5% 6.5% reduction over 3 years 43.9% reduction over 3 years
ii. Packaging recycled content 5% 11.7% increase over 3 years 28.3% increase over 3 years
iii. Food waste 5% 15.0% reduction over 3 years 30.0% reduction over 3 years
The performance conditions covering the three financial years 2023-2025 are as follows:
GOVERNANCE
How is sustainability embedded
in our business?
At Hilton Foods, we have
embedded sustainability
throughout our governance
structure so that we can
deliver a lasting positive
impact. Our governance
structure serves as a robust
framework, driving the
achievement of goals and
targets within our Sustainable
Protein Plan while ensuring
accountability and oversight
atall levels of the business.
MAIN BOARD OVERSIGHT
The Main Board is updated on the
progress of the 2025 Sustainable Protein
Plan every three months. In collaboration
with the Sustainability Committee, it
oversees the implementation of Hilton
Foods’ sustainability strategy throughout
the organisation.
SUSTAINABILITY COMMITTEE
Chaired by Non-Executive Director,
Rebecca Shelley, the Sustainability
Committee assumes a pivotal role in
overseeing the delivery of our long-
term social and environmental strategy.
Steve Murrells, our CEO is a permanent
member of the Sustainability Committee
and has management responsibility
for climate change and environmental
issues. Steve has extensive sustainability
experience having been responsible for
sustainability strategy in his previous roles
as the CEO of Co-op Group and Co-op
Retail. The committee actively supports
the business in the implementation of our
Sustainable Protein Plan, in addition to
approving formal corporate sustainability
reporting. Meeting quarterly, the
committee undertakes the responsibility
of assessing climate-related risks
alongside the Audit and Risk Committee,
ensuring the ongoing resilience of Hilton
Foods against climate-related risks.
The Committee Chair updates the Board
on climate change strategy and progress
against the Sustainable Protein Plan every
three months.
EXECUTIVE LEADERSHIP TEAM
The Executive Leadership Team, alongside
the CEO, receives monthly updates on
the progress of our 2025 Sustainable
Protein Plan. These sessions delve into
relevant collaborative projects and
customer requirements, underscoring the
commitment to keeping sustainability at
the forefront of strategic decision-making.
SENIOR MANAGEMENT TEAM
Under the stewardship of the Chief
Quality and Sustainability Officer, the
senior management team receives
monthly updates. The Sustainability team,
under this leadership, actively supports
site level senior management teams in
achieving targets, fostering supply chain
engagement and advancing global
reporting. Progress against sustainability
targets is shared across diverse functional
areas, ranging from People and Culture
to Quality, Operations and Procurement.
The Sustainability team plays a pivotal
role in leading the implementation of our
sustainability strategy, working closely
with site Sustainability leads.
LEADERSHIP TARGETS
AND LTIPS
The Sustainable Protein Plan is an essential
part of our plan to create sustainable value
for all our stakeholders.
In 2022, we announced specific EPS and
sustainability targets in the Hilton Foods
Long-Term Incentive Plan (LTIP) as part
of our ambition to embed sustainability
within our business strategy. This was the
first time the LTIP contained a significant
sustainability element.
We have further developed the LTIPs
to have an increased weighting around
our People pillar. People metrics are a
challenge to measure as they are not easily
quantifiable. Despite this challenge, we
want to demonstrate the importance of
our people within the Sustainable Protein
Plan and to the wider business, ensuring
they are held central to our values so
that leadership are held accountable
for progress across all three pillars of
our strategy.
Hilton Food Group PLC Annual Report and Financial Statements 2023
50
GOVERNANCE
Who is responsible for the Sustainable
Protein Plan at Hilton Foods?
Direct responsibility for sustainability, including climate
Shared responsibility
Main Board
Set the ambition for long-term sustainability programme, embedding this in the business culture
Chairman CEO
Chief Financial Officer Non-Executive Directors
Sustainability Committee Audit and Risk Management Committees
Non-Executive Director Non-Executive Directors
Key international leaders
across the business
Representatives from
Executive Leadership Team
Group Head of Sustainability
andHuman Rights
Group Internal
Audit and RiskDirector
Executive Leadership Team
Agree and oversee delivery of targets
Find out more about the Executive Team:
www.hiltonfoods.com/who-we-are/executive-leadership-team
Senior Management Team
Set global strategy and oversee Group and local implementation plans
Managing Directors Head of Departments
Group Head of Sustainability
and Human Rights
Commercial functions
Responsible for sustainability projects and reporting
Group Sustainability Team
Site Sustainability Leads
Integrate sustainability strategy into their areas of responsibility
People and Culture Procurement
Quality Operations
Hilton Food Group PLC Annual Report and Financial Statements 2023
51
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
PEOPLE
At Hilton Foods, we employ over
7,000 people and our people are
at the heart of our success. Their
health, safety and wellbeing are
our first priority.
We are an inclusive organisation, built on equity
and respect, ensuring opportunities for skills and
career development are open to all. It is essential
that every person across our business and supply
chain is treated fairly and rewarded appropriately.
This chapter highlights our progress on key people
projects this year.
VALUING
OUR PEOPLE
Being a fair, safe and inclusive
employerby engaging and
empoweringour people and
supportingour local communities
2025 Targets
Reduce Lost Time Incidents (LTIs) by 10%
(against2020 baseline across Hilton Foods)
Establish Global Wellbeing Framework tosupport
employee wellbeing
30% of all leadership roles filled by women
Employee consultative forums or works councils
atall Hilton Foods sites
Read more about how we are
enhancing our family leave policy
page 55.
ALIGNMENT WITH THE UN SDGs
5.5 Ensure women’s full and effective
participation and equal opportunities
for leadership at all levels of decision-
making in political, economic and
public life
8.8 Protect labour rights and
promote safe and secure working
environments for allworkers,
including migrant workers, in
particular women migrants, and
those in precarious employment
To prevent exploitation amid
the global challenges we face,
it’s pertinent that we empower
the voices of employees and
workers within the value
chain. Grievance mechanisms
provide a crucial channel for
transparency, fairness, remedy,
and accountability. Slave-Free
Alliance is proud to be partnering
with Hilton Foods and focusing
on the development of effective
escalation pathways in the
organisation, to amplify the
voicesofworkers and ensure
access to remedy.”
Rachel Hartley
Consultancy Director,
Slave-Free Alliance
Hilton Food Group PLC Annual Report and Financial Statements 2023
52
RESPECTING
HUMAN RIGHTS
Safeguarding the welfare and
justtreatment of all workers
andcommunities engaged with
ourbusiness and supply chains
DEVELOPING
POTENTIAL
Growing and developing our
people tobe thebest they can
be, ensuring our business is
ready forthe future
2025 Targets
Functioning governance structure in place
Train all Hilton Foods employees on human rights
Modern slavery awareness training extended
toallmanagerial colleagues
100% of labour and service providers audited
toHilton Foods Agency Labour Standard
100% of primary suppliers signed up toHilton
Foods Supplier Social Code ofConduct
100% of new primary suppliers screened using
Hilton Foods social criteria
100% of high risk primary suppliers audited
Read more about how we are promoting
gender equality in Hilton Foods
shrimp value chain page 56.
2025 Targets
All production colleagues offered the opportunity
to participate in ‘work conversations’ with their
manager to discuss performance, development
career aspirations, wellbeing, ideas and feedback
Development opportunities for all management
talent identified as ready for succession
through annual review ofleadership capability
and succession
150 colleagues to go through leadership
development programmes by 2025
Read more about how we are helping
our people to develop their skills
page 58.
Hilton Food Group PLC Annual Report and Financial Statements 2023
53
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
VALUING
OUR PEOPLE
We believe the work we do
as a business is crucial for
society and brings value to
all our stakeholders –
from consumers through
to farmers and producers.
But none of this value would
be possible without the people
who run, manage and drive
Hilton Foods forward each
and every day. That is why the
value we create as a business
depends on our 7,000 and
more employees, across all 10
countries where we operate.
There are so many different forms this
value can take. We know from connecting
with our employees, whether individually
through our engagement survey or within
our vibrant employee forums, that our
colleagues value their wellbeing and want
to be given opportunities to progress
and develop. They want to feel valued at
work and that they are working as part of
inclusive teams and communities. As an
inclusive organisation, it is our priority
to support employees with their mental
health as well as physical health challenges
and it goes without saying that they want
to be protected at work and operate in
safety-conscious environments.
The following case studies show some of
the work we are doing to help show this
support and value for our people.
OUR CORE BEHAVIOURS
We’re open and honest
– We share knowledge
and information
– We are clear on expectations
– We value honesty
We value each other
– We recognise efforts of others
andsay thank you
– We listen to and value the voices
andideas of others
– We value others for who they are
We’re respectful
– We never discriminate
against others
– We treat others how we wish
tobe treated
– We respect others’ time,
workloadand commitments
We’re friendly
and inclusive
– We are welcoming and patient
– We celebrate and embrace
our differences
– We say ‘hello’ and know the
valueofa smile
We’re understanding
and supportive
– We care and support the
wellbeing of others
– We support training and career
development
– We listen and give supportive
feedback
We’re responsible
– We proactively ask for and
givehelp to others
– We take personal responsibility
forour actions
– We trust, support and hold
eachother to account
PEOPLE continued
Board
Male 57%
Female 43%
Senior Management
Male 64%
Female 36%
Employees
Male 58%
Female 42%
Hilton Food Group PLC Annual Report and Financial Statements 2023
54
FAMILY LEAVE ENHANCEMENTS
AT HILTON FOODS UK
In October 2023, we enhanced our family
leave policy at our largest UK site, offering
the same benefits to all colleagues –
regardless of whether they work on site
orin our offices.
This includes 18 weeks full pay for maternity
leave and three weeks full pay for paternity
leave. In total, over 1,000 colleagues can
benefit from the new policies.
These changes have been well received by
colleagues and we will continue to look at
how we support our team members live life
well at Hilton Foods, particularly alongside
family and caring responsibilities.
USING TECHNOLOGY TO REDUCE
ACCIDENTS IN THE UK
This year, we introduced two new tools which
use innovative technology to help us identify
areas of concern and proactively inform us
of the most pressing risks that may lead to
accidents on sites.
Using Protex AI and Back-Track systems, colleagues
now have added support in understanding how to
undertake tasks in the safest manner. These new
tools allow us to improve safety decisions using
data to identify the risks before they lead to
accidents. We now have access to live data
showing the safety behaviours at our sites, from
use of spaces within the workplace to individual
analysis of workers manual handling. Using this
data, our Health and Safety team has also been
able to develop new KPIs to determine how safe
the work environment is and implement training
programmes to contribute to and maintain a
safer workplace.
Starting a family is an exciting
time and as a business it is
important we find ways to
support our colleagues and
their wellbeing at this time.”
Hilton Foods UK and Hilton Foods Ireland
Managing Director
I have saved hours since using
Protex AI thanks to the automatic
functionality. It allows me to
communicate more effectively
andmore quickly with colleagues,
and helps ensure our sites
are as safe as they can be.”
Safety and Wellbeing Coordinator
Hilton Foods UK
Hilton Food Group PLC Annual Report and Financial Statements 2023
55
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
SÓC TRĂNG
PEOPLE continued
RESPECTING
HUMAN RIGHTS
Building strong ethical standards
to embed respect for human
rights across our value chain is
essential for building a fairer food
system. Ourapproach is informed
by Principle 15 of the UN Guiding
Principles on Business and Human
Rights, which says companies must
“know and show” that they respect
human rights.
At Hilton Foods, we do this by protecting the
human rights of workers within our business
and our global supply chain networks, including
establishing fair remuneration, respect for the right
to freedom of association and collective bargaining,
high health and safety standards, discrimination-
free workplaces and access to effective grievance
procedures and remedy.
We have continued to integrate our Human Rights
Policy into our core business functions, through
the implementation of our global Supplier Social
Responsibility Code of Conduct and accompanying
Compliance Requirements. We are delivering a
globally agreed appraisal of human rights and
labour risk, linking this to our supplier approval
process. We use the internationally recognised
supply chain transparency platform, Sedex, to
monitor labour standards and gain in depth
insightinto working conditions in supplier sites.
We always seek to work collaboratively with
our suppliers, providing resources, training and
developing shared workstreams to align with
the supply chain, through our Food Network for
Ethical Trade and Seafood Ethics Action Alliance
memberships. Where suppliers are found to be
highrisk, they are required to provide additional
due diligence, up to and including an independent
ethical audit. Our preferred methodology for
ethical audits is the Sedex Members Ethical Trade
Audit (SMETA). If a supplier is unwilling to engage
on corrective actions or provide remediation
to workers, Hilton Foods will re-audit, re-train
and, if we have to, end the contract in question.
GENDER EQUALITY IN HILTON
SEAFOOD’S SHRIMP VALUE CHAIN
Women across South East Asia form a large part
of the workforce within the seafood industry.
For both historic and structural reasons, women
can be underrepresented in management
positions. To help address this, the Oxfam
Business Advisory Service has developed a
diagnostic tool for stakeholders in the shrimp
value chain to promote gender equality.
We worked with one of our Vietnamese shrimp
suppliers, alongside specialist support from the
Gender, Family and Community Development, a
Vietnamese NGO working to achieve gender equity
for women across the region. Our supplier had
already completed significant work to progress
gender equity on site, with nursing rooms, family
allowances and a family centred culture. However,
we wanted to see what opportunities there were for
innovation using the Oxfam diagnostic tool.
As a result of the project and use of the tool,
the supplier identified the need for training on
the meaning of gender equity across all levels
of the business. They have created a Women’s
Committee, a supportive network for women
in supervisory roles, now offering mentoring
and training opportunities for women across
the business.
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56
SUPPORTING MIGRANT FISHERS
ON THEIR UK WORKING RIGHTS
Fishers can be vulnerable to labour exploitation
due to the ‘at sea’ nature of their work, in
particular migrant workers, who may not be
fully aware of their rights within their country of
work. In 2023, Hilton Foods undertook a project
to promote awareness of core human rights for
migrant fishers in the UK, as well has how to
raise grievances at sea.
In collaboration with the Transport Workers
Federation, a democratic, affiliate-led federation
recognised as the world’s leading transport
authority, and Stella Maris, the largest ship-
visiting network in the world, resources were
developed, translated and disseminated to fishers
across the UK. These resources provided crew
with information on their rights and how to raise
grievances, together with employers’ information
on their responsibilities. In the medium-term, this
work forms the basis for developing networks
between migrant groups who can educate each
other. In the long-term, these materials could be
developed for other situations internationally.
This was funded through the Seafood Ethics
Action Alliance (SEAA) Change on the Water Fund,
with contributions from Hilton Seafood UK, Tesco
and Morrisons.
A FOCUS ON PREVENTING
MODERN SLAVERY
At Hilton Foods, we work to empower our
people, ensuring their working environment is
safe and they have meaningful opportunities
to engage with us. However, we believe we also
have a role to play in protecting all workers from
third party exploitation and modern slavery.
In 2023, Hilton Foods formed a strategic
partnership with Slave-Free Alliance to further hone
and focus our efforts to disrupt modern slavery.
Slave-Free Alliance, a social enterprise wholly
owned by global anti-slavery charity Hope for
Justice, acts as a critical friend to us as a business.
This year we worked together to address gaps
identified collaboratively. They provided an external
review of our newly launched Agency Labour
Standard and audit framework. The recruitment
of workers can be an area of increased risks, as the
recruitment journey can be fraught with different
agents and potential fees. Our new Standard will
allow us to have a consistent approach to the
competency and resilience of our labour providers,
to ensure that all workers on our sites are able to
freely enjoy their work.
In 2024, Slave-Free Alliance will be supporting us
to review our operational controls at a site level and
to develop robust escalation plans across the UK
and Ireland.
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
DEVELOPING
POTENTIAL
A business built around people must
ensure every colleague is able to
develop to their full potential. It is
vital that we do everything we can to
help each person within our business
to build their skills and careers. Our
teams across the world look to us to
ensure they are supported in their
training and career trajectories.
Over the past two years we have invested in a
range of new training programmes, projects and
management initiatives to help all our colleagues
have more opportunities to get on and get ahead.
The “work conversations” initiative we launched in
2022 continues to be impactful, with the number
of colleagues saying they have had opportunities
to discuss their individual performance up by 6%
compared to 2021.
This year we have introduced a number of new
training modules to help back our manufacturing
talent, with clear and obvious improvements on
different measures of employee performance and
engagement, as well as positive changes to key
quality indicators and efficiency measures within
the business.
MANUFACTURING EXCELLENCE
PROGRAMME – UK, ROI, SOHI,
SERVICES, SEAFOOD
Over the past two years, we have introduced
a new training module in partnership with
a leadership and change consultancy,
Project7, designed to create a new group of
manufacturing leaders, with skills across every
aspect of what it takes to run large and complex
manufacturing businesses.
97 colleagues have taken part, representing our
Hilton Foods UK, Hilton Seafoods, Hilton Foods
Ireland, SoHi and Hilton Services teams. The course
has provided these colleagues with immersive
training experiences, teaching them how to
improve every aspect of our business performance.
The result has been a clear and measurable return
on investment, for the individuals involved, for our
customers and for Hilton Foods.
For the individuals, the course has helped drive
wider engagement score improvements within
Hilton Foods this year (with our overall UK
engagement scores up 12% compared to 2022).
For our customers, the training has helped us to
boost key quality indicators, as recognised in the
award we received for the best Quality Supplier
from Tesco. We will now expand this Programme
across Europe and APAC.
12%
increased overall UK engagement
compared to 2022
We’re seeing the impact
in people themselves and
in the roles they’re doing.”
Commercial Financial Controller
Hilton Foods UK
80%
of employees said they are part of a team
thatworkswell together
PEOPLE continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
58
It was a great learning experience!
The individual coaching, the
learning modules and the project
on diversity and inclusion that we
worked on together were very
challenging and of great added
value for me personally.”
Senior HR Advisor
Hilton Foods Holland
It’s been fantastic to have
had the opportunity to take part
in such a valuable development
experience. Huge thank you to all
involved. I’m particularly grateful
for the support that allowed me
to complete the programme
whilst on maternity leave and
still participate in the
final presentations.”
Organisational Development Manager
Hilton Foods UK
EMERGING LEADERS PROGRAMME
IN THE UK AND EUROPE
One of the targets within the Sustainable
Protein Plan is to make sure 150 colleagues
have been through dedicated leadership
development programmes by 2025. This year,
we ran our Emerging Leaders Programme –
designed to support key talent in progressing to
the next level, with a focus on helping leaders to
retain talent within the business and how to be
inclusive leaders.
This year 14 people completed the course, of whom
four have already been promoted, while three of
the participants were given the opportunity to
complete the course through a combination of
video calls and virtual sessions to support their
development within the context of their own
maternity and paternity leave. The feedback
from the courses has been excellent and overall
149 colleagues have now completed leadership
development programmes since 2020.
99%
achieved towards our leadership
development target
Hilton Food Group PLC Annual Report and Financial Statements 2023
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
PLANET
REDUCING
EMISSIONS
Going further than addressing
our footprint by achieving net
negative emissions across
our sites and value chains
2025 Targets
100% renewable electricity across all our own
operations in Europe by end of 2025 and globally
by 2027
Achieve our Science-Based Targets across Scope 1,
2 and 3 and publish updated ambitions
Intensity reduction of 15% in emissions of
cattle in Europe by 2025 (aligned to the ERBS
Sustainability objectives)
Read more about how we have introduced
a new product development tool in UK and
Denmark in our Sustainability report.
ALIGNMENT WITH THE UN SDGs
2.4 By 2030, ensure sustainable food
production systems and implement
resilient agricultural practices that
increase productivity and production,
that help maintain ecosystems
14.4 By 2020, effectively regulate
harvesting and end overfishing,
illegal, unreported and unregulated
fishing and destructive fishing
practices and implement science-
based management plans
15.2 By 2020, promote the
implementation of sustainable
management of all types offorests,
haltdeforestation, restore
degraded forests and substantially
increase afforestation and
reforestation globally
Our Sustainable Protein Plan sets out
our ambition to contribute positively
to our planet by managing and
reducing our emissions, enhancing
animal welfare and progressing a
Nature Positive agenda.
The production of protein, in particular cattle
farming, remains one of the biggest contributors to
global emissions and we have a duty to transition
to a food system which actively enhances nature.
We are committed to being a net zero business
by 2048 and are implementing Decarbonisation
Plans in our manufacturing sites and in partnership
with our key supply chains. We are working hard
to provide active, responsible stewardship of our
natural environment across land and sea.
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ENHANCING
ANIMAL WELLBEING
Driving standards and
innovation in the care ofanimals
thatenhances their lives and
reducesantibiotic use
2025 Targets
More than 90% of livestock from farms in
assurance schemes
100% humane slaughter of animals across all
ourproducts, including aquaculture
Responsible antibiotic use throughout our
supply chain
Read more about how we are improving animal
welfare page 64.
NATURE
POSITIVE
Collaborating to improve our
stewardship of land and sea,promoting
biodiversity, addressing deforestation
andprotecting water and soils
2025 Targets
Eliminate deforestation from the conversion
of natural forests to agriculture or livestock
production in our supply chains
Maintain 100% paper and board from
certified sources
Planning and reporting tools provided to all
farmers to support regenerative farming
100% of seafood responsibly sourced to Hilton
Foods standards (aligned to the Sustainable
Seafood Coalition code and PAS 1550), and
openly reporting supply chains through Ocean
Disclosure Project
Hilton Seafood UK directly sourced wild caught
seafood 100% certified to the MSC standard
or equivalent
Read more about how we are using
birdsongand AI to measure biodiversity
onUKfarms page 66.
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
61
Hilton Food Group PLC Annual Report and Financial Statements 2023
REDUCING EMISSIONS
Reducing emissions while creating
aprofitable and growing business
is achallenge for every company in
everysector. For the food industry,
and even more so for businesses that
produce proteins, this challenge is
particularly pronounced.
At Hilton Foods, we are focusing on three areas
where we can drive lasting change, our own
business processes, sector wide collaboration,
and data and metrics. We have innovated across
all areas during 2023, through implementing
new tools into our manufacturing processes,
spearheading research with other industry experts
and investing in new technology that improves
energy efficiency.
Our work this year has meant we have made a 14%
reduction in our Scope 3 emissions and achieved a
CDP rating A- for climate change. However, we have
not stopped there. In September, we submitted
new targets to the Science-Based Targets initiative
(SBTi) for validation to ensure we are continuing to
raise the bar. These targets would bring us in line
with the goal of limiting global warming to 1.5°C.
DRIVING GROUNDBREAKING RESEARCH
INTO CATTLE EMISSIONS AT THE
UNIVERSITIES OF OXFORD AND LINCOLN
Solving the puzzle of how to feed the world effectively,
while also reducing greenhouse gas emissions, requires
a strong foundation of research and academic analysis.
Some of the research we are involved in at these
universities is at the forefront of thinking in the land-
sector and emissions space, and we are proud to play
our part.
At the University of Lincoln, we supported a project to
evaluate technologies to reduce emissions, particularly
methane in livestock farming. Cattle and sheep release
larger quantities of methane through digestion and
in their manure. The students explored interventions
available and the dependencies between them.
There is a lack of research in this area and so we felt it
was important to support the funding of this project.
The results will not just help the industry, but it will help
us advance our Scope 3 Transition Plan.
At the University of Oxford, we are funding a DPhil
project looking at how livestock production emissions
and sustainable land usage should be measured.
The researcher leading the project, Jess Zionts, is
assessing existing metrics and analysing how we
integrate these to ensure governments and corporates
look at efficiency of land use as well as the reduction of
emissions. This will help companies make more impactful
decisions and help us develop our Transition Plan to
achieve our Scope 3 targets.
With the research on cattle digestion, manure
management and on measuring land use and livestock
emissions, we have made a clear commitment to ensure
the findings are open sourced and any intellectual
property which emerges from the work will be shared
with the entire industry.
14%
reduction in our Scope 3
emissions and achieved a CDP
rating A- for climate change
PLANET continued
Scope 1 & 2 (market based)
UK 10%
EU 37%
New Zealand 3%
Australia 50%
Other 0%
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62
FOUNDING THE UK SEAFOOD
CARBON COLLABORATION
Last year, Hilton Foods founded the Seafood
Carbon Collaboration with Seafood Grimsby
Humber Alliance (SGHA). This brings together
the major UK seafood processors with
government and academia to provide the
industry with a unified direction on emissions
measurement and decarbonisation.
Core to this work is the development of a unified
carbon measurement tool, led by Seafish, to
ensure there is consistency across the UK seafood
industry that was finalised this year. This is a unique
collaboration of processors to provide direction
to the sector. The work is still underway, but as a
next step Seafish will be launching the tool across
both wild capture and aquaculture in 2024 and
we are looking into projects to explore additional
measurement systems and coordinated research
into how we can decarbonise the sector.
My research looks at what
measurement techniques
could incentivise progress
in feeding the world, given
finite land resources and
ambitious warming targets.
This is important, broadly
because we won’t change
what we don’t count and the
livestock sector’s significant
land footprint and methane
emissions means it faces
major challenges in getting
to net zero. My research helps
Hilton Foods refine their
decarbonisation strategy
to target interventions
in the most effective
geographic context and
theright timescale.”
Jess Zionts
DPhil student at University of Oxford
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63
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
ENHANCING
ANIMAL WELFARE
Animal welfare is a central part
of our sustainability strategy and
we are consistently striving to
adopt new innovations to improve
the lives of animals and further
industry understanding. Our work
has focused on improving welfare
in our supply chain, contributing to
industry working groups and driving
innovation in animal care.
To achieve our ambitions, we work in partnership
with industry and expert bodies. Last year we
joined the Stakeholder Advisory Board for the
Animal Welfare Research Network to identify and
prioritise new research areas. Additionally, we
hold the Vice-Chair of the European Roundtable
for Sustainable Beef and are founding members
of the Food Industry Initiative on Antimicrobials.
Meanwhile one of our Sustainability team is co-
chair of Seafood & Added Value Europe is Co-Chair
of Global GAP Aquaculture Committee.
PLANET continued
STUNNING IN WILD
CAPTURE VESSELS
Within the seafood industry, in recent years
there have been a number of scientific reports
on the most humane and effective methods of
capture and slaughter of wild caught seafood.
These reports have been species and gear
specific, with equipment requiring considerable
investment and space on vessels, which has
resulted in a poor uptake of welfare measures
inwild capture.
Furthermore, there is a lack of national and
international regulation on animal welfare in wild
capture fisheries.
To bridge this gap, Hilton Seafoods undertook
a viability project on the use of stunning in
wild capture vessels, identifying those in the
supply chain that had already taken action, the
technologies currently available. This was used to
identify future opportunities for collaboration to
ensure we strive for best practice in wild capture
welfare. It is hoped that this can eventually lead to
a breakthrough in animal welfare for wild capture
seafood, which has been overlooked due to a lack
ofresearch in this area.
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64
ANIMAL WELFARE TRAINING AT OUR
CENTRAL EUROPE SITES
In Hilton Foods Central Europe, we extended our
animal welfare training to colleagues in different
departments. This training enables our colleagues
to better understand our supply chain and the
requirements, ensuring animal welfare best practices
are followed throughout the business. Our shared
understanding of the standards helps us work with
suppliers to meet and maintain the best practice
approach to animal welfare.
ANIMAL WELFARE AUDITING –
EUROPE
Alongside our partner Albert Heijn, we set up
a dedicated farm assurance scheme in Europe
to give us enhanced visibility of the welfare
standards across our European supply chain.
While in the UK, schemes such as Red Tractor
provide assurance around animal welfare
standards on farms and in abattoirs across
the country, in Europe there is no equivalent
assurance system. In collaboration we ran an
audit programme that created a benchmark of
our supply chain ensuring our animal welfare
standards are implemented and upheld.
We are now in year two of running these dedicated
animal welfare audits for beef, pigs and lamb at
abattoir level and we have developed a beef and
lamb farming standard as an option for additional
assurances to our customers. We work together
with suppliers to resolve any non-conformances
and support them in continuous improvements.
Having worked in animal
production for my whole career,
Iwanted to continue to expand
my understanding of animal
welfare. Working at Hilton Foods
gave me the opportunity to
receive training, both in farm
and abattoir settings, giving me
the confidence to call out any
non-conformance and support
suppliers to develop their own
improvement plans.”
Group Audit Senior Manager
Hilton Foods
24/38
24 of a total of 38 audits
achieved a green rating
Hilton Food Group PLC Annual Report and Financial Statements 2023
65
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
NATURE POSITIVE
When we first developed the
Sustainable Protein Plan, we were
clear that we did not simply want
to protect our natural environment
– wewanted to enhance it and be
Nature Positive as a business.
With so much of our natural environment under
pressure as a result of climate change and other
challenges, we want to do whatever we can
to regenerate our natural habitats, while also
continuing to deliver against Hilton Foods’ ambition
of helping more people have access to affordable,
sustainable proteins.
Achieving these goals remains a major challenge.
Throughout 2023, we saw further threats to
nature and growing pressures on biodiversity.
Through thework we are doing to address
deforestation, protect water and soils and
strategically enhance biodiversity at every stage of
the food chain, we are doing everything can to help
reverse the trend and revitalise our planet.
The following case studies give a glimpse of how
weare doing this.
DEVELOPING CARBON NEGATIVE
ANIMAL FEED FOR OUR GLOBAL
SUPPLY CHAIN
A damaging factor behind rising emissions
remains widespread deforestation and demand
for soy is one of the biggest reasons why so
much land is deforested.
It is for this reason that we are founding members
of the UK Soy Manifesto and the Soy Transparency
Coalition. However, these partnerships only go
some way in addressing the problem. To reduce
emissions, we need to reduce demand for soy and
that is where our focus on animal feed comes in.
Currently, around three quarters of all soy is used
for animal feed, so finding a more sustainable,
protein rich source for animal feed can unlock
hugebenefits in the fight against climate change.
For two years, Hilton Foods has been working
in apartnership with FERA, the UK’s leading
science research organisation, as well as Greencore
and Future By Insects as part of an innovation
programme backed by Tesco and the WWF to
develop a new and potentially carbon-negative
form of animal feed derived from insects.
Whilst Future By Insects have led the development
of the process, the partnership is a genuine
collaboration, with each organisation providing to
its strengths. Greencore provided food waste and
Future By Insects the algae to sustain the insects;
the insects were reared in FERA’s cutting edge
facility; and Hilton Foods carried out the lifecycle
assessment for the project.
Our lifecycle assessment found that, because
the insect larvae are fed algae, this process could
produce carbon negative animal feed under the
right conditions, however a significant amount of
development is required to deliver this.
Appropriately deployed, this technology could be a
gamechanger in the fight against climate change and
help accelerate our efforts to reduce Scope 3 emissions.
The next step for Future By Insects is to take this
intellectual property to the market and find a long-
term partner to develop it at scale.
PLANET continued
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USING BIRDSONG AND AI TO MEASURE
BIODIVERSITY ON UK FARMS
Over the last two years we have been partnering
with Chirrup.ai to develop their pioneering
technology, using artificial intelligence to track
birdsong as a method of monitoring biodiversity.
This project has also been part of the Tesco-
WWF Innovation Accelerator, and we believe it
offers a scalable, science-based benchmark for
measuring biodiversity.
On the face of it, the technology appears very simple,
a small yellow box is positioned in a tree or a post
in a field. Inside the box, a microphone is activated
whenever a bird sings nearby, recording the birdsong.
Chirrup’s AI algorithm then identifies which species
of bird are present, where they fit in the ecosystem
and thereby builds a picture of the health of the
entire ecosystem.
Last year, Chirrup boxes were deployed across 30 sites
covering dairy, beef and sheep farm systems in Devon,
the Midlands and County Down.
In 2023, the boxes were certified by RSPB and
continue to support farmers to measure biodiversity
with over 25% of the farms hosting over eight
protected species. Importantly, feedback from farmers
is extremely positive, the boxes have empowered
farmers on something they knew was a challenge,
but where the existing solutions were expensive and
labour intensive. It has allowed them to address key
requirements, including Red Tractor, for measuring
biodiversity and promote regenerative farming.
In 2024, Hilton Foods will work with Chirrup to
validate the accuracy of their algorithm and
develop the advice to farmers based on the Chirrup
platform’s results.
ADVOCATING A DEFORESTATION-
FREE SUPPLY CHAIN
In our collective journey toward advocating
for deforestation free supply chains, we
have achieved significant milestones.
Originating fromour UK Soy statement, our
commitment has expanded to encompass
a broader European deforestation pledge.
As steering group members of the UK Soy
Manifesto Governance Board and founders of
TheSoy Transparency Coalition, we have been
atthe forefront of collaborative initiatives.
With over four years of collaboration with South
American strategic suppliers through our work
with the UK Roundtable on Sustainable Soy,
we are determined that all soy, in both our
products and in feed, does not contribute to
deforestation. Our dedication extends to aligning
with the 2025 European Deforestation regulation,
working with suppliers to ensure accurate due
diligence statements.
So far, we have achieved 100% certified soy protein
in salmon feed as well as 100% certified palm
oil, complying with our stringent deforestation
commitment. Collaborative efforts with soy
protein concentrate traders resulted in a collective
commitment to source only deforestation free
and conversion-free soy, bolstered by robust third
party verification.
Engagement extends to key retail partners such as
Woolworths, Tesco, Waitrose, Ahold Delhaize and
Sonae as we unite forces to address deforestation
witha singular, impactful ask. Together, we are
activelyshaping a sustainable and responsible
future for our supply chains.
Deforestation is a significant
contributor to climate change.
Hilton Foods was a founding
member of the UK Soy Manifesto,
for which we are secretariat, and
together we have been working
to tackle deforestation and soy
sustainability challenges since
2018 via the UK Roundtable on
Sustainable Soy. Our aim is to
develop practical solutions to
thechallenge of deforestation
and conversion-free soy.”
Jonathan Gorman
Efeca
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
67
PRODUCT
BALANCED
HEALTHY DIETS
Efficient regenerative food systems
producing more accessible and
nutritious proteins
2025 Targets
Doubling in sales of plant-based, vegetarian
andflexitarian (vegetables added to products
that were previously 100% meat orfish) products
compared toa2020 baseline
Assess health and sustainability attributes ofallof
our proteins to provide consumers with thefacts
on their role in a diet that ishealthy forus and
the planet
Read more about how we have
launched new products that provide
convenience for customers
page 70.
ALIGNMENT WITH THE UN SDGs
7.2 By 2030, increase substantially
the share ofrenewable energy in
theglobal energy mix
12.3 By 2030, halve per capita global food
waste at the retail and consumer
levels and reduce food losses along
production and supply chains,
including post-harvest losses
12.5 By 2030, substantially reduce waste
generation through prevention,
reduction, recycling and reuse
For over 30 years, Hilton Foods has
produced affordable, high quality
protein products. While we started
out as meat producers, over time
we have diversified into different
proteins and expanded into new
categories. In 2023, our products
reached 160 million consumers
across more than 20 markets as
we sought new ways of offering
a range of healthier and more
sustainable proteins.
We have worked to limit our environmental
impact through measures such as reducing the
amount of packaging used, increasing the amount
of recyclable material, implementing efficiency
programmes to minimise food waste, reduce
energy and water consumption, as well as sharing
best practice. At the same time, we are stepping
up our focus on reformulating our products
and looking at what more we can do to support
healthier diets.
The big challenge for the future is to bring
these two objectives together and help more
people enjoy healthier diets, which are also more
sustainable. We are making progress, but there is
more work to do.
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68
CIRCULAR
PACKAGING
Developing a circular economy
forpackaging andactively
bringingwaste materials back
intouse across our full value chain
2025 Targets
Reduce direct packaging waste by30% compared
to a 2020 baseline
Drive demand for circular tray-to-tray
recycling and actively prioritise the use
ofcircular material
All our retail packaging will be fully reusable,
recyclable or compostable
Achieve a minimum of 50% average recycled
content across allplastic packaging
Reduce the weight of our plastic packaging while
ensuring itremains fit for purpose
Read more about how we are reducing our
plastic packaging and improving recyclability
page 72.
RESOURCE
EFFICIENCY
Optimising food waste and
useofpackaging, energy and
wateracross sites, supply chains,
andinconsumers’ homes
2025 Targets
Improve energy efficiency in our facilities byatleast
10% compared toa 2020 baseline
Improve water efficiency in our facilities byatleast
10% compared toa 2020 baseline
Halve our factory generated foodwaste by
2030compared to2019 in line with the Champions
12.3 commitment todeliver UNSDG12.3
Read more about how we are
installing solar across our sites
page 74.
Hilton Food Group PLC Annual Report and Financial Statements 2023
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
BALANCED
HEALTHY DIETS
How to maintain a balanced
healthy diet continues to be at the
forefront of public consciousness.
As people’s lives get busier and more
demanding, finding ways to maintain
a balanced healthy diet becomes
more challenging.
In the past year there have been particular
trends front of mind for us; increasing desire for
convenience, continued consumer demand for
increased protein in their diets and consumers
seeking flavour adventure in their mid-week meals.
As a result of these trends we have created a ‘ready
to cook’ range with products such as ‘Beef Donburi
Stir Fry’ and ‘Salmon with Soft Cheese, Nduja, Red
Pepper and Tomato Stuffing with a Spicy Bean
Sauce’. Providing convenience to consumers whilst
not sacrificing health or cost is at the forefront of
our product development decisions.
PROVIDING A WIDER RANGE OF
HEALTHY PROTEINS
Ready meals are not considered to be the most
healthy, however we know consumers are looking
for products that are quick but still healthy.
We collaborated with our retail partners to
introducea range of products aimed at increasing
vegetable intake and access to products rich in
vitalnutrients like Omega-3 to help deciding
ondinner just that little bit easier.
With Tesco Central Europe we worked to develop
arange of products that incorporate vegetables
and legumes to help consumers increase vegetable
intake without sacrificing flavour. This includes
products such as Tesco’s Beef Burger with Beetroot
and pumpkin. Similarly, with Sonae we collaborated
to create beef burgers with 25% vegetables.
Furthermore, we wanted to expand our fish range
to offer a diverse selection for consumers, with
Asda we launched Basa Fillets with Gochujang
Butter, promotingOmega-3 consumption.
We remain committed to expanding our range of
healthier products and fostering collaborations
with retail partners to make nutritious eating more
accessible and convenient for consumers.
PRODUCT continued
INGREDIENTS FOR SUCCESS
INSIGHTS
INNOVATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
70
INTRODUCING OUR READY TO COOK
RANGE IN THE UK
In response to the growing demand for
convenient, nutritious and affordable meal
options, we collaborated with Tesco to
introduce the ‘ready to cook’ product lines.
This range not only caters to the need for quick
and easy meals but also addresses the rising
concerns of energy consumption in households
during the cost of living crisis.
The product range provides a convenient solution
for consumers, bridging the gap between
scratch cooking and prepared meals. The range
boasts a variety of options, including ‘Tandoori
Style Butter Chicken’, ‘Beef Donburi Stir Fry’
and ‘Pulled Pork Bao Buns’. Each item is crafted
based on comprehensive research conducted
by our Insights team, utilising market research
and consumer surveys to ensure alignment with
customer preferences.
We look forward to working
together with Hilton Foods to
support them in their journey
to both upskill their teams
and build expertise around
climate and healthy sustainable
diets, enabling consumers to
choose products that are better
for themselves and for the
planet. Working together with
industry to produce accessible
and nutritious protein that
comes from regenerative food
systems for their retail and food
service customers.”
Kate Cawley
Future Food Movement
Hilton Food Group PLC Annual Report and Financial Statements 2023
71
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
CIRCULAR PACKAGING
Our approach to circular packaging
is one that balances reducing
the amount of material without
compromising on safety or quality.
Packaging is essential to reduce food waste, so our
goal is not to remove packaging entirely, but rather
to look at how we can reduce, reuse or recycle all
our packaging materials.
We do this by implementing circular principles
across our value chain so we can assess how we
can use packaging materials in the most efficient
way. That is, we are focused on the reduction and
extended use of virgin materials to more sustainably
package Hilton Foods products. A lot of this work is
conducted in collaboration with our customers, as
we know just how important this area of work is for
their own sustainability targets, too.
We have continued to make progress across all our
markets this year. Our plastic packaging contains
over 64% recycled content. In 2023, we reduced
our plastic use by 604 tonnes through innovative
solutions like removing soaker pads in trays and our
flow wrap mince packaging.
FLOW WRAP MINCE IN EUROPE,
UK AND IRELAND
Working with Albert Heijn, we have developed
a flow wrap packaging alternative that is fully
kerbside recyclable, without compromising
thequality of the product.
Switching from a modified atmosphere packaged
(MAP) tray to flow wrap, allowed us to use an average
of 70% less packaging by weight across the range.
This solution has the added benefit of a reduced pack
size which allows us to fit more product into shipping
crates and retailers to fit more packs on the shelf.
Not only is this a unique product in the market due
to the texture of the mince when cooked, but the
flow wrap packing is also fully recyclable. In addition,
product information can be printed straight onto the
pack, so there are no mixed materials for recycling
and no label, therefore reducing products from three
pieces of packaging per item to one.
Following a successful launch with Albert Heijn in
Holland in 2021 and with ICA in Sweden in 2023, we
trialled the packaging in UK and Ireland in partnership
with Tesco, with the aim of reducing our plastic
packaging volume by 650 tonnes a year across the
range. Looking ahead, we are continually working to
improve the flow wrap and optimising the weight of it.
PRODUCT continued
604 tonnes
reduced in 2023
64%
recycled content in our plastic packaging
INGREDIENTS FOR SUCCESS
PARTNERSHIP
RESPONSIBILITY
A cleverly designed tray with cells that
lock away the moisture produced by
meat in its life cycle without affecting
the quality or shelf life allowing for the
removal of unrecyclable soaker pads.
Hilton Food Group PLC Annual Report and Financial Statements 2023
72
REDUCING PACKAGING ACROSS
ASIA PACIFIC
At Hilton Foods Asia Pacific, in partnership
with Woolworths, we challenged ourselves
to find ways to reduce materials in every part
of the packaging that we use for products.
Most products consist of an outer layer, inner
layer, and a film for freshness. We addressed all
parts this year.
We are proud to have achieved several significant
milestones, in compliance with the Sustainable
Packaging Guidelines administered by APCO.
All soaker pads were removed from thermoform
products, removing over 320,000 non-recyclable
soaker pads from landfill. Additionally, we targeted
the reduction of plastic in our films, focusing on
our MAP lid, sealed fresh and thermoform films,
decreasing the amount of plastic processed by 175
tonnes per year.
We have now set ourselves an additional target of
reducing plastic by a further 1,302 tonnes in 2024 in
our Asia Pacific business. We will also be trialling a
chemical process to turn packaging plastics back
into essential oils to produce new plastics, thereby
creating a fully circular approach.
BRISBANE
BUNBURY
MELBOURNE
NEW ZEALAND
ASSESSING OUR ENVIRONMENTAL
IMPACT OF PACKAGING
We developed a tool that allows our Packaging
team to estimate the environmental impact of
products during new product development,
including food waste impacts. It’s a simple
software tool where the team can input product
data to calculate the carbon footprint of the
product, broken down by product element and
supply chain stage.
The tool allows the team to understand the impact
of each product element and production process,
helping us ensure we use the right material in the
right place to minimise food waste, whilst ensuring
safety and quality is unaffected. It also helps address
our circularity targets, making recycled content and
recyclability easy to calculate.
As a food business, packaging is a small part of our
carbon footprint in isolation but has such a big part
to play in reducing food waste and the emissions
associated with producing that food waste. This tool
provides a simple method to allow us to develop
packaging with this in mind, ensuring we balance
our packaging targets with our wider product and
business ambitions.
AUDITING OUR PACKAGING
SUPPLY CHAIN
In light of impending European legislation on
packaging and heightened consumer concerns
about greenwashing, we prioritise transparency
in environmental claims. We’ve initiated
independent audits through reputable bodies like
RecyClass. Currently, we’ve successfully audited
our supply chain for our plastic tray and mince
flow wrap suppliers.
These audits not only validate the accuracy of our
claims but also contribute to verifying recycling
streams in the UK and Europe. By undergoing
rigorous scrutiny, we demonstrate our commitment
to authenticity and sustainability, ensuring
consumers can confidently trust the environmental
claims stated on our packaging. We are expanding
this verification process across our supply chain
to ensure we continue our dedication to being a
transparent business.
Hilton Food Group PLC Annual Report and Financial Statements 2023
73
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
RESOURCE EFFICIENCY
Any food business that wants to
succeed internationally has to
have a laser-like focus on waste
and productivity. We have to keep
innovating and be smart about
the resources we have to provide
qualitynutritious protein at an
accessible price.
That is why resource efficiency is a core focus at
Hilton Foods, as well as part of our Sustainable
Protein Plan. Our team of engineers have helped
to develop sites that are at the cutting edge of
resource efficiency, with almost all running yields
above 95%. We draw on their expertise, as well as
the commitment of all Hilton Foods colleagues, in
helping to tackle wider environmental challenges
around water security, energy security and
food waste.
We are making major progress. A big part of
that has been rolling out energy efficiency
programmes which are aligned to ISO50001:2018 –
an energy standard which helps businesses deliver
improvements in line with the UN Sustainable
Development Goals. We have also continued to
transfer more of our sites to renewable energy,
making significant investments in solar energy
in particular, including a new 1.76MW array at our
Melbourne site. Our investment in solar means
50% of our production sites use 100% renewable
electricity. Meanwhile we have expanded the work
we do to reduce food waste and water scarcity,
as a member of the Champions 12.3 coalition
committed to halving food waste by 2030.
MAKING OUR SITES ACROSS THE
GLOBE MORE SUSTAINABLE
We are constantly looking at ways to improve
the efficiency of our sites to ensure they are as
sustainable as possible and in turn reduce our
impact on the planet. We have made a number
ofchanges this year to contribute to this.
We continued to install solar panels across our site
network to generate clean electricity. Focusing on
the sites with the greatest generating capacity, this
year in Australia we installed a 1.76MW solar array
at our Melbourne site. This now means we have
solar generation at five of our sites, with plans in
place to install them across many of our remaining
production sites. Our ambition is to have 100%
renewable electricity in our European sites by 2025
and globally by 2027.
We have also rolled out energy efficiency
programmes aligned to the ISO50001:2018
standardacross our business. 2023 marks the
firstyear of our multisite certification and we
nowhave 10 sites (nine entities) certified, with
zeronon-conformances.
In practical terms, this means our teams on each
site use the same measurement and control
platform with standardised dashboards tracking
our consumption live. This allows them to target
reduction projects where they will have the
greatest impact and identify problems more
rapidly. Having this across sites allows us to share
knowledge and rapidly implement new innovations
across the world.
So far, our new energy management system has
led to a 6% reduction in energy consumption
compared to a 2020 baseline. We want to continue
our ambition and certify all our production sites
with ISO50001:2018 by end of 2025.
4,410MWh
of electricity generated on site in 2023
6.1MWp
of solar generation capacity
installed across our sites
PRODUCT continued
Food waste (tonnes)
2021 2023
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Biofuels
Anaerobic digestion
Composting
Incineration
Landfill
Other
Hilton Food Group PLC Annual Report and Financial Statements 2023
74
Schneider Electric’s team
was pleased to offer support
to Hilton Foods, with
procurement and carbon
emissions reporting; enabling
greater resource efficiency.
Through the use of various
EcoStruxure Resource
Advisor modules, including
Dashboards and Reporting,
Procurement Management,
Utility Data Management,
and the Emissions Module,
we were able to help
simplify reporting, and
help the team achieve
sustainability objectives.”
Jessica Kipper
Senior Director for Software Management
atSchneider Electric
USING COOLER WATER TO HELP
CLEAN OUR SITES
Nothing matters more than safety and hygiene
in our food manufacturing facilities. One of the
key processes therefore is the wash-down, which
ensures that all areas of food production are
kept to the highest standards of cleanliness and
food safety.
Historically, the wash-down has been an energy-
intense process, heavily reliant on water heating
by natural gas. However, we saw an opportunity to
be smarter in the way we use hot water, in order to
help reduce our Scope 1 and 2 emissions.
We brought together our Engineering, Hygiene
and Quality teams, as well as our chemical
suppliers to look at how we could make the wash-
down process more energy efficient. Following a
successful trial in Ireland, we are now moving from
an end-to-end washing process with temperatures
between 60
°
C - 70
°
C, to a hybrid process where we
only use extremely hot water for the first phase of
the washing and after that we switch to ambient
water temperature.
This change allows us to reduce natural gas, site
heating and the steam generated during the wash-
down process, without in any way compromising
our stringent health and hygiene standards.
We managed to lower our gas consumption during
the washing process by up to 70%.
As far as we can tell, we are the first major food
producer to pioneer a new hybrid approach to
wash-down processes. We are in the process
of implementing the project across all sites
that currently use hot water for the whole
washing process.
Hilton Food Group PLC Annual Report and Financial Statements 2023
75
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
TCFD REPORT
INTRODUCTION
Hilton Foods recognises that
climate change presents both
opportunities and challenges
to our business and our
sector, and is committed to
identifying, assessing, and
responding effectively to
these. Accordingly, during
the year, the Group has made
further progress on developing
its net zero plan.
We have substantially increased our
ambition for net zero with new Science-
Based Targets for Scope 1, 2 and 3
emissions. These significantly enhance
our planned near-term emissions
reductions, apply to a broader coverage
of our emissions than our previous targets
and include Science-Based Targets
set according to the Forest, Land and
Agriculture (FLAG) Guidance. Our new
targets have been filed and validated
by the Science-Based Targets initiative
(SBTi). To support our targets, we have
developed detailed site specific plans to
reduce our Scope 1 and 2 emissions, and
have also developed a detailed Scope 3
Transition Plan, a summary of which is
outlined below.
In line with the requirement for mandatory
climate-related disclosures arising from the
Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations
2022, as well as FCA Listing Rule 9.8.6R(8),
Recommendation Recommended disclosures Reference CA 414CB
Governance
Disclose the organisation’s
governancearoundclimate-related
risksandopportunities.
a) Describe the Board’s oversight of climate-related risks
and opportunities Page 77 (a)
b) Describe management’s role in assessing and managing
climate-related risks and opportunities Page 77 (a)
Strategy
Disclose the actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses, strategy,
andfinancial planning where such
informationis material.
a) Describe the climate-related risks and opportunities the
organisation has identified over the short, medium, and
long-term Page 80 (d)
b) Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy,
and financial planning Page 81 (e)
c) Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario Page 79 (f)
Risk Management
Disclose how the organisation
identifies, assesses, and manages
climate-related risks.
a) Describe the organisation’s processes for identifying and
assessing climate-related risks Page 79 (b)
b) Describe the organisation’s processes for managing
climate-related risks Page 87 (b)
c) Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management Page 78 (c)
Metrics and Targets
Disclose the metrics and targets used
to assess and manage relevant climate-
related risks and opportunities where
suchinformation is material.
a) Disclose the metrics used by the organisation to assess
climate- related risks and opportunities in line with its
strategy and risk management process Page 89 (h)
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks Page 90 (h)
c) Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets Page 89 (g)
we have provided information to
stakeholders on the potential climate-
related risks and opportunities for our
global food and services businesses and
value chains, and our relevant governance
structures related to our net zero ambition,
in turn helping them to make informed
decisions. We set out below our climate-
related financial disclosures consistent
with all of the TCFD recommendations and
recommended disclosures as detailed in
‘Recommendations of the Task Force on
Climate-related Financial Disclosures’, 2017,
including the appropriate annexes and
supporting guidance, which were used to
inform our disclosure about transitioning
to a low carbon economy (our Transition
Plan). Detail on the 11 recommended
disclosures can be found on the following
pages, in addition to detail of where
climate-related disclosures outlined in
Section 414CB of the Companies Act 2006
are located:
Making progress on developing
our net zero plan
Hilton Food Group PLC Annual Report and Financial Statements 2023
76
TCFD REPORT
GOVERNANCE
Our climate change governance
structure is outlined on page 51.
The Board’s oversight of climate-
related risks and opportunities
The Board, led by our Chair, Robert
Watson, is responsible for the long-term
success of the group and has ultimate
responsibility for climate-related risks
and opportunities. The Board meets not
less than eight times a year and provides
rigorous challenge to management
on progress against goals and targets.
This year, the Board approved our updated
Science-Based Targets and climate-related
strategy. Our climate KPIs, goals and
objectives as detailed below form part of
the Board agenda when appropriate.
The Board also ensures the Group
maintains an effective risk management
and internal control system, including over
climate-related risks and opportunities.
The Board, via the Audit Committee has
an ongoing review process for principal
risks, including climate change (see page
78). This is supported by an in depth
annual assessment.
The Board delegates certain sustainability
matters to principal committees: the
Sustainability Committee has oversight
of climate-related strategy, and the Audit
Committee supports the Board in relation
to climate-related risks. Individual board
members have experience relevant to
climate risk management, including
financial, supply chain, sustainability, and
general governance roles across a range of
industry sectors including global retailers
and their suppliers (see Board of Directors
biographies on page 112). In addition, the
Board received training on the Group’s
climate challenge, key and upcoming
legislation, regulatory trends and how we
are responding as a business.
Sustainability Committee
From a strategic perspective, climate-
related issues are discussed within the
Sustainability Committee, which is chaired
by Non-Executive Director, Rebecca
Shelley who has substantial sustainability
experience to inform Board discussions.
Rebecca led Tesco’s Sustainability strategy
and delivery programme internationally for
four years and established sustainability
programmes for financial services
companies including Prudential.
The Committee meets at least three times
per year and monitors the progress and
performance of the Group’s sustainability
strategy and key initiatives for reducing
Hilton’s climate footprint and that of our
supply chains as outlined in our Transition
Plan. The Committee also reviews our
reported KPIs as outlined in Metrics and
Targets below, through our KPI monitoring
system, which tracks Group-level metrics,
such as emissions, energy, and water
use. The Committee Chair informs the
Board of our strategy and progress every
three months.
Management’s role in assessing
and managing climate-related
risks and opportunities
Our Chief Executive, Steve Murrells, is a
permanent member of the Sustainability
Committee and has management
responsibility for climate change and
environmental issues. Steve has extensive
sustainability experience having been
responsible for sustainability strategy in
his previous roles as CEO of Co-op Group
and Co-op Retail. At the Co-op Group, he
campaigned on climate change issues
including serving as a panel member at
COP26 and as Chair of the BRC’s Climate
Action Roadmap steering group.
As part of our commitment to
sustainability, he leads our positive
response to addressing climate risk and
opportunities. Day-to-day governance of
climate-related issues are delegated to
the Executive Leadership Team, which
oversees the strategy to meet our climate
targets, monitors the progress of our net
zero transition and aligns our product
portfolio to shifts in demand.
Regional CEOs are responsible for climate
risk identification and mitigation at the
site level, while the Sustainability team
led by the Chief Quality and Sustainability
Officer is responsible for climate risk
mitigation across our supply chains.
These teams oversee carbon reduction
projects in partnership with customers
and suppliers, and members of the team
hold governance roles within industry
collaborative forums. The Executive
Leadership Team also monitors progress
against a project plan and KPI tracker
specific to each site.
Climate-related issues are monitored
by the Group Sustainability team and
mitigation strategies are developed for
approval by the Executive Leadership
Team and reported by the Group Head of
Sustainability and Human Rights to the
Sustainability Committee.
Processes by which management is
informed about climate-related issues
In addition to the above information
flow, management is also advised by our
internal experts in areas such as energy
procurement, sustainable agriculture,
and supply chain. Management is
involved in national, regional, and global
associations and forums, providing
scientific information on relevant risks
and mitigations; more detail on our
collaboration may be found in our separate
Sustainability report.
Hilton Food Group PLC Annual Report and Financial Statements 2023
77
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
TCFD REPORT continued
Likelihood Impact
Low – Highly unlikely to occur
– No supporting legislation in any relevant market
– Mitigations in place to eliminate disruption
– No regulatory impact
– Non substantial financial loss with limited impact on
business operations or key customers
– Minor adverse comment in local media
Medium – Unlikely to occur
– Legislation likely to be in place in some markets
– Mitigations in place to significantly reduce disruption
– Moderate regulatory or legal obligation
– Moderate impact on relationships with customers with
minimal effect on the strategic and financial health of the
business
– Unfavourable coverage in national media
– Minor disruption to services
High – More likely than not to occur
– Legislative instrument in place or highly likely to be across
most markets
– Limited mitigations in place
– High potential for disclosure to market, resulting in
significant penalties and high likelihood for a fall in share
price
– Loss of key customers as well as very significant contracts
– Widespread critical coverage in national/international
media
– Closure or suspension of business operations
– High staff turnover or departure of key personnel
RISK MANAGEMENT
Audit and Risk Committees
Climate-related risks are identified,
monitored and their mitigation strategies
are reviewed within the Internal Audit and
Risk management function, which ensures
the full integration of climate-related
risks into the Group’s risk management
framework. The Group Internal Audit
and Risk Director executes a key role,
supported by the Chief Quality and
Sustainability Officer, in ensuring that
management are identifying, mitigating,
monitoring, and reporting on all key risks
including climate change. Through this
process they coordinate the agenda
for the Risk Management Committee
where management presents risk
mitigation activities. They then assess
the effectiveness of these activities
independently to report to the Audit
Committee and Board. The Audit
Committee determines risk categorisation
and mitigation measures before final
Board approval. The Risk Management
Committee and the Audit Committee
both meet four times per year, and climate
change is discussed and monitored at all
Audit Committee meetings as one of our
principal risks.
Our processes to identify, assess and
monitor climate-related risks
The assessment of climate-related risks
is a collaborative effort across business
functions and allows for consideration of
a risk’s likelihood of occurrence, timescale,
and magnitude of potential impacts.
This process determines the categorization
of principal and emerging risks for final
approval by the Board. For magnitude,
climate-related risks and opportunities are
assessed using the criteria below.
Hilton Foods considers climate-related
risks and opportunities in all physical and
transition risk categories, both current and
emerging, whether they occur upstream,
within, or downstream of the Group’s
operations and whether they occur
in a bottom-up or top-down manner.
Existing and proposed legislation and
regulatory requirements are continually
monitored to determine changing
compliance requirements, such as controls
on emissions and deforestation, or product
environmental labelling. In combination,
this information helps in the determination
of the management treatment of risks and
helps prioritise resources in managing the
most material climate-related risks.
Risks are subject to continual refinement
and quantification over time, which
assists in any required incorporation of
climate-related risks into the Group’s
overall budgeting, strategy, and financial
statements. No significant changes to
climate-related risks and opportunities
were identified during 2023.
Climate risk assessment
We assess the relative magnitude of
climate-related risks and opportunities
using the below scale. This is specific to
climate-related risks and distinct from the
quantifiable indicators used to define our
principal risks. This scale accommodates
the larger potential impact of climate-
related risks on the Group, allows for a
greater delineation between climate-
related risks that would otherwise all be
classified as being at ‘High’ risk under our
principal risk matrix and allows for their
relative significance in relation to other
Group risks to be better reflected.
Hilton Food Group PLC Annual Report and Financial Statements 2023
78
TCFD REPORT continued
STRATEGY: APPROACH
Hilton Foods recognises that
climate change presents both
risks and opportunities to our
business and the management
or development of these are
factored into our Transition
Plan. The Group is impacted
by both physical and transition
risks which are outlined in
detail below. Climate change
has been a principal risk for
the Group since 2020.
For the purposes of this disclosure, we
have used the following time-horizons
for our climate risk analysis. The short-
term horizon covers our immediate
in-year actions, the medium-term
horizon includes our near-term business
strategy, and the long-term time horizon
encompasses our actions that contribute
to achieving our net zero strategy, our
asset life and sufficient time period
for climate-related risks to manifest.
Certain climate-related risks are unlikely
to materialise before the medium or long-
term horizon or may have a high degree
of unpredictability both in occurrence and
severity (e.g. cyclones).
Time-horizon From (years) To (years)
Short 0 1
Medium 1 5
Long +5
Our approach to climate
scenario analysis
In accordance with the TCFD
recommendations, we have reviewed
the behaviour of certain risks under
different climate outcomes to help inform
our strategy and financial planning.
We used three public scenarios to better
understand our exposure to climate
change transition risks and opportunities,
in addition to three IPCC scenarios to
model the behaviour of physical climate
hazards. The time horizons for scenario
analysis (2030, 2050, 2100) are longer
than our overall risk time horizons and are
derived from the modelling software used
to assess behaviour of risk under different
RCP scenarios. Use of these time frames
allows for more comprehensive evaluation
of potential risks given their greater
likelihood to materialise in the longer term.
Scenarios have been supplemented
with additional internal and external
sources specific to each risk to inform our
assumptions. Scenario analysis involves
assumptions and limitations such as:
– Impacts are considered in the context of
the current business structure, financial
performance and prices
– Impacts are modelled to occur in
a linear fashion, when in practice
dramatic climate-related impacts may
occur suddenly after tipping points
are breached
– The analysis considers each risk and
scenario in isolation, when in practice
climate-related risks may occur
in parallel as part of a wider set of
global impacts
Our overall assessment is that the business
remains resilient to climate-related
risks in all three scenarios, especially in
consideration of our awareness of the risks
and our existing and planned mitigation
strategies as outlined in our Transition
Plan. Our Transition Plan is fully integrated
and its execution is part of our ongoing
business strategy.
Scenario Source
Change in global
mean surface
temperature (°C)
by 2100 Notes
Net Zero
Emissions
by 2050
Scenario
(NZE) /
RCP2.6
IEA
1
IPCC
2
1.5 Greenhouse gas (GHG) emissions are
strongly reduced, resulting in a trajectory
consistent with limiting the temperature
increase to less than 1.5°C in 2100
compared to the pre-industrial period.
Thisprovides a below 2°C scenario.
Stated
Policies
(STEPS) /
RCP4.5
IEA
IPCC
2.5 A combination of physical and transition
risk impacts as temperatures rise by
around 2.5°C by 2100 with 50% probability.
This scenario is used as it represents a
base case scenario with the trajectory
implied by today’s policy settings.
RCP 8.5
IPCC 4.1-4.8 GHG emissions continue to grow
unmitigated, leading to a best estimate
global average temperature rise of 4.3°C
by 2100. This scenario is included for its
extreme physical climate risk impacts.
1 IEA (2023), WorldEnergyOutlook2023.pdf, IEA, Paris.
2 IPCC (2014), climate change 2014: AR5 Synthesis Report. Contribution of Working Groups I, II and III to the
FifthAssessment Report of the Intergovernmental Panel on climate change.
Hilton Food Group PLC Annual Report and Financial Statements 2023
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
TCFD REPORT continued
STRATEGY: PHYSICAL RISKS
With 24 operational facilities across the
world, Hilton Foods maintains a large and
diverse geographical footprint. In 2023 we
used geospatial risk modelling software
to analyse the Group’s exposure to natural
hazards such as heat stress, sea level rise,
storms, and drought, and how these risks
may change in the future under various
scenarios for global temperature rise
by 2030, 2050, and 2100. Since our last
assessment, no new production sites
have been added. Further detail on this
assessment can be found in our 2022
Annual report (page 75).
Each year we take the opportunity to
conduct a study into certain elements
of our upstream exposure to climate
change. A summary of last year’s study
into our Australian beef supply chain can
be found in the 2022 Annual report, page
76. This year, we have conducted a deep-
dive into the potential impact of climate
change on our salmon supply chain.
NORWEGIAN SALMON
CASE STUDY
As a leading supplier of chilled fish
to the UK retail market, and smoked
salmon internationally, our Sustainability
team closely monitors potential
climate-related risks to our seafood
supply chain. This year, we analysed
the impact of climate change on the
supply of Norwegian salmon. Our recent
acquisition of Foppen Seafood and the
diversification of our portfolio has raised
our exposure to salmon, which is a key
protein for the Group. Norway accounts
for more than 50% of world salmon
supply and is responsible for a larger
percentage of the Group’s supply.
Any climate-related impacts to salmon
farming in the region have the potential
to expose the company and the broader
industry to supply shortages and/or price
rises. Accordingly, the analysis helps with
our awareness, planning and strategy to
manage the impacts of climate change.
Risks: Research suggests that rising
surface water temperatures and changes
to global weather patterns may pose a
number of impacts to farmed salmon.
Research suggests that rising surface
water temperatures and changes to
global weather patterns may pose a
number of impacts to farmed salmon.
In June 2023 temperatures in the
Northeast Atlantic peaked at 1.6°C
above average
3
. End-of-century model
projections for global sea surface
temperatures range from 0.71 ± 0.45°C
under RCP 2.6, to 2.73 ± 0.72°C under
RCP 8.5 with increases to sea surface
temperatures being particularly acute in
the North and Norwegian sea
4
. Under an
extreme climate scenario, the North and
Norwegian seas surface temperature in
summer may rise by 0.4°C per decade
5
.
Rising sea temperatures are likely to
result in altered salinity, pH, and nutrient
availability, which can impact fish growth
rates. Higher average temperatures may
also contribute to welfare risks such as an
increased window for the potential of sea
lice infestation, exacerbated gill health
challenges due to the unpredicted
presence of plankton, or prevalence of
new diseases.
Climate change may also affect supplies
of salmon feed, with subsequent cost
rises and margin impacts for salmon
farmers. Studies suggest that El
Niño weather events may increase in
frequency and intensity through climate
change. As we saw in 2023, this has the
potential to alter wild fish migration
patterns, negatively impacting the
availability of Peruvian anchoveta and
other high oil yield fisheries, which
are used as fishmeal for European
producers. Restrictions common in
Norway in the use of alternatives to
fishmeal and oil or access to novel
ingredients, also increases the risk profile
for Norway in contrast to Canadian and
Chilean farms, where land animal protein
is routinely used.
Thirdly, increasingly stringent marine site
licensing and competition for locations
with other assets, including offshore
wind farms, means that Norwegian fish
farms have reduced flexibility to relocate
were the quality of an environment
to decline.
Mitigating actions: The dependence
of salmon farming yields on optimal
water conditions means the industry
has a well-established understanding of
potential impacts of changing conditions
and undertakes proactive research and
planning. In addition, producers have
longstanding breeding programmes
with integrated genetic selection to
ensure salmon have greater genetic
adaptability to changing environmental
conditions. Global warming is not a
new issue for the seafood industry, and
resistance to climate change is already
being selected for. Any adaptations can
be propagated relatively rapidly through
the industry given salmon’s relatively
short lifecycle (three years to fully grown).
Alternative farming methods are
also being investigated to ensure
the resilience and health of its fish
stocks. Some Norwegian producers
are moving to breed and raise smolt
(juvenile salmon) of up to 1kg on land.
This reduces the length of the marine
stage, reducing the environmental
concern and the requirement for
treatment in a marine pen, which is more
challenging. Other innovative solutions
currently being taken by salmon farmers
include farming on land for the entirety
of the life cycle or moving sites to
offshore locations.
The Group monitors feed prices
to help manage cost fluctuations.
Recognising the potential for further
fluctuations in fish oil prices, and our
efforts to reduce the carbon footprint
of our feeds, we continue to explore
novel feeds as well as the potential for
integrated multi-trophic aquaculture.
For instance, some of our salmon
suppliers are already using algal oil to
supplement fish oils and insect derived
protein to supplement fish meal.
3 https://climate.copernicus.eu/record-breaking-
north-atlantic-ocean-temperatures-contribute-
extreme-marine-heatwaves. p. 5, (Howes EL, Joos
F, Eakin CM and Gattuso J-P (2015) An updated
synthesis of the observed and projected impacts
of climate change on the chemical, physical and
biological processes in the oceans. Front. Mar. Sci.
2:36, doi: 10.3389/fmars.2015.00036).
4 p. 5, (Howes EL, Joos F, Eakin CM and Gattuso
J-P (2015) An updated synthesis of the observed
and projected impacts of climate change on
the chemical, physical and biological processes
in the oceans. Front. Mar. Sci. 2:36, doi: 10.3389/
fmars.2015.00036).
5 https://www.hi.no/hi/nettrapporter/rapport-fra-
havforskningen-en-2023-10.
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CLIMATE-RELATED PHYSICAL RISKS
1. Extreme weather or chronic climate impacts on upstream supply chains
Type Physical (rising mean temperatures)
Area Upstream
Primary potential
financial impact
Disruptions in local supply, regional availability and/or pricing volatility
Description Extreme weather and chronic climate conditions may impact the supply of plant products or produce
used in our vegetarian/flexitarian ranges and cause detrimental impacts on livestock through
degradation of pasture, volatility in supply of animal feed, and the welfare of livestock. Sudden
regional shocks may increase volatility in food prices in international markets. See the Norwegian
salmon case study for more in depth analysis. The impact on beef supply chains was discussed in our
2022 Annual report.
Time horizon Medium-long
Likelihood Likely locally in at least one supply chain
Impact Low-medium
Areas impacted Global
Response Long-term regional impacts resulting from climate change would be industry wide and not specific
to the Group.
We maintain flexibility in regional and global supply chains and have reduced exposure to local
disruptions in comparison to peers as we are not integrated at the farm level. A large proportion of
the Group’s purchased meat products are sourced from Northern Europe, where we consider climate
effects to be manageable admitting some adaptation to changes in precipitation patterns and
warming temperatures.
2. Risk of rising sea levels to Grimsby and Netherlands sites
Type Physical (rising sea levels)
Area Own operations
Primary potential
financial impact
Disruption to production, increased insurance premiums, loss of inventory
Description Eight coastal or low-lying sites are determined to be at high or extreme risk from rising sea levels and
coastal storm surge under our base case scenario by 2100, representing a third of our total estate. Sites
in the Netherlands are in the highest risk zone under all time horizons, but the level of national flood
protections is high. The risk score at our Grimsby sites is projected to increase from medium to high
under baseline and severe climate scenarios, which highlights risk of flood-related property damage,
destruction of products, and increased insurance premiums.
Time horizon Long
Likelihood As likely as not
Impact High
Areas impacted UK, Netherlands
Response Netherlands sites generally have very strong standards of regional flood protection. Specifically,
our Oosterhout and Zaandam sites are protected against a 1-in-2,000, and 1-in-10,000-year flood
respectively. While the standard of protection is lower at our Grimsby and Harderwijk sites, we note
that climate-related coastal flooding events are a long-term risk. We anticipate continuous planned
investment by the Dutch government on reinforcement of flood protections. Likewise, bodies such as
the UK Environment Agency oversee flood defences on the port of Grimsby, such as concrete wave
walls installed between 2013 and 2016. Given the proximity to population centres and critical national
infrastructure, we expect this level of investment to be maintained.
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3. Storm risk
Type Physical (severe weather)
Area Own operations
Primary potential
financial impact
Disruption to production, increased insurance premiums, destruction of protections
Description Flooding in February 2023 in New Zealand has raised awareness of the potential risk to our facilities
from storms and flooding. At present our Auckland facility is categorized as being at medium
exposure to flash floods, and our modelling suggests increases in maximum 5-day precipitation at
the site by 11% and 14% under 1.5°C and 2.6°C scenarios respectively (by 2030). When measuring wind
speed severity, the site will remain at a low exposure (142-184km/h) to tropical cyclones, and medium
exposure (121-160km/h) to extratropical cyclones under all future time horizons and scenarios.
In addition, the Brisbane metropolitan area is historically prone to flash flooding and is under very high
precipitation stress in all future time horizons and scenarios. While our modelling does not indicate a
direct impact to our Brisbane facility, severe river flooding may impact local infrastructure, transport
links and employees, affecting the normal operation of the site.
Time horizon Short
Likelihood Likely locally in at least one supply chain
Impact Medium-high
Areas impacted Auckland, Brisbane
Response While we project increased precipitation at our Auckland facility, such storms are challenging to
model given their infrequency, high degree of random variability and complex interrelation of
underlying smallscale physical processes. We will continue to proactively monitor projected changes
to this risk and our business continuity plans at the site. In addition, the Auckland site has substantial
disaster preparedness plans in the event of earthquakes which can also be enacted in the event of
other physical hazards including storms.
4. Drought impacting production facilities
Type Changes in precipitation patterns; rising mean temperatures (water scarcity)
Area Own operations
Primary potential
financial impact
Disruption to production
Description Several sites, most notably those in Australia and Greece, operate in locations where water scarcity is
a present reality, and where the risk is expected to rise, with more infrequent precipitation events and
increased annual maximum temperatures under all scenarios. Analysis indicates our Melbourne (10%
of our global abstracted freshwater) and Bunbury (3%) facilities are respectively at high and very high
exposure to increased drought stress under warming scenarios.
Time horizon Short
Likelihood Very likely
Impact Medium
Areas impacted Melbourne, Bunbury
Response Water scarcity is already a feature of operating in Australia, and we are focused on improving the
efficiency of water use onsite with cleaning optimization at all four APAC sites. Additionally, individual
states have well developed drought preparedness plans and comprehensive water grids. In the event
of severe drought conditions, we have strong relationships with all relevant authorities to minimise
impacts and have the ability at Melbourne to connect tankers to supply water.
Targets/KPIs We are targeting improved water efficiency by 10% compared to a 2018 baseline.
1 Total water withdrawn.
2 Total water consumed, percentage of each in regions with High or Extremely High Baseline
Water Stress.
TCFD REPORT continued
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CLIMATE-RELATED TRANSITION RISKS
1. Changing consumer purchasing preferences to lower emission alternatives
Type Transition (market)
Area Downstream
Primary potential
financial impact
Reduced revenues of higher emission foods
Description There is a risk that we fail to take full advantage of changing purchasing preferences for
lower-emission proteins, resulting in loss of market share and reduced revenues.
Time horizon Short-medium
Likelihood Likely
Impact Medium
Areas impacted Developed markets
Response Our mitigation strategy includes creating a diversified portfolio of proteins that aligns with consumer
demand including through expanding our seafood and plant-based offerings, as well as achieving
significant reductions in the emission intensity of beef and lamb supplied to Hilton Foods. In addition,
we are diversifying our business model, including through our Greenchain Solutions platform.
We are committed to increasing our provision of plant-based proteins across the Group. Accordingly,
we are actively expanding our provision of plant-based protein at several sites.
We are investing in acquisitions to gain market share in lower emission proteins, such as the
acquisition of Dalco and Foppen, and investment in Cellular Agriculture.
Targets Hilton Foods has aligned its objectives for mitigating the greenhouse gas emissions of cattle in the
UK and Ireland to the European Round Table for Beef Sustainability (ERBS) objectives of an intensity
reduction of 15% in emissions of cattle by 2025.
Doubling in sales of plant-based, vegetarian, and flexitarian products compared to a 2020 baseline.
2. Carbon pricing introduced to incentivise purchase of lower carbon foods
Type Transition (emerging regulation)
Area Downstream
Primary potential
financial impact
Price increases of higher emission products affecting balance of consumer demand
Description If product pricing is adjusted to reflect its carbon footprint, there may be a reduction in consumer
demand, leading to reduced profits from foods where the footprints have not been mitigated.
Modelling suggests that beef and lamb products would receive the largest increase in pricing, with
some regional variation. This is detailed in our 2021 TCFD report.
Time horizon Medium-long
Likelihood Likely
Impact Medium
Areas impacted Global
Response Active involvement in supply chain carbon reduction programmes in collaboration with other industry
stakeholders. To progress our objective for reducing emissions intensity by 2025, we have engaged in
leadership of collaborative action to address the footprint of cattle farming with the European Round
Table in Beef Sustainability (ERBS) and UK Cattle Sustainability Platform (UKCSP)
Targets We have committed to the UN Race to Zero through signing the Business Ambition for 1.5°C.
Our near and long-term emissions targets (including FLAG targets) have been submitted to the SBTi
for validation.
An intensity reduction of 15% in emissions of cattle in Europe by 2025, aligned to the ERBS
Sustainability objectives.
100% renewable electricity across all our own operations in Europe by end of 2025 and globally by 2027.
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CLIMATE-RELATED TRANSITION RISKS continued
3. Reliance on third parties for achievement of emissions targets
Type Transition (market and reputation)
Area Upstream/own operations
Primary potential
financial impact
Higher costs, higher cost of capital
Description Delivery against the Group’s Transition Plan is in part reliant on third parties, and, whilst our near-term
targets can be delivered with existing commercial technologies, our long-term targets require wider
commercialisation or new technologies. Upstream, we are not integrated at the farm level so rely on
farmers and other stakeholders to drive reductions of beef-related emissions.
Reductions in Scope 2 emissions may be constrained by rates of grid decarbonisation and the ability
of local grids to support renewable energy tariffs.
Time horizon Long
Likelihood Unlikely
Impact High
Areas impacted Global
Response We seek to influence third parties’ decarbonisation, through working collaboratively with retailers
and engaging with governmental, farm assurance and industry bodies to shape supply chain
decarbonisation policy. We continue to work with Foods Connected to develop the tools to effectively
monitor and accelerate this transition and are involved in academic research to better understand our
upstream emissions. Additionally, we are beginning to introduce climate clauses into contracts, and
are developing data reporting requirements for suppliers. This is additional to other work to promote
sustainability in supply chains, including working to implement renewable energy in our Vietnamese
seafood supply chain.
We are implementing mitigations to reduce our reliance on the decarbonisation of the electricity grid,
including the installation of on site generation and power purchase agreements.
Targets We have revised our Science-Based Targets for Scope 1, 2, and 3. These are now in line with the 1.5°C
pathway. Our plans and initiatives are outlined further below.
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OPPORTUNITIES
1. Decarbonisation of our operations inc. food and packaging waste, energy, and water efficiency
Type Energy Source, Resource Efficiency
Area Own operations
Primary potential
financialimpact
Reduced cost and lower price volatility from self-generation, reduced energy use, packaging, and
water efficiency.
Description In our operations, electrification, energy efficiencies, investment in self-generation (solar/wind) and
long-term contracts for renewable electricity sources may reduce outgoing costs, improve resilience,
and mitigate against the cost of future external carbon pricing.
Improved packaging recyclability, reducing plastic content and reductions in weight may result in
lower packaging costs and less waste.
Time horizon Short-medium
Likelihood Very likely
Impact Medium-high
Response See key emissions reduction drivers above. Further details are outlined in our Transition Plan.
We continue to seek grants and subsidies to facilitate facility upgrades as they become
increasinglyavailable.
Areas impacted Global
Targets/KPIs Improve energy and water efficiency in our facilities by at least 10%, before the end of 2025, compared
to a 2018 baseline.
100% renewable electricity across all our own operations in Europe by end of 2025 and globally
by 2027.
2. Expand offering of supply chain systems, automation
Type Products and Services
Area Upstream
Primary potential
financial impact
Increased revenue
Description By leveraging our IT and automation solutions for supply chain management, we have an opportunity
to add a strategic growth driver in the sale of technology and services to other companies to enable
them to become more efficient and reduce operating emissions.
Through Greenchain Solutions, an industry leading technology platform providing end-to-end supply
chain solutions, the Group is at the forefront of technology and physical architecture design, which
improves internal logistics.
Time horizon Medium
Likelihood Very likely
Impact High
Response We continue to work with customers and suppliers to incentivise uptake of our technology and supply
chain solutions. We can also lead in environmental data collection and traceability across multi-tier
supply chains and capitalize on growing requirements for transparency across value chains to prevent
negative environmental impacts.
Areas impacted Global
Targets/KPIs Enable farmers to reduce their emissions and improve biodiversity, to promote more regenerative
farming, by providing planning and reporting tools.
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OPPORTUNITIES continued
3. Meeting consumer demand for foods with demonstrably lower footprints
Type Markets
Area Downstream
Primary potential
financial impact
Increased revenues from sales of profitable low climate impact products
Description Demand is growing not only for vegan and vegetarian food products, but also for a balanced portfolio
of meat and fish products that have significantly reduced environmental impacts. Overall protein
demand is expected to double by 2050, presenting a significant opportunity for increased revenue if
we successfully anticipate changing consumer preferences.
Time horizon Medium
Likelihood More likely than not
Impact Medium
Response
Hilton Foods have pursued several key acquisitions to diversify and strengthen its offering within the
vegan/vegetarian and seafood markets.
As we do not farm or slaughter animals our infrastructure can react quickly to emerging consumer
behaviour. Hilton Foods is well-placed to respond to consumer preferences through the adaptability of
our factories and operations, allowing us to quickly upscale production of lower-carbon products such
as fish or plant-based as required.
In addition, our recent investment in Cellular Agriculture, a leading UK cultured meat technology
venture, offers the opportunity to further diversify our future product portfolio.
Areas impacted Global
Targets/KPIs Doubling in sales of vegan, vegetarian and flexitarian products compared to a 2020 baseline.
4. Demonstrated ESG credentials
Type Markets
Area Downstream
Primary potential
financial impact
Increased access to capital, commercial opportunities
Description Enhancing Hilton Foods ESG reputation may lead to new revenue opportunities from environmentally
conscious partners. Investors and banks increasingly incorporate sustainability criteria into their
assessments, with climate change being a primary concern.
Time horizon Medium
Likelihood More likely than not
Impact Medium
Response Strong governance structures to manage sustainability issues and maintain appropriate internal
controls to ensure timely and accurate reporting of non-financial information, and progression against
ESG-related targets. We are also working with our supply chain to improve value chain impacts, e.g.
via introduction of preferential financing for suppliers who meet climate targets and introducing
climate clauses into our supplier contracts.
Areas impacted Global
Targets/KPIs External ESG ratings
TCFD REPORT continued
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TRANSITION PLAN SUMMARY
Central to our sustainability strategy is
our revised Science-Based Targets and a
group-level commitment to be net zero by
2048 across Scope 1, 2 and 3. Based on this
ambition and our emissions exposures, we
have developed a comprehensive net zero
Transition Plan, involving actions at our
own sites, commodity-level strategies, and
collaborative efforts throughout our value
chain to reduce emissions in accordance
with the Paris Agreement goals.
This year we revised our Science-Based
Targets including updates to our new
near-term targets to ensure alignment
with our net zero commitment. These have
now been validated by the SBTi. Our new
targets dramatically increase the pace of
our ambition, aligning our operational and
value chain emissions to 1.5ºC pathways,
and are applicable to all our Scope 3
emissions. Our targets now see the near
elimination of our operational emissions
by 2030 and align our business to Forest,
Land and Agriculture (FLAG) sector
guidance from the SBTi. This document
seeks to summarise our route to net
zero and will be followed by a detailed
standalone Transition Plan which will be
published later in 2024.
Our revised emissions reduction targets
for 2030 are to:
– Reduce absolute Scope 1 and 2 GHG
emissions 95% by 2030 from a 2020
base year
– Reduce absolute Scope 3 GHG
emissions from purchased goods and
services, waste generated in operations
and downstream transportation and
distribution 45% by 2030 from a 2020
base year.
– Reduce absolute Scope 3 GHG
emissions from Forestry, Land and
Agriculture (FLAG) 45% by 2030 from a
2020 base year
Alongside these targets, we also commit
to no deforestation across our primary
deforestation-linked commodities,
with a target date of 31 December 2025.
The company also commits to reach net
zero greenhouse gas emissions across
the value chain by 2048. This includes a
commitment to:
– Reduce absolute Scope 1 and 2 GHG
emissions 98% by 2048 from a 2020
base year.
– Reduce Scope 3 energy and industrial
emissions 90% by 2048 from a 2020
base year
– Reduce absolute Scope 3 FLAG GHG
emissions 100% by 2048 from a 2020
base year
6
.
The development of our planned
mitigation activities is already advanced.
Our Transition Plan is based on the
results of our transition risk analysis
and decarbonisation modelling of both
our operations and key supply chains.
A summary of our Transition Plan,
outlining key initiatives and strategy,
isincluded below.
Scope 1 and 2 emissions
We have developed site level plans
for emissions reductions for all of our
production sites. Workstreams are also
in place to decarbonise non-production
sites, albeit these are immaterial to
our overall footprint. Our site plans are
based on a generic technology pathway
applied against our primary emission
sources: electricity; heat; vehicles and
static engines; fugitive emissions
(primarily from refrigeration) and process
emissions. These are adapted for each site,
considering local technology availability
(particularly with regard to heat), local
weather conditions (with regard to cooling
and solar installation), market technology
readiness and site energy demand.
Alongside forecast emissions reductions,
our plan includes likely financial
implications and when emissions savings
will be realised. We are now in the process
of delivering these site level plans with
oursite teams.
Scope 1 emissions account for 30% of our
combined Scope 1 and 2, with the majority
derived from natural gas used in heating
or in our cooking processes. The Group has
a small vehicle fleet, including site vehicles
such as forklifts and delivery vehicles at a
small number of sites.
Energy efficiency is a key element of
our Transition Plan. We are committed
to reducing our energy demand and
continue to take initiatives to drive
energy efficiencies through our roll out
of ISO50001 across our sites. Our site
level roadmaps are in place and include
a number of energy efficiency projects
across our sites. These are often highly
locally specific, but cumulatively they
contribute to a meaningful reduction in
our energy use, and thus emissions, over
time. By sharing knowledge across sites,
we are able to deliver reductions more
rapidly and more efficiently. One such
example is the use of cold water in
cleaning processes, which was piloted in
Ireland and has since been refined and
delivered in Portugal and Holland with
further roll out to other sites ongoing.
We are targeting 100% renewable
electricity across all own operations in
Europe by 2025, and globally by 2027.
This will be achieved via three methods.
Firstly, the electricity generation
mix is shifting towards lower carbon
technologies in the countries we operate
in, and we expect these trends to continue
in the long-term, delivering further
significant improvements across our
near-term target horizon. Secondly, where
available, we are reducing our exposure
to the electricity grid through power
purchase agreements. We are working
with providers to secure contracts which
will reduce our market-based Scope 2
emissions. This year we have secured zero
carbon energy at our Zaandam facility,
our 10th facility to use fully renewable
electricity. Thirdly, we plan to expand the
installation of self-generation of renewable
electricity on our sites, primarily via solar
photovoltaics but we are also evaluating
wind generation in suitable locations.
We are working with district heat providers
at our Danish, Swedish and Polish facilities
to continue their transition to renewable
sources and are exploring opportunities at
sites where district heat networks can be
implemented at other sites. We anticipate
the electrification of most cooking
processes and are actively evaluating the
installation of heat pumps for cleaning and
space heating at all sites.
6 Target includes FLAG emissions and removals.
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TCFD REPORT continued
Over time, we will be able to electrify our
entire existing fleet, primarily through the
use of battery electric vehicles. This will be
most immediate across our sites where
there are fewer restrictions on range.
We recognise that the technology and
infrastructure are not fully mature for
use in long distance heavy applications,
however this is developing at pace and
we anticipate all fleet vehicles will be
electrified in the medium-term.
We are continuing our programme to
phase out the use of CO
2
as a direct
cooling gas in mince production, having
removed the process from Australian and
Polish sites already and reduced its use
elsewhere. We have a programme in place
to improve monitoring of our refrigeration
systems and replace fluorinated gases
with lower GWP gases; utilising drop in
gases initially and transitioning to natural
refrigerant systems as sites are upgraded.
Through ongoing projects, we have already
significantly reduced our fluorinated gas
inventory and our use of CO
2
as a process
gas in 2024.
Scope 3 emissions
By its nature, an assessment of Scope 3
emissions is more reliant on estimates
and assumptions. A higher degree of
uncertainty is derived from the Group’s
FLAG emissions exposure and the fact that
we are not directly exposed to terrestrial
farming, which then limits our ability to
directly reduce our Scope 3 emissions.
Scope 1 & 2 Transition Plan
2021 2023 Grid
Improvements
Energy
Efficiency
Local Self
Generation
Renewable
Electricity
Purchasing
Cooling system
upgrades
Fleet
transition
New Heating
and Cooking
Technologies
Natural gas Diesel LPG Fugitive emissions Process emissions Electricity District heat 2023 acquisition
2023 Scope 3 Emissions
by Operational Facitity
UK 22%
EU 25%
New Zealand 4%
Australia 49%
Other 0%
Our approach to Scope 3 mitigation
has involved a comprehensive review of
technologies and interventions, supported
by literature and research projects. This has
been enhanced in 2023 through research
projects conducted with the University
of Lincoln on manure management and
enteric emissions abatement.
Through risk assessments, we have
developed decarbonisation pathways for
our key species (beef, lamb, pork, chicken,
salmon, tropical aquaculture, and wild
capture), which form the basis of our
Transition Plan for FLAG commodities.
Of these, the most material emissions
sources relate to terrestrial livestock,
although there is also more commonality
and therefore overlap between terrestrial
species pathways. Our species pathways
include impacts from drivers such as
genetic and health improvements as
well as process and operational changes
such as feed basket transition, manure
handling improvements, enteric emissions
abatement, and land-based sequestration.
A range of potential impact from each
driver has been quantified, with a range
estimated for its efficacy where relevant,
but we have not included financial
modelling due to the high degree of
uncertainty involved. Nevertheless, our
results indicate that multiple scenario
options are available to reduce emissions
in line with the 2030 target, even with
no change to the species mix in our
products, and therefore that there is a
pathway for livestock, particularly cattle
(outlined further below), to form part of a
net zero future. We continue to invest in
low carbon proteins to mitigate risks of
a shift in protein demand as seen by our
recent acquisitions of Dalco and Foppen,
investment in Cellular Agriculture, as well
as the expansion of the food-park model
and our Greenchain Solutions technology
services platform. The impact of this was
explored further in our 2022 TCFD report.
With regard to the Energy and Industrial
emissions in our supply chain, we
have developed decarbonisation
roadmaps for packaging and conducted
decarbonisation modelling on
Downstream Transportation and supply
chain energy use. We will develop
roadmaps for service-based businesses
in the coming year, however emissions
associated with these businesses are a
small part of our overall footprint.
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TCFD REPORT continued
METRICS AND TARGETS
Climate-related metrics and targets
Hilton Foods reports carbon dioxide
equivalent (CO
2
e) emissions across a 100
year timescale (GWP100) aligned to the
IPCC’s sixth Assessment Report and the
recommendations of the Greenhouse Gas
Protocol and the Science-Based Target
initiative. Our emissions are reported
across Scope 1, 2 (both location- and
market-based) and all relevant Scope 3
categories. Since 2020, our emissions data
has been independently verified by GEP
Environmental across all three Scopes to
a ‘limited level of assurance’, is in line with
ISO 14064:3. In addition, we report on GHG
emissions intensity, total consumption
of electricity, energy intensity, renewable
electricity, gas, and water, as well as
emissions from fluorinated gases.
When calculating our Scope 1, 2 and 3
emissions we use the most appropriate
public data for our supply chains
combined with supplier specific emission
factors where available. We take an equity
share approach. Agito, Sphere, Cellular
Agriculture and Evolve 4 were added to
the boundary in 2023, including backward
calculation. Foppen has been included
since our acquisition in 2022, just as Fairfax
Meadow and Dalco were added in 2021.
This report contains backward calculated
emissions across Scope 1, 2 and 3 to allow
consistent comparison.
At Hilton Foods we are constantly working
to improve how we measure and report
our Scope 3 emissions. In 2021 we moved
from a financial accounting approach to
an inventory approach. In 2022 we have
refined this to use more regional and
supply chain specific data. This has led
to a change in our estimated emissions
compared to what was reported in
prior years.
In 2023 there has been no major change in
methodology, however following validation
of our Science-Based Targets some
changes have been made. Cooking of
products in food service environments was
previously reported in Scope 3 Category
10 and will now be reported in Category
9. Downstream distribution by retailers
was not previously reported and will be
reported in Scope 3 category 9.
Transport emissions were not reported on
a well to wheel basis and have now been
reported in that way. Homeworking and
use phase emissions have been reported
separately as these are indirect Scope 3
emissions outside the target Scope. 5% of
the footprint was calculated using primary
data in 2023.
We will also be reporting an estimate of
our Scope 3 emissions by greenhouse gas
for the last three years. Understanding this
will allow us to better understand our
warming impacts in the future. These are
not included in the verification of our
Scope 3 by GEP Environmental.
Through our engagement with the
Seafood Carbon Collaboration and Seafish,
support of the Chirrup.ai project, and
sponsorship of a DPhil at Oxford University,
Hilton Foods is actively engaged in work to
improve understanding and deployment
of climate metrics. The recently released
Seafish methodology for wild capture fish
has not been included in our 2023 data,
but we are striving to include it in 2024.
Climate-related targets
In order to align with updated guidance
and the ambition of the Paris Agreement,
Hilton Foods has revised its Science-
Based Targets covering Scope 1, 2 and 3
emissions. Our updated near-term and
long-term targets are outlined in detail on
page 87.
To ensure we meet these targets, we have
developed a Transition Plan summarised
on page 87 which includes detailed site
level decarbonisation plans for each of
our operations and commodity-level
trajectories which will be developed
with our team as well as in collaboration
with our customers and suppliers. All our
climate-related goals and objectives,
detailed above, are monitored as KPIs
through the year, and reported to and
reviewed by the Board.
Beef transition
Our Transition Plan for beef considers
five main areas; enteric emissions, feed,
manure, energy, and land use, across
the three greenhouse gases associated
with cattle production. A number of
these interventions, including feed
basket transition, genetic improvements
and feed conversion optimisations will
reduce the footprint across these areas.
Decoupling synthetic fertiliser production
from natural gas by transition to green
hydrogen, use of legumes and improving
fertiliser application will significantly
reduce emissions from feed production,
including pasture. Improved manure
handling, storage and application
technologies will contribute to reduced
nitrous oxide and methane emissions.
Changes to diet, feed additives and
other new technologies will contribute
to a reduction in enteric emissions.
Reductions in emissions from energy
will be delivered through electrification,
installation of local renewable self-
generation and deployment of other low
carbon energy sources. Grazing cattle will
actively enhance land-based sequestration
through direct deposition and the
mechanical action of their hooves, and
this can be further enhanced through the
deployment of silvopasture techniques.
Delivery of this plan will evolve as we move
further in to implementation, but the
roadmap and targets has been developed
to allow flexibility in delivery.
Further details on our Scope 3
decarbonisation journey will be published
in our comprehensive Transition Plan
disclosure which will be published later
in 2024.
Hilton Food Group PLC Annual Report and Financial Statements 2023
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
2023 2022
Carbon Footprint UK
Global
(excl. UK) Total UK
Global
(excl. UK) Total
Scope 1 – total (tCO
2
e)
6,485 11,109 17,594
6,437 11,030 17,467
2023 Equivalent Scope 1 – total (tCO
2
e) 6,437 11,105 17,542
Scope 1 – emissions from
refrigerants (tCO
2
e) 1,129 2,947 4,071 1,537 1,638 3,175
Scope 2 – location based (tCO
2
e)
8,199 52,147 60,346
6,599 47,866 54,465
2023 Equivalent Scope 2 –
locationbased(tCO
2
e) 6,603 47,941 54,544
Scope 2 – market based (tCO
2
e)
2 48,285 48,286
3 41,586 41,589
2023 Equivalent Scope 2 –
marketbased(tCO
2
e) 7 41,661 41,669
Scope 3 – 01. Purchased
goods and services 2,765,297 9,914,777 12,680,074 3,138,700 9,423,085 12,561,785
Scope 3 – 02. Capital goods 1,257 2,321 3,578 2,253 7,582 9,835
Scope 3 – 03. Fuel and energy
related activities 1,755 13,541 15,296 3,134 13,824 16,958
Scope 3 – 04. Upstream transportation
anddistribution 2,842 39,510 42,352 3,526 33,426 36,952
Scope 3 – 05. Waste 2,119 2,565 4,685 2,764 7, 581 10,345
Scope 3 – 06. Business travel 697 620 1,317 322 609 931
Scope 3 – 07. Employee commuting 784 1,724 2,506 1,354 1,985 3,339
Scope 3 – 07. Employee commuting
(indirect) 100 92 191 109 98 207
Scope 3 – 08. Upstream leased assets Out of Scope Out of Scope
Scope 3 – 09. Downstream transportation
and distribution 3,681 13,741 17,422 3,961 15,302 19,263
Scope 3 – 10. Processing of sold products
Out of Scope Out of Scope
Scope 3 – 11. Use of sold products
Scope 3 – 11. Use of sold products (indirect) 2,816 22,699 25,515 2,561 27,7 14 30,274
Scope 3 – 12. End–of–life treatment
of sold products 5,656 20,786 26,442 7,384 54,651 62,035
Scope 3 – 13. Downstream leased assets
Out of Scope Out of ScopeScope 3 – 14. Franchises
Scope 3 – 15. Investments
Scope 3 – Forestry, Land Use
andAgriculture(FLAG) (tCO
2
e) 2,624,358 9,453,007 12,077, 365 3,088,629 9,376,063 12,464,692
Scope 3 Upstream (tCO
2
e) 2,774,751 9,975,057 12,749,808 3,152,054 9,488,091 12,640,145
Scope 3 Downstream (tCO
2
e) 9,338 34,526 43,864 11,345 69,953 81,297
Scope 3 – non–FLAG (tCO
2
e) 159,731 556,577 716,307 74,770 181,981 256,751
Scope 3 – CO
2
(tCO
2
) 582,972 1,750,219 2,333,190 684,707 1,736,586 2,421,293
Scope 3 – CH4 (tCH4) 46,684 192,078 238,762 51,696 173,232 224,928
Scope 3 – N2O (tN2O) 3,144 10,817 13,961 3,524 10,246 13,771
Scope 3 – Unallocated (tCO
2
e) 93,125 206,978 300,103 138,571 465,037 603,608
Total Scope 3 (tCO
2
e)* 2,784,088 10,009,584 12,793,672 3,163,399 9,585,757 12,751,716
Total Scope 1, 2 and 3 – location based (tCO
2
e) 2,798,772 10,072,840 12,871,613 3,178,995 9,644,653 12,823,648
Total Scope 1, 2 and 3 – market based (tCO
2
e)
2,790,575 10,068,977 12,859,553 3,169,839 9,638,373 12,810,772
Intensity ratio Scope 1 and 2 – market based
(tonnes CO
2
e per tonne product) 0.10 0.14 0.13 0.05 0.15 0.12
NON-FINANCIAL DISCLOSURES
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NON-FINANCIAL DISCLOSURES
2021 2020 (SBT base year)
Carbon Footprint UK
Global
(excl. UK) Total UK
Global
(excl. UK) Total
Scope 1 (tCO
2
e) 5,999 9,562 15,561 4,503 6,136 10,639
SBTi Scope 1 – total (tCO
2
e) 6,093 14,015 20,108 6,283 12,739 19,022
Scope 1 – emissions from
refrigerants(tCO
2
e) 493 1,748 2,241 848 249 1,097
Scope 2 – location based (tCO
2
e) 8,900 48,349 57,249 8,607 49,069 57,676
2023 Equivalent Scope 2 –
locationbased(tCO
2
e) 8,754 56,004 64,758 8,915 66,815 75,730
Scope 2 – market based (tCO
2
e) 1,182 40,822 42,004 – 47,103 47,103
2023 Equivalent Scope 2 –
marketbased(tCO
2
e) 1,185 47,088 48,273 1,474 55,083 56,557
Scope 3 – 01. Purchased goods andservices 3,011,947 10,199,534 13,229,866 3,653,411 10,720,381 14,392,177
Scope 3 – 02. Capital goods 2,004 5,950 7,954 3,578 102,644 106,221
Scope 3 – 03. Fuel and energy
relatedactivities 3,275 12,955 16,230 4,066 13,132 17,198
Scope 3 – 04. Upstream transportation
anddistribution 2,478 75,189 77,666 3,040 75,673 78,713
Scope 3 – 05. Waste 18,004 11,195 29,199 6,062 6,970 13,032
Scope 3 – 06. Business travel 39 141 180 2 3 5
Scope 3 – 07. Employee commuting 898 1,425 2,323 917 1,081 1,998
Scope 3 – 07. Employee commuting
(indirect) 210 171 381 299 280 580
Scope 3 – 08. Upstream leased assets Out of Scope
Scope 3 – 09. Downstream transportation
and distribution 5,734 117,057 122,791 5,478 121,520 126,999
Scope 3 – 10. Processing of sold products
Out of Scope
Scope 3 – 11. Use of sold products
Scope 3 - 11. Use of sold products (indirect) 7,911 84,093 92,004 8,199 104,641 112,840
Scope 3 – 12. End–of–life treatment
of sold products 6,357 17,032 23,389 6,432 23,471 29,904
Scope 3 – 13. Downstream leased assets
Out of ScopeScope 3 – 14. Franchises
Scope 3 – 15. Investments
Scope 3 – Forestry, Land Use and
Agriculture (FLAG) (tCO
2
e) 3,241,797 11,802,691 15,044,488 3,860,330 11,340,601 13,820,745
Scope 3 Upstream (tCO
2
e) 3,038,645 10,306,388 13,363,418 3,671,076 10,919,884 14,609,344
Scope 3 Downstream (tCO
2
e) 12,091 134,089 146,180 11,911 144,991 156,903
Scope 3 – non–FLAG (tCO
2
e) 3,050,736 10,440,477 13,509,598 3,682,986 11,064,876 945,502
Scope 3 – CO
2
(tCO
2
) 641,837 1,901,373 2,543,210 724,673 1,882,355 2,607,028
Scope 3 – CH4 (tCH4) 47,559 189,819 237,378 62,185 205,014 267,198
Scope 3 – N2O (tN2O) 3,614 11,392 15,005 4,272 11,781 16,053
Scope 3 – Unallocated (tCO
2
e) 148,519 475,614 642,518 134,931 635,414 788,730
Total Scope 3 (tCO
2
e)* 3,058,857 10,524,741 13,601,983 3,691,484 11,169,797 14,879,667
Total Scope 1, 2 and 3 – location based (tCO
2
e) 3,310,022 12,242,786 15,571,193 3,937,567 11,893,893 15,831,459
Intensity ratio SC1&2 (tonnes CO
2
per tonne produced)
0.03 0.19 0.12 0.03 0.12 0.15
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
NON-FINANCIAL DISCLOSURES continued
2023 2022
Energy, kWh UK
Global
(excl. UK) Total UK
Global
(excl. UK) Total
Total renewable fuel consumption 19,515 51,435 70,950 – – –
Coal – – – – – –
Heavy oil – – – – – –
Transport fuel 17,588,170 3,404,391 20,992,561 8,417,671 4,456,096 12,873,767
LPG 283,632 12,342,448 12,626,080 172,210 6,461,190 6,633,400
Natural gas 17,476,039 37,127,101 54,603,140 15,513,205 32,454,081 47,967,286
Total non-renewable fuel consumption 35,347,841 52,873,940 88,221,781 24,103,086 43,371,368 67,474,454
Total electricity consumption 40,007,694 124,421,651 164,429,345 34,131,367 112,454,749 146,586,116
Solar electricity generation on-site 231,758 4,178,221 4,409,979 303,297 2,667,753 2,971,050
Proportion of electricity
fromlocalgeneration 1% 3% 3% 1% 2% 2%
Total renewable electricity consumption 39,998,107 65,729,208 105,727,314 34,120,813 56,669,613 90,790,426
Total non-renewable
electricityconsumption
9,587 58,692,443 58,702,031 10,554 56,041,891 56,052,445
Proportion of renewable electricity 100% 53% 64% 100% 50% 62%
Total renewable other energy consumption
(district heating)
– 6,500,348 6,500,348 – 5,345,664 5,345,664
Non-renewable other energy consumption
(district heating)
– 1,288,804 1,288,804 – 2,000,553 2,000,553
Total renewable energy consumption 39,998,107 72,229,556 112,227,663 34,120,813 62,015,277 96,136,090
Total non-renewable energy consumption 35,357,428 112,855,187 148,212,616 24,113,640 101,413,813 125,527,452
Total energy consumption 75,355,535 185,084,743 260,440,278 58,234,453 163,429,090 221,663,542
Energy consumption (kWh used
pertonneof volume produced) 522 414 440 486 450 459
2021 2020
Energy, kWh UK
Global
(excl. UK) Total UK
Global
(excl. UK) Total
Total renewable fuel consumption – – – – – –
Coal – – – – – –
Heavy oil – – – – – –
Transport fuel 5,584,948 1,044,790 6,627,737
LPG – 3,7 17,606 3,7 17,606 – 1,981,079 1,981,079
Natural gas 15,537,123 24,876,987 40,414,110 21,332,658 30,218,747 51,551,406
Total non-renewable fuel consumption 21,122,070 29,639,383 50,761,453 21,332,658 32,199,827 53,532,485
Total electricity consumption 42,295,591 99,553,665 141,849,256 37,769,233 97,429,104 135,198,337
Solar electricity generation on-site 223,291 2,926,408 3,149,699 243,000 2,260,000 25,030,00
Proportion of electricity from
localgeneration 1% 3% 2% 1% 2% 2%
Total renewable electricity consumption 38,510,862 35,573,856 74,084,718 243,000 25,984,033 26, 227,033
Total non-renewable
electricityconsumption 3,784,728 63,979,808 67,764,537 37,526,233 71,445,071 108,971,304
Proportion of renewable electricity 91% 36% 52% 1% 27% 19%
Total renewable other energy consumption
(district heating) – – – – – –
Non-renewable other energy consumption
(district heating) – 71,066,11 71,066,11 – 13,921,96 13,921,96
Total renewable energy consumption 38,510,862 35,573,856 74,084,718 243,000 25,984,033 26,227,033
Total non-renewable energy consumption 24,906,799 100,725,802 125,632,601 58,858,892 105,037,093 163,895,985
Total energy consumption 63,417,662 136,299,658 199,717,320 59,101,892 131,021,126 190,123,018
Energy consumption (kWh used
pertonneof volume produced) 293 513 405 447 397 411
Hilton Food Group PLC Annual Report and Financial Statements 2023
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NON-FINANCIAL DISCLOSURES continued
Freshwater (m3) 2023 2022 2021 2020 2019
UK* 333,355 391,453 290,064 329,600 297,500
Ireland 22,337 26,506 39,231 45,000 49,000
The Netherlands** 268,742 284,899 173,478 164,700 169,000
Sweden 58,872 57,069 61,830 58,300 59,000
Denmark 47,801 48,048 44,945 46,000 45,000
Poland 101,055 98,147 89,366 96,000 74,000
Greece*** 79,625 96,500 – – –
Portugal^ 35,587 31,960 28,953 31,950 35,000
Australia 271,014 254,380 264,544 249,300 47,000
New Zealand 101,686 105,996 21,218 – –
Other**** 16 – – – –
Total Freshwater Use 1,320,090 1,394,957 1,013,629 1,020,850 775,500
Total Freshwater Withdrawals 1,181,246 1,379,145 998,288 – –
Intensity (m3 per tonne of product produced) 2.23 2.90 2.03 – –
* Inclusion of Fairfax Meadow sites from 2022. Due to water meter failure, 2022 usage at Laforey Road is based on estimated billing.
** Inclusion of 100% of Dalco from 2021 and Foppen from 2022.
*** Inclusion of Foppen from 2022.
**** International sales offices.
^ Adjusted to JV holding.
Sites in areas of water stress (defined by World Resources Institute).
Very high = 0, High = 2 - Hilton Foods Australia site in Truganina and Foppen site in Greece.
Hilton Food Group PLC Annual Report and Financial Statements 2023
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
NON-FINANCIAL DISCLOSURES continued
Workforce 2023 2022 2021
Male Female Total Male Female Total Male Female Total
Board 4 3 7 4 3 7 5 2 7
Executive Management 9 3 12 9 3 12 7 3 10
Senior Leadership* 38 24 62 28 13 41 28 11 39
Senior Management** 217 120 337 234 111 345 28 11 39
Employees 4,091 2,960 7,051 4,358 2,879 7,237 3,395 2,386 5,781
Board 57% 43% 57% 43% 71% 29%
Executive Management 75% 25% 75% 25% 70% 30%
Senior Management 64% 36% 68% 32% 72% 28%
Employees 58% 42% 60% 40% 59% 41%
New employees 1,604
Total number of graduates and
apprentices 43
Total number of employees
entitled to take maternity,
paternity or adoption leave 3,799 2,671 6,470
Total number of employees
that started maternity,
paternity or adoption leave in
2023 105 228 333
Total number of employees
that returned to work after
maternity, paternity or
adoption leave completed
during 2023 91 81 172
Total number of employees
that have been back in the
business for 12 months since
being on maternity, paternity
or adoption leave 47 57 104
Training (Hours) 36,829 12,007 8,444
Number of employees who
completed training 1,314 2,669
Average training expense per
employee £321.70 £555.80
Number of employees who
have been trained on ethical
standards (i.e. anti bribery and
corruption) 3,375 3,325
% of employees covered
by collective bargaining
agreements 23% 26% 41%
% of employees who are
trained on ethical standards
(e.g. Anti-Bribery and
Corruption Policy) 48%
Total staff turnover 26% 30% 25%
Total fatality rate 0 0 0
We have received no human rights/quality violations for the past three years.
* Senior Leadership is defined in line with the FTSE Women Leaders Index, direct reports to Executive Leadership Team.
** Senior Management is defined in line with Hilton Foods Sustainable Protein Plan (SSP) ‘30% of women in leadership’ target. This is defined as all those who identify as
women as Functional Lead, Head of Department or Job Level 5
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NON-FINANCIAL DISCLOSURES continued
Workforce 2020 2019 2018
Male Female Total Male Female Total Male Female Total
Board 5 2 7 5 1 6 5 1 6
Executive Management 8 2 10 8 2 10 8 2 10
Senior Management** 47 11 58 39 11 50 39 11 50
Employees 3,185 2,206 5,391 2,981 1,963 4,944 2,878 1,840 4,718
Board 71% 29% 83% 17% 83% 17%
Executive Management 80% 20% 80% 20% 80% 20%
Senior Management 81% 19% 78% 22% 78% 22%
Employees 59% 41% 60% 40% 61% 39%
New employees
Soft Skills Training (Hours) 6,554 4,523
Number of employees who
completed soft skills training 1,314 2,669
Average soft skills training
expense per employee
Number of employees who
have been trained on ethical
standards (i.e. anti bribery and
corruption)
% of employees covered
by collective bargaining
agreements 33%
% of employees who are
trained on ethical standards
(e.g. Anti-Bribery and
Corruption Policy)
Total staff turnover 17% 22% 23%
Total fatality Rate 0 0 0
We have received no human rights/quality violations for the past three years.
* Senior Leadership is defined in line with the FTSE Women Leaders Index, direct reports to Executive Leadership Team.
** Senior Management is defined in line with Hilton Foods Sustainable Protein Plan (SSP) ‘30% of women in leadership’ target. This is defined as all those who identify as
women as Functional Lead, Head of Department or Job Level 5.
The decline of employees covered by collective bargaining agreements is representative of Hilton Foods new acquisitions in 2022.
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
NON-FINANCIAL DISCLOSURES continued
Health and Safety 2023 2022 2021 2020 2019*
% Change
(2023 vs 2022)
Hours Worked 10,966,423 10,238,356 9,559,280 9,143,579 9,7 17,405 7%
First Aid Incidents 694 645 586 677 573 8%
Lost Time** Incidents 115 138 138 87 147 -17%
Lost Time Incident
Frequency Rate 10.49 13 14 9.51 15.13 -22%
Number of Days Lost 2787 4,867 3,514 2,198 2,012 -43%
Lost time incident severity rate 254.17 475 368 240.33 207.05 -47%
Non injury incidents/hazards 9,302 6,046 5,191 4,993 85* 54%
* This data was not recorded on a Group basis in this format in 2019.
** The definition use of a ‘lost time incident’ is when the injured person does not attend work for the start of their next shift not including the day of the incident.
Lost-time incident rate for current and last 2 fiscal years covers 100% of directly employed Hilton employees, this number excludes contractors.
Lost Time Incidents over a Five Year Period
We have introduced an additional measure to track performance in respect of LTIs. We have taken the median over 5 years, and
against that median we have improved our LTI performance by 17%. We continue to track our performance against our Sustainable
Protein Plan 2020 target. In respect of this target there has been an increase of 32%. 2020 was an unusually low year for LTIs, we
believe this was driven by Covid-19. 2022 data includes new acquisitions. The safety framework introduced in 2019 is increasingly
driving improvements in data and reporting quality. We have set up working groups to continue the journey of reducing LTIs year
on year and deliver on initiatives in place for 2024 such as: a sustained campaign to reduce the total number of incidents across our
four highest accident groups; developing behaviour-based safety programme that can be implemented across all Hilton Foods sites;
designing a safety guide that is image based to be issued to all Hilton Foods employees; conducting a global review of loading bay
safety and developing a range of Hilton Foods standards and lastly, increasing awareness of mental health and wellbeing.
Health and Safety
First Aid
Incidents
Lost Time
Incidents
Lost Time
Incident
Frequency Rate
Number of
Days Lost
Lost Time
Incident
Severity Rate
Non Injury
Incidents
/Hazards
5-year Median 586 138 14.44 3514 367.63 5191
% Change in 2023 (vs 5-year Median) 11% -17% -27% -21% -31% 79%
Nutritional Context, for growing areas
in healthier products % of total sales 2023 2022 2021
Products with a high source of Omega-3 4% 1% 1%
Low fat products (<3%) 4% 3% 3%
Lower fat products (<5%) 4% 9% 16%
Products containing E Numbers 27% 18% 21%
Low salt products (less than 0.12g/100g) 9% 15% 15%
Other information 2023 2022 2021
Total site waste (tonnes) 31,600 27,456 47,405
Customer service level (%) 94.10% 95.86% 96.44%
Charitable donations £87,992 £153,327 £72,629
No Hilton Foods staff have been disciplined or dismissed due to non-compliance with anti-corruption policy/policies in the current and last 2 fiscal years.
Hilton Food Group PLC Annual Report and Financial Statements 2023
96
FOOD SAFETY AND QUALITY
OUR QUALITY POLICY
Hilton Foods is committed to working
in an ethical, open and honest manner
to produce products of the highest food
safety and quality. This is underpinned by
our Group Quality Policy which outlines
our commitment across the Group
to ensure:
– Food safety, product quality, legality
and integrity.
– The achievement of customer
satisfaction by adherence to product
specifications and service requirements.
– Adequate resources in the pursuit
of continuous improvement for our
products, processes and our people.
– A programme to develop a food
safety culture.
Our commitment to food safety and
quality combined with our first-class
manufacturing facilities and our customer
focus makes us the first choice for our
retail partners.
Managerial responsibility and
accountability for our product safety and
quality policy sits with the Chief Quality
and Sustainability Officer, a member of the
Executive Leadership Team.
We are committed to working in
an ethical, open and honest manner
FACTORY STANDARDS AND
QUALITY SYSTEMS
Our specialised processing and packing
facilities are designed with a focus
on hygiene and temperature control,
including a high degree of automation
and robotics which drives efficiency
and minimises handling. This means we
have industry leading food safety and
ensure the quality throughout shelf life for
our customers.
Our people are our most important
asset to ensure high quality and safety
and our focus is on training everyone
to be responsible for the quality of our
products, assisted by highly qualified and
experienced quality assurance teams.
By automating our quality assessment and
labelling systems, we ensure consistent
adherence to customer specifications and
reduce the risk of label errors.
All of our sites have achieved certification
from the Global Food Safety Initiative
(GFSI) recognised scheme and are also
audited annually by our central audit
team against our own Factory Standards,
driving continuous improvement across
the Group. Our customers frequently visit
and audit the sites that supply them and
we value the opportunity to demonstrate
that Hilton Foods consistently meets
their expectations.
Our sites have facilities for organoleptic
and physical assessment and many have
laboratory facilities for microbiological and
chemical testing, all with trained personnel
and appropriate local accreditation.
We set clear specifications and monitor
the raw materials used in our products.
Samples are assessed based on risk
assessment for microbiological standards
and a range of authenticity tests including
speciation testing and screening for
adulteration using chemical and DNA
methodologies. These checks and tests are
used to evaluate new supply chains and
to monitor existing ones where required.
All testing is carried out at accredited
laboratories and results are used to
assess the performance of suppliers and
drive continuous improvement. We are
members of the Food Industry Intelligence
Network where we compile industry-
wide compliance statistics and share
intelligence on suspected food fraud.
We have a comprehensive product recall
policy and mechanism that is verified
by simulated tests and is integrated into
our wider business crisis management
systems. To ensure we have access to the
latest food science, we are members of
Campden BRI and Food Drink Ireland and
also supported by Teagasc Ireland.
PRODUCT STANDARDS
Our Innovation teams include qualified
chefs covering each of the food categories
we produce, and we share expertise in
product and process development across
the Group. They utilise our Market Insight
Team and consumer focus groups to
ensure our new product launches have a
high degree of success.
We only use ingredients and additives
where required to increase food safety
and ensure product stability and quality.
We comply with our customers’ lists
of prohibited additives and actively
reformulate where we can to remove
artificial ingredients and unnecessary
additives. Where possible we eliminate
known allergens and clearly label them
when present.
We are reformulating products to reduce
the total salt and fat in food and increase
fibre in line with customer health targets.
Hilton Food Group PLC Annual Report and Financial Statements 2023
97
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
We partner with suppliers that share our
commitment to quality, food safety, animal
welfare and sustainability and we clearly
state the standards we expect. We have
full traceability back to the farms and
fishing vessels that supply the slaughter
operations and primary processing
factories. This ensures that consumers can
trust the products we produce.
Our supplier approval process gives us
full transparency on the safety, quality
and the provenance of the raw materials
we use against the Hilton Foods Supplier
Standards. We audit suppliers at a
frequency determined by risk assessment
which looks at a combination of raw
material, food safety risk, supply chain
threat and vulnerability, horizon scanning
and supplier history. The majority of
our suppliers are certified against GFSI
benchmarked standards by independent
audit bodies.
For new suppliers, our policy is to take
from GFSI-certified suppliers and audit
them against our standard. Where we use
smaller, local suppliers, we sometimes
take from non-GFSI certified sites, but
we monitor these using a combination of
a Hilton Foods Supplier Standards audit
and self-assessment questionnaires.
The current GFSI certification status of
our meat and seafood supply chains is
95% and for ingredient suppliers is 90%.
These audit processes have been in place
for more than four fiscal years.
We work alongside our suppliers to
address the footprint of our supply chains,
including factories, abattoirs and farms,
and we are building decarbonisation and
water stewardship plans for each sector
with our key suppliers.
We partner with suppliers
that share the same values
All farms, livestock facilities and slaughter
facilities for farm animals supplying
Hilton Foods UK and Ireland and the
majority supplying to the other European
and Australian markets are certified to
independent assurance schemes. In some
instances, a higher standard of farm
assurance is required such as welfare
schemes or organic standards.
We have developed livestock animal
welfare standards in partnership with our
retail customers. 100% of our livestock
slaughter facilities are audited by a welfare
qualified auditor. This can be to the Hilton
Foods Supplier Standard using our own
team of welfare-trained auditors, an
independent audit using a dedicated
second party or by auditors employed by
our retail partners.
We disclose all of the fisheries and fish
farming areas that we buy from on the
Ocean Disclosure Project website. We have
built our own fisheries risk assessment
tool in accordance with the Sustainable
Seafood Coalition Codes and BSI PAS
1550 standard, both of which we helped
to develop. It combines data sources
for fishery stock assessments, fishing
effort, impact of fishing gear and risk
of illegal fishing (for eliminating illegal
unreported or unregulated fisheries).
Hilton Seafood UK has signed to support
the Environmental Justice Foundation
Charter for Transparency.
Over 98% of Hilton Seafood UK wild
capture volume is from certified fisheries
and we help fund and actively participate
in fishery improvement projects to
bring the remainder of our supply to
certification. We hold Marine Stewardship
Council certification for all of our
manufacturing facilities that use wild fish.
Over 99% of our farmed fish and shellfish
are from certified farms (ASC, GlobalGAP,
or BAP). Hilton Seafood UK carry out
additional audits by its qualified auditors.
SUPPLY CHAIN INTEGRITY, ENVIRONMENTAL
IMPACT ASSESSMENT AND TRACEABILITY
Hilton Food Group PLC Annual Report and Financial Statements 2023
98
Hilton Food Group PLC Annual Report and Financial Statements 2023
98
SASB Code Sub-Category
2nd Sub-
category Disclosure Unit of Measure 2023 Response
FB-FR-
130a.1
Energy
Management
Measurement (1) Total energy consumed,
(2) percentage grid
electricity, (3) percentage
renewable
Gigajoules (GJ),
Percentage (%)
1) 937,585 GJ.
2) see page 92.
3) 64% globally.
FB-PF-
140a.1
Water
Management
Measurement (1) Total water withdrawn,
(2) total water consumed,
(3) percentage of each
in regions with High or
Extremely High Baseline
Water Stress
Thousand cubic
meters (m³),
Percentage (%)
1) see page 93.
2) see page 93.
3) 8%.
FB-PF-
140a.2
Water
Management
Measurement Number of incidents
of non-compliance
associated with water
quantity and/or quality
permits, standards,
andregulations
Number There was one incident of non-
conformance in FY23 at our Wiri site in
New Zealand due to an overflow of trade
waste. The issue was reported to the local
authorities and the corrective actions
were carried out to close out the non-
conformance.
FB-PF-
140a.3
Water
Management
Description Description of water
management risks and
discussion of strategies
and practices to mitigate
those risks
N/A See 'Resource Efficiency' disclosure on
page 74 of this report.
FB-PF-
250a.1
Food Safety Measurement Global Food Safety
Initiative (GFSI) audit (1)
non-conformance rate
and (2) associated
corrective action rate for
(a) major and (b) minor
non-conformances
Rate 20 sites are GFSI certified (including
Hilton Food Solutions) 14 sites are
certified against BRC standard, 8 sites are
AA (>5 minors), 5 sites are A grade (6-10
minors) and 1 site is B grade (11-16 minors).
4 sites are certified against FSCC 22000
standard, all have graded Pass. 2 sites are
certified IFS standard, both rated 96% to
high level grade.
FB-PF-
250a.2
Food Safety Measurement Percentage of ingredients
sourced from Tier 1
supplier facilities certified
to a Global Food Safety
Initiative (GFSI) recognised
food safety certification
programme
Percentage (%)
by cost
In FY23, 90.2% of our ingredients
sourcedfrom Tier 1 supplier facilities
werecertified to a Global Food Safety
Initiative (GFSI) recognised food safety
certification programme.
FB-PF-
250a.3
Food Safety Measurement (1) Total number of notices
of food safety violation
received, (2) percentage
corrected
Number,
Percentage (%)
In FY23 we received no notices of food
safety violations.
FB-PF-
250a.4
Food Safety Measurement (1) Number of recalls
issued and (2) total
amount of food product
recalled
Number, Metric
tons (t)
In FY23, we had only one product
recallinour Bunbury site, 3.377kg
ofproduct recalled.
FB-PF-
260a.1
Health and
Nutrition
Measurement Revenue from products
labelled and/or marketed
to promote health and
nutrition attributes
Reporting
currency
Hilton Foods is a predominantly own
label provider to our customers brands.
We work with our customer's to enhance
the health and nutrition attributes
of our products. We do not currently
gather data on the revenue of sales from
products labelled and/or marketed to
promote health and nutrition attributes.
We are working to develop an internal
database to be able to gather and share
data on the nutritional attributes of our
products across our different markets.
SASB PROCESSED FOODS REPORT
Hilton Food Group PLC Annual Report and Financial Statements 2023
99
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
SASB PROCESSED FOODS REPORT continued
SASB Code Sub-Category
2nd Sub-
category Disclosure Unit of Measure 2023 Response
FB-PF-
260a.2
Health and
Nutrition
Description Discussion of the process
to identify and manage
products and ingredients
related to nutritional and
health concerns among
consumers
N/A Hilton Foods is actively engaged in
reformulating products to reduce the
fat, salt, sugar and calories, where
appropriate, across our global product
range.
We actively promote the adoption
of Omega-3 products amongst our
customers, engaging with the salmon
industry to increase the Omega-3
content.
As a predominately private label
supplier, we work in partnership with our
customers to deliver health benefits to
their consumers, please refer to 'Balanced
healthy diets' disclosure on page 70 of
this report.
FB-PF-
270a.1
Product
Labelling and
Marketing
Measurement Percentage of advertising
impressions (1) made on
children and (2) made
on children promoting
products that meet
dietary guidelines
Percentage (%) Hilton Foods is a predominantly own
label provider to our customers' brands,
so we do not conduct any consumer
facing marketing - whether to children or
otherwise.
FB-PF-
270a.2
Product
Labelling and
Marketing
Measurement Revenue from products
labelled as (1) containing
genetically modified
organisms (GMOs) and (2)
non-GMO
Reporting
currency
Hilton Foods do not generate revenue
from products labelled as (1) containing
genetically modified organisms (GMOs)
and (2) non-GMO.
FB-PF-
270a.3
Product
Labelling and
Marketing
Measurement Number of incidents of
non-compliance with
industry or regulatory
labelling and/or
marketing codes
Number Hilton Foods has not received any
incidents of non-compliance with
industry or regulatory labelling and/or
marketing codes in FY23.
FB-PF-
270a.4
Product
Labelling and
Marketing
Measurement Total amount of monetary
losses as a result of legal
proceedings associated
with labelling and/or
marketing practices
Reporting
currency
Hilton Foods has not been a party to any
legal proceedings in FY23 in relation to
branding/ product labelling.
FB-PF-
410a.2
Packaging
Lifecycle
Management
Description Discussion of strategies to
reduce the environmental
impact of packaging
throughout its lifecycle
N/A See 'Circular Packaging' disclosure on
page 72 of this report.
FB-PF-
430a.1
Environmental
and Social
Impacts of
Ingredient
Supply Chain
Measurement Percentage of food
ingredients sourced
that are certified to third
party environmental and/
or social standards, and
percentages by standard
Percentage (%)
by cost
In FY23, 90.2% of our ingredients
sourced from Tier 1 supplier facilities
certified to a Global Food Safety
Initiative (GFSI) recognised food safety
certification programme.
Activity
Metrics Sub-Category
2nd Sub-
category Disclosure Unit of Measure 2023 Response
FB-PF-
000.A
N/A Measurement Weight of products sold Metric tons (t) 517,347
FB-PF-
000.B
N/A Measurement Number of production
facilities
Number Hilton Food Group plc has 24 production
sites which are wholly-owned, and one
joint venture.
Hilton Food Group PLC Annual Report and Financial Statements 2023
100
GRI REPORT
Statement of use Hilton Food Group plc has reported in accordance with the GRI Standards for the period 31 December 2022
until 31 December 2023.
GRI 1 used GRI 1: Foundation 2021
Applicable GRI
Sector Standard(s)
N/A
GRI Standard
GRI 2: General
Disclosures 2021
2-1 Organisational details Annual report page 162
2-2 Entities included in the organisation's
sustainability reporting
Annual report page 89
2-3 Reporting period, frequency and
contact point
The Annual report is published annually in April, the reporting
period is 31 December 2021 to 31 December 2022. This is in
alignment with financial reporting. Publication date and point of
contact are detailed on page 101
2-4 Restatements of information Annual report page 89
2-5 External assurance Annual report page 89
2-6 Activities and workers Annual report page 12
2-9 Governance structure and composition Annual report page 110
2-10 Nomination and selection of the
highest governance body
Annual report page 114
2-11 Chair of the highest governance body Annual report page 114
2-12 Role of the highest governance body in
overseeing the management of impacts
Annual report page 115
2-13 Delegation of responsibility for
managing impacts
Annual report page 115
2-14 Role of the highest governance body
in sustainability reporting
Annual report page 50
2-15 Conflicts of interest Annual report page 120
2-22 Statement on sustainable
development strategy
Annual report page 43
2-25 Processes to remediate
negativeimpacts
Hilton Foods Whistleblowing Policy (https://www.hiltonfoods.
com/media/dulnlntq/hilton-foods-whistleblowing-policy-jan24)
Modern Slavery Statement (https://www.hiltonfoods.
com/media/kfajiga2/hilton-foods-modern-slavery-act-
statement-2023.pdf)
2-26 Mechanisms for seeking advice and
raising concerns
Hilton Foods Whistleblowing Policy (https://www.hiltonfoods.
com/media/dulnlntq/hilton-foods-whistleblowing-policy-jan24)
2-27 Compliance with laws and regulations Hilton Foods have no significant instances of non-compliance
with laws and regulations or received any fines during the
reporting period.
2-28 Membership associations Sustainability report on our website
2-29 Approach to stakeholder engagement Annual report page 36
2-30 Collective bargaining agreements Annual report page 94
Material Topics
GRI 3: Material Topics
2021
3-1 Process to determine material topics Annual report page 49, details our double materiality process.
3-2 List of material topics Annual report page 49
Hilton Food Group PLC Annual Report and Financial Statements 2023
101
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Biodiversity
GRI 3: Material
Topics 2021
3-3 Management of material topics Annual report page 49
GRI 304:
Biodiversity 2016
304-1 Operational sites owned, leased,
managed in, or adjacent to, protected areas
and areas of high biodiversity value outside
protected areas
Hilton Foods New Zealand's facility at 11 Puaki Drive, Wiri,
Auckland 2104 is 2km from Puhinui Reserve, Wiri, Auckland
2025 which has considerable historic, conservation and cultural
amenity value and is protected under local law. No other site is
adjacent to a protected area.
304-2 Significant impacts of activities,
products and services on biodiversity
Hilton Foods is using certification to mitigate exposure to
biodiversity risk.
100% of palm oil, timber and directly sourced soy products
are certified as deforestation free by RSPO, FSC, PEFC and
soy respectively. Soy is a key ingredient in feed consumed
by livestock in our supply chain. We are working to eliminate
deforestation in our supply chain by the end of 2025. This
includes deforestation in the production of directly purchased
ingredients as well as the production of feed and livestock in our
supply chain.
We are also committed to ensuring the sustainability of wild
capture fisheries. 98% of the wild capture fish in our products
is sourced from Marine Stewardship Council (MSC) certified
fisheries, with the remainder from a comprehensive Fishery
Improvement Project (FIP).
We are also working to develop novel intervention measures
for biodiversity to facilitate biodiversity improvement
activities based on output measures. This is detailed further
in the Nature Positive section.
GRI REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
102
GRI REPORT continued
Emissions
GRI 3: Material
Topics 2021
3-3 Management of
material topics
Annual report page 49
GRI 201: Economic
Performance
305-1 Direct (Scope 1)
GHG emissions
a) Annual report page 90
b) All gases are included in the calculation; CO
2
, CH4, N2O, HFCs, PFCs, SF6 , NF3
c) We do not produce any biogenic CO
2
emissions
d) 2020
i) 2020 was chosen as baseline as it was the first year for which detailed data was
available. An assessment was conducted at sites where data was available for
prior years to understand the impact of COVID-19, but it was determined that
there was not a significant anomaly in energy use.
ii) 2020 = 19,020 tCO
2
e
iii) There are no significant changes in emissions that triggered recalculations of
base year emissions
e) Australian National Greenhouse Accounts Factors, IEA, UK Government
Greenhouse gas reporting: conversion factors 2023 and Supplier Data
f) Equity share
g) Our calculation model is aligned to ISO14044 and the Greenhouse Gas Protocol
305-2 Energy indirect
(Scope 2)
GHG emissions
a) Annual report page 90
b) All gases are included in the calculation; CO
2
, CH4, N2O, HFCs, PFCs, SF6 , NF3
c) We do not produce any biogenic CO
2
emissions
d) 2020
i) 2020 was chosen as baseline as it was the first year for which detailed data was
available. An assessment was conducted at sites where data was available for
prior years to understand the impact of COVID-19, but it was determined that
there was not a significant anomaly in energy use.
ii) Equivalent scope group location based Scope 2 emissions were 75,728 tCO
2
e and
market based Scope 2 emissions were 56,557 tCO
2
e
iii) There are no significant changes in emissions that triggered recalculations of
base year emissions
e) Australian National Greenhouse Accounts Factors, IEA, UK Government
Greenhouse gas reporting: conversion factors 2023 and Supplier Data
f) Equity share
g) Our calculation model is aligned to ISO14044 and the Greenhouse Gas Protocol
305-3 Other indirect
(Scope 3)
GHG emissions
a) Annual report page 90
b) All gases are included in the calculation; CO
2
, CH4, N2O, HFCs, PFCs, SF6 , NF3
c) We do not produce any biogenic CO
2
emissions
d) 7. Employee commuting – Teleworking
e) 2020
i) 2020 was chosen as baseline as it was the first year for which detailed data was
available. An assessment was conducted at sites where data was available for
prior years to understand the impact of COVID-19, but it was determined that
there was not a significant anomaly in energy use.
ii) 2020 = 19,020 tCO
2
e
iii) There are no significant changes in emissions that triggered recalculations of
base year emissions
f) Ecoinvent, Hestia, FAO, Dalhousie University Seafood CO
2
Database, Australian
National Greenhouse Accounts Factors, IEA, UK Government Greenhouse gas
reporting: conversion factors 2023, collated literature and Supplier Data
g) Our calculation model is aligned to ISO14044 and the Greenhouse Gas Protocol
305-4 GHG emissions
intensity
Annual report page 90 (All gases are included)
305-5 Reduction of
GHG emissions
Annual report page 90
305-6 Emissions of
ozone-depleting
substances (ODS)
a) Our direct footprint of ozone depleting substances is zero
b) All emissions of fluorinated gases
c) https://www.gov.uk/guidance/ozone-depleting-substances-ods
Hilton Food Group PLC Annual Report and Financial Statements 2023
103
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
GRI REPORT continued
Employment
GRI 3: Material
Topics 2021
3-3 Management of
material topics
Annual report page 49
GRI 401:
Employment
401-1 New employee
hires and employee
turnover
Annual report page 94
"401-2 Benefits
provided to full-time
employees that are not
provided to temporary or
part-time employees"
Annual report page 94
401-3 Parental leave Annual report page 94
Occupational health and safety
GRI 3: Material
Topics 2021
3-3 Management of
material topics
Annual report 49
GRI 403:
Occupational
Health and Safety
2018
403-1 Occupational
health and safety
management system
a) Hilton Foods implements a Safety Framework Management System, consisting of
Global Standard, Global Procedures and Global Key Requirements. Local flexibility
is obtained by development of local procedures by each facility detailing how they
meet the Global Key Requirements.
i) The Safety Framework was implemented to bring a global standard to the way
Hilton Foods manages health, safety and wellbeing.
Global Standards
– HFG/GS/001 - Leadership, Commitment, Accountability and Planning.
– HFG/GS/002 – Hazard and Risk Management.
– HFG/GS/003 – Legal Compliance and Records Management.
– HFG/GS/004 – Training, Communication and Consultation.
– HFG/GS/005 - Emergency Management and Incident Investigation.
– HFG/GS/006 - Health, Wellbeing and Injury Management.
– HFG/GS/007 - Performance Monitoring, Measurement and Reporting.
– HFG/GS/008 - Assurance, Corrective Action and Management Review.
ii) The framework consists of Global Standard, Global Procedures and Global
Key Requirements. The Safety Framework was implemented to bring a global
standard to the way Hilton Foods manages health, safety and wellbeing.
b) This Framework is implemented in all facilities.
Hilton Food Group PLC Annual Report and Financial Statements 2023
104
GRI REPORT continued
Occupational health and safety
403-2 Hazard
identification, risk
assessment, and
incident investigation
a) Hilton Foods implements a Global Hazard and Risk Management process across
all its facilities. Hazards reports can be raised by anyone in the business and the
processes used to record hazards range from using electronic reporting systems,
Hazard T Cards, or populating Excel Spreadsheets. The global procedure is based on
and promotes the methodology of the Hierarchy of Controls.
i) All hazards reported are reviewed by the local Safety team and allocated to the
appropriate Department Manager for action. They are logged and monitored by
the local safety team. Hazards can be raised by any employee, contractor, visitor
or member of the public, the responsibility for the action is with the relevant
Department Manager where the hazard was identified.
ii) Hazard Reports raised, closed, and the Hazard Close Out Rate are three of a
suite of health and safety performance key performance indicators used in all of
Hilton Foods facilities. These are reviewed locally via Daily Review Meetings with
Operations and Management Teams. They are reported on via weekly Senior
Management Team Meetings, and also are included in monthly Executive and
Board reports.
b) All employees, contractors, visitors are encouraged to raise or report all hazards
if and when they observe them, as stated in Hilton Foods Health and Safety
Policy. Hilton Foods run several employee forums where employees are invited to
attend and participate in open discussion on any topic. These range from Safety
Committee meetings through to open discussion forums (your voice). Hilton Foods
also promotes a whistleblowing service for employees and investigates any calls to
this service thoroughly.
c) At Hilton Foods, all employees permanent and temporary are encouraged to
stop the operation if they feel something is not safe or is an imminent risk to
health. The use of emergency stops under these situations is actively encouraged
and is communicated via inductions and safety discussions. Employees are
also encouraged to report any unsafe processes, equipment or actions to their
immediate supervisor, who will take the necessary action and stop the operation
if required.
d) Hilton Foods has a documented Global Procedure for Incident Investigation that
is implemented in all of its operational facilities as standard. The team during the
investigation will use one or more incident causation models to ascertain the root
cause (iCAM, 5 Why’s, Fishbone or Tripod method). All corrective actions raised
from incident investigations are entered into a shared action tracker and reviewed
weekly against progress to close out.
403-3 Occupational
health services
Hilton Foods facilities partner with an Occupational Health provider who provide
services such as management referrals, health surveillance, job/task risk assessments
and general advice on a range of health, safety and wellbeing topics. Where facilities
do not have on site Occupational Health Services, they partner with a local medical
practice and encourage employees to take advantage of this service.
403-4 Worker
participation,
consultation, and
communication on
occupational health
and safety
a) Hilton Foods have a number of forums where employees participate and are
consulted on health and safety. Health and Safety Representatives are in place in all
facilities, part of their role is to consult with employees on health and safety issues.
b) We have Safety Committees chaired by the Safety Manager and attended by a
cross section of employees and the safety representatives at all facilities. There
is also a management of change process implemented as part of the safety
framework, and this invites employees who may be affected by a proposed change
whether process, procedural, operational or a new piece of machinery / equipment
to be part of the change process and put forward their points.
403-5 Worker training
on occupational health
and safety
Basic health and safety is covered during induction, all employees permanent and
temporary receive this induction. Contractors receive a contractors induction which
also covers the basic health and safety requirements. Safety is also included within
operational SOPs and these are trained out to employees appropriate to their roles
and activities. Employees working with chemicals undergo safe-use of chemicals
training, whilst engineers are where possible multiskilled and competent in both
mechanical and electrical engineering. All Health and Safety Managers and advisors
(27 across all sites) receive specific training on health and safety, this will be to Nebosh
certificate and Diploma level or similar depending on local legislative requirements in
different geographies.
Hilton Food Group PLC Annual Report and Financial Statements 2023
105
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
GRI REPORT continued
Occupational health and safety
403-10 Work-related
ill health
a) No fatalities as a result of work-related ill health or cases of recordable work-related
ill health were reported for all employees.
b) No fatalities as a result of work-related ill health or cases of recordable work-related
ill health were reported for workers who are not employees but whose work and/or
workplace is controlled by the organization.
c) No hazards reported within the period have contributed to high consequence
injuries.
d) No workers have been excluded.
e) We measure Hazard Reporting performance via a close out rate taking the total
number closed, divided by the total number raised and multiplying by 100. This
gives us our percentage close out rate.
Forced or compulsory labor
GRI 3: Material
Topics 2021
3-3 Management of
material topics
The description of management approach for forced or compulsory labour is
included under GRI 414: Supplier Social Assessment.
GRI 409: Forced or
Compulsory Labor
2016
409-1 Operations and
suppliers at significant
risk for incidents of forced
or compulsory labor
Hilton Foods take a zero tolerance approach to forced labour. Forced or compulsory
labour can be influenced by third party exploitation, or in some cases in-country
practices.
Our risk assessment methodology enables us to prioritise areas of highest risk to
rights holders, these are:
ii) Asia, South America and in some cases Europe
b) Our multi-faceted approached to protect all workers from the risks of forced labour,
and those within our international supply chains can be viewed in GRI 414: Supplier
Social Assessment (page 109).
Hilton Food Group PLC Annual Report and Financial Statements 2023
106
GRI REPORT continued
Supplier social assessment
GRI 3: Material
Topics 2021
3-3 Management of
material topics
a) We are committed to respecting and championing the human rights of all who
come into contact with our business, including our employees, agency workers,
workers within our supply chain, and our local communities. It is essential that
every person in our value chain is treated fairly and rewarded appropriately for
their work, whether on farm or fishing vessel, abattoir, factory, or distribution
centre. Hilton Foods runs a human rights program across its global businesses,
addressing risks to rights holders within it’s own operations and supply chains.
The saliency of human rights as a material topic within our ESG risks is presented
on page 56 of our Annual report. Adjacent topics held within our human rights
response, as demonstrated within our materiality matrix, include the wellbeing,
diversity and inclusion of our employees, health and safety, talent development
and availability, and traversing both our own operation and the supply chain,
responsible recruitment. Respect of human rights forms a core element of our
2025 Sustainable Protein Plan, see page 56 of our Annual report.
b) Globally the risk of forced labour has increased in the past 12 months, influenced
by the continuing economic impact of the Covid-19 pandemic, increased
migration due to climate degradation, coinciding with growing political instability
and conflict. The adverse impacts of economic instability, forced migration, and
fluctuating labour market dynamics create overlapping crises which can increase
the risk of exploitation for vulnerable groups. Hilton Foods human rights program
works proactively to identify potential negative impacts, and work collaboratively
with suppliers, stakeholders, and rights holders where they are identified to
provide remediation and remedy where possible.
c) Our Human Rights Policy and Supply Chain Social Responsibility Policy underpin
our commitment to respecting human rights and tackling modern slavery,
available publicly on our website at www.hiltonfoods.com.Human Rights Policy
(here) This policy describes our commitment to all workers employed to work within
our own operations available on our website at www.hiltonfoods.com
These policies outline our commitment to following; the United Nations Guiding
Principles on Business and Human Rights, the International Labour Organisation’s
Declaration on Fundamental Principles and Rights at Work, and the Ethical Trade
Initiative Base Code. As full participants of the UN Global Compact (UNGC), we
are committed to supporting their 10 Principles. We are committed to respecting
the human rights of workers on our sites and those engaged within our supply
chains by complying with our legal human rights requirements at a national,
and international level. Where national law and international frameworks such as
the Ethical Trade Initiative (ETI) Base Code are in conflict, we will work to ensure
the highest standard is offered to workers. In 2023, we initiated an internal audit
program aligned to the SMETA standard in 2022. This is conducted by the Group
Ethics and Social Sustainability Senior Manager, who is a SA8000 trained lead
auditor with training in investigative interview skills.
In 2023, a new Agency Labour Standard was introduced to ensure the
competency of all labour providers supplying Hilton Foods, with particular
attention to the operational controls needed to mitigate the risks of modern
slavery and hidden third party exploitation. It ensures the competency, financial
resilience and ethical behaviour of our labour providers. In addition to this, a Hilton
Foods Accommodation Standard is in operation to provide assurance of the
quality and safety of housing or accommodation where offered. To further
our action on human rights, Hilton Foods became a corporate member of the
Slave-Free Alliance to engage in business-specific improvements related to
reduce modern slavery, particularly forced labour, labour trafficking and other
hidden third party exploitation of workers.
Hilton Food Group PLC Annual Report and Financial Statements 2023
107
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
GRI REPORT continued
Supplier social assessment
GRI 3: Material
Topics 2021
3-3 Management of
material topics
Our Supplier Social Responsibility Code of Conduct, which describes the labour
standards we expect within our supply chain, ensuring working conditions are fair
and safe and that all workers are treated with dignity and respect. This document
forms part of our new global supplier onboarding process and is a condition of
supply. Our Supplier Social Responsibility Compliance Requirements outlines the
steps suppliers must take to demonstrate observance of the code. All our business
units are responsible for ensuring that suppliers understand and comply with
these requirements.
Our Children’s Rights and Child Labour Remediation Policy describes our
responsibility to respect children’s rights and support the human rights of
children. We will contribute towards the elimination of child labour in all our
business activities and business relationships. None of our direct operations hold
any significant risk of child labour, however, child labour can be hidden in more
complex global agricultural supply chains. We commit to provide decent work
for young workers, parents, and caregivers, and will ensure the protection and
safety of children in all business activities and facilities. We work to ensure that all
employees understand their statutory obligations with respect to children and
young people, from apprentices to work experience candidates.
d) Hilton Foods holds an overarching human rights strategy, with timebound goals
and targets that traverse our global operations. We seek to address human rights
and modern slavery in line with our commitment to the United Nations Guiding
Principles on Business and Human Rights to respect human rights by; identifying,
preventing, mitigating, and accounting for how we address our impacts on human
rights, and enabling processes for remediation. Our commitments and public
actions on human rights can be viewed on page 56 of our Annual report.
Our Human Rights Policy sets out the standard for our commitments and
public actions on human rights can be viewed on page 56 of this report. In 2023,
we initiated an internal audit program aligned to the SMETA standard. This is
conducted by the Group Ethics and Social Sustainability Senior Manager, who is a
SA8000 trained lead auditor with training in investigative interview skills.
All protein suppliers are required to agree to the Code of Conduct and register
on Sedex, an ethical data platform. Suppliers are required to complete a self-
assessment questionnaire, covering labour rights, health and safety, the
environment and business ethics. High risk sites are required to conduct a SMETA
audit. Supplier sites with open critical non-conformances are not approved to
supply until closed and reviewed by third party auditor. Where risks or impacts are
identified and a supplier refuses to remediate, a cease of supply will be considered.
We work collaboratively with all suppliers to remediate where issues arise and
identify root causes. In situations of low leverage, for example at a fishery level, we
will work collaboratively with a wide range of stakeholders to remedy or advocate
for systemic change.
We work to identify potential human rights and modern slavery risk within our own
operations and supply chains primarily through utilisation of the Sedex RADAR risk
assessment tool. Sedex is an internationally recognised supply chain transparency
platform, to monitor labour standards and gain insight into working conditions
in supplier sites. All our risk assessment work utilises publicly available sources of
risk data, which are robust in nature, e.g. UN agencies such as the UNDP and the
ILO, the World Bank, the US Department of State, specialist research agencies and
commercial risk data providers. We also consider the nature of the work or activity
being undertaken, i.e. labour intensity, workforce skill level, etc., and reporting on
any known human rights risks from NGOs or media. This sits alongside our Supplier
Ethical Approval and Risk Assessment process, which is housed in our supplier
management system, Foods Connected. We piloted this system in 2021 and
launched it across our business in 2022. We conduct supply chain due diligence as a
function of assessing the effectiveness of our human rights commitments. In-scope
suppliers are required to complete the Sedex Self-Assessment Questionnaire, which
allows us to hold a detailed site-specific risk assessment. We continue to onboard
new suppliers onto Sedex and complete the retrospective action of connecting with
our existing supply base.
Hilton Food Group PLC Annual Report and Financial Statements 2023
108
GRI REPORT continued
Supplier social assessment
GRI 3: Material
Topics 2021
3-3 Management of
material topics
e) Our management of modern slavery risk across our operations and supply chain
falls within our broader approach to human rights, which is included within our
2025 Sustainable Protein Plan. Please refer to page 49 of our Annual report for
further information on our governance process for human rights.
f) The eradication of forced labour cannot be achieved by one business alone,
collaborative action from government and civil society is essential. At Hilton Foods,
we collaborate with several third parties to safeguard labour rights and improve
working conditions.
We have strengthened our commitment to the Food Network for Ethical Trade
through engaging in its governance by becoming an elected Board Member. We
also act as Board sponsor for their Empowering Work working group, delivering
training on in-work poverty, worker engagement and improving access to worker
representation.
We are a founding member of the Seafood Ethics Action Alliance, a collaborative
forum to ensure human rights are respected in seafood supply chains. In 2022,
we were elected as Chair of their Steering Committee and continued to lead their
human rights due diligence workstream.
In 2023, we are pleased to announce our membership of the Slave-Free Alliance,
who will act as a ‘critical friend’ to help us enhance our work within this area. As an
international social enterprise, they have the knowledge and expertise to support us
to prevent exploitation across our value chain.
GRI 414: Supplier
Social Assessment
2016
414-1 New suppliers
that were screened
usingsocial criteria
a) All protein suppliers are currently in the process of being taken through our new
Supplier Ethical Approval and Risk Assessment process.
Customer health and safety
GRI 3: Material
Topics2021
3-3 Management of
material topics Annual report 49
416-2 Incidents of non-
compliance concerning
the health and safety
impacts of products
and services
SASB Report page 99
APPROVAL OF THE STRATEGIC REPORT
Pages 6 to 109 of this Annual report
comprises a Strategic report which
has been drawn up and presented in
accordance with applicable English
company law, in particular Chapter 4A
of the Companies Act 2006, and the
liabilities of directors in connection
with this report shall be subject to the
limitations and restrictions provided by
such law.
It should be noted that the Strategic
report has been prepared for the Group
as a whole, and therefore gives greater
emphasis to the Company and its
subsidiaries when viewed in its entirety.
Approved by order of the Board
of Directors
Neil George
Company Secretary
2 April 2024
Hilton Food Group PLC Annual Report and Financial Statements 2023
109
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
GOVERNANCE
Board of Directors 112
Governance at a glance 114
Board activities 116
Corporate governance statement 118
Directors’ report 122
Report of the Audit Committee 124
Report of the Nomination Committee 127
Directors’ Remuneration report 129
Statement of Directors’ responsibilities 149
Independent auditors’ report 150
OUR INGREDIENTS FOR SUCCESS
Hilton Food Group PLC Annual Report and Financial Statements 2023
110
OUR INGREDIENTS FOR SUCCESS
We provide the most efficient supply chain to our partners
through leveraging our industry leading technology and
international knowledge and expertise.
EXPERTISE
TECHNOLOGY
111
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
BOARD OF DIRECTORS
Committees key
Audit Committee
Remuneration Committee
Nomination Committee
S
Executive Sustainability Committee
Underline denotes Committee Chair.
NON-EXECUTIVE CHAIRMAN
EXECUTIVE DIRECTORS
COMPANY SECRETARY
Neil George
Company Secretary
Neil joined Hilton Foods in 2007 as Group
Financial Controller and Company Secretary.
He began his career in finance qualifying as a
Chartered Accountant having trained within a
regional practice. Since moving into industry he
has worked in finance and company secretarial
roles across a variety of international publicly
listed manufacturing businesses including in the
packaging machinery and medical device sectors.
Robert Watson, OBE
Non-Executive Chairman
Tenure: 21 years
Independent: No
Biography: Robert joined Hilton Foods as Chief Executive in 2002 and was appointed as Executive
Chairman in 2018. He transitioned to a non-executive capacity on 1 January 2021. Robert is Chairman
of the Board and is also Chairman of the Nomination Committee.
Key skills and competencies: Robert has over 40 years’ experience in the meat industry, hasproven
himself as an industry leader and has overseen the successful growth of the Hilton Food Group to
date. Robert brings this wealth of experience and valuable skills as Chairman ofthe Group.
Current external appointments: Whitworths Holdings Ltd.
Previous experience: A founder of the Foyle Food Group in 1977 and previously
a board member of the Livestock Meat Commission and Food For Britain.
Steve Murrells CBE
Chief Executive Officer
Tenure: 1 year
Independent: No
Biography: Steve joined Hilton Foods as Chief Executive Officer in 2023.
Key skills and competencies: An exceptional business leader with a wealth of experience in the
retail and food supply chain sectors in large national and multinational businesses. Steve was
appointed CBE for services to the food supply chain.
Current external appointments: Non-Executive Director at Noble Foods and a Trustee
on the Royal Countryside Fund.
Previous experience: CEO at Co-op, CEO at Tulip and senior positions at Tesco and Sainsbury.
Matt Osborne
Chief Financial Officer
Tenure: 2 years
Independent: No
Biography: Matt joined Hilton Foods in 2018 and from 2018 to 2022 served as the Hilton Foods
Group Financial Controller. He was promoted to Chief Financial Officer in May 2022.
Key skills and competencies: Matt has a degree in chemistry and is a qualified
Chartered Accountant.
Current external appointments: None.
Previous experience: Matt trained with Grant Thornton and joined Greene King
in 2007 reaching the position of Group Financial Controller.
Hilton Food Group PLC Annual Report and Financial Statements 2023
112
BOARD OF DIRECTORS
Patricia Dimond
Non-Executive Director
Tenure: 2 years
Independent: Yes
Biography: Patricia joined Hilton Foods in 2022
as an independent Non-Executive Director.
She is Chair of the Audit Committee.
Key skills and competencies: Patricia qualified
as a Chartered Accountant working with
Deloitte in Canada and the UK, is a CFA charter
holder and holds an MBA from IMD Switzerland
with a 30 year international career in consumer,
retail and financial markets.
Current external appointments:
Non-Executive Director at Foresight VCT plc,
Aberforth Smaller Companies Trust plc, English
National Opera and the National Academy for
Social Prescribing.
Previous experience: Executive roles with
Storehouse, Mothercare and Value Retail plc, a
management consultant with McKinsey and
Co and formerly Non-Executive Director at LXi
REIT plc.
NON-EXECUTIVE DIRECTORS
Angus Porter
Non-Executive Director and
Senior Independent Director
Tenure: 5 years
Independent: Yes
Biography: Angus joined Hilton Foods as an
independent Non-Executive Director in 2018.
He is the Senior Independent Director and the
designated NED for workforce engagement.
Key skills and competencies: Angus’
extensive knowledge and experience in public
companies and the food and retail sectors are
valuable to the decisions of the Board. He has
an MA in natural sciences and PhD from the
University of Cambridge.
Current external appointments:
Non-Executive Co-Chairman of Direct Wines
Ltd. and Non-Executive Director at McColl’s
Retail Group plc.
Previous experience: Angus has held
numerous executive and non-executive roles
including Mars, BT, Abbey National and WPP.
He was Chief Executive of the Professional
Cricketers’ Association, Non-Executive Director
and Senior Independent Director of Punch
Taverns plc, Non-Executive Director of
TDC A/S (Denmark).
Sarah Perry
Non-Executive Director
Tenure: New
Independent: Yes
Biography: Sarah joined Hilton Foods in 2023
as an independent Non-Executive Director.
Key skills and competencies: Sarah
has considerable supply chain and
logistics experience.
Current external appointments:
Vice President integrated supply chains at
Carlsberg Marston’s Brewing Company Ltd,
a director of Carlsberg UK Holdings Ltd and a
director of various companies involved with
their SDE Innserve joint venture business
with Heineken.
Previous experience: Senior executive
operations and logistics roles at Coca-Cola
European Partners plc, Oxford University Press
and DHL UK.
Rebecca Shelley
S
Non-Executive Director
Tenure: 4 years
Independent: Yes
Biography: Rebecca joined Hilton Foods
in 2020 as an independent Non-Executive
Director. She is Chair of the Remuneration and
executive Sustainability Committees.
Key skills and competencies: Rebecca has
held market-facing investor relations and
corporate communications roles at a number
of listed companies. She has a BA (Hons) in
Philosophy and Literature from the University of
Warwick and an MBA in International Business
and Marketing from Cass Business School.
Current external appointments:
Non-Executive Director at Sabre Insurance
Group plc, Liontrust Asset Management plc.
and Conduit Holdings Limited.
Previous experience: Rebecca was Group
Communications Director and a member of
the Executive Committee at Tesco plc and
Global Corporate Affairs Director at TP ICAP
plc. Other roles include Norwich Union plc,
Prudential plc and as a partner at Brunswick
LLP. She was also on the Board of the British
Retail Consortium, a Trustee of the Institute
of Grocery Distribution and formerly Non-
Executive Director at Arraco Global Markets Ltd.
Hilton Food Group PLC Annual Report and Financial Statements 2023
113
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
GOVERNANCE AT A GLANCE
HIGHLIGHTS
– Successful transition of Steve Murrells as
CEO and Sarah Perry as NED
– Female Board representation above the
40% FCA target
– Continuing low level of
whistleblowing reports
– Successful follow-up actions from the 2022
external Board evaluation
– Internal Board evaluation in 2023
Growth and success through partnership
Through the creation of efficient, innovative and responsible food
manufacturing and supply chain solutions with the ambition to be the
international food and supply chain services partner of choice.
BOARD COMPOSITION AS AT 1 JANUARY 2024
2023/24 HIGHLIGHTS
91% 43% 57%
of employees contributed to the
annual engagement survey in 2023
(2022: 91%)
Board female representation
(2022: 43%)
Independent Non-Executive
Directors on the Board
(2022: 57%)
For more information
see page 54.
For more information
see page 119.
For more information
see page 118.
Male Female
Executive Directors 2
Independent Non-Executive Directors 4
Non-Executive Chair 1
57%
57%
71%
43%
43%
29%
2023
2022
2021
Board gender balance
Board independence
21
5
4
R
obert Watson
Angus Porter
Rebecca Shelley
2
new
Patricia Dimond
Sarah Perry
Chair and Non-Executive Director tenure
Years: 5 10 15 20
Hilton Food Group PLC Annual Report and Financial Statements 2023
114
GOVERNANCE AT A GLANCE
OUR GOVERNANCE FRAMEWORK
Shareholders
The Board
Leads the Group’s governance structure and is collectively responsible for promoting the
long-term sustainable success of the Group. Sets and approves the strategy and key policies
and monitors progress towards achieving these objectives.
Chairman
Leads the Board.
Responsible for ensuring the
Board’s overall effectiveness
indirecting the Company.
Ensures Board meeting agendas
are aligned with the business
strategy, in collaboration with the
CEO and Company Secretary.
Promotes a culture of openness
and debate.
Chief Executive Officer
Responsible for the day-to-day
management of the business.
Develops the strategic direction
and promotes our culture
and values.
Chief Financial Officer
Responsible for all financial related
activities including risk,
treasury, and finance strategy.
In collaboration with the
CEO oversees strategic planning,
deal analysis and negotiations,
and investor relations.
Senior Independent Director
Works closely with the Chair,
acting as a sounding board and as
an intermediary for the other
Directors and shareholders.
Available for shareholders
to raise concerns that normal
channels have failed to resolve.
Independent
Non-Executive Directors
Responsible for holding
management and Executive Directors
to account against the
agreed performance objectives.
They apply independent judgement,
expertise and oversight to critically
challenge management and to support
strategy development.
They scrutinise the robustness and
effectiveness of financial controls and
risk management processes.
Company Secretary
Responsible for advising the
Board on all governance matters
and ensuring compliance
with Board procedures.
Supports the Chairman in ensuring
that the Directors receive timely,
accurate and clear information.
All Directors have access to the
advice of the Company Secretary.
Committees
The Board has delegated certain responsibilities to formal Board subcommittees
Audit Committee Remuneration Committee Nomination Committee
Read more
see page 124.
Read more
see page 129.
Read more
see page 127.
Executive Leadership Team
Implementation of the agreed strategy and budget and the day-to-day management
ofthe Group’s operations is delegated to the Executive Leadership Team, led by the Group CEO.
Find out more about the Executive Leadership Team
www.hiltonfoods.com/who-we-are/executive-leadership-team
Executive Committees
The Executive Team has delegated certain responsibilities to executive subcommittees, including:
Risk Management Committee
Reports to the Audit Committee
Sustainability Committee
Chaired by an Independent Non-Executive Director
Hilton Food Group PLC Annual Report and Financial Statements 2023
115
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Our activities – 2023 overview
JANUARY
HIGHLIGHTS
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
Board approves the full year
trading update.
Update on ESG disclosures.
The AGM trading update was reviewed
by the Board.
Hybrid AGM held from the Hilton Foods
offices in Huntingdon, UK.
Board updated on development of the
Greenchain Solutions tech stack.
Supply agreement with Walmart
Canada announced.
Board approves the 2023
interim results.
Board visit to our Hilton Foods Holland
and Foppen sites.
Christine Cross retires from the Board.
Sarah Perry appointed as a NED.
2023 interim dividend of 9p paid
to shareholders.
The Board with the Audit Committee
conducted a review of risk
management and internal audit.
Board approves the 2022 full year results.
Investor day held at Hilton Foods,
Huntingdon UK.
Steve Murrells appointed as Chief
Executive Of ficer.
Philip Heffer steps down from the Board.
Final dividend of 22.6p paid
to shareholders.
Board approves acquisition of
an 80% investment in Evolve 4.
This timeline sets out an overview of key Board activities throughout 2023.
BOARD ACTIVITIES
Hilton Food Group PLC Annual Report and Financial Statements 2023
116
STRATEGIC OVERSIGHT
– The Walmart Canada venture was considered and approved.
– Various capital allocation projects were reviewed and approved, including to
increase our crate pool in Australia and production line refurbishments in our
UK and Irish factories.
– Ongoing support and oversight for the development of our new vegan and
vegetarian strategy.
– Potential strategic investment and acquisition opportunities such as approval
of the joint venture with Sphere and investment in Evolve 4 were reviewed
and approved.
– Oversight of the Greenchain Solutions tech stack development.
– Approved the Company’s dividend strategy and payment of the interim
andfullyear dividends.
– Dedicated business strategy sessions focusing on long-term growth
and opportunity.
– All our Board members attended the Investor Day held in November.
BUSINESS PERFORMANCE
– Financial performance versus
budget and previous year
performance was reviewed at
regular intervals throughout
the year.
– Review and approval of the
2024 budget.
– The Board closely monitored
the UK Seafood turnaround plan
through 2023.
– Operational performance was
monitored through regular
updates from the Executive
Leadership Team.
– Reports received from the Board
Committee Chairs were reviewed.
– The Board visited our Hilton Foods
Holland and Foppen sites
in September.
SUSTAINABILITY
– Our submission of more ambitious
Science-Based Targets across
Scope 1, 2 and 3 emissions aligned
to the 1.5ºC pathway was approved.
– The Board received training on the
Group’s Sustainable Protein Plan,
key and upcoming legislation,
climate change trends and how we
are responding as a business.
– Our ESG disclosure and ratings
performance were considered.
– Regular reports from the
Sustainability Committee
were received.
– The Hilton Foods CDP scores
for forests and climate change
were reviewed.
TALENT DEVELOPMENT
– The Board considered
succession planning and future
leadership requirements.
– Targets for the proportion of
women in senior positions were
reviewed, as was gender pay
gap data.
– Approved the appointment of
Steve Murrells as CEO and Sarah
Perry as a Non-Executive Director.
– Ways of working for the Executive
Leadership Team were reviewed
and shared goals and priorities
were identified.
– Results of the employee
engagement survey were reviewed
and next steps identified.
RISK, AUDIT AND
GOVERNANCE
– Reports of whistleblowing
investigations were reviewed
bythe Board.
– Progress against recommendations
from the 2022 external Board
evaluation was monitored
though 2023.
– An internal evaluation process was
conducted, building on the findings
of the 2022 external evaluation.
– The Board were updated on
proposed changes to the
UK Corporate Governance
Code, reviewed the new
IFRS sustainability standards
and monitored upcoming
legislative changes.
– The Board approved the full year
results in April and the interim
results in September.
– The Board received regular health
and safety updates.
BOARD ACTIVITIES
Hilton Food Group PLC Annual Report and Financial Statements 2023
117
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
CORPORATE GOVERNANCE STATEMENT
2023 Overview
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.
Company purpose, values and culture
Our purpose is to create efficiency and
flexibility in the food supply chain without
compromising 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. The Hilton Foods model of ‘growth
through total partnership’ creates value
forits stakeholders as well as contributing
to wider society.
Our core values, guide us in delivering a
sustainable future for all our stakeholders.
These values are integral to our strategic
compass, which navigates us. Our strong
values-based culture supports us in
achieving good governance.
The Board aims to enhance shareholder
value by providing entrepreneurial
leadership for the Group whilst ensuring
there is an appropriate framework of
checks and balances in place.
Further information including our business
model can be found on pages 12 to 15.
Governance code and compliance
We evaluate our governance against
principles and provisions contained in
the 2018 UK Corporate Governance Code
(“Code”) issued by the Financial Reporting
Council which can be obtained from
www.frc.org.uk/corporate/ukcgcode.cfm.
This Corporate governance statement
together with the Board Committee
reports and the Directors’ remuneration
report on pages 129 to 148 detail how
the Board applies the principles of good
governance and best practice as set out
in this Code.
The Directors consider that the Company
has complied with the provisions of
the Code during 2023 except for two
provisions relating to Hilton’s Chairman.
Robert Watson is one of the Hilton
Foods founders, joining the Board as
Chief Executive in 2002. In 2018 he
transitioned to Executive Chairman
and from 1 January 2021 moved into a
non-executive capacity. Provision 9 of
the Code states that a chairman should
be independent on appointment and
that a chief executive should not go on
to become chair of the same company
although the Code does recognise
that this can happen in exceptional
circumstances. Additionally Provision 19
of the Code states that the Chair should
not remain in post beyond nine years from
the date of their first appointment to the
Board. Whilst Robert’s situation does not
comply with these provisions the Directors
are of the strong view that there are valid
exceptional circumstances which are in
the best interests of the Company and its
stakeholders and these are detailed below.
THE BOARD
Board responsibilities
The Board has specific powers reserved
to it contained in a schedule of matters
reserved for decision by the Board.
These powers include changes to capital
structure, acquisitions and disposals,
major trading agreements, major capital
expenditure projects, dividends, treasury
and risk management policies, approval
of budgets and financial reports, and
the giving of any guarantees or letters of
comfort. The Board also has responsibility
for setting policy and monitoring matters
including financial and risk control, health
and safety policy, management succession
and planning and environmental issues.
There is a clear written division of
responsibilities between the Chairman
and the Chief Executive, agreed by the
Board, split between running the Board
and the business. They maintain a close
working relationship, speaking regularly
between Board meetings to ensure a full
understanding of evolving issues and to
facilitate swift decision making.
Membership
At the date of this report the Board
consists of the Chairman, two Executive
Directors and four Non-Executive Directors
whose names, responsibilities, brief
biographies and membership of Board
Committees are set out on pages 112 to
113. The Directors bring strong judgement
and expertise to the Board’s deliberations
and with diversity achieves a balance of
skills and experience appropriate for the
requirements of the business.
Steve Murrells joined the Board as CEO
on 3 July 2023 replacing Philip Heffer who
stepped down from the Board on the
same date. Sarah Perry joined the Board
4 December 2023 as an independent
Non-Executive Director replacing Christine
Cross who stepped down from the Board
on the same date.
All Directors are reappointed annually
under the Company’s Articles and for FTSE
350 companies under the Code. All new
Directors are subject to reappointment
by shareholders at the first opportunity
following their appointment.
Chairman
Robert Watson is one of the Hilton
Foods founders and as such has an
intimate knowledge of the business as
well as having relationships with key
decision makers at supermarket retailing
businesses around the world. He has held
senior Hilton Foods Board positions since
2002 and during that time has guided
the Group to significant continuous and
sustainable growth including a successful
flotation in 2007. This success is illustrated
by the graph on page 146 which charts
Hilton Foods total shareholder return
over the past ten years showing average
compound annual growth of 9.4%, which
compares with 4.4% achieved by the
FTSE 250 Index. A further indicator of
Hilton’s enduring success is the average
compound annual growth in Hilton Foods
adjusted operating profit which, over the
17 years since flotation, is 11.3%.
Robert joined Hilton Foods initially as
Chief Executive, transitioning during
2018 to Executive Chairman and in 2021
he moved into a non-executive capacity.
This transition path had been discussed
with Hilton Foods major shareholders
over a number of years to ensure both
openness and transparency and to gauge
their views. They have been supportive of
these changes to date and Hilton Foods
will continue to engage with them in the
future to ensure that this remains the case.
Robert has been instrumental in Hilton
Foods success over a prolonged period
and Hilton Foods other Directors
continue to have the strong view that
Robert’s knowledge and experience
within the business can contribute to
our further growth and success in the
future. The Board believes that he has
demonstrated, and will continue to
demonstrate, objective judgement that is
in the best interests of the Group. The 2022
external Board evaluation supported the
Board’s view that under the leadership of
Robert Watson Hilton Foods has grown to
be a successful FTSE 250 company.
Hilton Food Group PLC Annual Report and Financial Statements 2023
118
CORPORATE GOVERNANCE STATEMENT
Whilst Robert cannot be designated as
independent under the Code, the Board
believes that he has, since moving to Non-
Executive Chairman, distinguished himself
by critically scrutinising decisions purely
on the basis of his extensive knowledge of
the Group, its history, the industry in which
it operates and its stakeholders. He has
shown that he is able to chair and monitor
the Group without prejudice and that he
is impartial in his judgement and voting
behaviour. He is also supported in this by
a strong Senior Independent Director.
In view of the above, the Board believes
that there are valid exceptional
circumstances envisaged by the Code
which are in the best interests of the Group
and its stakeholders for Robert to continue
as Hilton Foods Chairman.
We do also appreciate stakeholder
concerns to ensure appropriate
governance, and specifically with regard
to the balance of the Hilton Foods
Board, which comprises a majority of
independent Non-Executive Directors.
The Board maintain an ongoing focus
on appropriate succession planning
arrangements and it is now anticipated
that Robert will step down by the end of
2024. The process to appoint his successor
has commenced and is being led by the
Senior Independent Director.
Non-Executive Directors
The Non-Executive Directors, excluding
the Chairman but including the Senior
Independent Director, are considered to be
independent as none of the circumstances
detailed in the UK Corporate Governance
Code apply and no other relevant
circumstances apply, all having served on
the Board for seven years or less. Whilst all
the Non-Executive Directors hold other
directorships outside of Hilton Foods
it is considered that they are all able to
devote sufficient time to meet their Hilton
Foods Board responsibilities. The Non-
Executive Directors do not participate in
any of the Group’s pension arrangements
or in any of the Group’s bonus or share
option schemes.
The Non-Executive Directors met once
during the year specifically to scrutinise
the performance of the executive
management. A further meeting was held
without the Chairman present to assess
his performance.
Shareholder engagement
The Chairman seeks regular
engagement with major shareholders
in order to understand their views on
governance and performance against
the strategy. Board Committee chairs
seek engagement with shareholders
on significant matters related to their
areas of responsibility. Angus Porter, the
Senior Independent Director, is available
to shareholders as an alternative to the
Chairman, CEO and CFO. Following all
conversations or meetings he reports
anyrelevant findings to the Board.
Board balance and diversity
Tables for reporting on gender identity or sex and ethnic background as at 31 December 2023 are set out below.
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
Table for reporting on gender identity or sex
Men 4 57.1% 4 9 75.0%
Women 3 42.9% 0 3 25.0%
Table for reporting on ethnic background
White British or other White
(including minority-white groups)
7 100.0% 4 11 91.7%
Mixed/Multiple Ethnic Groups 0 0.0% 0 0 0.0%
Asian/Asian British 0 0.0% 0 1 8.3%
Black/African/Caribbean/Black British 0 0.0% 0 0 0.0%
Other ethnic group, including Arab 0 0.0% 0 0 0.0%
Not specified/ prefer not to say 0 0.0% 0 0 0.0%
Hilton Foods is committed to diversity on its Board, Executive Committee and its direct reports including implementing targets for
female representation and persons of colour. Further diversity information on Executive Committee direct reports and all employees
can be found in the Sustainability report on page 94.
During the year the balance of independent Non-Executive Directors on the Board was 57.1% and female representation on the Board
was 42.9%, thereby meeting the Board female FCA target. Other FCA targets relating to senior positions on the Board held by women
and Board positions held by those from a minority ethnic background have not yet been met. We will look to increase diversity within
the Group at every opportunity in the future.
Hilton Food Group PLC Annual Report and Financial Statements 2023
119
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
CORPORATE GOVERNANCE STATEMENT continued
Directors’ conflicts of interest
Under the Companies Act 2006, the
Group’s Directors have an obligation to
avoid any situation where they have a
conflict of interest. The Group has in place
procedures that require all Directors to
notify the Group of any conflicts of interest
and, for any such conflicts of interest to be
authorised by non-interested Directors,
which is permitted under the Company’s
Articles. The Board considers that the
Directors’ powers of authorisation of
conflicts have operated effectively and that
the procedures set out above have been
followed properly. No conflicts of interest
during 2023 were identified.
Information and support provided
to Board members
Members of the Board and its Committees
are given appropriate documentation in
advance of each Board and Committee
meeting. For regular Board meetings
these include a detailed period report
on current and forecast trading, with
comparisons against both budget and
prior years. For all meetings appropriate
explanatory papers are circulated well in
advance on matters which the Board or
Committee will be required to approve or
provide responses.
The Board operates both formally through
Board and Committee meetings and
informally through regular contact
between Directors. To assist them in
carrying out their responsibilities the
Directors have, in addition to full and
timely access to all relevant information
from management in advance of Board
meetings, the right to obtain independent
professional advice at the Company’s
expense and the advice and services of
the Company Secretary to enable them
to perform their duties as Directors.
The Company Secretary is responsible to
the Board, through the Chairman, for all
governance matters. The appointment
and removal of the Company Secretary is
determined by the Board as a whole.
Attendance at Board meetings
The Board meets not less than eight times a year to direct and control the strategy and
operating performance of the Group. The following table sets out the Board meeting
attendance by Board members together with the percentage attended. Attendance at
Board Committee meetings is set out in each Committee report.
Number
attended
Percentage
attended
Robert Watson 9 100%
Steve Murrells (appointed 3 July 2023) 5 100%
Matt Osborne 9 100%
Angus Porter 9 100%
Rebecca Shelley 9 100%
Patricia Dimond 9 100%
Sarah Perry (appointed 4 December 2023) 1 100%
Philip Heffer (resigned 3 July 2023) 4 100%
Christine Cross (resigned 4 December 2023) 7 88%
OTHER GOVERNANCE
Training
Training is available to the Board
to develop their knowledge and
understanding of the business and to
enable them to perform their duties as
Directors. Regular updates on regulatory,
governance and legal matters is provided
as part of the Board pack prior to each
meeting and where relevant throughout
the year. The Directors have access to the
Board portal which is used as a source
of reference materials including a range
of articles and reports on relevant topics.
Expert internal and external speakers
deliver tailored training as required.
During the year the Board received
specialist sessions to update on Company
strategy and options for tech stack
funding and incentives. The Board also
received training from external experts
on ESG matters including the upcoming
Corporate Sustainability Reporting
Directive and IFRS sustainability disclosure
standards, changes to the UK Corporate
Governance Code, climate change
and human rights. They also received
an update on vegan and vegetarian
market dynamics.
The Board visited our Foppen and Hilton
Foods Holland facilities in Harderwijk and
Zandaam in the Netherlands respectively
which included factory tours, meetings
with colleagues and an opportunity to
discuss future strategy in the region.
Performance evaluation
Following the external performance
evaluation of the Board in 2022 focus
in 2023 centred around the main areas
for Board development identified in
the external evaluation report including
i) succession planning, ii) improving
agendas, Board papers and timelines,
iii) increasing opportunities to align as a
team and iv) considering lessons learned.
Additionally an internal evaluation was
performed during the year whereby each
Director completed a detailed written
questionnaire with the opportunity to
comment on any issue not directly covered
by the questionnaire. The responses
were analysed and considered by the
Board who have concluded that the
individual Directors, the Board and
its standing Committees continue to
perform effectively.
Annual General Meeting
Our 2024 AGM will continue in a hybrid
format at which shareholders will be asked
to vote on 17 resolutions dealing with
key governance matters, including the
reappointment of all Directors, approval
of the Directors’ remuneration report and
the appointment of Deloitte LLP as the
external auditors.
Hilton Food Group PLC Annual Report and Financial Statements 2023
120
CORPORATE GOVERNANCE STATEMENT continued
Risk management and
internal control
The Board of Directors has overall
responsibility for the Group’s systems
of internal control including financial,
operational and compliance controls
and risk management which operate to
safeguard the shareholders’ investments
and the Group’s assets and for reviewing
their continuing effectiveness. Such an
internal control system can only provide
reasonable and not absolute assurance
against material misstatement or loss
as it is designed to manage rather
than eliminate risk and failure to meet
business objectives.
The Board has carried out a robust
assessment of the principal risks facing
the Company, including those that would
threaten its business model, future
performance, solvency or liquidity, which
are summarised in the Risk management
section on pages 28 to 34.
The Group operates within a clearly
defined organisational structure with
established responsibilities, authorities
and reporting lines to the Board.
The organisational structure is designed
to plan, execute, monitor and control the
Group’s objectives effectively and ensure
internal control becomes integral to all the
Group’s operations. The Board confirms
that the Group’s internal risk based control
systems have been fully operative up
to the date of the Annual report being
approved, key ongoing processes and
features of which are set out below:
– appropriate mechanisms to identify and
evaluate business risk;
– a Group Internal Audit function which is
involved in the review and testing of the
internal control systems and of key risks
across the Group in accordance with
an annual programme agreed with the
Audit Committee;
– a strong control environment;
– an information and communication
process; and
– a monitoring system and regular Board
reviews for effectiveness.
The Group’s planning and financial
reporting procedures include detailed
budgets and a three-year strategic
plan which are approved by the Board.
Periodic management accounts report
performance compared to the budget
and additionally forecasts are updated
through the year. These management
accounts together with half-yearly
and annual accounts are reviewed.
All financial information published by
the Group is approved by the Board and
Audit Committee.
The Chief Financial Officer and Group
Financial Controller are responsible
for overseeing the Group’s internal
controls. The management of the Group’s
businesses has identified the key business
risks within its operations. These have
been reviewed and discussed through
the Risk Management Committee and by
the Audit Committee, and their financial
implications and the effectiveness
of the control processes in place to
mitigate these risks have been assessed.
The Board has reviewed a summary of
these findings and this, together with
itsdirect involvement in the strategies
ofthe business, investment appraisal
andbudgeting processes, has enabled
theBoard to report on the effectiveness
ofthe Group’s internal control systems.
Whistleblowing policy
Hilton Foods is committed to a free and
open culture in dealings between its
officers, employees, customers, suppliers
and all people with whom the Group
engages in business relations. We seek
to conduct our business honestly and
with integrity at all times. The Board has
therefore established a whistleblowing
policy which covers all our employees and
operations so that any suspected business
misconduct can be reported via a 24/7/365
telephone and web-based reporting
service available in all local languages.
The policy allows anonymised reporting
and that reports are treated confidentially.
More information on this policy can be
found on our website. The Board receives
reports on any communications reported
via this mechanism and regularly reviews
the whistleblowing arrangements.
During the year two whistleblowing
reports were received both relating to
people and culture matters.
Anti-bribery and
anti-corruption policy
Hilton Foods has a zero tolerance approach
to bribery and corruption and accordingly
the Board has established an Anti-Bribery
and Anti-Corruption policy. The recently
updated policy, which is available in local
languages, covers all our employees and
operations and also applies to third parties
such as suppliers, contractors and other
business partners. The policy defines and
prohibits bribes and facilitation payments
and covers all corporate hospitality
including gifts, entertaining and charitable
donations which must be authorised.
Hilton Foods does not make contributions
to political parties. Regular training is
provided to all colleagues to maintain
awareness of these policies and processes.
Preventing the facilitation of tax
evasion policy
Hilton Foods has a zero-tolerance
approach to preventing the facilitation
of tax evasion, either by Hilton Foods
employees, our associates, our
representatives or third parties. In 2023 the
Board established a dedicated policy that
upholds our zero tolerance to preventing
tax evasion in all the jurisdictions in
which we operate. The policy defines
our governance, guiding principles, risk
assessment process, risk based prevention
and due diligence procedures. It also
confirms our top level commitment, led
by the Board and Audit Committee to
preventing the facilitation of tax evasion.
A training programme was launched
in 2024.
By order of the Board
Neil George
Company Secretary
2 April 2024
Hilton Food Group PLC Annual Report and Financial Statements 2023
121
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
DIRECTORS’ REPORT
The Directors present their
report together with the
audited consolidated financial
statements for the 52 weeks
ended 31 December 2023.
Reference to other relevant
information incorporated into
this report is below.
STRATEGIC REPORT
The Strategic report on pages 6 to
109 sets out the development and
performance of the Group’s business
during the financial year, the position
of the Group at the end of the year,
future developments and a description
of the principal risks and uncertainties
facing the Group. The Group’s financial
instruments risk management objectives
and policy are discussed in the treasury
risk management policies section of the
Performance and financial review on
page 26.
This Strategic report also includes the
Sustainability report on pages 41 to 109
which contains details of the Group’s
employment practices and greenhouse
gas emissions.
A statement which sets out how the
Directors have had regard to the matters
under Section 172 of the Companies
Act 2006 is also included in the
Strategic report.
CORPORATE GOVERNANCE
AND OTHER STATUTORY
DISCLOSURES
The Corporate governance statement,
Board Committee reports and Directors’
remuneration report on pages 129 to 148
includes information required by DTR 7.2.
Details of Hilton Foods Long Term
Incentive Plan is included in the Directors’
Remuneration Report on pages 129
to 148. The Hilton Food Group plc
Employee Benefit Trust, which operates
in connection with that Plan, elected to
waive its right to receive dividends on
shares held by it. During the year the
value of dividends waived was £36,102
(2022: £21,877). There is no further
information required to be disclosed
underLR 9.8.4R.
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
The table below sets out where stakeholders can find further information relating to
non-financial matters including on the key areas of disclosure required by sections
414CA and 414CB of the Companies Act. The Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations 2022 amend these sections of the Companies
Act 2006, to require inclusion of climate disclosures in the Annual report. We believe
these have been addressed within this year’s climate-related disclosures on page 76.
Information requirement Where to read more Page
Business model and future
developments Our business model 12 to 15
Principal risks
Risk management and principal
risks 28 to 34
Financial risk management Performance and financial review 24 to 27
Non-financial KPIs Key performance indicators 25 – 26
Environment Sustainability report 40 to 109
Employees including disabilities Sustainability report 94 – 95
Human rights Sustainability report 41 to 109
Social matters Sustainability report 41 to 109
Anti-bribery and corruption Corporate governance statement 118 to 121
PRINCIPAL ACTIVITIES
RESULTS AND DIVIDENDS
The profit before income tax is £48.6m
(2022: £29.6m).
An interim dividend of 9.0p per ordinary
share was paid in December 2023.
The Directors recommend the payment
ofa final dividend for the period which is
not reflected in these financial statements,
of 23.0p per ordinary share totalling
£20.6m, which, together with the interim
dividend, represents 32.0p per ordinary
share for the year. Subject to approval at
the Annual General Meeting, the final
dividend will be paid on 28 June 2024 to
members on the register at the close of
business on 31 May 2024. Shares will be
ex dividend on 30 May 2024.
DIRECTORS AND
THEIR INTERESTS
The Directors of the Company in office
throughout 2023, together with their
biographical details, are set out on pages
112 to 113. All the Directors served for the
whole of the year under review except
Steve Murrells who joined the Board on
3 July 2023 with Philip Heffer leaving the
Board on that date and Sarah Perry who
joined the Board on 4 December 2023
with Christine Cross leaving the Board on
that date. Details of Directors’ interests
in shares are provided in the Directors’
remuneration report on page 143.
Directors are subject to reappointment
at the Company’s AGM following the year
in which they are appointed. Under its
Articles all Directors will retire and stand
for election or re-election, as appropriate,
at each Annual General Meeting.
DIRECTORS’ INDEMNITIES
As permitted by law and its Articles of
Association the Company has in place
appropriate directors’ and officers’ liability
insurance cover during the year and up to
the date of signing this report.
Hilton Food Group PLC Annual Report and Financial Statements 2023
122
DIRECTORS’ REPORT
SUBSTANTIAL SHAREHOLDINGS
As at the date of this report, the Company is aware or has been notified of the following
interests of 3% or more of the voting rights of the Company:
Number of
ordinary shares
Percentage of
issued share
capital
Nature of
holding
abrdn 8,216,357 9.16% Indirect
Quantum Partners LP 5,980,000 6.67% Indirect
P. Heffer 4,255,016 4.74% Direct
Vanguard Asset Management 3,908,364 4.36% Indirect
Montanaro Investment Managers 3,705,000 4.13% Indirect
Janus Henderson 3,458,316 3.86% Indirect
R. Heffer 3,113,310 3.47% Direct
BlackRock 3,115,568 3.47% Indirect
The Companies Act 2006 also allows
that Hilton Food Group plc shareholders
representing at least 5% of paid-up capital
with voting rights of the Company can
require that the Directors call a general
meeting to include the text of a resolution
that may properly be moved at that
meeting. Additionally shareholders have
the right under the Company’s Articles
to vote on resolutions to reappoint
every Director annually at each Annual
General Meeting.
DIRECTORS’ STATEMENT AS TO
DISCLOSURE OF INFORMATION
TO AUDITORS
The Directors who were members of
the Board at the time of approving the
Directors’ report are listed on pages 112
to 113. Having made enquiries of fellow
Directors and the Company’s auditors,
each of these Directors confirm that:
– to the best of each Director’s knowledge
and belief, there is no information
relevant to the audit of which the
Company’s auditors are unaware; and
– each Director has taken all the steps a
Director might reasonably be expected
to have taken to be aware of any relevant
audit information and to establish that
the Company’s auditors are aware of
that information.
INDEPENDENT AUDITORS
Following the completion of an audit
tender in 2022 PricewaterhouseCoopers
LLP will be replaced by Deloitte LLP and
a resolution proposing their appointment
will be submitted at the Annual
General Meeting.
ANNUAL GENERAL MEETING
The Notice convening the Annual General
Meeting can be found in the separate
Notice of Annual General Meeting
accompanying this Annual report and
financial statements, and can also
be found on the Company’s website
at www.hiltonfoods.com/investors/
shareholder-information/.
By order of the Board
Neil George
Company Secretary
2 April 2024
There are robust safeguard controls in
place to monitor transactions between
major shareholders of the Company.
These include share register analysis on
at least a quarterly basis and weekly share
transaction reporting.
As a policy Hilton Foods does not have
any devices which would limit the ability
to perform a takeover of Hilton Food
Group plc. This includes devices which
would limit share ownership and/or issue
new capital for the purpose of limiting or
stopping a takeover.
POLITICAL DONATIONS
No donations for political purposes
were made during the year (2022: £nil).
The practice of making political donations
would require authority from shareholders
and Hilton Foods has never sought
such authority.
SHARE CAPITAL
AND CONTROL
The following information is given pursuant
to Section 992 of the Companies Act 2006:
– The Company has one class of share
being ordinary shares of 10p each which
have no special rights. The holders
of ordinary shares rank equally and
are entitled to receive dividends and
return of capital as declared and to
vote at general meetings. With minor
exceptions, there are no restrictions on
transfers of ordinary shares.
– There are no restrictions on voting rights
of ordinary shares.
– Rights over ordinary shares issued under
employee share schemes are exercisable
directly by the employees. The Company
is not aware of any agreements
between shareholders that may result in
restrictions on the transfer of its shares
or on voting rights.
– The Company may appoint or remove
a Director by an ordinary resolution of
the shareholders. Additionally the Board
may appoint a Director who must retire
from office at the following Annual
General Meeting and if eligible then
stand for re-election.
– The Company’s Articles may be
amended by a special resolution of
the shareholders.
– The Directors have general powers to
manage the business and affairs of the
Company. Additionally the following
specific authorities were passed as
resolutions at the Company’s Annual
General Meeting held on 23 May 2023:
– Directors have authority to resolve
that the Company shall purchase up
to 10% of its own shares subject to
certain conditions.
– Directors have authority, within
limits, to exercise the powers of the
Company to allot shares and limited
authority to disapply shareholder pre-
emption rights.
Both these authorities expire on the
earlier of the date of 23 August 2024
or the next Annual General Meeting at
which renewal of these authorities will
be sought.
– The Company has significant long-term
supply agreements with customers
which the customer may terminate
in the event that ownership of the
Company, following a takeover, passes
to a third party which is not reasonably
acceptable to that customer. There are
no agreements between the Company
and its Directors or employees providing
for compensation for loss of office or
employment that occurs because of a
takeover bid.
Hilton Food Group PLC Annual Report and Financial Statements 2023
123
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
REPORT OF THE AUDIT
COMMITTEE
CHAIR’S INTRODUCTION
I am pleased to report on the activities of
the Audit Committee for the 52 weeks ended
31 December 2023.
ROLE OF THE COMMITTEE
The Audit Committee is established by the Board of Directors.
Terms of reference formalise the roles, tasks and responsibilities
of the Committee to comply with the UK Corporate Governance
Code and to achieve best practice. The Committee terms of
reference are available and can be found on the Company’s
website at www.hiltonfoods.com.
The Committee meets no less than three times per year.
MEMBERSHIP OF THE COMMITTEE
Members of the Committee are appointed by the Board on the
recommendation of the Nomination Committee. In 2023 the
Committee comprised the independent Non-Executive Directors
Patricia Dimond (Chair), Angus Porter, Rebecca Shelley, Christine
Cross (to 4 December 2023) and Sarah Perry (from 4 December
2023). The Committee is comprised 100% of independent
Non-Executive Directors. Other individuals such as the Chairman,
Chief Executive Officer, Chief Financial Officer, Group Internal
Audit and Risk Director and the external auditors are invited to
attend meetings as appropriate
I have recent and relevant financial experience and, together with
other Committee members, have a wide experience of the food
industry and commerce in general. The external auditors and the
Group Internal Audit and Risk Director have the opportunity for
direct access to the Committee without the Executive Directors
being present.
HIGHLIGHTS
– The Committee undertook a review
of the cyber security roadmap in
recognition of ever-increasing threats
– Intangible assets related to the
Dalco acquisition were reviewed
for impairment
– The internal controls programme
assessed the effectiveness of the
design, operation and documentation
of financial internal controls
– The Committee approved a new policy
for the Prevention of the Facilitation
of Tax Evasion
ATTENDANCE AT MEETINGS
OFTHEAUDITCOMMITTEE
Number
attended
Percentage
attended
Patricia Dimond 4 100%
Angus Porter 4 100%
Rebecca Shelley 4 100%
Christine Cross (resigned
4 December 2023) 4 100%
Key areas of focus included
cyber security, an impairment
review and the internal
controls programme.”
Patricia Dimond
Chair
Hilton Food Group PLC Annual Report and Financial Statements 2023
124
RESPONSIBILITIES OF
THE COMMITTEE
The main responsibilities of the Audit
Committee, which are contained in the
UK Corporate Governance Code and also
in the Committee’s terms of reference,
arethe review and monitoring of:
– the integrity of the financial
statements of the Company, any
formal announcements relating to
the Company’s financial performance
and significant financial reporting
judgements contained in them;
– the Annual report and financial
statements, to determine whether
taken as a whole, are fair, balanced
and understandable, and provide the
information necessary for shareholders
to assess the Company’s performance,
business model and strategy;
– the Company’s internal financial
controls and internal control and
risk management systems and
their effectiveness;
– the work completed and the
effectiveness of the Company’s internal
audit function;
– the scope and effectiveness of
the external auditors including
recommendations to the Board
regarding the appointment,
reappointment and removal of the
external auditors, and approval
of their remuneration and terms
of engagement;
– the external auditor’s independence
and objectivity including the policy on
engagement of the external auditors
to supply non-audit services, giving
consideration to the impact this may
have on their independence;
– the effectiveness of the external audit
process, taking into consideration
relevant UK professional and regulatory
requirements; and
– the adequacy of the Company’s
whistleblowing, anti-bribery and anti-
facilitation of tax evasion arrangements.
As part of its responsibilities the
Committee meets with the external
auditors and the Head of Internal Audit at
least once a year without management
being present. In addition it reports to
the Board on how it has discharged
its responsibilities.
HOW THE COMMITTEE
HAS DISCHARGED ITS
RESPONSIBILITIES
During 2023 the Committee met four
times at appropriate intervals in the
financial reporting and audit cycles.
The work of the Committee during
the year focused on the key areas set
out below.
MONITORING THE INTEGRITY
OF THE FINANCIAL
STATEMENTS INCLUDING
SIGNIFICANT JUDGEMENTS
The Committee reviewed the half and
full year financial reports including
the application of accounting policies,
estimates and judgements in their
preparation and, the clarity and
completeness of the disclosures.
The Committee also held discussions
withmanagement and the external
auditors and reviewed supporting papers
in respect of these matters.
The key areas of focus and significant
issues considered during the year were:
– revenue recognised on the Group’s
major contracts;
– exceptional items including a
reorganisation cost of £4.0m
recognised for ongoing efficiency and
restructuring programmes;
– the carrying value of goodwill and
intangible assets related to the Dalco
acquisition which were reviewed for
impairment. An impairment of £1.3m
in respect of fixed assets was agreed
for inclusion in the Half Year report.
Other acquired intangible assets were
reviewed for impairment with no
impairments identified;
– prior year depreciation relating to
buildings, plant and machinery has
been reclassified from administration
expenses to cost of sales, in line with
accounting standards;
– prior year restatement of revenue in the
half year reporting; the adjustment did
not impact profit or full year reporting.
Relevant internal controls and processes
were reviewed in light of the adjustment;
– IFRS standards. The Committee
reviewed the impact of new standards,
and specifically IFRS16 leases;
– the ongoing impacts and insurance
claim status from the fire at Hilton’s
facility in Belgium during 2021 and the
related disclosures;
– the work done to meet the disclosure
requirements under the Task Force on
Climate-related Financial Disclosure
(TCFD) framework including the
reasonableness of the metrics and
targets outlined in the Annual report.
The Committee was satisfied with the
disclosures made (see pages 76 to 89);
and
– the impact of potential sensitivities on
the Group’s cash flow. The Committee
concurred that the statements made
in relation to going concern and the
Group’s viability were appropriate.
The Committee was satisfied that the
Annual report and financial statements
were, taken as a whole, considered to be
fair, balanced and understandable and
provide the information necessary for
shareholders to assess the Group and
Company’s position and performance,
business model and strategy.
The Committee reviewed a paper
prepared by the Chief Financial Officer
relating to going concern and the Group’s
longer-term viability and concluded that
the Group should be considered as a
going concern. The proposed disclosures
relating to the Group’s longer-term viability
were agreed.
Thereafter the Committee recommended
that the Board approve these financial
reports for publication and that the letter
of representation to the external auditors
be signed.
INTERNAL AUDIT, RISK
MANAGEMENT AND
INTERNAL CONTROLS
During the year the Group Internal
Audit and Risk Director reported to the
Committee on the internal audit work
performed and on key focus areas for
future work. The 2023 Internal Audit
Plan focused on inventory management
and provisioning, key financial controls
and commercial and supply chain
management across various sites within
the business. The Committee received
regular updates on the implementation
progress of the Internal Controls
programme, which during the year
focused on risk assessment, planning and
gap analysis to ensure compliance with the
revised UK Corporate Governance code
published in January 2024. The Committee
noted the findings from this and other
work done and agreed the Internal Audit
Plan for the year ahead. The Committee
was satisfied that the internal audit
function had been effective in its work
during the year.
Hilton Food Group PLC Annual Report and Financial Statements 2023
125
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
REPORT OF THE AUDIT COMMITTEE continued
Cyber security is registered as a principal
risk by Hilton Foods. We recognise the
ever-increasing threats in this area and
as such have comprehensive mitigation
plans in place. In 2023, the Committee
received cyber security updates including
the outcomes of a gap analysis against
the NIST framework and an overview
of systems testing to assess security
against external threats. The committee
also reviewed progress against our cyber
security roadmap and will continue to
subject it to scrutiny in 2024.
The Committee received regular updates
on risk management including changes to
the assessments of risks and consideration
of emerging risks. The Committee
also reviewed the work done by the
Risk Management Committee and an
updated principal risks register. Key risk
areas reviewed included geopolitical and
macroeconomic risks, management of
property risk, strategic capital project
management, data governance and
labour supply challenges. At the end of
the year, the Committee considered a
report from the Group Internal Audit and
Risk Director on the effectiveness of the
risk management and internal control
systems. Based on the report and the work
done by Internal Audit during the year, the
Committee concluded that the Group’s
internal control and risk management
systems were operating effectively and
reported accordingly to the Board.
The Committee also received updates
on any alleged bribery and fraud in the
business at every meeting together with
individual updates as required to be able
to be satisfied that the arrangements are
adequate. Any whistleblowing reports
received are reviewed at Board level.
EXTERNAL AUDIT
The Committee oversees the relationship
with, and the performance of, the external
independent auditors. UK law sets the
maximum duration for an audit firm to
conduct the statutory audit of a public
interest entity as 10 years although it can
be extended up to 20 years where a public
tendering process is conducted every
10 years. The Committee has complied
with the Competition and Markets
Authority ‘The Statutory Audit Services for
Large Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014’.
The current audit partner, Martin Cowie,
took over responsibility for the audit in
2019 in accordance with PwC’s policy
that the lead partner is rotated every five
years to ensure continued objectivity and
independence. The next rotation is due in
2024. The engagement partners on key
components are also required to rotate
every five years.
The current external independent auditors,
PricewaterhouseCoopers LLP (PwC), were
appointed in 2007 and reappointed in 2016
following a public audit tender process.
During 2022 a further audit tender process
was conducted with the outcome that
Deloitte LLP was selected as external
auditors. They shadowed the work of the
existing external auditors during the FY
2023 audit and will formally be proposed
for appointment as the Group’s external
auditors for the FY 2024 audit at the
forthcoming Annual General Meeting.
During the year meetings were held with
the external auditors before the audit
to agree their audit plan and fees and
after their half year review and year-end
audit work to discuss their key findings.
The Committee considered issues raised
by PwC in their audit management letter
ensuring that they were discussed locally
with an action plan to resolve.
PwC annually confirm their compliance
with UK regulatory and professional
requirements including ethical
standards and that their objectivity is
not compromised. Their audit work
is subject to independent partner
and periodic quality control reviews.
Potential independence threats through
the provision of non-audit services are
mitigated through various safeguards.
After the conclusion of their 2022 audit,
the Committee reviewed the effectiveness
of the audit including PwC’s performance
and concluded that the audit had been
effective. The Committee continues to
be satisfied with the independence and
performance of PwC.
NON-AUDIT SERVICES
AND FEES
Hilton Foods policy on the use of the
external auditors for non-audit services,
designed to preserve the independence
of the external auditors, was reviewed
and updated during the year. This policy
categorises non-audit services into
(i) continuing services which the
Committee permits the external auditors
to undertake subject to a price cap;
(ii) irregular or significant services requiring
Committee approval on a case by case
basis; and (iii) non-permitted services.
The level of non-audit fees was reviewed.
In 2023 the fees were £95,000 (including
£66,000 for work in connection with the
half year review) which represent 8% of
audit fees in the year compared with a
70% cap and an average of 8% over three
years. Excluding items required by EU or
national legislation, the three year average
of non-audit fees was 3% of audit fees.
Further details of audit and non-audit
costs can be found in note 6 on page 172.
The Committee considers that the level
of non-audit fees does not affect the
independence of the external auditors.
OTHER
A prevention of the facilitation of tax
evasion policy was approved and the
Anti-Bribery and Anti-Corruption policy
was reviewed during the annual cycle.
Meetings were held with both the
external and internal auditors without
management present.
CONCLUSION
The Committee considers that the
work performed as detailed above
demonstrates that the Committee
continues to operate effectively and
discharges its responsibilities.
I will be available to shareholders at the
forthcoming Annual General Meeting to
respond to any questions relating to the
work of the Committee.
On behalf of the Audit Committee
Patricia Dimond
Chair
2 April 2024
Hilton Food Group PLC Annual Report and Financial Statements 2023
126
REPORT OF THE
NOMINATION COMMITTEE
CHAIR’S INTRODUCTION
I am pleased to report on the activities of
the Nomination Committee for the 52 weeks
ended 31 December 2023.
ROLE OF THE COMMITTEE
The Nomination Committee is established by the Board of
Directors. Terms of reference formalise the roles, tasks and
responsibilities of the Committee to comply with the UK
Corporate Governance Code and to achieve best practice.
The Committee terms of reference are available and can be
found on the Company’s website at www.hiltonfoods.com.
The Nomination Committee leads the process for
Board appointments.
The Committee meets on an as required basis.
MEMBERSHIP OF THE COMMITTEE
The Committee is chaired by the Chairman of the Board.
The independent Non-Executive Directors are the other
members of the Committee who therefore comprise a majority
of 80%. Sarah Perry joined the Committee following her
appointment as a Non-Executive Director on 4 December 2023 at
which time Christine Cross left the Committee.
HIGHLIGHTS
– CEO appointment of Steve Murrells
and transition management
– New Independent Non-Executive
Director Sarah Perry appointed
– New Remuneration Committee Chair
– Progression of Chair succession plans
ATTENDANCE AT MEETINGS OF
THENOMINATION COMMITTEE
Number
attended
Percentage
attended
Robert Watson 4 100%
Angus Porter 4 100%
Rebecca Shelley 4 100%
Patricia Dimond 4 100%
Christine Cross (resigned
4 December 2023) 4 100%
Key areas of focus included
the appointment of a
new CEO and associated
transition management.”
Robert Watson OBE
Chairman
2 April 2024
Hilton Food Group PLC Annual Report and Financial Statements 2023
127
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
REPORT OF THE NOMINATION COMMITTEE continued
RESPONSIBILITIES OF
THE COMMITTEE
The main responsibilities of the
Nomination Committee, which are
contained in the UK Corporate Governance
Code and also in the Committee’s terms of
reference, are:
– to review the structure, size and
composition of the Board and its
Committees which should have a
combination of skills, experience
and knowledge;
– to promote diversity of gender, social
and ethnic backgrounds, cognitive and
personal strengths;
– to give consideration to succession
planning for Directors and other senior
executives and identify appropriate
candidates for the approval of the Board;
– to make recommendations to the Board
with regard to any changes and oversee
new appointments to the Board;
– to review the results of the Board
performance evaluation relating to the
composition of the Board; and
– to review the time requirements of Non-
Executive Directors.
HOW THE COMMITTEE
HAS DISCHARGED ITS
RESPONSIBILITIES
During 2023 the Committee met four
times and considered a range of topics
including resource, succession planning
and reviewing time commitments.
The Committee considered the continuing
evolution and composition of the Board in
order to maintain a strong, well-balanced
and diverse Board with particular focus in
the year on the Chairman, CEO and Non-
Executive Director positions.
The Committee noted that Philip Heffer
had advised the Board that he wished to
step down from the Board in 2023 and
step back after almost 30 years with Hilton
Foods, including the last five years as
Group CEO. A new CEO was identified in
Steve Murrells who had recently stepped
down from his previous CEO role. Steve is
an exceptional business leader with a
wealth of experience in the retail and food
supply chain sectors in large national
and multinational businesses. He was
appointed CBE in the 2022 New Year
Honours list for services to the food supply
chain. The Committee agreed that Steve
was an excellent candidate such that no
other candidates needed to be considered
and recommended to the Board that he
be offered the CEO position. Steve joined
the Board on 3 July 2023. Philip stepped
down from the Board at that time and into
a part time Co-Founder and Board Advisor
role. He assisted Steve ensuring a smooth
transition. Additionally an induction
programme was arranged for Steve.
Sarah Perry was appointed as an
Independent Non-Executive Director
replacing Christine Cross who stepped
down from the Board following over seven
years’ service. A search was conducted
by Sam Allen Associates who have no
other connections with the Company or
individual Directors. For this appointment
the desired skills included experience in
international supply chain technologies,
including logistics as well as being highly
commercial. Sarah met these criteria and
in addition brought experience in health
and safety. Following her appointment
on 4 December 2023 an induction
programme was arranged for Sarah.
Rebecca Shelley was appointed Chair of
the Remuneration Committee following
Christine’s departure.
After these changes the balance of the
Board’s independence was maintained
at 57% and Board gender diversity
maintained at 43%, above the FCA target.
The Committee gave further consideration
to the Chairman position and planning
for the time when I step down, which is
now anticipated to be by the end of 2024.
The process to appoint my successor has
commenced and is being led by the Senior
Independent Director.
Hilton Foods is an inclusive business and
we ensure that we give equal access to
all opportunities. Our approach supports
diversity which is overseen by the
Committee. The gender balance of those
in senior management and their direct
reports continues to improve, increasing
from 31.7% in 2022 to over 33.3% in 2023.
We continue to develop management
structures to promote our talent pipeline
as part of a succession planning process
covering the Directors and senior
management positions to enable, where
possible, recruitment of vacant positions
from internal candidates. Accordingly,
processes are in place to assess the
current management population against
criteria for larger management roles they
could potentially fill in the future and put
in place individual development plans.
Given the growth in business categories
and geographies, the Committee
continues to monitor the planning of
resource implications. The Chairman
has discussions with each Director to
review and agree their training and
development needs.
CONCLUSION
The Committee considers that the
work performed as detailed above
demonstrates that the Committee
continues to operate effectively and
discharges its responsibilities.
I will be available to shareholders at the
forthcoming Annual General Meeting to
respond to any questions relating to the
work of the Committee.
On behalf of the Nomination Committee
Robert Watson OBE
Chairman
2 April 2024
Hilton Food Group PLC Annual Report and Financial Statements 2023
128
DIRECTORS’ REMUNERATION
REPORT
ANNUAL STATEMENT
Dear Shareholder,
On behalf of the Board, and following my
appointment as Committee Chair in December
2023, I am pleased to present the Directors’
remuneration report for the 52 weeks ended
31 December 2023. This report sets out the
Company’s policy on Directors’ remuneration
as well as information on remuneration
paid to Directors during the year. The report
complies with the requirements of The Large
and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment)
Regulations 2013 and has been prepared in
line with the provisions of the 2018 UK
Corporate Governance Code (the ‘Code’) and
the Financial Conduct Authority Listing Rules
(the ‘Listing Rules’).
2023 saw continued volume growth across the Group including
a full year of volumes from the Foppen fish business which we
acquired in 2022. There was a good recovery in our UK seafood
business although the continuing macroeconomic headwinds
and inflationary cost increases have impacted our vegetarian/
vegan business. The size and complexity of Hilton Foods
increased further during 2023, including an agreement with
new customer, Walmart, to build a factory in Canada, and the
development of an innovative technology offer, including the
acquisition of Evolve 4, a software business.
HIGHLIGHTS
– New CEO and development of the CFO
(appointed in 2022)
– Annual bonus to include free cash
flow measure
– LTIP grant includes ESG performance
measures for second year
– Recovery in our UK seafood business
but challenges in the vegetarian/
vegan business
ATTENDANCE AT MEETINGS OF
THEREMUNERATION COMMITTEE
Number
attended
Percentage
attended
Rebecca Shelley 4 100%
Angus Porter 4 100%
Patricia Dimond 4 100%
Sarah Perry (appointed
4 December 2023) 1 100%
Christine Cross (resigned
4 December 2023) 3 100%
Performance objectives were
set in respectof delivering
shareholder value and platform
for growth, being fit for the
future, key retailpartnerships,
a green and digitalautomated
future, brand and culture.”
Rebecca Shelley
Chair of the Remuneration Committee
2 April 2024
Hilton Food Group PLC Annual Report and Financial Statements 2023
129
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
DIRECTORS’ REMUNERATION REPORT continued
PERFORMANCE AND 2023
PAY OUTCOMES
The Company continues to implement
its strategy with a diverse spread of
operations across Europe, the Asia
Pacific region and North America.
Trading volumes increased and the
recovery in the UK seafood business
contributed to a satisfactory financial
result for 2023, a year in which we saw a
significant recovery in the share price.
The financial element of the annual bonus
was based on the Group’s underlying
adjusted profit before tax and free cash
flow. The actual performance was adjusted
profit before tax of £66.0m and free cash
flow of £112.1m resulting in an award for the
CEO of 105.3% and CFO of 66.5% of salary
for the financial element of the bonus.
The personal element of the bonus for
the Executive Directors was based on
performance objectives set in respect of
delivering shareholder value and platform
for growth, being fit for the future, key
retail partnerships, a green and digital
automated future, brand and culture.
Following the Committee’s assessment of
these targets, the CEOs and CFO earned
annual bonuses of 20% of salary for the
personal element of the annual bonus.
The Committee’s assessment of the
performance of the Executive Directors is
detailed on pages 139 to 141.
The LTIP award granted in 2021 is due to
vest in 2024 and is 70% based on EPS and
30% based on relative TSR. Following the
end of the three year performance period
to 31 December 2023, EPS growth was
below the threshold target and relative
TSR was below median. Accordingly,
the 2021 LTIP awards will lapse in full in
May 2024.
The remuneration policy operated
as intended in terms of Company
performance and quantum and
accordingly no changes were considered
to be necessary and no discretion was
exercised. There were no payments to
Directors during the year outside of
the approved Policy and there were no
changes made to the terms of the bonus
or outstanding share awards.
CEO recruitment
Philip Heffer stepped down from the Board
in July 2023. We were fortunate to appoint
Steve Murrells as his replacement. Steve is
extremely experienced in the UK retail sector
and as the best candidate with the deepest
and broadest experience, Hilton Foods was
required to match his previous base salary of
£750k and, given his home and family are in
the north west of England, a £100k annual
travel allowance was agreed recognising
the disturbance to his family life. It was the
Board’s strong preference for Steve to be
based at our head office in Huntingdon
rather than at home or at another Hilton
Foods location, in line with our previous
CEO and with the needs of the business.
The allowance has been kept separate from
base salary to ensure transparency and
avoid it being consolidated into pension,
bonus and LTIP awards.
The annual bonus potential and LTIP awards
of 150% of salary and 175% respectively are in
line with that offered to the previous CEO.
As discussed with our major shareholders,
the Committee believes that Steve’s salary
at appointment is appropriate for the
following reasons:
– Board experience: Steve is an experienced
leader and a seasoned CEO, having led
Co-op’s food business between 2012 and
2017, before being promoted to CEO of the
Co-op Group between 2017 and 2022.
– Retail experience: A key objective of the
Board was to appoint an individual with
a significant level of retail experience.
Steve is a real heavyweight in the UK
retail sector having worked for several
of the largest supermarket retailers,
including Tesco, J Sainsbury and the
Co-op and was made a CBE for services
to the food supply chain in the 2022
New Year’s Honours list. This experience
adds a further dimension to the Hilton
Foods Board.
– Recognising the size and complexity of
Hilton Foods: Major shareholders were
consulted in 2021 in respect of ensuring
Philip Heffer’s salary appropriately
reflected Hilton Food’s growth,
complexity and international breadth.
However, it is clear the Group’s size and
complexity increased further during
2023, including an agreement with a
new customer in Walmart to build a
factory in Canada, a new geography.
Furthermore Hilton Foods is creating
an innovative technology offer in its
Greenchain Solutions division, including
through the acquisition of Evolve 4, a
software business which, in conjunction
with existing capabilities and expertise,
will leverage our supply chain capabilities
and differentiates us from pureplay
food businesses.
2024 IMPLEMENTATION
Details of how the Committee intends
to operate the policy during 2024 are set
out below.
Base salaries
Our broad principle to align base salary
increases for the Executive and Non-
Executive team with the wider workforce
has been in place for four years. As such,
Steve Murrells’ salary and Robert Watson’s
annual fee for 2024 were increased by 5%
from 1 January 2024, slightly below that of
the UK wider workforce.
Reflecting his further progress in the role
to date and the Committee’s desire to
move his package closer to market as his
experience in the role grows and in line with
previous stated intentions, Matt Osborne’s
salary was increased from £320k to £370k
from 1 January 2024. This remains below
that of his predecessor and will be kept
under review.
Pension and benefits
Pension provision will continue to be
offered at 7% of salary in line with the
broader workforce.
Variable pay
The maximum annual bonus potential
for Steve Murrells has been set at 150% of
salary. Consistent with the Committee’s
intention to move Matt Osborne’s package
to market over time, his maximum bonus
potential was increased from 100% to 125%
of salary for 2024. Performance targets will
be majority based on financial metrics and
minority based on personal and strategic
targets. Financial metrics will be based
on a sliding scale of adjusted profit before
tax (80% weighting) and free cash flow
(20% weighting). As the financial targets
are set with reference to the 2024 budget,
and the personal and strategic targets are
considered commercially sensitive, the
Committee will disclose the targets on a
retrospective basis in next year’s report.
One third of any bonus awarded over 50%
of salary will be deferred into Hilton Foods
shares for two years.
Hilton Food Group PLC Annual Report and Financial Statements 2023
130
DIRECTORS’ REMUNERATION REPORT continued
The 2024 LTIP awards will be capped at 175%
of salary for Steve Murrells and, consistent
with the Committee’s intention to move
Matt Osborne’s remuneration package to
market over time, his 2024 LTIP awards will
be capped at 150% of salary (an increase
from the 125% of salary granted in 2023).
Vesting will continue to be determined by
stretching EPS, relative TSR and ESG targets.
Non-Executive Director fees
In recognition of increasing responsibilities
and time commitments, the Board Chair
and Executive Directors agreed that
independent Non-Executive Director
base fees should increase to £58k from
1 January 2024. In addition to the base fee,
the Audit and Remuneration Committee
Chairs will receive a £12k supplement,
with the Senior Independent Director
(who is also the NED responsible for
workforce engagement) and Sustainability
Committee Chair each receiving a
£10k supplement.
ACTIVITIES OF THE
COMMITTEE
The Committee’s main activities during
2023 are summarised below and full
details are set out in the relevant sections
of this report.
– Agreeing the new CEO remuneration
package for 2023 and Executive Director
base salary increases for 2024 including
a review of salary increases for the
wider workforce.
– Agreeing annual bonus award levels for
2022 and setting the targets for 2023.
– Reviewing the EPS performance targets
and vesting levels for the 2020 LTIP
awards which vested in 2023.
– Approving the LTIP awards granted
in 2023.
– Approving the issue of the Sharesave
scheme for 2023.
– Reviewing the CEO pay ratio and gender
pay gap disclosures; and
– Performing an annual evaluation of
the Committee’s performance and
reviewing its terms of reference.
In addition, the Committee considered
how the remuneration policy and practices
are consistent with the six factors set out in
Provision 40 of the Code:
Clarity – Our policy approved by
shareholders in 2022 is understood by
our Senior Executive Team and has been
clearly articulated to our shareholders
and representative bodies (both on an
ongoing basis and when changes are
proposed). This includes appropriate two-
way dialogue with staff, and consideration
of their views in respect of remuneration
within the Group.
Simplicity – The Committee is mindful
of the need to avoid overly complex
remuneration structures which can be
misunderstood and deliver unintended
outcomes. Therefore, a key objective of the
Committee is to ensure that our executive
remuneration policies and practices
are straightforward to communicate
and operate.
Risk – Our policy (current and proposed)
has been designed to ensure that
inappropriate risk taking is discouraged
and will not be rewarded through: (i) the
balanced use of annual and long-term pay
which employ a blend of financial, non-
financial and shareholder return targets;
(ii) the significant role played by equity
in our incentive plans; and (iii) malus/
clawback provisions.
Predictability – Our incentive plans are
subject to individual caps, with our share
plans also subject to market standard
dilution limits.
Proportionality – There is a clear link
between individual awards, delivery of
strategy and our long-term performance.
In addition, the significant role played by
performance-related pay, together with
the structure of the Executive Directors’
service contracts, ensures that poor
performance is not rewarded.
Alignment to culture – Our executive pay
policies are aligned to our culture through
the use of non-financial metrics in our
incentive arrangements.
USE OF DISCRETION
Under the Code and its terms of reference,
the Committee has the right to exercise
independent judgement and discretion in
its assessment of Directors’ remuneration,
taking account of the performance
of the Company, Directors’ individual
performances and wider circumstances.
The Committee was satisfied that no
discretion needed to be exercised in
respect of the policy or its operation for the
52 weeks ended 31 December 2023.
LOOKING AHEAD
The Remuneration Committee is
committed to ensuring that the policy and
its implementation remains compliant
with prevailing legislative requirements,
and is aligned with evolving best practice,
while continuing to take account of our
overarching remuneration philosophy and
delivering value to shareholders.
Transparency and equality of pay across all
grades, gender and geographies remains
a key focus of the business and is a regular
item on the Committee’s agenda.
SHAREHOLDER
CONSULTATION AND
AGM APPROVALS
Following my appointment as Chair of the
Remuneration Committee, I wrote to our
major shareholders to introduce myself
and provide an update on a number of
decisions made by the Committee in
respect of the Executive Directors.
On the basis that our Remuneration Policy
was last approved in 2022 and no changes
are proposed for 2024, an advisory
resolution in respect of the Directors’
remuneration report (excluding the
policy) will be put to shareholders at our
forthcoming 2024 AGM.
I hope we continue to receive your support
in respect of our Annual report at our
forthcoming AGM.
Rebecca Shelley
Chair of the Remuneration Committee
Hilton Food Group PLC Annual Report and Financial Statements 2023
131
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
DIRECTORS’
REMUNERATION POLICY
This part of the Remuneration Report sets
out our remuneration policy which was
approved by shareholders at, and took
effect from, the AGM held on 24 May 2022.
The full policy approved by shareholders
at the 2022 AGM is presented in the 2021
Annual report and financial statements.
No changes are proposed for 2024.
OVERVIEW OF
REMUNERATION POLICY
The Committee considers that the
Group’s remuneration policies should
encourage a strong performance culture
and emphasise long-term shareholder
value creation in order to be aligned with
shareholders’ interests.
The policy, developed following a
comprehensive remuneration review, has
the following objectives:
– To develop a remuneration structure
which supports the Company’s
strong performance culture and our
key objective of creating long-term
shareholder value.
– To enable the Company to recruit and
retain executives with the capability
to lead the Company on its ambitious
growth path.
– To ensure our remuneration structures
are transparent and easily understood
both internally and externally.
– To align the interests of all our
stakeholders: the Hilton Foods team,
our customers, the communities and
environment in which we operate and
our shareholders; and
– To reflect principles of best practice.
REMUNERATION POLICY TABLE
The following table summarises all elements of pay which make up the total remuneration opportunity for Directors,
and details how each element is operated and links to the Company’s strategy.
Element Purpose and link to strategy Operation Maximum opportunity
Base
salary
To recruit and reward
executives of a suitable
calibre for the role and
duties required
Normally reviewed annually by the Committee with effect
from 1 January, taking account of Company size and
structural changes, performance, individual performance,
changes in responsibility and levels of increase for the
broader employee population.
Reference is also made to levels within relevant FTSE and
industry comparators on a periodic basis although this is
only one factor that is taken into account when determining
pay levels and increases.
The Committee considers the impact of any base salary
increase on the total remuneration package.
Pay levels throughout the organisation are also taken
into account in order to ensure adequate provision for
timely succession.
Normally capped by the
increases made to the
general workforce.
On occasion it may
be appropriate for a
new Director to be
positioned on a below
market base salary but
then to provide above
market increases as
the executive gains
experience in the role.
Benefits To provide market
competitive benefits to
ensure the retention
of employees
The Company typically provides:
– Company car and fuel;
– Private healthcare; and
– Other ancillary benefits, including relocation expenses
(as required).
Any reasonable business-related expenses (including tax
thereon) may be reimbursed.
Executive Directors are eligible for other benefits which are
introduced for the wider workforce on broadly similar terms.
The value of traditional
benefits is based
on the cost to the
Company and is not
predetermined.
Relocation expenses or
benefits will take into
account the nature of
the relocation and will
be provided on a fair
and reasonable basis.
Pension To provide adequate
retirement benefits
Employer contributions are made to money purchase
pension schemes or in certain circumstances a
salary supplement may be paid in lieu of such pension
contributions.
Up to 7% of base
salary to align with the
broader workforce.
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
132
Element Purpose and link to strategy Operation Maximum opportunity
Annual
bonus
To encourage and reward
delivery of the Company’s
short-term financial and/
or strategic objectives
The Committee will review performance metrics at the
start of the year. Performance criteria will be aligned to
the Company’s strategic objectives at that time.
The majority of the bonus will be linked to challenging
financial metrics, which will typically include a measure
f profit. Strategic or other individual targets may be used
to determine a minority of the bonus outcome.
For financial measures, typically a sliding scale of targets
will be set. Where operated, no more than 20% of that
element shall be payable for threshold performance.
It may not be possible to set sliding scale targets for
individual or strategic measures but full disclosure on the
objectives and performance against these will be provided
on a retrospective basis.
One third of any bonus over 50% of salary will be deferred
into shares for two years.
Dividend equivalents may be paid on the value of dividends
paid during the vesting period on any deferred bonus shares.
The payment will be in the form of additional shares and
may assume reinvestment.
Bonuses are subject to malus and claw-back provisions in
circumstances of misstatement, error or gross misconduct,
reputational damage and insolvency/corporate failure.
Up to 150% of base
salary.
Long-term
incentives
To encourage and
reward delivery of the
Company’s medium-term
objectives. To provide
a way of building up a
meaningful shareholding
in the Company and
providing alignment with
shareholders’ interests
Under its Long Term Incentive Plan (LTIP) Hilton makes
annual awards of conditional shares or nil cost options
to selected senior executives.
Awards vest subject to continued employment and
satisfaction of challenging performance conditions
measured over three years to be satisfied by the issue of
new shares or through purchasing shares in the market.
The performance measures will be based on financial
(e.g. EPS), share-price related (e.g. relative TSR) and, when
appropriate, ESG performance targets.
Performance targets will be determined at the date of
grant with up to 10% vesting at threshold performance.
The Committee may introduce new, or reweight existing,
performance measures so that they are aligned with
the Company’s strategic objectives at the start of each
performance period. Quantitative ESG measures aligned
with Company strategic objectives will also be added,
capped at 15% of the total award.
Awards are subject to malus and claw-back provisions for
three years following vesting in circumstances of material
misstatement, error or misconduct, reputational damage
and insolvency/corporate failure.
A two-year post-vesting holding period will operate for
LTIP awards granted to Executive Directors.
Dividend equivalents may be paid on the value of
dividends paid during the vesting period or any holding
period (if applicable). The payment may be in the form of
additional shares and may assume reinvestment.
Up to 175% of salary for
all Executive Directors.
All-employee
share
schemes
To encourage employee
share ownership and
thereby increase
their alignment with
shareholders
All employees are eligible to join any permissible all-
employee scheme. Executive Directors will be eligible to
participate in any all-employee share plan operated by the
Company on the same terms as other eligible employees.
Under Hilton’s Sharesave Scheme (HMRC-approved for the
UK), regular savings over three years is followed by a six
month period to exercise the options granted.
No performance conditions attach to options granted under
the scheme.
The maximum level of
participation is subject
to the limits imposed
by HMRC from time to
time (or a lower cap set
by the Company).
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
133
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Element Purpose and link to strategy Operation Maximum opportunity
Shareholding
guidelines
To further align Executive
Directors’ interests with
those of long-term
shareholders and other
stakeholders
Executive Directors are expected to build a holding in the
Company’s shares equal to a minimum value of 300% of
base salary for the Chief Executive Officer and 200% of base
salary for all other Executive Directors.
To the extent that this guideline has not been achieved,
executives are normally required to retain 50% of any
vested share awards (after the sale to meet tax obligations).
Shareholdings for new executive Board members can be
built over a five year period.
N/A
Post-
cessation
guidelines
Post-cessation shareholding guidelines will increase to
100% of the relevant in-employment guideline for two years
post-cessation (from 50% for one year currently). However
the increased guideline will only include shares from
share awards granted post the 2022 AGM (i.e. own shares
purchased and shares from past awards will be excluded).
The previous policy post cessation guideline will continue
to apply until sufficient shares under the new policy have
been acquired.
N/A
Non-
Executive
Director fees
To attract and retain
a high-calibre Non-
Executive Chairman and
Non-Executive Directors
by offering a market
competitive fee level
The Non-Executive Directors receive fees for carrying out
their duties.
Fees are reviewed annually. A base fee is augmented
for Committee Chairmanship or membership to take
into account the additional time commitment and
responsibilities associated with those committees. Neither
the Chairman nor the Non-Executive Directors are eligible
for any performance-related remuneration.
Non-Executive Director remuneration is determined
by the Chairman and the Executive Directors. The
Executive Chairman’s remuneration is determined by
the Remuneration Committee. If there is a temporary
yet material increase in the time commitments for Non-
Executive Directors, the Board may pay extra fees on a pro-
rata basis to recognise the additional workload.
Additional fees may be payable in relation to extra
responsibilities undertaken such as chairing a Board
Committee and/or a Senior Independent Director role or
being a member of a committee.
Any reasonable business-related expenses (including
tax thereon) can be reimbursed if determined to be a
taxable benefit.
As for the Executive
Directors, there is no
prescribed maximum
annual increase,
although it will normally
align to the workforce
pay increase.
Any increases to fee
levels will take into
account the general
salary increase for the
broader UK employee
population, the level
of time commitment
required to undertake
the role and the level
of fees paid in the
general market.
Notes
1. As Hilton operates in a number of geographies, remuneration practices vary across the Group. However, employee remuneration policies are based on the same broad
principles and the remuneration policy for the Executive Directors is designed with regard to the policy for employees as a whole. For example, the Committee takes
into account the general base salary increase for the broader UK employee population when determining the annual salary review for the Executive Directors. There are
some differences in the structure of the remuneration policy for the Executive Directors and other senior employees, which the Remuneration Committee believes are
necessary to reflect the different levels of responsibility of employees across the Company. The key differences in remuneration policy between the Executive Directors
and employees across the Group are the increased emphasis on performance-related pay and the inclusion of a share-based Long Term Incentive Plan for Executive
Directors. There is a lower aggregate incentive quantum at below executive level with levels driven by market comparatives and the impact of the role. Long-term
incentives are not provided outside of the most senior executives as they are reserved for those viewed as having the greatest potential to influence Group levels
of performance.
2. Long-term incentive and Sharesave schemes are operated in accordance with their respective Scheme and other rules under which the Committee has some
discretion relating to their administration which is consistent with market practice. Under the LTIP such discretion covers:
– participation;
– the timing of the grant of award and/or payment;
– treatment of awards in the event of good leavers (including determination of good leaver status), death and intervening events (including variations in capital and
change of control) which address vesting date, exercise period and reduction in number of vesting options;
– minor alterations to benefit the plan administration, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or
regulatory treatment;
– where an event has occurred such that it would be appropriate to amend the performance condition so long as the altered performance condition is not materially
less difficult to satisfy; and
– adjusting the long-term incentive vesting outcome if the level of vesting is not considered to be commensurate with performance over the period. The Committee,
in using its discretion, would act fairly and reasonably and would seek to consult with shareholders prior to the use of any upwards discretion.
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
134
OTHER POLICY INFORMATION
Element Description
Non-UK based
Directors
and foreign
currency
translation
Directors may be employed who are based outside of the UK and therefore subject to the employment laws and
accepted practice for that country which may be different to those in the UK. The Committee will ensure that
any future overseas based Directors are remunerated on an equivalent basis as in the UK albeit that it may be
necessary to satisfy local statutory requirements.
Approach to
recruitment
The remuneration package for a new Executive Director would be set in accordance with the terms of the
Company’s approved remuneration policy in force at the time of appointment. For the appointment of a new
Chairman or Non-Executive Director, the fee arrangement would be set in accordance with the approved
remuneration policy in force at that time.
The salary for a new Executive Director shall take into account the experience and calibre of the individual and
the market rate required for recruiting him or her. The initial salary may be set below the normal market rate, with
phased increases over the first few years as the Executive Director gains experience in their new role. Pension
provision will be workforce aligned.
Depending on the timing of the appointment, the Committee may deem it appropriate to set different annual
bonus performance criteria for the remainder of the first performance year of appointment. The bonus would
be pro-rated to reflect the portion of the year in employment. In addition, an LTIP award can be made shortly
following an appointment (providing that the Company is not in a closed period). The maximum bonus and LTIP
grant level will be in accordance with the maxima outlined in the policy table.
If an individual is forfeiting remuneration from his or her previous employer, the Committee may offer additional
cash and/or share-based elements when it considers these to be in the best interests of the Company and its
shareholders. Such payments would reflect and be limited to remuneration relinquished when leaving the former
employer and would reflect (as far as possible) the nature and time horizons attaching to that remuneration and
the impact of any performance conditions. The aim of any such award would be to ensure that so far as possible,
the expected value and structure of the award will be no more generous than the amount being forfeited.
Shareholders will be informed of any such payments in the remuneration report.
For an internal Executive Director appointment, any variable pay element awarded in respect of the prior role will
be allowed to pay out according to its terms. In addition, any other ongoing remuneration obligations existing
prior to appointment may continue.
For external and internal Executive Director appointments the Committee has the discretion to pay ongoing
relocation costs for a reasonable period, as well as one-off payments (assuming they are fair and reasonable).
Any share-based awards referred to in this section will be granted as far as possible under the Company’s existing
share plans. If necessary, awards may be granted outside of these plans as permitted under the Listing Rules.
Payment for
loss of office
Payments for loss of office are made in accordance with the terms of the Directors’ service contracts as below.
On termination no bonus is payable unless the Committee determines good leaver circumstances apply where,
subject to performance conditions, a pro-rata bonus may be payable at the Company’s discretion.
LTIP awards will generally lapse on cessation although they may be capable of vesting in certain good leaver
situations. For good leavers, outstanding share awards may vest at the original vesting date, or on the date of
cessation if the Committee decides, subject to time pro-rating and the performance conditions being satisfied.
In accordance with its terms of reference the Committee ensures that contractual terms on termination, and
any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty
to mitigate loss is fully recognised. The Committee may pay reasonable outplacement and legal fees where
considered appropriate. In addition, the Committee may pay any statutory entitlements or settle or compromise
claims in connection with a termination of employment, where considered in the best interests of the Company.
Consideration
of shareholder
views
The Committee is always interested in shareholder views and is committed to an open dialogue. Accordingly, the
Committee will seek to engage with major shareholders on any proposed significant changes to its remuneration
policies or in the event of a significant exercise of discretion. The Committee considers shareholder feedback
received in relation to each AGM alongside views expressed during the year. In addition, we engage actively with
our largest shareholders and consider the range of views expressed.
Consideration
of employment
conditions
elsewhere in
the Group
The Committee takes into account the general employment reward packages of employees across the Group
when setting policy for Executive Director remuneration and is kept informed of changes in pay across the Group.
Non-Executive Directors engage with employees on a number of areas including Group wide remuneration.
These discussions ensure that all employees’ views are taken on board.
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
135
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
DIRECTOR SERVICE CONTRACT AND OTHER RELEVANT INFORMATION
Provision Executive Directors Non-Executive Directors
Term Steve Murrells appointed on 3 July 2023
with no fixed term.
Matt Osborne appointed on 24 May 2022
with no fixed term.
Robert Watson – from 1 January 2021
Angus Porter – from 1 July 2018
Rebecca Shelley – from 1 April 2020
Patricia Dimond – from 1 April 2022
Sarah Perry – from 4 December 2023
Re-election
at AGM
Annually under the Company’s Articles and for FTSE 350
companies under the UK Corporate Governance Code.
Annually under the Company’s Articles and for FTSE 350
companies under the UK Corporate Governance Code.
Notice period Up to 12 months for both the Company and the Director.
The service contract policy for new appointments will be
on similar terms as existing Directors.
Six months for both the Company and the Director.
Termination
payment /
payments
in lieu of notice
Up to 12 months’ salary in lieu of notice.
If a claim is made against the Company in relation to a
termination (e.g. for unfair dismissal), the Committee
retains the right to make an appropriate payment in
settlement of such claims as considered in the best
interests of the Company. Additional payments in
connection with any statutory entitlements (e.g. in
relation to redundancy) may be made as required.
None.
Change of
control
There are no enhanced terms in relation to a change of
control.
There are no enhanced terms in relation to a change of
control.
External
appointments
External appointments can be held and earnings
retained from such appointments with the
Company’s permission.
N/A
INSPECTION
Executive Director service agreements and Non-Executive Director appointment letters are available for inspection at the Company’s
registered office.
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
136
ANNUAL REPORT ON
REMUNERATION
Role of the Committee
Remuneration policy is delegated
by the Board to the Remuneration
Committee established by the Board of
Directors. Terms of reference formalise
the roles, tasks and responsibilities of the
Committee to comply with the Code and
to achieve best practice. The Committee’s
terms of reference are available and can
be found on the Company’s website at
www.hiltonfoods.com.
The Committee meets at least twice
per year.
Membership of the Committee
Members of the Committee are appointed
by the Board on the recommendation
of the Nomination Committee and
in consultation with the Chair of the
Remuneration Committee. In 2023 the
Committee comprised independent
Non-Executive Directors Christine
Cross (Committee Chair and member
to 4 December 2023), Angus Porter,
Rebecca Shelley (Committee Chair from
4 December 2023), Patricia Dimond and
Sarah Perry (from 4 December 2023).
Rebecca has served on the Hilton Foods
Remuneration Committee since 2020 and
has experience of being a Remuneration
Committee chair.
Other individuals such as the Chairman,
Chief Executive and external advisors
may be invited by the Committee to
attend meetings as and when required.
The Company Secretary is in attendance
at all meetings.
Responsibilities of the Committee
The main responsibilities of the
Remuneration Committee which are
contained in the Code and also in the
Committee’s terms of reference are:
– setting the remuneration policy
and agreeing payments for the
Company’s Non-Executive Chairman,
the Executive Directors and Executive
Leadership Team;
– approving the design of, and
determining the targets for, any
performance-related pay schemes
operated by the Company and
approving the aggregate annual
payments made under such schemes;
– reviewing the design of all share
incentive plans for approval by the Board
and shareholders; and
– reviewing all elements of workforce
remuneration and associated policies.
External advisors
The Committee recognise the complexity
and technical nature of remuneration
issues and have therefore appointed
experts, FIT Remuneration Consultants
LLP, on remuneration matters. FIT’s
fees, on a time and expense basis, for
advice provided to the Remuneration
Committee during the year were £21,973
(excluding VAT) which included advising
on senior executive packages including
benchmarking and the CEO change and
also on the change of Committee chair.
FIT does not provide any other services to
the Group and the Committee is satisfied
that it provides independent and objective
remuneration advice. FIT is a signatory to
the Code of Conduct for Remuneration
Consultants in the UK, details of which
can be found on the Remuneration
Consultants Group’s website at
www.remunerationconsultantsgroup.com.
Share scheme dilution limits
The Company applies established good
governance restrictions over the issue of
new shares under all its share schemes
of 10% in 10 years and 5% in 10 years for
discretionary schemes. As at 31 December
2023 the headroom available under these
limits was 1.8% and 0% respectively.
Statement of voting at Annual
General Meeting
The following table shows the voting
results in respect of the 2022 Directors’
remuneration report (other than the
Directors’ remuneration policy) approved
at the 2023 AGM and the Directors’
remuneration policy which was approved
by shareholders at the 2022 AGM:
Approve
Directors'
remuneration
report
Approve
Directors’
remuneration
policy
AGM year 2023 2022
Resolution
type
Advisory Binding
Votes for
%
52,502,977
90.78%
76,038,800
99.05%
Votes
against
%
5,333,206
9.22%
733,039
0.95%
Votes
withheld 2,258,083 3,750
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
137
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
The remainder of this section is subject to audit.
Single total figure table of remuneration
The remuneration of individual Directors is set out below.
52 weeks to 31 December 2023
Salary
and fees
(note 1)
£’000
Benefits
(note 2)
£’000
Pension
(note 3)
£’000
Total
fixed pay
£’000
Annual
bonus
(note 4)
£’000
Long-term
incentive
(note 5)
£’000
Total
variable
pay
£’000
Total
£’000
Executive Directors
Steve Murrells
(appointed 3 July 2023) 375 52 26 453 470 – 470 923
Matt Osborne 320 16 22 358 277 – 277 635
Non-Executive Directors
Robert Watson 280 – – 280 – – – 280
Angus Porter 58 – – 58 – – – 58
Rebecca Shelley 58 – – 58 – – – 58
Patricia Dimond 64 – – 64 – – – 64
Sarah Perry
(appointed 4 December 2023) 4 – – 4 – – – 4
Former Directors
Philip Heffer
(resigned 3 July 2023) 310 2 22 334 388 – 388 722
Christine Cross
(resigned 4 December 2023) 59 – – 59 – – – 59
Total 1,528 70 70 1,668 1,135 – 1,135 2,803
52 weeks to 1 January 2023
Salary
and fees
(note 1)
£’000
Benefits
(note 2)
£’000
Pension
(note 3)
£’000
Total
fixed pay
£’000
Annual
bonus
(note 4)
£’000
Long-term
incentive
(note 5)
£’000
Total
variable
pay
£’000
Total
£’000
Executive Directors
Philip Heffer 570 3 58 631 – – – 631
Matt Osborne 163 7 11 181 – – – 181
Non-Executive Directors
Robert Watson 270 – – 270 – – – 270
Christine Cross 62 – – 62 – – – 62
Angus Porter 56 – – 56 – – – 56
Rebecca Shelley 56 – – 56 – – – 56
Patricia Dimond 45 – – 45 – – – 45
Former Directors
Nigel Majewski 165 5 25 195 – – – 195
John Worby 26 – – 26 – – – 26
Total 1,413 15 94 1,522 – – – 1,522
Notes
1. Salary and fees
Reflects salaries/fees paid to Directors in respect of 2023 (with 2022 comparatives).
2. Benefits
Benefits provided comprised travel allowance, (totalling £50k), company car and fuel and private healthcare.
3. Pension
Payments were made during 2023 to money purchase pension schemes (£22k) or in lieu as a salary supplement (£48k) at the rate of
15% of base salary until May 2022 and thereafter at 7% of salary for all Executive Directors.
4. Annual bonus
The 2023 annual bonus had two elements. The financial element bonus was based on adjusted profit before tax and free cash flow
performance against a sliding scale of targets. A strategic element bonus was available based on achievement of personal objectives.
No bonus is paid unless both financial metrics achieve threshold performance. The bonus outcome for 2023 for all Executive Directors
is summarised below.
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
138
Bonus element Metric Weighting
Threshold
performance
Target
performance
Maximum
stretch target 2023 achieved
Financial Adjusted profit
before tax
80% £58.1m £64.6m £67. 8m £66.0m
Free cash flow 20% £34.3m £38.1m £40.0m £112.1m
% of base salary CEO/CFO 20%/20% 75%/50% 130%/80% 105.3%/66.5%
Strategic % of base salary CEO/CFO 20%/20% 20.0%/20.0%
Total % of base salary CEO/CFO 150%/100% 125.3%/86.5%
To be paid in cash 100.2%/74. 3%
To be deferred into Hilton Foods shares for two years subject to continued employment 25.1%/12.2%
The Executive Directors were set a number of different personal and strategic objectives individually tailored to their role and
the needs of the business in the year now under review. The achievements against these objectives were considered carefully by
the Committee. A summary of these objectives and achievements for the Executive Directors is set out below together with the
assessment and overall outcome.
PHILIP HEFFER – TO 3 JULY 2023
Objectives Detailed Targets Weighting % Remuneration Committee Assessment
1. Delivering
shareholder
value/platform
for growth
– Review the 5-year strategic plan with the
incoming CEO and agree organic growth
targets particularly international markets
and alternative protein strategy
– Successfully manage the full year results,
roadshow and the introduction on the
new CEO to the key shareholders
– Oversee the integration of Foppen and
the Seafood recovery plan for 2023
25% Met in full – Agreed strategic plan with new CEO
going forward and growth targets.
Reviewed alternative protein strategy
and clear decisions made on direction
going forward
– Full year result roadshow a success
with the introduction of the new CEO
– Seafood recovery and integration plan
implemented
2. Fit for the
future
– Final implementation of the
organisational design and structural
changes to the regions
– Successful Transition Plan to the
new CEO
25% Met in full – Organisation design re-structured and
successfully implemented for better
regional control and not by category
3. Key retail
partnerships
– Re-visit and stabilise major customer
contracts to extend contract length and
leverage business growth across proteins
– Finalise negotiations for new retail
customers internationally
20% Met in full – Various contract discussions initiated
which were successful concluded by
the year-end
– Walmart Canada deal finalised
and signed
4. Green and digital
automated
future
– Accelerate progress on the People,
Planet, Product to ensure 2025 goals
achieved. Focus especially on waste,
energy and water utilisation. Roll out
forward commitments on Scope 1, 2
and 3 emissions
– Review legacy systems and agree way
forward for UK and ROI in particular
20% Met in full – People, Planet, Product plan
successfully implemented,
extended Scope 1, 2 and 3 emissions
commitments and improved culture
within the Group
– Strategy agreed for system changes
in UK and ROI, continued with strong
investment in UK delivering significant
cost savings
5. Brand and
culture
– An engaged and safe workforce as
measured through pulse surveys
and health and safety metrics
– Demonstrate personal inclusion
leadership action aligned to the
diversity and inclusion plan, targeting
over 30% women
10% Met in full – All safety metrics improving and
achieved diversity targets
Outcome of strategic personal objectives, Remuneration Committee assessment:
20% bonus achieved from a total of 20%.
DIRECTORS’ REMUNERATION REPORT continued
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139
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
STEVE MURRELLS – FROM 3 JULY 2023
Objectives Detailed Targets Weighting % Remuneration Committee Assessment
1. Deliver
shareholder
value and
platform for
growth
– Deliver a material outcome that supports
our growth agenda
– Develop an engagement strategy with
our investors that provides greater insight
on the business
– Convert business perception from a meat
packer to an international protein provider
that drives change through technical
capability
13% Met in full – Walmart Canada signed up on a new
cost plus deal
– A considerable step change in
investor stakeholder management
was delivered including a successful
investor day and a narrative of moving
Hilton beyond a meat packer
– Share price started the year below
£6.00 and ended the year at £8.00
2. Achieve Seafood
recovery
– Ensure service, quality and value targets
are met
– Improve on employee engagement
– Turn business back to black, delivering
budgeted EBIT
40% Met in full – Back to basics campaign ensured all
targets were met
– Employee engagement score
increased to 75% across both sites
– FY23 EBIT was profitable exceeding
the target
3. Dalco recovery/
turnaround
– Position the business for market-wide
reduced volumes in this category
– Set out a new plan that simplifies the
business, sets it up for success and
achieves a SKU reduction
20% Met in full – Inventory and SKU reduction delivered
– Expert MD in vegan/vegetarian was
hired, joining in January 2024
– Decision made to close the Oss site
to simplify the business with a clear
recovery plan for 2024
4. Set up Hilton
Services and
Greenchain for
success
– Drive a clear vision and strategy for
Greenchain Solutions
– Ensure effective retention, structures and
succession plans are in place for co-CEOs
and the level below
10% Met in full – Board agreement for a standalone
entity and ambitious plan to grow over
the next four years
– Decoupled the co-CEO approach.
Approval to recruit a new CIO and
Services number two to secure
succession and ensure the core service
delivery to the Group is maintained
5. Ensure a fit for
future business
– Deliver or exceed budgeted regional
cost-out programmes targets
– Outperform financial and operational
targets with the support of focused KPIs
– Rediscover first class partner relationships
with no material customer dissatisfaction
by year-end
12% Met in full – All cost-out programmes achieved
– Full year numbers exceeded
consensus and budget across all
focused KPIs
– Rebuilt relationships with major
partners across four separate countries
6. Continuously
improve culture
– Drive the development and
implementation of an internal
communications strategy and framework
ensuring that this is in place by year-end
– Role model leadership excellence through
implementing a regular communications
cadence on-line and in-person, ensuring
the successful delivery of the annual
leadership conference, annual townhalls
and quarterly leadership update
5% Met in full – New Communications and Investor
Relations Director role recruited.
Regular internal comms cadence put
in place
– 2024 communications programme
developed
– 2023 leadership event well received by
our senior people with feedback that
exceeded expectations
– Significant time spent coaching
and developing all members of the
Executive Leadership Team with some
growing into bigger roles
Outcome of strategic personal objectives, Remuneration Committee assessment:
20% bonus achieved from a total of 20%.
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
140
MATT OSBORNE
Objectives Detailed Targets Weighting % Remuneration Committee Assessment
1. Financing
strategy
– Long term
view of
partnerships
– Responsible
corporate
citizen
– Prepare Group financing strategy
to support continued growth and
investment providing for delivery of agreed
expansionary plans and flexibility to fund
future projects
– Introduce measurable ESG links into the
Group’s wider financing strategy aligned to
annual bonus plans and LTIP
– Support for ongoing customer contract
development to align with strategic goals
30% Met in full – Ongoing discussions with advisors re.
financing strategy
– Certainty of projects required to allow
us to progress
– Target increase of existing facility
– Initial discussions to build ESG links
into next facility
– Ongoing support provided in
customer contract developments and
wider strategic development
2. Investor relations
– Responsible
corporate
citizen
– Long term
view of
partnerships
– Maintain positive relationships with
investors and analysts
– Develop relationships with new and
potential new investors
30% Met in full – Continued positive investor
engagement and momentum
– Further strengthening of relationships
with analysts
– Engagement with a number of
potential investors throughout the year
– Successful investor day with
overwhelmingly positive feedback and
market reaction
– More insightful trading updates and
investor material being produced
providing greater insight and
transparency and restoring investor
confidence
3. Balance sheet
and financing
– Responsible
corporate
citizen
– Sharing
expertise
internationally
– Enhanced oversight of balance sheet
exposures and mitigation of potential risks
– Target overall improvement in working
capital management
– Utilise existing balance sheet to optimise
debt and cash levels e.g. through
introduction of invoice discounting, supply
chain financing
– Screen and prioritise capital investments
through enhanced capital governance
processes to maximise returns whilst
implementing Hilton Foods strategy
20% Met in full – Quarterly balance sheet reviews for
higher risk businesses established
providing increased rigour and over
balance sheet positions
– Increased focus on working capital in
areas with notable improvements in
inventory
– New supply chain financing schemes
joined
– Greater focus on need to demonstrate
consistent returns on investment
– Wider finance leadership team
strategy being established including
formalised capital allocation
workstream
4. Finance team
leadership
– Sharing
expertise
internationally
– Consumer led
and customer
focused
– Support the continued growth of
Change to Hilton Food Group plc through
financial support and direction, centrally
and regionally
– Focus on reporting enhancements,
standardisation of reporting structures and
enhanced insight through updated KPIs
– Drive finance oversight and support for
cost-out programmes
– Re-build finance leadership team
culture with delivery through regional
finance directors
20% Met in full – Board pack improved incrementally
throughout the year with positive
Board feedback
– Single KPI introduced and a step
forward from previous version
– PMR programmes delivered in
year with reporting built into more
standardised OpCo monthly reporting
– Finance leadership team reestablished
including team building sessions and
finance strategy workshops
– Draft finance strategy document
prepared with key initial workstreams
including capital allocation, cash
management, enhancing KPIs and
enhancing cross-cultural working
Outcome of strategic personal objectives, Remuneration Committee assessment:
20% bonus achieved from a total of 20%.
DIRECTORS’ REMUNERATION REPORT continued
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
5. Long term incentive plan
Long-term incentives comprise the number of share awards under the Company’s share plans where the achievement of
performance targets ended in the year multiplied by the difference between the share price on the date of vesting and the
exercise price.
Awards were granted in 2021 under the Long Term Incentive Plan which are due to vest in 2024, subject to performance conditions
covering the three financial years 2021-2023 with a 70% weighting given to an EPS metric and a 30% weighting to a TSR metric.
The share price at the date the awards were granted was £12.12. The long-term incentive vesting outcome is summarised below.
EPS metric
Threshold
performance
Maximum
performance
2023
achieved
2021-23 adjusted basic EPS % annual growth 6% 13% 2.83%
Vesting % 10% 100% 0.0%
TSR metric
Threshold
performance
Maximum
performance
2023
achieved
2021-23 adjusted TSR growth Median Upper quartile 113th out of 154
constituents
Vesting % 10% 100% 0.0%
The overall vesting is 0% which is not affected by any assumptions over acquisitions.
Director Awards granted
Awards
expected to vest
0.0%
2023 Q4 average
share price
£7.585
Amount attributable
to share price
appreciation
No. No. £’000 £’000
Philip Heffer 73,089 – – –
Matt Osborne 4,492 – – –
6. Payments to past directors
Philip Heffer stepped down from the Board on 3 July 2023 but continued to be employed as advisor to the Board. There were no other
payments made to former directors in 2023.
7. Payments for loss of office
There were no payments for loss of office made in 2023.
DIRECTORS’ REMUNERATION REPORT continued
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142
DIRECTOR SHAREHOLDING AND SHARE INTERESTS
Details of Director shareholdings and changes in outstanding share awards were as follows:
Director Type
At
1 January
2023
Granted
(note 4) Exercised Lapsed
At 31
December
2023
Exercise
price
(pence)
Earliest
exercise
date
Latest
exercise
date Notes
Robert
Watson
Shares 2,067,292 2,042,292 1
Nil cost options 24,241 – – – 24,241 nil 21.05.22 21.05.29 3
Nil cost options 5,017 – – (5,017) – nil 28.09.23 28.09.30 3
Total nil cost options 29,258 – – (5,017) 24,241
Steve
Murrells
Shares – 28,781 1
Nil cost options – 182,039 – – 182,039 nil 15.05.26 15.05.33 3
Total nil cost options – 182,039 – – 182,039
Matt
Osborne
Shares 216 5,171
Share options 947 – – (947) – 950.00 01.08.22 01.02.23 2
Share options 1,495 – – (1,495) – 1204.00 01.08.25 01.02.26 2
Share options – 2,678 – – 2,678 672.00 01.08.26 01.02.27 2
Total share options 2,442 2,678 – (2,442) 2,678
Nil cost options 3,455 – (3,455) – – nil 21.05.22 21.05.29 3
Nil cost options 4,485 – – (4,485) – nil 28.09.23 28.09.30 3
Nil cost options 4,492 – – – 4,492 nil 11.05.24 11.05.31 3
Nil cost options 24,033 – – – 24,033 nil 16.05.25 16.05.32 3
Nil cost options – 55,479 – – 55,479 nil 15.05.26 15.05.33 3
Total nil cost options 36,465 55,479 (3,455) (4,485) 84,004
Philip
Heffer
Shares 3,824,566 4,255,016 1
Nil cost options 56,230 – – – 56,230 nil 21.05.22 21.05.29 3
Nil cost options 72,981 – – (72,981) – nil 28.09.23 28.09.30 3
Nil cost options 73,089 – – – 73,089 nil 11.05.24 11.05.31 3
Nil cost options 82,849 – – – 82,849 nil 16.05.25 16.05.32 3
Nil cost options – 100,406 – – 100,406 nil 15.05.26 15.05.33 3
Total nil cost options 285,149 100,406 – (72,981) 312,574
Christine
Cross Shares 25,000 25,000 1
Angus
Porter Shares 2,877 2,877 1
Rebecca
Shelley Shares 3,281 3,281 1
Patricia
Dimond Shares 5,650 19,188 1
Sarah
Perry Shares – – 1
DIRECTORS’ REMUNERATION REPORT continued
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Notes
1. All shares are beneficially owned with the exception of 1,246,917 shares held by various family trusts of which Robert Watson is a
trustee. There have been no other changes in the interests of Directors between 31 December 2023 and the date of this report.
The Company’s remuneration policy includes a shareholding guideline such that Executive Directors are expected to build a holding
in the Company’s shares at least equal to a minimum value as a percentage of base salary. At 31 December 2023 the guideline and
actual share holdings were as follows:
Director
Guideline minimum holding
value as a % of salary
Actual holding value
as a % of salary Guideline met?
No. £’000 £’000
Steve Murrells 300% 31% On track
Matt Osborne 200% 13% On track
In accordance with the remuneration policy Steve Murrells and Matt Osborne, as new Directors, will retain at least 50% of any vested
share awards (after the sale to meet tax obligations) to build up their shareholdings over a period of no more than five years to meet
the guideline.
2. Share options granted under Hilton’s all employee Sharesave Scheme.
3. Nil cost options granted under the Long Term Incentive Plan which are subject to the performance conditions and compound
earnings per share growth below on a sliding scale over the performance period.
Grant year
Performance
basis
Performance
period
Threshold
vesting
Compound annual
growth at
threshold vesting
Maximum
vesting
Compound
annual growth at
maximum vesting
2020 EPS 70% 2020 – 2022 10% 6% 100% 12%
TSR 30% Median Upper quartile
2021 EPS 70% 2021 – 2023 10% 6% 100% 13%
TSR 30% Median Upper quartile
2022 EPS 60% 2022 – 2024 10% 5% 100% 12%
TSR 25% Median Upper quartile
ESG – Scope 1&2
energy 5%
6.5% reduction
over period
43.9% reduction
over period
ESG – Recycled
packaging 5%
11.7% increase over
period
28.3% increase
over period
ESG – Food waste 5% 15.0% reduction
over period
30.0% reduction
over period
2023 EPS 60% 2023 – 2025 10% 11% 100% 17%
TSR 25% Median Upper quartile
ESG – Scope 1&2
energy 5%
35% reduction
over period
52% reduction
over period
ESG – Scope 3
energy 5%
21% increase over
period
33% increase over
period
ESG – People gender,
inclusion and human
rights metrics 5%
Various Various
4. Grant of LTIP nil cost option awards in the year, were as follows:
Director Face value
Number of
shares under
2023 LTIP award
Proportion
of salary
Share price
date
Closing
share price
Steve Murrells £1,312,500 182,039 175% 12 May 2023 721p
Matt Osborne £400,000 55,479 125% 12 May 2023 721p
Philip Heffer £723,928 100,406 175% 12 May 2023 721p
5. LTIP nil cost option exercises in the year occurred when the share price was 668p.
DIRECTORS’ REMUNERATION REPORT continued
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144
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN THE 2024 FINANCIAL YEAR
Base salaries, benefits and pension
Executive Director salary levels from 1 January 2024, with prior year comparatives, are set out below. The rationale for the increase for
Matt Osborne, above that of the workforce, is set out in the annual statement.
Director
2023
£’000
2024
£’000
Steve Murrells 750 788
Matt Osborne 320 370
There are no changes in benefits other than an inflationary increase applied to Steve Murrells’ travel allowance.
Annual bonus
Following the adoption of the new remuneration policy at the 2022 AGM, the maximum annual CEO bonus opportunity increased
from 125% to 150% of salary for 2023 onwards. The maximum bonus opportunity for the CFO will increase from 100% to 125% of salary
for 2024. Performance targets will be based on financial metrics (130% of the bonus for CEO and 105% for CFO) and personal and
strategic targets (20% of the bonus). A bonus deferral mechanism will apply whereby one third of any bonus over 50% of salary will be
deferred into Hilton shares for two years.
Financial metrics include adjusted profit before tax target (80% weighting) and free cash flow target (20% weighting). As the financial
targets, based on sliding scales and set with reference to the 2024 budget, and the personal and strategic targets are considered
commercially sensitive, the Committee will disclose targets on a retrospective basis in next year’s report.
2024 LTIP awards
The 2024 LTIP awards will be capped at 175% of salary for Steve Murrells and 150% of salary for Matt Osborne with vesting, once again,
determined by stretching EPS (60% weighting), relative TSR (25% weighting) and ESG targets (15% weighting).
Stretching yet motivational EPS and ESG targets will be set following the Annual report approval date. In respect of the TSR targets
10% of this part of an award will vest for median performance against the constituents of the FTSE 250 (excluding investment trusts)
increasing pro-rata to full vesting for this part of an award for upper quartile performance. In addition, no part of this award may vest
unless the Committee is satisfied with the underlying performance of the Company.
Details of the 2024 grant and performance targets will be published immediately following the grant via a Regulatory
Information Service.
Non-Executive Directors
Fees for the Chairman increased by 5.0%, slightly less than the increase for the UK general workforce. In recognition of increasing
responsibilities and time commitments, the Board Chair and Executive Directors agreed that independent Non-Executive Director
base fees should increase to £58k from 1 January 2024. Going forward, in addition to the base fee, the Audit and Remuneration
Committee Chairs will receive a £12k supplement, with the Senior Independent Director and Sustainability Committee Chair each
receiving a £10k supplement. The supplement for the Senior Independent Director includes duties on workforce engagement.
DIRECTORS’ REMUNERATION REPORT continued
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145
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
TSR PERFORMANCE GRAPH
The graph below shows the Total Shareholder Return performance (TSR) (share price movements plus reinvested dividends) of the
Company compared against the FTSE 250 Index covering the ten years from 2014 to 2023. The FTSE 250 Index (excluding Investment
Trusts) is, in the opinion of the Directors, the most appropriate index against which the TSR of the Company should be measured as it
is a broad equity index of which Hilton Food Group plc is a constituent.
Total return index (rebased 31/12/2013 = 100)
Hilton Food Group
FTSE 250 (ex IT)
350
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
300
250
200
150
100
50
0
CHIEF EXECUTIVE OFFICER REMUNERATION TEN YEAR TREND
Director 2014 2015 2016 2017 2018
1
2019 2020 2021 2022 2023
2
Total remuneration (£'000) 626 784 1,235 1,570 1,627 1,562 1,765 1,686 631 1,645
Annual bonus (as a percentage of
the maximum) 32% 60% 69% 80% 78% 100% 100% 68% 0% 84%
Long term incentive vesting (as a
percentage of the maximum) 0% 0% 61% 73% 88% 66% 100% 70% 0% 0%
Notes
1. Robert Watson was CEO until 30 June 2018 when Philip Heffer was appointed as CEO. Data for the 2018 year comprises the remuneration of Robert Watson from
1 January 2018 to 30 June 2018 and that of Philip Heffer from 1 July 2018 to 30 December 2018.
2. Philip Heffer was CEO from 30 June 2018 until 4 July 2023 when the current CEO Steve Murrells was appointed. Data for the 2023 year comprises the remuneration
of Philip Heffer from 1 January 2023 to 3 July 2023 and that of Steve Murrells from 3 July 2023 to 31 December 2023.
DIRECTORS’ REMUNERATION REPORT continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
146
DIRECTOR REMUNERATION PERCENTAGE CHANGE
Executive Directors Non-Executive Directors
Company
average
Philip
Heffer
Matt
Osborne
Nigel
Majewski
Robert
Watson
Angus
Porter
Rebecca
Shelley
Patricia
Dimond
Christine
Cross
John
Worby
Left 3 July
2023
Appointed
24 May
2022
Left 24 May
2022
Appointed
1 April
2020
Appointed
1 April
2022
Left 4
December
2023
Left 24 May
2022
2023 percentage increase over 2022
Salary/fees % change 7.4% 8.8% 18.5% n/a 3.6% 3.6% 3.6% 3.6% 3.6% 3.6%
Benefits % change 19.3% 31.3% 38.4% n/a n/a n/a n/a n/a n/a n/a
Annual bonus % change 100% 100.0% 100.0% n/a n/a n/a n/a n/a n/a n/a
2022 percentage increase over 2021
Salary/fees % change 4.6% 12.6% n/a 2.0% 2.0% 2.0% 2.0% n/a 2.0% 2.0%
Benefits % change -28.7% -83.2% n/a -59.7% n/a n/a n/a n/a n/a n/a
Annual bonus % change -100.0% -100.0% n/a -100.0% n/a n/a n/a n/a n/a n/a
2021 percentage increase over 2020
Salary/fees % change -1.0% 2.0% n/a 2.0% -33.3% 7.9% 7.9% n/a 2.0% 2.0%
Benefits % change -23.1% -29.0% n/a -39.9% -100.0% n/a n/a n/a n/a n/a
Annual bonus % change -43.0% -30.6% n/a -30.6% -100.0% n/a n/a n/a n/a n/a
2020 percentage increase over 2019
Salary/fees % change 2.8% 2.0% n/a 2.0% 2.0% 2.0% n/a n/a 2.0% 2.0%
Benefits % change -1.9% -31.6% n/a 18.2% 21.9% n/a n/a n/a n/a n/a
Annual bonus % change 4.5% 2.0% n/a 2.0% 2.0% n/a n/a n/a n/a n/a
Notes
1. The percentage changes for leavers are based on annualised numbers.
2. Robert Watson was an Executive Director in 2020 moving to a Non-Executive role from 2021 onwards.
3. Rebecca Shelley was appointed in 2020. Matt Osborne and Patricia Dimond were appointed in 2022.
4. The table above excludes Steve Murrells and Sarah Perry who joined the Board during 2023.
CEO PAY RATIO
CEO pay ratio
Year Method
25th percentile
pay ratio
Median –
50th percentile
pay ratio
75th percentile
pay ratio
2019 Option B 83 79 51
2020 Option B 87 78 48
2021 Option B 73 65 48
2022 Option B 30 25 16
2023 Option B 66 59 48
Option B was adopted so that it could be linked with other reward-based activity collecting similar information. This information,
comprising basic pay since the majority of employees do not receive benefits or annual bonuses, as at 5 April 2023 was used as a
starting point to identify those UK employees as the best equivalents of P25, P50 and P75. There was no reliance on estimates or
judgements. The information for these employees was then updated as at 31 December 2023 to represent total pay and benefits for
the 2023 financial year.
DIRECTORS’ REMUNERATION REPORT continued
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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
DIRECTORS’ REMUNERATION REPORT continued
CEO PAY RATIO continued
Year
CEO
£’000
25th percentile
pay ratio
£’000
50th percentile
pay ratio
£’000
75th percentile
pay ratio
£’000
Salary component 685 24 27 33
Total pay and benefits 1,645 25 28 34
The CEO’s remuneration is weighted more heavily towards variable pay than that of the wider workforce so that it is aligned with the
Group performance. This will inevitably cause the pay ratios to fluctuate over time. Pay ratios for the year increased due to the bonus
awarded to the CEO following no bonus in 2022. The P25, P50 and P75 pay ratios decreased due to lower CEO pay.
The Committee has considered the pay data for the three employees identified and believes that it fairly reflects pay at the relevant
quartiles amongst the UK workforce. The Committee is satisfied that the median pay ratio for the year is consistent with the pay,
reward and progression policies for the Group’s UK employees who have the same pay and reward policies and opportunities.
GENDER PAY GAP
We report information about the difference in average pay for its male and female employees as required by gender pay gap
legislation. Gender pay gap metrics are submitted by the Group’s three main UK employing entities. The headline gender pay metric
is the difference in the median hourly pay received by men and women. These metrics are set out below which generally show an
improving trend and compare favourably with the UK average.
Year Hilton Foods UK Hilton Seafood UK Fairfax Meadow UK average
2023 8.9% 11.8% 4.0%
2022 4.6% 4.0% 4.0% 14.4%
2021 9.8% 11.1% 0.0% 15.1%
Note: A positive % metric favours men and a negative % metric favours women.
Hilton Foods gender pay gap arises because there are more males than females at all levels of the organisation, and in particular for
senior roles. This is in common with the majority of employers in the meat processing industry, as there is a history of our sector being
male dominated. Therefore the key to improving gender pay is to improve opportunities for those who identify as women. We are
addressing this by encouraging candidate diversity through our recruitment processes, supporting the development of women
through our approach to capability and succession, our leadership development programmes and the women’s network.
For more information and to view the full metrics see the gender pay gap portal or our website www.hiltonfoods.com.
RELATIVE IMPORTANCE OF SPEND ON PAY
The following table sets out for the comparison total spend on pay with dividends.
Year
2023
£’000
2022
£’000 % change
Staff costs (note 8 to the financial statements) 266,588 239,692 12%
Dividends payable 28,689 26,578 8%
Note:
Dividends payable comprises any interim dividends paid in respect of the year plus the final dividend proposed for the year but not
yet paid.
On behalf of the Board
Rebecca Shelley
Chair of the Remuneration Committee
2 April 2024
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148
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual report and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
prepared the Group and Company financial statements in accordance with UK-adopted international accounting standards.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and the Company and the profit or loss of the Group for that period. In preparing these
financial statements the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
– make judgements and accounting estimates that are reasonable and prudent; and
– prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group and the Company will
continue in business.
They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the
Company’s transactions and which disclose with reasonable accuracy at any time the financial position of the Group and Company
and to enable them to ensure that the financial statements and the Directors’ remuneration report comply with the Companies
Act 2006.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
DIRECTORS’ CONFIRMATIONS
The Directors consider that the Annual report and financial statements, taken as a whole, is fair, balanced and understandable and
provide the information necessary for shareholders to assess the Group’s and Company’s position and performance, business model
and strategy.
Robert Watson OBE Matt Osborne
Chairman Chief Financial Officer
Hilton Food Group PLC Annual Report and Financial Statements 2023
149
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Report on the audit of
the financial statements
OPINION
In our opinion, Hilton Food Group
plc’s group financial statements and
company financial statements (the
“financial statements”):
– give a true and fair view of the state
of the group’s and of the company’s
affairs as at 31 December 2023 and of
the group’s profit and the group’s and
company’s cash flows for the 52 week
period then ended;
– have been properly prepared in
accordance with UK-adopted
international accounting standards
as applied in accordance with the
provisions of the Companies Act 2006;
and
– have been prepared in accordance with
the requirements of the Companies
Act 2006.
We have audited the financial statements,
included within the Annual report and
Financial Statements (the “Annual
report”), which comprise: the consolidated
and company balance sheets as at
31 December 2023; the consolidated
income statement, the consolidated
statement of comprehensive income, the
consolidated and company statements of
changes in equity and the consolidated
and company cash flow statements for the
period then ended; and the notes to the
financial statements, comprising material
accounting policy information and other
explanatory information.
Our opinion is consistent with our
reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance
with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK)
are further described in the Auditors’
responsibilities for the audit of the
financial statements section of our report.
We believe that the audit evidence we
have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We remained independent of the group in
accordance with the ethical requirements
that are relevant to our audit of the
financial statements in the UK, which
includes the FRC’s Ethical Standard,
as applicable to listed public interest
entities, and we have fulfilled our other
ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief,
we declare that non-audit services
prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in note 6, we
have provided no non-audit services to the
company or its controlled undertakings in
the period under audit.
OUR AUDIT APPROACH
Overview
Audit scope
– Seven trading subsidiaries, together
with the parent company and four
intermediate holding companies, were
in-scope for full scope group reporting.
In addition, audit procedures were
performed over specific balances in
three other components. This accounted
for 89% of the total group revenue
and 86% of profit before tax and
exceptional items.
Key audit matters
– Accounting for the impact of the
Belgium fire (group)
– Carrying value of goodwill (group)
– Carrying value of investments
(company)
Materiality
– Overall group materiality: £2,493,000
(2022: £2,500,000) based on 5% of
three year average profit before tax
and exceptional items (2022: three
year average profit before tax and
exceptional items).
– Overall company materiality: £200,000
(2022: £250,000) based on 1% of total
assets, however, capped at £200,000 for
group reporting.
– Performance materiality: £1,869,000
(2022: £1,875,000) (group) and £150,000
(2022: £187,500) (company).
The scope of our audit
As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that,
in the auditors’ professional judgement,
were of most significance in the audit of
the financial statements of the current
period and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) identified by
the auditors, including those which had
the greatest effect on: the overall audit
strategy; the allocation of resources in
the audit; and directing the efforts of the
engagement team. These matters, and
any comments we make on the results of
our procedures thereon, were addressed
in the context of our audit of the financial
statements as a whole, and in forming our
opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks
identified by our audit.
Accounting for material acquisitions
(group), which was a key audit matter
last year, is no longer included because
of there being no material acquisitions
during the current year. Otherwise, the key
audit matters below are consistent with
last year.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HILTON FOOD GROUP PLC
Hilton Food Group PLC Annual Report and Financial Statements 2023
150
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HILTON FOOD GROUP PLC
Key audit matter How our audit addressed the key audit matter
Accounting for the impact of the Belgium fire (group)
On 13 June 2021, Hilton Foods Belgium experienced a fire at its
meat product packaging facility in Ghent, Belgium. Both Hilton
and the landlord’s own occupied part of the property were
severely damaged, as were adjoining Hilton offices.
As a result of the fire, exceptional costs totalling £8,466,000
(2022: £9,500,000) have been recognised in the year related
to the incremental cost of fulfilling the Delhaize contract and
associated legal and insurance costs.
During the year, the group received a payment from their insurers
of £9,776,000 which has been recognised within other income
and as part of the exceptional items.
We focused on this area given the level of judgement in not
recognising an insurance receivable, any potential claims
against the group and the recoverability of any related Belgium
contract receivables.
Note 9 in the financial statements.
We held discussions with the Directors, management and
management’s specialists along with obtaining management’s
insurance policy;
We reviewed correspondence between management, the
insurers and management’s claims advocate;
We discussed the accounting treatment for insurance proceeds
with our internal accounting technical team;
We obtained independent confirmation from the group’s legal
representatives to consider any claims made against the group;
We reviewed correspondence between management and
Delhaize during the financial period and post period end to
ascertain the recoverability of receivable balances related to the
Belgium contract;
We tested a sample of the exceptional costs recognised and
reviewed the disclosures within the financial statements and
consider these to be reasonable.
No issues were identified through the procedures we performed.
Carrying value of goodwill (group)
The value of goodwill at the balance sheet date amounts to
£83.9m (2022: £82.6m).
The carrying value of goodwill is a key audit matter because of
its magnitude alongside the level of judgement and estimation
involved in determining its recoverability. In the current year
this was particularly due to the challenging plant-based market
impacting the Dalco cash generating unit and assessing
management’s ability to execute the turnaround plan of UK
Seafood. Therefore the recoverability of goodwill within the Dalco
and UK Seafood business and across the group was considered to
be an area of significant audit focus.
The estimation includes the preparation of cash flow forecasts,
growth rates applied to these cash flows, the terminal growth
rate and the rate at which cash flows have been discounted.
Note 15 in the financial statements.
We have reviewed management’s year end impairment
assessments at the reporting date;
We obtained management’s impairment models for each of the
group CGUs;
We tested the construct of the models to validate that they
were in accordance with the requirements of a value in use
model, as defined by accounting standards;
We tested the mathematical accuracy of the impairment
models and related calculations;
We involved PwC valuation experts to assist us in evaluating
and challenging management on the underlying assumptions
and estimates applied in performing their assessments,
particularly in respect of discount rate and terminal growth rate;
We have challenged management over the cash flows adopted
in each of the models, agreeing year one cashflows to the board
approved budgets; and
We assessed the Group’s disclosures in respect of impairment
review in accordance with IAS 36.
No issues were identified through the procedures performed.
Carrying value of investments (company)
The value of investments in subsidiary undertakings in the
value of investments in subsidiary undertakings in the company
balance sheet is £247.8m (2022: £247.8m) representing 98%
(2022: 98%) of total assets. This investment is held in Hilton Foods
Limited which is the holding company with direct or indirect
ownership of all entities within the group.
Given the nature of the activities of the parent, the carrying value
of investments represents the most significant balances within
the parent’s financial statements. Therefore it is considered of
greatest importance to users of the financial statements and
from an audit perspective. Given the historic trading performance
of the group this is considered to be an area of normal audit risk.
Management performed an assessment of the impairment
trigger indicators as set out in IAS 36 as at year end date and
concluded there were no indicators present hence an assessment
of impairment was not required for any subsidiaries.
Note 17 in the financial statements.
We obtained management’s assessment of impairment trigger
indicators, as set out in IAS 36, for subsidiaries along with details
of year to date results and compared them to the prior year
which demonstrated significant growth across the Company’s
subsidiaries; and
We considered the view of management and the performance
of the group as a whole (including individual subsidiaries) and
concluded that management’s trigger assessment is fair and
there are no indicators of impairment.
We also consider the disclosures made in the financial
statements to be appropriate.
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
151
How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough work to
be able to give an opinion on the financial
statements as a whole, taking into
account the structure of the group and
the company, the accounting processes
and controls, and the industry in which
they operate.
The Group is structured as a parent
company with forty-five subsidiary
undertakings. There are thirty-one
trading subsidiaries located in the United
Kingdom, the Republic of Ireland, the
Netherlands, Poland, Denmark, Sweden,
New Zealand, Australia, Canada, USA,
China, Greece and Hong Kong. There are
six intermediary holding companies,
located in the United Kingdom and
Netherlands, which are all required to
have statutory audits. The remaining eight
entities are dormant entities. In addition
to these forty-five entities, the Group has a
50% interest in six joint venture companies
which are located in Australia, Portugal,
Ireland and the United Kingdom.
The key protocols we adopted in
respect of working with all component
auditors were: issuing formal Group
reporting instructions, which set out
our requirements for the component
auditors, together with our assessment of
audit risks in the Group; holding planning
discussions with all component auditors
in order to agree those requirements;
discussing the Group audit risks to identify
any component specific risks; high level
analysis of the financial information of the
component by the Group engagement
team to identify any unusual transactions
or balances for discussion with component
auditors; ongoing communication and
interaction throughout the audit with the
component audit teams; attending, with
Group management, the component
clearance meetings held between
the component auditors and local
management; and obtaining signed
interoffice opinions that the component
financial information was properly
prepared in accordance with the group’s
accounting policies.
There are three financially significant
components in the Group whose statutory
audit opinions are not signed by the
Group engagement partner. Those
are Hilton Foods Holland, Hilton Foods
Australia and Hilton Foods Limited Sp. Zoo.
The Group engagement team reviewed
the component auditors’ working papers
that support their interoffice opinions for
these significant components. This review
included assessing their work over the two
significant risk areas applicable to these
components: i) management override of
controls; and ii) the risk of fraud in revenue
recognition. There were only one non-
significant reporting component which
is not signed by the group engagement
leader, this related to HFG Sverige AB
and therefore we reviewed their audit
working papers remotely in the current
year. Following these reviews, meetings
were held with each component to discuss
findings from the engagement team’s
review. In addition to the UK entities, the
Group engagement partner visited the
Group’s operations in the Netherlands
and Australia and the Group engagement
director visited the Polish site. This
included meeting with local PwC audit
teams, local management and touring
the facilities.
The impact of climate risk
on our audit
In scoping our audit, we held discussions
with management in order to understand
their assessment of the impact of
climate change on the business and in
the context of the Annual report and
Financial Statements. We confirmed
that climate change did not represent a
significant risk of material misstatement
to the financial statements for the period
ended 31 December 2023. In reaching
this conclusion, we considered: the key
physical and transitional risks at both
a company and subsidiary level; the
commitments made by the group referred
to in the Sustainability report within the
Annual report such as science-based
targets to reduce their emissions, how
those targets will be achieved and related
progress against those targets, alongside
the costs of doing so; the impact of climate
change on any estimates or judgements
made by management; the nature of
the group’s customer contracts; and
the consistency of the climate-related
disclosures made by the group with the
financial statements and our knowledge of
the group obtained from our audit.
Materiality
The scope of our audit was influenced
by our application of materiality.
We set certain quantitative thresholds
for materiality. These, together with
qualitative considerations, helped us to
determine the scope of our audit and the
nature, timing and extent of our audit
procedures on the individual financial
statement line items and disclosures and
in evaluating the effect of misstatements,
both individually and in aggregate on the
financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
£2,493,000 (2022: £2,500,000). £200,000 (2022: £250,000).
How we
determined it
5% of three year average profit before tax and
exceptional items (2022: three year average profit
before tax and exceptional items)
1% of total assets, however, capped at £200,000 for
group reporting
Rationale for
benchmark
applied
Given that the group’s businesses are profit oriented
and the directors use profit based measures to assess
the performance of the group, we believe that using
a three year average profit before tax and exceptional
items benchmark provides us with a consistent year
on year basis for determining materiality. We used an
average benchmark to reflect the impact of the UK
Seafood business as it continues to deliver against
management’s turnaround strategy, and the impact
of that on the consolidated profit before tax when
compared to the underlying base businesses across
the other entities in the group.
We believe that total assets is the primary measure
used by the shareholders in assessing the performance
of the company and is a generally accepted auditing
benchmark for a holding company with no trading
operations. The statutory materiality for the company
was £2,539,000 (2022: £2,250,000), however, this was
capped at £200,000 (2022: £250,000) for the purposes
of group reporting.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HILTON FOOD GROUP PLC continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
152
For each component in the scope of our
group audit, we allocated a materiality that
is less than our overall group materiality.
The range of materiality allocated across
components was between £200,000
and £2,000,000. Certain components
were audited to a local statutory audit
materiality that was also less than our
overall group materiality.
We use performance materiality to reduce
to an appropriately low level the probability
that the aggregate of uncorrected and
undetected misstatements exceeds
overall materiality. Specifically, we use
performance materiality in determining
the scope of our audit and the nature
and extent of our testing of account
balances, classes of transactions and
disclosures, for example in determining
sample sizes. Our performance
materiality was 75% (2022: 75%) of overall
materiality, amounting to £1,869,000
(2022: £1,875,000) for the group financial
statements and £150,000 (2022: £187,500)
for the company financial statements.
In determining the performance
materiality, we considered a number of
factors - the history of misstatements, risk
assessment and aggregation risk and the
effectiveness of controls - and concluded
that an amount at the upper end of our
normal range was appropriate.
We agreed with the Audit Committee that
we would report to them misstatements
identified during our audit above £120,000
(group audit) (2022: £100,000) and £10,000
(company audit) (2022: £12,500) as well
as misstatements below those amounts
that, in our view, warranted reporting for
qualitative reasons.
CONCLUSIONS RELATING
TO GOING CONCERN
Our evaluation of the directors’ assessment
of the group’s and the company’s ability to
continue to adopt the going concern basis
of accounting included:
– Performing a risk assessment to identify
factors that could impact the going
concern basis of accounting;
– Understanding and evaluating the
group’s financial forecasts including
severe, but plausible downside scenarios
that could arise;
– Auditing and challenging management
on the assumptions used within the
forecasts, including consideration
of alternative views, and their
impact on the group’s liquidity and
covenant compliance;
– Obtaining and reviewing the group’s
financing arrangements, including an
audit of bank covenant compliance
and the classification of debt between
current and non-current;
– Comparing the group’s financial
forecasts to historical performance to
assess management’s ability to forecast
as well as assessing the year to date
performance against budget for the
2024 financial year; and
– Reviewing and evaluating the adequacy
of the disclosures made in the financial
statements in relation to going concern.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or
conditions that, individually or collectively,
may cast significant doubt on the group’s
and the company’s ability to continue as
a going concern for a period of at least
twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we
have concluded that the directors’ use of
the going concern basis of accounting in
the preparation of the financial statements
is appropriate.
However, because not all future events
or conditions can be predicted, this
conclusion is not a guarantee as to the
group’s and the company’s ability to
continue as a going concern.
In relation to the directors’ reporting on
how they have applied the UK Corporate
Governance Code, we have nothing
material to add or draw attention to in
relation to the directors’ statement in
the financial statements about whether
the directors considered it appropriate
to adopt the going concern basis
of accounting.
Our responsibilities and the responsibilities
of the directors with respect to going
concern are described in the relevant
sections of this report.
REPORTING ON OTHER
INFORMATION
The other information comprises all of the
information in the Annual report other
than the financial statements and our
auditors’ report thereon. The directors
are responsible for the other information.
Our opinion on the financial statements
does not cover the other information and,
accordingly, we do not express an audit
opinion or, except to the extent otherwise
explicitly stated in this report, any form of
assurance thereon.
In connection with our audit of the
financial statements, our responsibility
is to read the other information and, in
doing so, consider whether the other
information is materially inconsistent with
the financial statements or our knowledge
obtained in the audit, or otherwise
appears to be materially misstated.
If we identify an apparent material
inconsistency or material misstatement,
we are required to perform procedures
to conclude whether there is a material
misstatement of the financial statements
or a material misstatement of the other
information. If, based on the work we
have performed, we conclude that there
is a material misstatement of this other
information, we are required to report that
fact. We have nothing to report based on
these responsibilities.
With respect to the Strategic report and
Directors’ report, we also considered
whether the disclosures required by
the UK Companies Act 2006 have
been included.
Based on our work undertaken in the
course of the audit, the Companies Act
2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work
undertaken in the course of the audit, the
information given in the Strategic report
and Directors’ report for the period ended
31 December 2023 is consistent with
the financial statements and has been
prepared in accordance with applicable
legal requirements.
In light of the knowledge and
understanding of the group and company
and their environment obtained in the
course of the audit, we did not identify any
material misstatements in the Strategic
report and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’
Remuneration Report to be audited has
been properly prepared in accordance
with the Companies Act 2006.
CORPORATE GOVERNANCE
STATEMENT
The Listing Rules require us to review the
directors’ statements in relation to going
concern, longer-term viability and that part
of the corporate governance statement
relating to the company’s compliance
with the provisions of the UK Corporate
Governance Code specified for our review.
Our additional responsibilities with respect
to the corporate governance statement
as other information are described in the
Reporting on other information section of
this report.
Based on the work undertaken as part of
our audit, we have concluded that each of
the following elements of the corporate
governance statement is materially
consistent with the financial statements
and our knowledge obtained during the
audit, and we have nothing material to add
or draw attention to in relation to:
– The directors’ confirmation that they
have carried out a robust assessment of
the emerging and principal risks;
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HILTON FOOD GROUP PLC continued
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– The disclosures in the Annual report
that describe those principal risks,
what procedures are in place to identify
emerging risks and an explanation
of how these are being managed
or mitigated;
– The directors’ statement in the financial
statements about whether they
considered it appropriate to adopt the
going concern basis of accounting in
preparing them, and their identification
of any material uncertainties to the
group’s and company’s ability to
continue to do so over a period of at
least twelve months from the date of
approval of the financial statements;
– The directors’ explanation as to
their assessment of the group’s and
company’s prospects, the period this
assessment covers and why the period is
appropriate; and
– The directors’ statement as to whether
they have a reasonable expectation that
the company will be able to continue
in operation and meet its liabilities
as they fall due over the period of its
assessment, including any related
disclosures drawing attention to any
necessary qualifications or assumptions.
Our review of the directors’ statement
regarding the longer-term viability of the
group and company was substantially less
in scope than an audit and only consisted
of making inquiries and considering
the directors’ process supporting their
statement; checking that the statement is
in alignment with the relevant provisions
of the UK Corporate Governance Code;
and considering whether the statement is
consistent with the financial statements
and our knowledge and understanding
of the group and company and their
environment obtained in the course of
the audit.
In addition, based on the work undertaken
as part of our audit, we have concluded
that each of the following elements of
the corporate governance statement is
materially consistent with the financial
statements and our knowledge obtained
during the audit:
– The directors’ statement that they
consider the Annual report, taken
as a whole, is fair, balanced and
understandable, and provides the
information necessary for the members
to assess the group’s and company’s
position, performance, business model
and strategy;
– The section of the Annual report that
describes the review of effectiveness of
risk management and internal control
systems; and
– The section of the Annual report
describing the work of the
Audit Committee.
We have nothing to report in respect
of our responsibility to report when
the directors’ statement relating to the
company’s compliance with the Code does
not properly disclose a departure from a
relevant provision of the Code specified
under the Listing Rules for review by
the auditors.
RESPONSIBILITIES FOR THE
FINANCIAL STATEMENTS
AND THE AUDIT
Responsibilities of the directors
for the financial statements
As explained more fully in the Statement
of directors’ responsibilities, the directors
are responsible for the preparation of the
financial statements in accordance with
the applicable framework and for being
satisfied that they give a true and fair
view. The directors are also responsible for
such internal control as they determine
is necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the financial statements, the
directors are responsible for assessing
the group’s and the company’s ability to
continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern
basis of accounting unless the directors
either intend to liquidate the group or the
company or to cease operations, or have
no realistic alternative but to do so.
Auditors’ responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditors’
report that includes our opinion.
Reasonable assurance is a high level
of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are instances
of non-compliance with laws and
regulations. We design procedures in line
with our responsibilities, outlined above, to
detect material misstatements in respect
of irregularities, including fraud. The extent
to which our procedures are capable of
detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the
group and industry, we identified that
the principal risks of non-compliance
with laws and regulations related to
health and safety requirements and
other legislation related to food safety
legislation, and we considered the
extent to which non-compliance might
have a material effect on the financial
statements. We also considered those
laws and regulations that have a direct
impact on the financial statements such
as Companies Act 2006, UK Listing Rules
and UK and International corporation tax
legislation. We evaluated management’s
incentives and opportunities for fraudulent
manipulation of the financial statements
(including the risk of override of controls),
and determined that the principal risks
were related to posting inappropriate
journal entries to manipulate financial
results, including revenue recognition,
management bias through judgements
and assumptions in significant
accounting estimates and the accounting
for significant one-off or unusual
transactions. The group engagement
team shared this risk assessment with the
component auditors so that they could
include appropriate audit procedures
in response to such risks in their work.
Audit procedures performed by the group
engagement team and/or component
auditors included:
– Discussions with internal audit,
management and those charged with
governance including consideration of
known or suspected instances of non-
compliance with laws and regulations
and fraud;
– Evaluation, and where relevant,
testing of the operating effectiveness
of management’s controls designed
to prevent and detect fraud in
financial reporting;
– Identifying and testing unusual journal
entries, in particular, journal entries
posted to improve financial results,
including revenue recognition;
– Challenging assumptions and
judgements made by management,
in particular in relation to goodwill
impairment assessments and
accounting for exceptional items:
– Confirming that there have been no
material matters reported on the
group’s whistleblowing helpline;
– Reviewing minutes from board and
other committee meetings e.g.
audit committee or remuneration
committee; and
– Obtaining an understanding of the legal
and regulatory framework applicable
to the group and how the group is
complying with that framework.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HILTON FOOD GROUP PLC continued
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There are inherent limitations in the audit
procedures described above. We are less
likely to become aware of instances of
non-compliance with laws and regulations
that are not closely related to events and
transactions reflected in the financial
statements. Also, the risk of not detecting
a material misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing
complete populations of certain
transactions and balances, possibly using
data auditing techniques. However, it
typically involves selecting a limited
number of items for testing, rather than
testing complete populations. We will
often seek to target particular items
for testing based on their size or risk
characteristics. In other cases, we will
use audit sampling to enable us to draw
a conclusion about the population from
which the sample is selected.
A further description of our responsibilities
for the audit of the financial statements
is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditors’
report.
Use of this report
This report, including the opinions,
has been prepared for and only for
the company’s members as a body in
accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no
other purpose. We do not, in giving these
opinions, accept or assume responsibility
for any other purpose or to any other
person to whom this report is shown or
into whose hands it may come save where
expressly agreed by our prior consent
in writing.
Other required reporting
COMPANIES ACT 2006
EXCEPTION REPORTING
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
– we have not obtained all the information
and explanations we require for our
audit; or
– adequate accounting records have not
been kept by the company, or returns
adequate for our audit have not been
received from branches not visited by
us; or
– certain disclosures of directors’
remuneration specified by law are not
made; or
– the company financial statements and
the part of the Directors’ Remuneration
Report to be audited are not in
agreement with the accounting records
and returns.
We have no exceptions to report arising
from this responsibility.
APPOINTMENT
Following the recommendation of the
Audit Committee, we were appointed
by the members on 1 October 2007 to
audit the financial statements for the year
ended 31 December 2007 and subsequent
financial periods. The period of total
uninterrupted engagement is 17 years,
covering the years ended 31 December
2007 to 31 December 2023.
Other matter
In due course, as required by the Financial
Conduct Authority Disclosure Guidance
and Transparency Rule 4.1.14R, these
financial statements will form part of the
ESEF-prepared annual financial report
filed on the National Storage Mechanism
of the Financial Conduct Authority in
accordance with the ESEF Regulatory
Technical Standard (‘ESEF RTS’).
This auditors’ report provides no assurance
over whether the annual financial report
will be prepared using the single electronic
format specified in the ESEF RTS.
Martin Cowie (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
Belfast
2 April 2024
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HILTON FOOD GROUP PLC continued
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155
FINANCIAL
STATEMENTS
Consolidated income statement 158
Consolidated statement of
comprehensive income 158
Consolidated and Company
Balance Sheet 159
Consolidated and Company
statement of changes in equity 160
Consolidated and Company
cash flow statement 161
Notes to the financial statements 162
ADDITIONAL INFORMATION 195
Registered office and advisors 195
Hilton Food Group PLC Annual Report and Financial Statements 2023
156
OUR INGREDIENTS FOR SUCCESS
We provide the most efficient supply chain to our partners
through leveraging our industry leading technology and
international knowledge and expertise.
EXPERTISE
TECHNOLOGY
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
157
Hilton Food Group PLC Annual Report and Financial Statements 2023
CONSOLIDATED INCOME STATEMENT
for the 52 weeks ended 31 December 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 52 weeks ended 31 December 2023
Note
2023
| 2022 | |||
| 52 weeks | 52 weeks | ||
| £’000 | £’000 | ||
| Continuing operations | |||
Revenue | 5 | ||
Cost of sales | 7 | ( | ( |
Gross profit | |||
Distribution costs | 7 | ( | ( |
Other administrative expenses | ( | ( | |
Exceptional income – Insurance proceeds | 9 | ||
Exceptional costs | 9 | ( | ( |
Total administrative expenses | 7 | ( | ( |
Share of profit in joint ventures and associates | 17 | ||
Operating profit | |||
Finance Income | 10 | ||
Finance costs | 10 | ( | ( |
Finance costs – net | ( | ( | |
Profit before income tax | |||
Income tax expense | ( | ( | |
Exceptional tax income | 9 | ||
Total income tax expense | 11 | ( | ( |
Profit for the period | |||
| Attributable to: | |||
Owners of the parent | |||
Non–controlling interests | |||
| |||
| Earnings per share attributable to owners of the parent during the period | |||
Basic (pence) | 12 | ||
Diluted (pence) | 12 |
| 2023 | 2022 | |
| 52 weeks | 52 weeks | |
| £’000 | £’000 | |
Profit for the period | ||
| Other comprehensive (expense)/income | ||
| Items that may be reclassified to profit or loss | ||
Currency translation differences | ( | |
Gain on cash flow hedges | ||
Other comprehensive expense for the period net of tax | ||
Total comprehensive income for the period | ||
| Total comprehensive income attributable to: | ||
Owners of the parent | ||
Non–controlling interests | ||
|
The notes on pages 162 to 196 are an integral part of these consolidated financial statements.
Hilton Food Group PLC Annual Report and Financial Statements 2023
158
CONSOLIDATED AND COMPANY BALANCE SHEET
as at 31 December 2023
Group | Company | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| Note | £’000 | £’000 | £’000 | £’000 | |
| Assets | |||||
| Non-current assets | |||||
Property, plant and equipment | 14 | – | – | ||
Intangible assets | 15 | – | – | ||
Lease: right of use assets | 16 | – | – | ||
Investments | 17 | 247,785 | 247,785 | ||
Deferred income tax assets | 24 | – | – | ||
247,785 | 247,785 | ||||
| Current assets | |||||
Inventories | 19 | – | – | ||
Trade and other receivables | 20 | 5,667 | 5,875 | ||
Current tax assets | – | – | |||
Financial assets at fair value through OCI | 31 | – | – | ||
Cash and cash equivalents | 21 | 416 | 186 | ||
6,083 | 6,061 | ||||
Total assets | 253,868 | 253,846 | |||
| Equity | |||||
| Equity attributable to owners of the parent | |||||
Ordinary shares | 25 | 8,960 | 8,943 | ||
Share premium | 144,926 | 144,926 | |||
Employee share schemes reserve | – | – | |||
Foreign currency translation reserve | ( | ( | – | – | |
Cashflow hedging reserve | – | – | |||
Other reserves | ( | ( | 71,019 | 71,019 | |
Retained earnings | 28,961 | 28,958 | |||
253,866 | 253,846 | ||||
Non-controlling interests | – | – | |||
Total equity | 253,866 | 253,846 | |||
| Liabilities | |||||
| Non-current liabilities | |||||
Borrowings | 22 | – | – | ||
Lease liabilities | 16 | – | – | ||
Deferred income tax liabilities | 24 | – | – | ||
– | – | ||||
| Current liabilities | |||||
Borrowings | 22 | – | – | ||
Lease liabilities | 16 | – | – | ||
Trade and other payables | 23 | 2 | – | ||
Financial liabilities at fair value through OCI | 31 | – | – | ||
Current tax liabilities | – | – | |||
2 | – | ||||
Total liabilities | 2 | – | |||
Total equity and liabilities | 253,868 | 253,846 |
The notes on pages 162 to 196 are an integral part of these consolidated financial statements.
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
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CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
for the 52 weeks ended 31 December 2023
| Attributable to owners of the parent | ||||||||||||
| Foreign | ||||||||||||
| Employee | currency | Cash | ||||||||||
| share | tran- | flow | Non- | |||||||||
| Share | Share | Own | schemes | slation | hedge | Other | Retained | controlling | Total | |||
| capital | premium | shares | reserve | reserve | reserve | reserves | earnings | Total | interests | equity | ||
Group | Note | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
Balance at 3 January 2022 | ( | ( | ( | |||||||||
Profit for the period | ||||||||||||
| Other comprehensive | ||||||||||||
| (expense)/income | ||||||||||||
| Currency translation differences | ( | ( | ||||||||||
Gain/(Loss) on cash flow hedging | ||||||||||||
| Total comprehensive income | ||||||||||||
| for the period | ( | |||||||||||
Transactions with non- controlling interests | ( | ( | ||||||||||
Issue of new shares | ||||||||||||
Adjustment in respect of employee share schemes | ( | ( | ( | |||||||||
| Settlement of employee | ||||||||||||
| share scheme | ( | ( | ( | |||||||||
| Tax on employee share | ||||||||||||
| schemes | ( | ( | ( | |||||||||
Dividends paid | 13 | ( | ( | ( | ( | |||||||
Total transactions with owners | ( | ( | ( | ( | ||||||||
Balance at 1 January 2023 | ( | ( | ||||||||||
Profit for the period | ||||||||||||
| Other comprehensive | ||||||||||||
| (expense)/income | ||||||||||||
| Currency translation | ||||||||||||
| differences | ( | ( | ( | ( | ||||||||
Gain on cash flow hedging | ||||||||||||
| Total comprehensive income | ||||||||||||
| for the period | ( | |||||||||||
Transactions with non- controlling interests | ||||||||||||
Issue of new shares | ||||||||||||
Adjustment in respect of employee share schemes | ||||||||||||
| Tax on employee share | ||||||||||||
| schemes | – | ( | ( | ( | ||||||||
Dividends paid | 13 | ( | ( | ( | ( | |||||||
Total transactions with owners | ( | ( | ( | ( | ||||||||
Balance at 31 December 2023 | ( | ( |
Company
Balance at 3 January 2022
8,893 142,043 – – – – 71,019 28,850 250,805 – 250,805
Profit for the period – – – – – – – 25,600 25,600 – 25,600
Total comprehensive income
for the year
– – – – – – – 25,600 25,600 – 25,600
Issue of new shares 50 2,883 – – – – – – 2,933 – 2,933
Dividends paid 13 – – – – – – – (25,492) (25,492) – (25,492)
Total transactions with owners 50 2,883 – – – – – (25,492) (22,559) – (22,559)
Balance at 1 January 2023 8,943 144,926 – – – – 71,019 28,958 253,846 – 253,846
Profit for the period – – – – – – – 28,282 28,282 – 28,282
Total comprehensive income
for the period
– – – – – – – 28,282 28,282 – 28,282
Issue of new shares 17 – – – – – – – 17 – 17
Dividends paid 13 – – – – – – – (28,279) (28,279) – (28,279)
Total transactions with owners 17 – – – – – – (28,279) (28,262) – (28,262)
Balance at 31 December 2023 8,960 144,926 – – – – 71,019 28,961 253,866 – 253,866
The notes on pages 162 to 196 are an integral part of these consolidated financial statements.
Hilton Food Group PLC Annual Report and Financial Statements 2023
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CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
for the 52 weeks ended 31 December 2023
Group | Company | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| 52 weeks | 52 weeks | 52 weeks | 52 weeks | ||
| Note | £’000 | £’000 | £’000 | £’000 | |
| Cash flows from operating activities | |||||
Cash generated from operations | 27 | – | – | ||
Interest paid | ( | ( | – | – | |
Income tax paid | ( | ( | – | – | |
Net cash generated from operating activities | – | – | |||
| Cash flows from investing activities | |||||
Acquisition of subsidiary, net of cash acquired | ( | ( | – | – | |
Acquisition investments in associates | ( | ( | – | – | |
Issue/(repayment) of inter-company loan | 227 | (1,206) | |||
Purchases of property, plant and equipment | ( | ( | – | – | |
Proceeds from sale of property, plant and equipment | – | – | |||
Purchases of intangible assets | ( | ( | – | – | |
Interest received | – | – | |||
Dividends received | 28,282 | 25,600 | |||
Dividends received from joint venture | – | – | |||
Insurance proceeds for property, plant and equipment | – | – | |||
Net cash (used in)/generated from investing activities | ( | ( | 28,509 | 24,394 | |
| Cash flows from financing activities | |||||
Purchase of non-controlling interest | ( | – | – | ||
Proceeds from borrowings | 28 | – | – | ||
Repayments of borrowings | ( | ( | – | – | |
Payment of lease liability | ( | ( | – | – | |
Issue of ordinary shares | – | 1,133 | |||
Dividends paid to owners of the parent | ( | ( | (28,279) | (25,492) | |
Dividends paid to non-controlling interests | ( | ( | – | – | |
Net cash (used in)/generated from financing activities | ( | (28,279) | (24,359) | ||
Net increase/(decrease) in cash and cash equivalents | ( | 230 | 35 | ||
Cash and cash equivalents at beginning of the period | 186 | 151 | |||
Exchange (losses)/gains on cash and cash equivalents | 28 | ( | – | – | |
Cash and cash equivalents at end of the period | 21 | 416 | 186 |
The notes on pages 162 to 196 are an integral part of these consolidated financial statements.
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
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1 GENERAL INFORMATION
business supplying major international food retailers in fourteen European countries, Australia and New Zealand. The Company’s
subsidiaries are listed in note 17.
The Company is a public company limited by shares incorporated and domiciled in the UK
of the registered office is 2–8 The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE . The registered number of the
Company is 06165540.
The Company maintains a Premium Listing on the London Stock Exchange.
The financial period represents the 52 weeks to 31 December 2023 (prior financial period 52 weeks to 1 January 2023).
These consolidated financial statements were approved for issue on 2 April 2024.
The Company has taken advantage of the exemption in Section 408 Companies Act 2006 not to publish its individual income
statement, statement of comprehensive income and related notes. Profit for the period dealt with in the income statement of Hilton
Food Group plc amounted to £28,282,000 (2022: £25,600,000).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE FINANCIAL STATEMENTS
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NOTES TO THE FINANCIAL STATEMENTS
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
| Annual rate | |
Buildings (including leasehold improvements) | 4% – 14% |
Plant and machinery | 12.5% – 33% |
Fixtures and fittings | 14% – 33% |
Motor vehicles | 25% |
NOTES TO THE FINANCIAL STATEMENTS continued
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NOTES TO THE FINANCIAL STATEMENTS continued
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
NOTES TO THE FINANCIAL STATEMENTS continued
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NOTES TO THE FINANCIAL STATEMENTS continued
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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
2023 | 2022 | |||
| Income | Income | |||
| statement | Equity | statement | Equity | |
| Group | £’000 | £’000 | £’000 | £’000 |
Annual effect of a change in Group-wide interest rates by - 0.5% | 1,505 | 1,505 | 1,495 | 1,495 |
Annual effect of a change in Group-wide interest rates by +0.5% | (1,505) | (1,505) | (1,495) | (1,495) |
Annual effect of a change in exchange rates to the GBP £ by +10% | 4,297 | 24,444 | 2,639 | 23,434 |
Annual effect of a change in exchange rates to the GBP £ by -10% | (3,515) | (20,000) | (2,159) | (19,173) |
NOTES TO THE FINANCIAL STATEMENTS continued
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2023 | 2022 | |||||
| Trade and | Trade and | |||||
| Borrowings | Leases | other payables | Borrowings | Leases | other payables | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
Less than one year | 28,641 | 22,945 | 448,758 | 28,279 | 22,645 | 418,794 |
Between one and two years | 32,105 | 22,667 | – | 27,188 | 22,793 | – |
Between two and five years | 26,562 | 57,835 | – | 54,375 | 63,656 | – |
Over five years | 179,125 | 198,430 | – | 188,947 | 220,081 | – |
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
Leases
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the
lease term if the lease is reasonably certain to be extended (or not terminated). For leases of buildings and equipment, the following
factors are normally the most relevant:
– If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate).
– If any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to
extend (or not terminate).
– Otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to
replace the leased asset.
Extension options in vehicles leases have not been included in the lease liability, because the Group could replace the assets without
significant cost or business disruption.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not
exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances
occurs, which affects this assessment, and that is within the control of the lessee.
Long-term supply contracts
On adoption of IFRS 16 the Group elected not to reassess whether a contract is or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the Group relied on its assessments made applying IAS 17 and IFRIC 4
“Determining whether an Arrangement contains a Lease”.
Some of Hilton’s long-term supply contracts are on a cost plus basis. These cost plus arrangements typically contain benchmarking
clauses which allow our customers to obtain competitive pricing or to source supply from a competitor. Additional product inputs and
packaging are traded in active markets which are monitored by our customers and furthermore product selling prices are updated
on a frequent basis thereby resulting in pricing that is, in substance, market price. On this basis the criteria in IFRIC 4 for determining
whether these agreements contained a lease were not met.
Under IFRS 16 the assessment of whether a contract is or contains a lease will be determined based on whether the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an asset judgement is required in the assessment of a customer’s
right to:
– obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use; and;
– direct the use of the identified asset.
NOTES TO THE FINANCIAL STATEMENTS continued
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4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS continued
Although a number of the Group’s supply contracts are fulfilled from dedicated manufacturing facilities, and therefore customers will
obtain a significant proportion of the economic benefits from their use, the Group believes that future Long Term Supply contracts
should not be assessed as containing leases as the Group considers it has the right to direct the use of the identified assets.
In making this assessment, the Group has considered that the Group controls the raw materials including the timing and amount of
purchases and has discretion as to how and when such materials are processed to fulfil customer orders. Therefore, the Group obtains
the economic benefits from processing the inventory, has the right to direct the use of the identified assets and the customer rights
are limited to placing orders. This consideration is particularly judgmental given orders are typically produced on a real-time basis.
However, it is the Group’s view that this real-time production is inherent in the context of producing perishable goods with a short
shelf life and not indicative of the customer having the right to control the use of the facilities.
Share-based payments
The Group operates a Long Term Incentive Plan (LTIP) and an employee Sharesave scheme both of which have been accounted for as
equity-settled share based payment schemes under IFRS 2.
Upon exercise, awards under the LTIP scheme may be settled either through issuing new shares to participants, or by issuing shares
that have been purchased in the market.
Awards under the LTIP scheme first began to vest during the 2017 financial period and options exercised were settled either
by providing plan participants with shares purchased in the market by the Group or the cash equivalent to the market value of
the shares.
Critical accounting estimates
Goodwill impairment
Goodwill is reviewed for impairment at least on an annual basis. Details of the tests and carrying value of the assets are shown in
note 15. An impairment review requires an estimation of the recoverable amount of the cash-generating units to which the goodwill
is allocated using either value-in-use or fair value less costs of disposal calculations. Value-in-use calculations require assumptions
to be made regarding the expected future cash flows from the cash generating unit and choice of a suitable discount rate in order
to calculate the present value of those cash flows. Fair value less costs of disposal calculations can be based on transaction prices
observed in the market for comparable assets or if these are not available using a discounted cash flow model, requiring assumptions
in respect of cash flows and suitable after-tax discount rates to be made. If the actual cash flows are lower than estimated, future
impairments may be necessary. Sensitivities are applied to the key assumptions used in the impairment assessment and as explained
in note 15. The impact in running reasonable sensitivities did not result in a material impairment in any of the CGU’s subject to
impairment testing.
Share-based payments
Note 26 describes the key assumptions and valuation model inputs used in the determination of the fair values of awards made under
the Group’s share based payment plans.
In addition, estimates are made as to the number of awards that will ultimately vest based on the Group’s projected future financial
performance, in relation to the probability of meeting non-market-based performance conditions and the continuing participation of
employees in the plans.
If projected performance was to increase or decrease by 10% compared to expectations there would be no impact to the share-based
change to the share based payments.
Business combinations
For business combinations the assets acquired, liabilities assumed and consideration payable are all valued at fair value. This requires
a number of estimates and judgements to be applied notably when assessing the fair value of acquired property, plant and
equipment, identifiable intangible assets and acquired leased assets and liabilities. Note 18 describes the business combinations that
took place in the period and the Group’s approach to assessing fair values of acquired assets and liabilities.
During 2023 and 2022 there were no other critical accounting estimates or judgements in relation to the application of the Group or
Company’s accounting policies.
NOTES TO THE FINANCIAL STATEMENTS continued
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2023 | 2022 | ||||||||||
| UK and | Central | UK and | Central | ||||||||
| Ireland | Europe | APAC | costs | Total | Ireland | Europe | APAC | costs | Total | ||
| Group | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
Total revenue | 1,389,095 | 1,061,406 | 1,614,975 | – | 4,065,476 | 1,349,055 | 999,300 | 1,592,946 | – | 3,941,301 | |
Inter-co revenue | (59,827) | (16,102) | – | – | (75,929) | (66,969) | (26,732) | – | – | (93,701) | |
Third party revenue | 1,329,268 | 1,045,304 | 1,614,975 | – | 3,989,547 | 1,282,086 | 972,568 | 1,592,946 | – | 3,847,600 | |
| Adjusted operating | |||||||||||
| profit/(loss) | |||||||||||
| segment result | |||||||||||
(see note 32) | 35,492 | 40,851 | 30,277 | (11,639) | 94,981 | 13,629 | 36,043 | 26,705 | (5,233) | 71,144 | |
Amortisation of acquired intangibles | (5,084) | (4,432) | – | – | (9,516) | (2,449) | (5,808) | – | – | (8,257) | |
Exceptional items | (1,778) | (1,950) | – | (147) | (3,875) | (2,214) | (6,800) | – | (2,882) | (11,896) | |
Impact of IFRS 16 | 553 | 662 | 3,282 | 42 | 4,539 | 487 | 428 | 2,120 | – | 3,035 | |
| Operating profit/ | |||||||||||
| (loss) segment | |||||||||||
result | 29,183 | 35,131 | 33,559 | (11,744) | 86,129 | 9,453 | 23,863 | 28,825 | (8,115) | 54,026 | |
Finance income | 35 | 137 | 399 | – | 571 | 6 | 350 | – | – | 356 | |
Finance costs | (9,107) | (10,512) | (13,817) | (4,626) | (38,062) | (2,829) | (5,265) | (5,336) | (11,338) | (24,768) | |
| Income tax | |||||||||||
(expense)/credit | (2,725) | (4,822) | (6,087) | 2,992 | (10,642) | 771 | (4,240) | (7,505) | 852 | (10,122) | |
| Profit/(loss) | |||||||||||
for the period | 17,386 | 19,934 | 14,054 | (13,378) | 37,996 | 7,401 | 14,708 | 15,984 | (18,601) | 19,492 | |
Depreciation, amortisation and impairment | 23,341 | 19,559 | 35,974 | 555 | 79,429 | 26,787 | 12,989 | 37,64 | 0 | 353 | 77,769 |
Additions to non-current assets | 29,565 | 21,078 | 8,260 | 715 | 59,618 | 33,408 | 12,789 | 9,643 | 1,167 | 57,007 | |
Segment assets | 404,751 | 397,551 | 431,684 | 36,128 | 1,270,114 | 412,651 | 357, 285 | 481,229 | 24,825 | 1,275,990 | |
| Current income | |||||||||||
tax assets | – | 5,995 | |||||||||
| Deferred income | |||||||||||
tax assets | 19,136 | 13,801 | |||||||||
Total assets | 1,289,250 | 1,295,786 | |||||||||
Segment liabilities | 187,225 | 199,881 | 380,598 | 184,621 | 952,325 | 184,209 | 202,694 | 466,492 | 121,153 | 974,548 | |
| Current income | |||||||||||
tax liabilities | 704 | – | |||||||||
| Deferred income | |||||||||||
tax liabilities | 14,743 | 15,921 | |||||||||
Total liabilities | 967,772 | 990,469 |
NOTES TO THE FINANCIAL STATEMENTS continued
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5 SEGMENT INFORMATION continued
| Revenues from | Non-current assets excluding | |||
| external customers | deferred tax assets | |||
| 2023 | 2022 | 2023 | 2022 | |
| £’000 | £’000 | £’000 | £’000 | |
| Analysis by geographical area | ||||
United Kingdom – country of domicile | 1,265,333 | 1,184,006 | 223,058 | 257,481 |
Netherlands | 475,790 | 446,387 | 117,829 | 56,671 |
Belgium | 18,994 | 26,915 | 94 | 883 |
Sweden | 245,202 | 237,438 | 24,392 | 9,119 |
Republic of Ireland | 89,054 | 83,686 | 5,184 | 3,008 |
Denmark | 123,098 | 131,845 | 16,207 | 16,468 |
Central Europe | 154,722 | 142,905 | 23,735 | 23,717 |
APAC | 1,617,354 | 1,594,418 | 271,780 | 343,530 |
3,989,547 | 3,847,600 | 682,279 | 710,877 | |
| Analysis by principal customer | ||||
Customer 1 | 1,107,282 | 1,100,571 | ||
Customer 2 | 337,832 | 341,289 | ||
Customer 3 | 243,501 | 230,716 | ||
Customer 4 | 120,770 | 124,506 | ||
Customer 5 | 1,447,520 | 1,430,806 | ||
Other | 732,642 | 619,712 | ||
3,989,547 | 3,847,600 |
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Fees payable to the Group’s auditors for the audit of the parent Group and consolidated financial statements | 300 | 244 |
| Fees payable to the Group’s auditors and their associates for other services: | ||
– The audit of the Group's subsidiaries pursuant to legislation | 867 | 801 |
– Other services pursuant to legislation | 66 | 53 |
– All other services including regulatory acquisition work | 29 | 25 |
Total fees payable to the Group’s auditors and their associates | 1,262 | 1,123 |
NOTES TO THE FINANCIAL STATEMENTS continued
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172
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Changes in inventories of finished goods and goods for resale | 7,079 | 3,620 |
Raw materials and consumables used | 3,240,084 | 3,175,358 |
Employee benefit expense (note 8) | 268,588 | 239,692 |
Depreciation, amortisation and impairment – owned assets | 60,435 | 56,959 |
Depreciation and amortisation – leased assets | 18,994 | 20,780 |
Repairs and maintenance expenditure on property, plant and equipment | 33,163 | 30,861 |
Transportation expenses | 46,300 | 42,254 |
Gain on impact of acquisition of Foods Connected Ltd | – | (2,702) |
Foreign exchange gain | (348) | (391) |
Other expenses | 229,708 | 228,378 |
Total cost of sales, distribution costs and administrative expenses | 3,904,003 | 3,794,809 |
Cost of sales | 3,559,185 | 3,464,837 |
Distribution costs | 47,655 | 42,028 |
Administrative expenses | 297,163 | 287,944 |
Total cost of sales, distribution costs and administrative expenses | 3,904,003 | 3,794,809 |
| 2023 | 2022 | |
| Group | £’000 | £’000 |
| Staff costs during the period | ||
Wages and salaries | 235,369 | 211,054 |
Social security costs | 18,258 | 17,274 |
Share options granted to Directors and employees | 1,815 | (655) |
Pension costs – defined contribution plan | 13,146 | 12,019 |
268,588 | 239,692 |
| 2023 | 2022 | |
| Number | Number | |
| Average number of monthly persons employed (including Executive Directors) | ||
| during the period by activity | ||
Production | 5,165 | 5,137 |
Administration | 1,411 | 1,551 |
6,576 | 6,688 |
| 2023 | 2022 | |
| Group | £’000 | £’000 |
| Key management compensation (including Directors) | ||
Salaries and short-term employee benefits, including termination benefits | 12,102 | 10,059 |
Post-employment benefits | 256 | 94 |
Share-based payments | 2,113 | 3,074 |
14,471 | 13,227 |
| 2023 | 2022 | |
| Group | £’000 | £’000 |
| Directors’ emoluments | ||
Aggregate emoluments | 2,733 | 1,414 |
Group contribution to money purchase pension scheme | 70 | 94 |
2,803 | 1,508 |
NOTES TO THE FINANCIAL STATEMENTS continued
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9 EXCEPTIONAL ITEMS
| Operating | Profit | ||
| profit | Tax | after tax | |
| 2023 | 2023 | 2023 | |
| Group | £’000 | £’000 | £’000 |
Fire in Belgium | 7,711 | – | 7,711 |
Insurance proceeds | (9,776) | – | (9,776) |
Impairment | 1,955 | (282) | 1,673 |
Reorganisation costs | 3,985 | (939) | 3,046 |
Total exceptional costs/(income) | 3,875 | (1,221) | 2,654 |
| Operating | Profit | ||
| profit | Tax | after tax | |
| 2022 | 2022 | 2022 | |
| Group | £’000 | £’000 | £’000 |
Fire in Belgium | 9,500 | – | 9,500 |
Acquisition of Foods Connected Ltd | (2,701) | – | (2,701) |
Acquisition related costs | 1,204 | – | 1,204 |
Reorganisation costs | 3,893 | (145) | 3,748 |
Total exceptional costs/(income) | 11,896 | (145) | 11,751 |
Fire in Belgium
In June 2021 the Group’s facility in Belgium suffered an extensive fire. Exceptional costs totalling £7,711,000 (2022 cost £9,500,000)
have been recognised in the period relating to additional costs incurred in continuing to operate in Belgium including the ongoing
insurance and legal claim.
Insurance Proceeds
The Group received an interim insurance payment of £9,776,000 related to the Fire Insurance claims in Belgium with further
insurance claims pending. The results for the period to 31 December 2023 do not include potential additional income that may be
received in respect of these claims. The balance of insurance proceeds are considered to be contingent assets. Legal claims have been
made against the Group in connection with the fire. However at this stage the Group considers the likelihood of incurring financial
liabilities as a result of these claims to be remote.
Impairment
Dalco announced the closure of one of its sites. This closure allows us to optimise production and drive efficiencies at a single site
creating a centre of excellence for our vegan and vegetarian production. An exceptional impairment charge of £1,200,000 has
been recognised in respect of property, plant, and equipment. An additional impairment of £755,000 has been taken in respect of
computer software in Belgium. An exceptional tax credit of £282,000 has been recognised in respect of these costs.
Reorganisation costs
During the period exceptional reorganisation costs of £3,985,000 have been recognised by the Group. These costs resulted from
on-going efficiency and restructuring programmes which led to redundancies at a number of facilities operated by the Group.
An exceptional tax credit of £939,000 has been recognised in respect of these costs.
| 2023 | 2022 | |
| Group | £’000 | £’000 |
| Finance income | ||
Interest income on short term bank deposits | 565 | 63 |
Other interest income | 6 | 293 |
Finance income | 571 | 356 |
| Finance costs | ||
Bank borrowings | (20,056) | (12,241) |
Interest on lease liabilities | (8,556) | (8,758) |
Supply chain finance interest | (8,248) | (2,721) |
Other interest expense | (1,202) | (1,048) |
Finance costs | (38,062) | (24,768) |
Finance costs – net | (37,491) | (24,412) |
NOTES TO THE FINANCIAL STATEMENTS continued
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11 INCOME TAX EXPENSE
| 2023 | 2022 | |
| Group | £’000 | £’000 |
| Current income tax | ||
Current tax on profits for the period | 17,088 | 13,697 |
Adjustments to tax in respect of previous periods | (160) | 195 |
Total current tax | 16,928 | 13,892 |
| Deferred income tax | ||
Origination and reversal of temporary differences | (5,769) | (3,753) |
Adjustments to tax in respect of previous periods | (517) | (17) |
Total deferred tax | (6,286) | (3,770) |
Income tax expense | 10,642 | 10,122 |
Deferred tax charged directly to equity during the period in respect of employee share schemes amounted to £26,000
(2022: charge £1,031,000).
Factors affecting future tax charges
The Group operates in numerous tax jurisdictions around the world and is subject to factors that may affect future tax charges
including transfer pricing, tax rate changes and tax legislation changes.
The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the standard rate of UK
Corporation Tax of 23.5% (2022: 19%) applied to profits of the consolidated entities as follows:
| 2023 | 2022 | |
| £’000 | £’000 | |
Profit before income tax | 48,638 | 29,614 |
Tax calculated at the standard rate of UK Corporation Tax 23.5% (2022: 19%) | 11,430 | 5,627 |
| Effects of: | ||
Expense/(income) not deductible for tax purposes | (202) | 1,074 |
Joint venture received net of tax | (137) | (238) |
Adjustments to tax in respect of previous periods | (677) | 178 |
Profits taxed at rates other than 23.5% (2022: 19%) | 1,310 | 5,867 |
Impact of change in tax rates | 59 | (398) |
Non-taxable gain on acquisition of JV | – | (513) |
Unrecognised losses carried forward/(brought forward) | 566 | (444) |
Deferred tax recognised in reserves | (26) | (1,031) |
Accelerated capital allowances | (1,681) | – |
Income tax expense | 10,642 | 10,122 |
Adjustments to tax in respect of prior periods have resulted from changes in assumptions in respect of deductible expenses and the
application of capital allowances.
NOTES TO THE FINANCIAL STATEMENTS continued
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12 EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the profit attributable to owners of the parent by the weighted average number of
ordinary shares in issue during the period.
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Group has share options for which a calculation is done to determine the
number of shares that could have been acquired at fair value (determined as the average annual market share price of the Group’s
shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares
calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
2023 | 2022 | ||||
Group | Basic | Diluted | Basic | Diluted | |
Profit attributable to owners of the parent | (£'000) | 36,380 | 36,380 | 17,706 | 17,706 |
Weighted average number of ordinary shares in issue | (thousands) | 89,544 | 89,544 | 89,234 | 89,234 |
Adjustment for share options | (thousands) | – | 895 | – | 690 |
Adjusted weighted average number of ordinary shares | (thousands) | 89,544 | 90,439 | 89,234 | 89,924 |
Basic and diluted earnings per share | (pence) | 40.6 | 40.2 | 19.8 | 19.7 |
13 DIVIDENDS
| 2023 | 2022 | |
| Group and Company | £’000 | £’000 |
| Final dividend in respect of 2022 paid Final dividend paid in year pence per share 22.6p per ordinary | ||
share (2022: | 20,221 | 19,143 |
| Interim dividend in respect of 2023 paid Interim dividend paid pence per share 9p per ordinary share | ||
(2022: 7.1p) | 8,058 | 6,349 |
Total dividends paid | 28,279 | 25,492 |
The Directors propose a final dividend of 2 3. 0 p (2022: 2 2 .6 p) per share payable on 28 June 2024 to shareholders who are on the
register at 31 May 2024. This dividend totalling £20.6m (2022: £20.2m) has not been recognised as a liability in these consolidated
financial statements.
Dividends paid to non-controlling interests in the period totalled £1,545,000 (2022: £1,264,000).
NOTES TO THE FINANCIAL STATEMENTS continued
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14 PROPERTY, PLANT AND EQUIPMENT
| Land and | |||||
| buildings | |||||
| (including | |||||
| leasehold | Plant and | Fixtures and | |||
| improvements) | machinery | fittings | Motor vehicles | Total | |
| Group | £’000 | £’000 | £’000 | £’000 | £’000 |
| Cost | |||||
At 3 January 2022 | 111,676 | 460,998 | 18,616 | 308 | 591,598 |
Exchange adjustments | 3,313 | 15,110 | 654 | 25 | 19,102 |
Acquisition (note 18) | 6,040 | 11,443 | 1,263 | 81 | 18,827 |
Additions | 6,484 | 44,946 | 3,591 | 119 | 55,140 |
Transfer | – | 496 | 100 | – | 596 |
Disposals | (7) | (1,171) | (47) | – | (1,225) |
At 1 January 2023 | 127, 506 | 531,822 | 24,177 | 533 | 684,038 |
| Accumulated depreciation | |||||
At 3 January 2022 | 33,779 | 250,865 | 15,418 | 48 | 300,110 |
Exchange adjustments | 1,122 | 7,960 | 406 | 17 | 9,505 |
Charge for the period | 7,623 | 36,529 | 2,712 | 121 | 46,985 |
Transfer | – | 496 | 100 | – | 596 |
Disposals | (7) | (717) | (45) | – | (769) |
At 1 January 2023 | 42,517 | 295,133 | 18,591 | 186 | 356,427 |
| Net book amount | |||||
At 3 January 2022 | 77,897 | 210,133 | 3,198 | 260 | 291,488 |
At 1 January 2023 | 84,989 | 236,689 | 5,586 | 347 | 327,611 |
| Cost | |||||
At 2 January 2023 | 127, 506 | 531,822 | 24,177 | 533 | 684,038 |
Exchange adjustments | (491) | (12,570) | (309) | (9) | (13,379) |
Acquisition (note 18) | – | – | 5 | – | 5 |
Additions | 3,016 | 51,882 | 451 | 79 | 55,428 |
Transfer | 400 | (9,561) | 7,624 | 2 | (1,535) |
Disposals | (881) | (31,043) | (1,939) | (91) | (33,954) |
At 31 December 2023 | 129,550 | 530,530 | 30,009 | 514 | 690,603 |
| Accumulated depreciation and impairment | |||||
At 2 January 2023 | 42,517 | 295,133 | 18,591 | 186 | 356,427 |
Exchange adjustments | (550) | (5,523) | (209) | (5) | (6,287) |
Charge for the period | 7,018 | 37,264 | 3,264 | 82 | 47,628 |
Exceptional impairment (note 9) | – | 1,200 | – | – | 1,200 |
Disposals | (803) | (29,667) | (1,939) | (91) | (32,500) |
At 31 December 2023 | 48,182 | 298,407 | 19,707 | 172 | 366,468 |
| Net book amount | |||||
At 31 December 2023 | 81,368 | 232,123 | 10,302 | 342 | 324,135 |
The cost and net book amount of property plant and equipment in the course of its construction included above comprise plant and
machinery £32,357,000 (2022: £26,877,000).
NOTES TO THE FINANCIAL STATEMENTS continued
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| Brand and | ||||
| Computer | customer | |||
| software | relationships | Goodwill | Total | |
| Group | £’000 | £’000 | £’000 | £’000 |
| Cost | ||||
At 3 January 2022 | 16,751 | 35,079 | 69,482 | 121,312 |
Exchange adjustments | 19 | – | – | 19 |
Acquisition (note 18) | 2,849 | 37,452 | 21,105 | 61,406 |
Impact of finalising fair value of prior year acquisitions (note 18) | – | 9,440 | (8,053) | 1,387 |
Additions | 1,867 | – | – | 1,867 |
Transfer | (596) | – | – | (596) |
At 1 January 2023 | 20,890 | 81,971 | 82,534 | 185,395 |
| Accumulated amortisation | ||||
At 3 January 2022 | 5,204 | 10,333 | – | 15,537 |
Charge for the period | 2,019 | 7,955 | – | 9,974 |
Transfer | (596) | – | – | (596) |
At 1 January 2023 | 6,627 | 18,288 | – | 24,915 |
| Net book amount | ||||
At 3 January 2022 | 11,547 | 24,746 | 69,482 | 105,775 |
At 1 January 2023 | 14,263 | 63,683 | 82,534 | 160,480 |
| Cost | ||||
At 2 January 2023 | 20,890 | 81,971 | 82,534 | 185,395 |
Exchange adjustments | (419) | – | – | (419) |
Acquisition (note 18) | 1 | 343 | 1,325 | 1,669 |
Additions | 4,190 | – | – | 4,190 |
Transfer | 1,535 | – | – | 1,535 |
Disposals | (22) | – | – | (22) |
At 31 December 2023 | 26,175 | 82,314 | 83,859 | 192,348 |
| Accumulated amortisation and impairment | ||||
At 2 January 2023 | 6,627 | 18,288 | – | 24,915 |
Exchange adjustments | (274) | – | – | (274) |
Charge for the period | 2,538 | 8,314 | – | 10,852 |
Exceptional impairment (note 9) | 755 | – | – | 755 |
Disposals | (22) | – | – | (22) |
At 31 December 2023 | 9,624 | 26,602 | – | 36,226 |
| Net book amount | ||||
At 31 December 2023 | 16,551 | 55,712 | 83,859 | 156,122 |
NOTES TO THE FINANCIAL STATEMENTS continued
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178
16 LEASES
(i) Amounts recognised in the balance sheet
The balance sheet includes the following amounts relating to leases:
| Lease: right of use assets | Land and | |||
| Buildings | Equipment | Vehicles | Total | |
| Group | £’000 | £’000 | £’000 | £’000 |
Opening net book amount as at 3 January 2022 | 211,773 | 7,234 | 2,997 | 222,004 |
Exchange Adjustments | 5,946 | 230 | 80 | 6,256 |
Additions | 2,462 | 2,272 | 1,101 | 5,835 |
Acquisition (note 18) | 3,106 | – | 108 | 3,214 |
Remeasurements, reclassification and scope changes | 120 | – | (71) | 49 |
Depreciation | (17,105) | (1,945) | (1,730) | (20,780) |
Closing net book amount at 1 January 2023 and 2 January 2023 | 206,302 | 7,791 | 2,485 | 216,578 |
Exchange Adjustments | (9,703) | (105) | (17) | (9,825) |
Additions | – | 4,123 | 996 | 5,119 |
Reclassification | 3,990 | (2,584) | (1,406) | – |
Remeasurements, reclassification and scope changes | 1,012 | 175 | 18 | 1,205 |
Depreciation | (16,086) | (2,225) | (683) | (18,994) |
Closing net book amount at 31 December 2023 | 185,515 | 7,175 | 1,393 | 194,083 |
Lease liabilities
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Current | 15,276 | 16,006 |
Non-current | 211,585 | 230,152 |
226,861 | 246,158 |
Maturity analysis – contractual undiscounted cash flows
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Less than one year | 22,945 | 22,645 |
One to five years | 80,502 | 86,449 |
More than five years | 198,430 | 220,081 |
Total lease liabilities | 301,877 | 329,175 |
(i) Amounts recognised in the consolidated income statement
The income statement shows the following amounts related to leases:
Depreciation charge on right-of-use assets
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Buildings | 16,086 | 17,105 |
Plant and equipment | 2,225 | 1,945 |
Vehicles | 683 | 1,730 |
18,994 | 20,780 | |
Interest expenses (included in finance costs) | 8,556 | 8,758 |
Expenses relating to short-term leases (included in costs of goods sold and administrative expenses) | 1,130 | 748 |
The total cash outflow for leases in 2023 was £22,699,00 (2022: £24,387,000).
NOTES TO THE FINANCIAL STATEMENTS continued
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16 LEASES continued
Variable lease payments
Leases with liabilities recognised of £9,014,000 (2022: £9,476,000), accounting for 3.7% (2022: 3.8%) of total lease liabilities, are subject
to five yearly RPI linked rent reviews. These rent reviews are subject to a minimum collar, the impact of which is included in the
calculation of lease liabilities and a maximum cap. If the impact of these variable lease payments had been recognised, applying index
levels as at 2 January 2023, lease liabilities would have increased by 2023: £5,588,000 (2022: £4,536,000).
In addition, leases with liabilities recognised totalling £3,606,000 (2022: £5,021,000), accounting for 1.5% (2022: 2.0%) of total lease
liabilities, are subject to annual CPI linked rent increases. If the impact of these variable lease payments had been recognised,
applying index levels as at 31 December 2023, lease liabilities would have increased by £338,000 (2022: £1,054,000).
2023 | 2022 | |||||
| Joint Ventures | Associates | Total | Joint Ventures | Associates | Total | |
| Group | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
At the beginning of the period | 4,443 | 1,765 | 6,208 | 5,539 | – | 5,539 |
Acquisitions | – | 1,685 | 1,685 | 1,139 | 1,765 | 2,904 |
Profit for the period | 585 | – | 585 | 1,235 | – | 1,235 |
Disposal of investment | – | – | – | (2,925) | – | (2,925) |
Dividends received | (458) | (10) | (468) | (672) | – | (672) |
| Effect of movements | ||||||
in foreign exchange | (71) | – | (71) | 127 | – | 127 |
At the end of the period | 4,499 | 3,440 | 7,939 | 4,443 | 1,765 | 6,208 |
| (%) Proportion of ordinary | ||||||
| shares held by | ||||||
Joint venture | Registered address | Country | Share class | Parent | Group | |
| Sohi Meat Solutions – | Zona Industrial de Santarem – Quinta de | Portugal | €5 Ordinary | – | 50 | |
| Distribuicao de Carnes SA | Mocho District, Santarem, 2005 002 Varzea | |||||
Agito Global, Unipessoal LDA | nº 249 - 1º, Avenida da Liberdade, Lisboa | €1 Ordinary | – | 50 | ||
| Concelho, Santo António, Lisboa, 1250 143 | ||||||
| LISBOA | ||||||
Agito Group Pty Limited | C/O PwC, Level 15, 125 St Georges Terrace, | Australia | AUD 1 | – | 50 | |
| Perth, Western Australia, 6000 | Ordinary | |||||
Agito Global Limited | 5th Floor, Beaux Lane House, Mercer Street | Ireland | €1 Ordinary | – | 50 | |
| Lower, Dublin 2, Dublin, D02 DH60 | ||||||
Agito Holdings Limited | 2-8 Interchange Latham Road, Huntingdon | UK | £1 Ordinary | – | 50 | |
| PE29 6YE | ||||||
Agito Global Limited | First Floor Offices, Unit 6b, Vantage Park, | £1 Ordinary | – | 50 | ||
| Huntingdon, Cambridgeshire, PE29 6SR | ||||||
Sphere Design Limited | Chalfont Park House, Chalfont Park, Gerrards | £1 Ordinary | – | 50 | ||
| Cross, Buckinghamshire SL9 0DZ | (2022: nil) | |||||
Associates | Registered address | Country | Share class | Parent | Group | |
Cellular Agriculture Limited | Felin Y Glyn, Pontnewydd, Llanelli, SA15 5TL | UK | £0.000002 | – | 29.23 | |
| Series A-1 | (2022: | 17.45) | ||||
| Ordinary | ||||||
| A Turner and Sons Sausage | 205 | North Lane, Aldershot, Hants, GU12 4SY | £1 Ordinary | – | 16.25 | |
| Limited |
NOTES TO THE FINANCIAL STATEMENTS continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
180
| 2023 | 2022 | |
| Summarised balance sheet | £’000 | £’000 |
| Current assets | ||
Cash and cash equivalents | 226 | 320 |
Other current assets | 50,589 | 44,850 |
Total current assets | 50,815 | 45,170 |
Non-current assets | 18,672 | 20,700 |
Total current liabilities | (59,293) | (54,504) |
Total non-current liabilities | (4,686) | (5,987) |
Net assets | 5,508 | 5,379 |
| Reconciliation to carrying amounts | ||
Opening net assets | 5,379 | 5,702 |
Profit for the period | 1,169 | 1,224 |
Dividends paid | (915) | (1,344) |
Exchange adjustments | (125) | (203) |
Closing net assets | 5,508 | 5,379 |
Group’s share – % | 50% | 50% |
Group’s share – £k | 2,754 | 2,690 |
| 2023 | 2022 | |
| Summarised statement of comprehensive income | £’000 | £’000 |
Revenue | 354,875 | 306,007 |
Depreciation and amortisation | (4,715) | (4,338) |
Net finance costs | (1,545) | (709) |
Income tax expense | (250) | (275) |
Profit for the period | 1,169 | 1,224 |
Dividends received from joint venture entity | 458 | 672 |
| 2023 | 2022 | |
| Individually immaterial joint ventures: | £’000 | £’000 |
Aggregate carrying amount of individually immaterial joint venture | 1,745 | 1,549 |
Aggregate Group share of profit for the year | – | 409 |
NOTES TO THE FINANCIAL STATEMENTS continued
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17 INVESTMENTS CONTINUED
| 2023 | 2022 | |
| Summarised balance sheet | £’000 | £’000 |
Current assets | 87,833 | 79,441 |
Current liabilities | (64,744) | (55,132) |
Current net assets | 23,089 | 24,309 |
Non-current assets | 6,958 | 4,668 |
Non-current liabilities | (554) | (361) |
Non-current net assets | 6,404 | 4,307 |
Net assets | 29,493 | 28,616 |
Accumulated non-controlling interests | 5,899 | 5,722 |
| Summarised statement of comprehensive income | ||
Revenue | 344,956 | 329,934 |
Profit for the period | 7,638 | 7,083 |
Other comprehensive income | 673 | 1,519 |
Total comprehensive income | 8,311 | 8,602 |
Profit allocated to non-controlling interests | 1,528 | 1,417 |
Dividends paid to non-controlling interests | 1,218 | 1,193 |
| Summarised cash flows | ||
Cash flows from operating activities | 12,310 | 385 |
Cash flows from investing activities | (2,156) | (1,538) |
Cash flows from financing activities | (6,090) | (5,965) |
Impact of foreign exchange | (310) | 1,096 |
Net increase/(decrease) in cash and cash equivalents | 3,754 | (6,022) |
| 2023 | 2022 | |
| Company | £’000 | £’000 |
At 1 January 2023 and 31 December 2023 | 247,785 | 247,785 |
NOTES TO THE FINANCIAL STATEMENTS continued
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182
| NOTES TO THE FINANCIAL STATEMENTS continued | |||
Subsidiary undertakings | Country | Subsidiary undertakings | Country |
| Proportion of shares held by | Proportion of shares held by | ||
| Parent 100% and Group 100% | Parent 0% and Group 100% | ||
| Hilton Foods Limited | UK | Hilton Foods Australia Pty Limited | Australia |
| Proportion of shares held by | Foppen Seafood Canada Inc | Canada | |
| Parent 0% and Group 100% | Hilton Foods Canada Inc | Canada | |
| Fairfax Meadow Europe Limited | UK | Hong Kong Fu-Peng Co Limited | China |
| Fairfax Meadow Limited | UK | Shanghai Fu Peng Food Trading Co Limited | China |
| (formerly Fairfax London Limited) | Olympic Eel and Salmon Industry SA | Greece | |
| Greenchain Solutions Limited | UK | Dalco Food BV | Netherlands |
| Hilton Food Group (Europe) Limited | UK | Foppen Eel and Salmon BV | Netherlands |
| Hilton Food.com Limited | UK | Foppen Groep BV | Netherlands |
| Hilton Foods Asia Pacific Limited | UK | Hilton Logistics BV | Netherlands |
| Hilton Foods UK Limited | UK | Paling En Zalmfileerderij J. Foppen Jzn. BV | Netherlands |
| Hilton Seafood UK Limited | UK | Hilton Seafood Holland BV | Netherlands |
| Hilton Services Limited | UK | (formerly Dutch Seafood Company BV) | |
| Icelandic UK Limited | UK | Hilton Foods New Zealand Limited | New Zealand |
| Seachill Limited | UK | Hilton Foods Ltd Sp zoo | Poland |
| Seachill UK Limited trading as Hilton Seafood UK | UK | Hilton Foods Sverige AB | Sweden |
| Coldwater Seafood UK Limited | UK | Foppen USA Inc | USA |
| SV Cuisine Limited | UK | ||
| Hilton Foods Belgium BV | Belgium | ||
| Hilton Foods Danmark A/S | Denmark | Proportion of shares held by | |
| Hilton Foods (Ireland) Limited | Ireland | Parent 0% and Group 80% (2022: nil) | |
| Evolve 4 Group Limited | UK | ||
| Evolve 4 Limited | UK | ||
| Proportion of shares held by Parent 0% and Group | Evolve 4 Solutions Limited | UK | |
| 80% Group voting rights 100% | |||
| Hilton Meats Holland Limited | UK | ||
| Hilton Foods Holland BV | Netherlands | Proportion of shares held by | |
| Parent 0% and Group 65% | |||
| Foods Connected Ltd | UK | ||
| Proportion of shares held by | Foods Connected Australia Pty Limited | Australia | |
| Parent 0% and Group 65% | Foods Connected America Inc | USA | |
| Hilton Food Solutions Limited | UK | ||
| Hilton Food Solutions Holland BV | Netherlands |
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| Evolve 4 Group | |
| 2023 | Limited |
| Group | £’000 |
Property, plant and equipment | 5 |
Intangibles-Computer Software | 1 |
Brand and customer relationship intangibles | 343 |
Trade and other receivables | 294 |
Cash and cash equivalents | 42 |
Trade and other payables | (1,315) |
Deferred tax | 53 |
Goodwill | 1,325 |
Fair value of assets acquired | 748 |
| Consideration | |
Paid on completion | 455 |
Deferred Payment | 143 |
Non-controlling interest | 150 |
| 748 |
19 INVENTORIES
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Raw materials and consumables | 128,853 | 162,216 |
Finished goods and goods for resale | 50,888 | 44,513 |
179,741 | 206,729 |
The cost of inventories recognised as an expense and included in cost of sales amounted to £3,247,163,000 (2022: £3,178,978,000).
The Group charged £1,543,000 in respect of inventory write-downs (2022: £1,012,000). The amount charged has been included in cost
of sales in the income statement.
NOTES TO THE FINANCIAL STATEMENTS continued
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184
Group | Company | |||
| 2023 | 2022 | 2023 | 2022 | |
| £’000 | £’000 | £’000 | £’000 | |
Trade receivables | 219,809 | 218,175 | – | – |
Less: provision for impairment of trade receivables | (927) | (1,137) | – | – |
Trade receivables – net | 218,882 | 217,038 | – | – |
Amounts owed by Group undertakings | – | – | 5,667 | 5,875 |
Amounts owed by related parties (see note 30) | 4,081 | 838 | – | – |
Other receivables | 41,798 | 34,090 | – | – |
Prepayments | 12,993 | 19,194 | – | – |
277,754 | 271,160 | 5,667 | 5,875 |
Group | Company | |||
| 2023 | 2022 | 2023 | 2022 | |
| Currency | £’000 | £’000 | £’000 | £’000 |
UK Pound | 80,736 | 94,093 | 5,667 | 5,875 |
Euro | 66,510 | 54,327 | – | – |
Swedish Krona | 26,120 | 17,230 | – | – |
Danish Krone | 18,047 | 33,646 | – | – |
Polish Zloty | 6,467 | 4,397 | – | – |
Australian Dollar | 58,135 | 50,035 | – | – |
New Zealand Dollar | 14,998 | 12,317 | – | – |
US Dollar | 5,721 | 4,602 | – | – |
Chinese Renminbi | 1,020 | 513 | – | – |
277,754 | 271,160 | 5,667 | 5,875 |
| 2023 | 2022 | |
| Group | £’000 | £’000 |
At the beginning of the period | 1,137 | 699 |
Acquisition | 89 | 328 |
Provision for receivables impairment | 420 | 467 |
Receivables impairment released | (699) | (216) |
Receivables written off during the period as uncollectable | (17) | (143) |
Exchange differences | (3) | 2 |
At the end of the period | 927 | 1,137 |
NOTES TO THE FINANCIAL STATEMENTS continued
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Group | Company | |||
| 2023 | 2022 | 2023 | 2022 | |
| £’000 | £’000 | £’000 | £’000 | |
Cash at bank and on hand | 126,715 | 87,224 | 416 | 186 |
| 2023 | 2022 | |
| Group | £’000 | £’000 |
| Current | ||
Bank borrowings | 28,641 | 28,279 |
| Non-current | ||
Bank borrowings | 237,792 | 270,510 |
Total borrowings | 266,433 | 298,789 |
| 2023 | 2022 | |
| Currency | £’000 | £’000 |
UK Pound | 83,228 | 79,878 |
Euro | 82,550 | 88,432 |
Danish Kroner | – | 837 |
Polish Zloty | 7,780 | 9,666 |
Australian Dollar | 73,504 | 93,162 |
New Zealand Dollar | 19,371 | 26,814 |
266,433 | 298,789 |
Group | Company | |||
| 2023 | 2022 | 2023 | 2022 | |
| £’000 | £’000 | £’000 | £’000 | |
Trade payables | 376,552 | 366,222 | – | – |
Amounts owed to related parties (see note 30) | 518 | 314 | – | – |
Social security and other taxes | 10,029 | 7,409 | – | – |
Accruals | 71,688 | 52,258 | 2 | – |
458,787 | 426,203 | 2 | – |
NOTES TO THE FINANCIAL STATEMENTS continued
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186
| Accelerated | Acquired | ||||
| capital | intangible | Other timing | |||
| allowances | assets | IFRS 16 Leases | differences | Total | |
| Group | £’000 | £’000 | £’000 | £’000 | £’000 |
At 3 January 2022 | 1,761 | (5,373) | 5,306 | 1,126 | 2,820 |
Deferred Tax on Fair Value uplift | – | (2,932) | – | – | (2,932) |
Exchange differences | (71) | – | 216 | 40 | 185 |
Acquisition (note 18) | 3,993 | (8,925) | – | – | (4,932) |
Income statement credit/(charge) | 587 | 1,309 | 1,323 | 551 | 3,770 |
Tax charged directly to equity | – | – | – | (1,031) | (1,031) |
At 1 January 2023 | 6,270 | (15,921) | 6,845 | 686 | (2,120) |
Exchange differences | – | – | (412) | 612 | 200 |
Acquisition (note 18) | – | – | – | 53 | 53 |
Income statement credit/(charged) | 766 | 2,661 | 2,942 | (83) | 6,286 |
Tax charged directly to equity | – | – | – | (26) | (26) |
At 31 December 2023 | 7,036 | (13,260) | 9,375 | 1,242 | 4,393 |
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Deferred tax liabilities | (14,743) | (15,921) |
Deferred tax assets | 19,136 | 13,801 |
4,393 | (2,120) |
Group | Company | ||||
| Number of | |||||
| shares | 2023 | 2022 | 2023 | 2022 | |
| (thousands) | £’000 | £’000 | £’000 | £’000 | |
Authorised, issued and fully paid ordinary shares of 10p each At 2 January 2023/ 3 January 2022 | 89,433 | 8,943 | 8,893 | 8,943 | 8,893 |
| Issue of new shares relating to employee incentive | |||||
schemes | 169 | 17 | 50 | 17 | 50 |
At 31 December 2023 / 1 January 2023 | 89,602 | 8,960 | 8,943 | 8,960 | 8,943 |
NOTES TO THE FINANCIAL STATEMENTS continued
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
187
26 SHARE-BASED PAYMENT
All-employee Sharesave scheme
These schemes are open to all eligible employees of the Group (including the Executive Directors) who make regular savings
over a three year period. The exercise price of the granted options is equal to the market price of the shares on the date of the
grant. The options are exercisable starting three years from the grant date and must be exercised within six months thereafter.
No performance conditions are attached to the options granted under the scheme.
Long Term Incentive Plan (LTIP)
Under the Group’s Long Term Incentive Plan nil cost share options are granted to Executive Directors and to selected senior
employees. The options are exercisable starting three years from the grant date subject to the Group achievement of performance
targets comprising minimum earnings per share (EPS) compound growth target and total shareholder return (TSR). Awards granted
during the period introduced three new ESG performance metrics.
Awards will vest on a sliding scale, with 10% vesting at threshold and 100% vesting at maximum, as follows:
Performance basis | Threshold vesting | Maximum vesting |
EPS | 5%-11% compound per year | 12%-17% compound per year |
| TSR – performance against the constituents | ||
| of the FTSE 250 (excluding investment | ||
trusts) | Median | Upper quartile |
ESG – Scope 1 and 2 energy | 6.5%-35% reduction over period | 43.9%-52% reduction over period |
ESG - Scope 3 energy | 21% reduction over period | 33% reduction over period |
ESG – Recycled packaging | 11.7% increase over period | 28.3% increase over period |
ESG – Food waste | 15.0% reduction over period | 30.0% reduction over period |
| ESG – People gender, inclusion | ||
and human rights | Various | Various |
The options have a contractual option term of 10 years. The Group has no legal or constructive obligation to repurchase or settle the
options in cash.
Movements in the number of share options outstanding and their related weighted exercise price are as follows:
Sharesave | Long-term incentive | |||
| Options | Exercise price | Options | Exercise price | |
| Group | (’000) | (pence) | (’000) | (pence) |
At 3 January 2022 | 601 | 1,128.69 | 1,588 | – |
Granted | 231 | 1,204.00 | 366 | – |
Exercised | (117) | 950.00 | (219) | – |
Lapsed | (210) | 1,198.80 | (156) | – |
At 1 January 2023 | 505 | 1,174.95 | 1,579 | – |
Granted | 743 | 672.00 | 769 | – |
Exercised | – | – | (97) | – |
Lapsed | (358) | 1,068.40 | (393) | – |
At 31 December 2023 | 890 | 797.99 | 1,858 | – |
NOTES TO THE FINANCIAL STATEMENTS continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
188
| Number of options | ||||||
| Group | Exercise price | 2023 | 2022 | |||
Expiry date | Type of scheme | Status | (pence) | (‘000) | (‘000) | |
February 2023 | Sharesave | Exercisable | 950.00 | – | 68 | |
February 2024 | Sharesave | Exercisable | 1228 | .00 | 68 | 128 |
February 2025 | Sharesave | Not exercisable | 1 | 200.00 | 63 | 126 |
February 2026 | Sharesave | Not exercisable | 1204. | 00 | 77 | 183 |
February 2027 | Sharesave | Not exercisable | 672.00 | 682 | – | |
April 2024 | Long Term Incentive Plan | Exercisable | nil cost | – | 2 | |
April 2025 | Long Term Incentive Plan | Exercisable | nil cost | 55 | 55 | |
April 2026 | Long Term Incentive Plan | Exercisable | nil cost | 61 | 63 | |
April 2027 | Long Term Incentive Plan | Exercisable | nil cost | 53 | 55 | |
May/July 2028 | Long Term Incentive Plan | Exercisable | nil cost | 84 | 129 | |
May 2029 | Long Term Incentive Plan | Exercisable | nil cost | 172 | 217 | |
September 2030 | Long Term Incentive Plan | Exercisable | nil cost | – | 342 | |
May 2031 | Long Term Incentive Plan | Not exercisable | nil cost | 344 | 356 | |
May 2032 | Long Term Incentive Plan | Not exercisable | nil cost | 341 | 360 | |
May 2033 | Long Term Incentive Plan | Not exercisable | nil cost | 748 | – | |
Total | 2,748 | 2,084 |
The fair value of options granted during 2023 determined using the Black-Scholes valuation model ranged from 714p to 739p per
option. The significant inputs into the model were the exercise price shown above, volatility of 36% based on a comparison of similar
listed companies, dividend yield of 3.95%, an expected option life of 3.0 years, and an annual risk-free interest rate of 3.66-3.85%.
See note 8 for the total expense recognised in the income statement for share options granted to Directors and employees.
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Profit before income tax | 48,638 | 29,614 |
Finance costs – net | 37,491 | 24,412 |
Operating profit | 86,129 | 54,026 |
| Adjustments for non-cash items: | ||
Share of post tax profits of joint venture | (585) | (1,235) |
Depreciation of property, plant and equipment | 47,628 | 46,985 |
Depreciation of leased assets | 18,994 | 20,780 |
Impairment of property, plant and equipment | 1,200 | – |
Impairment of intangible asset | 755 | – |
Insurance proceeds adjustments for property, plant, and equipment | (4,906) | – |
Amortisation of intangible assets | 10,852 | 9,974 |
Gain on acquisition of Foods Connected Ltd (2022) | – | (2,701) |
Gain on disposal of fixed assets | (76) | – |
Adjustment in respect of employee share schemes | 1,855 | (655) |
| Changes in working capital: | ||
Inventories | 22,769 | (23,741) |
Trade and other receivables | (14,865) | (14,443) |
Trade and other payables | 46,375 | 9,322 |
Cash generated from operations | 216,125 | 98,312 |
NOTES TO THE FINANCIAL STATEMENTS continued
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
189
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Cash and cash equivalents | 126,715 | 87, 224 |
Borrowings (including overdrafts) | (266,433) | (298,789) |
Net bank debt | (139,718) | (211,565) |
Lease liabilities | (226,861) | (246,158) |
Net debt | (366,579) | (457,723) |
| Cash/other | Borrowings | Net | |||
| financial | (including | bank | Lease | Net | |
| assets | overdrafts) | debt | liabilities | debt | |
| £’000 | £’000 | £’000 | £’000 | £’000 | |
At 2 January 2022 | 140,170 | (224,732) | (84,562) | (243,396) | (327,958) |
Cash flows | (54,576) | 228,565 | 173,989 | 15,631 | 189,620 |
Lease additions | – | – | – | (5,835) | (5,835) |
Acquisition | – | (56,938) | (56,938) | (3,214) | (60,152) |
Repaid on acquisition | – | 56,938 | 56,938 | – | 56,938 |
New borrowings | – | (295,790) | (295,790) | – | (295,790) |
Exchange adjustments | 1,630 | (6,832) | (5,202) | (9,306) | (14,508) |
Other changes | – | – | – | (38) | (38) |
At 1 January 2023 | 87,224 | (298,789) | (211,565) | (246,158) | (457,723) |
Cash flows | 40,746 | 38,313 | 79,059 | 14,585 | 93,644 |
Lease additions | – | – | – | (5,119) | (5,119) |
Acquisition | 42 | – | 42 | – | 42 |
New borrowings | – | (11,372) | (11,372) | – | (11,372) |
Exchange adjustments | (1,297) | 5,415 | 4,118 | 9,831 | 13,949 |
At 31 December 2023 | 126,715 | (266,433) | (139,718) | (226,861) | (366,579) |
Group | Company | |||
| 2023 | 2022 | 2023 | 2022 | |
| £’000 | £’000 | £’000 | £’000 | |
Property, plant and equipment | 7,026 | 20,309 | – | – |
NOTES TO THE FINANCIAL STATEMENTS continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
190
| 2023 | 2022 | |
| Group Sales | £’000 | £’000 |
Sohi Meat Solutions Distribuicao de Carnes SA – fee for services | 3,426 | 3,190 |
Sohi Meat Solutions Distribuicao de Carnes SA – recharge of joint venture costs | 467 | 409 |
Agito Holdings Limited | 211 | 464 |
| 2023 | 2022 | |
| Group Purchases | £’000 | £’000 |
Agito Holdings Limited | 6,203 | 259 |
| Owed from related parties | ||
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Agito Holdings Limited | 1,855 | 464 |
Sohi Meat Solutions Distribuicao de Carnes SA | 1,631 | 374 |
Sphere Design Limited | 189 | – |
Cellular Agriculture Ltd | 406 | – |
4,081 | 838 |
| Owed to related parties | ||
| 2023 | 2022 | |
| Group | £’000 | £’000 |
Agito Holdings Limited | 401 | 259 |
Sohi Meat Solutions Distribuicao de Carnes SA | 117 | 55 |
518 | 314 |
NOTES TO THE FINANCIAL STATEMENTS continued
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
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191
31 FINANCIAL INSTRUMENTS BY CATEGORY
The accounting policies for financial instruments
2023 | 2022 | |||
| Financial | Financial | |||
| Financial | Assets at | Assets at | ||
| Assets at | Amortised | Amortised | ||
| Fair Value | Cost | Total | Cost | |
| Group | £’000 | £’000 | £’000 | £’000 |
| Assets | ||||
Financial assets at fair value through OCI | 3,625 | – | 3,625 | – |
Trade and other receivables | – | 264,761 | 264,761 | 251,966 |
3,625 | 264,761 | 268,386 | 251,966 |
2023 | 2022 | |||||
| Financial | Financial | |||||
| Financial | Liabilities at | Financial | Liabilities at | |||
| Liabilities at | Amortised | Liabilities at | Amortised | |||
| Fair Value | Cost | Total | Fair Value | Cost | Total | |
| Group | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| Liabilities | ||||||
Trade and other payables | – | 448,758 | 448,758 | – | 418,794 | 418,794 |
Financial liabilities at fair value through OCI | 244 | – | 244 | 3,398 | – | 3,398 |
Borrowings | – | 266,433 | 266,433 | – | 298,789 | 298,789 |
Lease liabilities | – | 226,861 | 226,861 | – | 246,158 | 246,158 |
244 | 942,052 | 942,296 | 3,398 | 963,741 | 967,139 |
In addition to the above, amounts owed to the Company by Group undertakings of £5,667,000 (2022: £5,875,000) are classified as
‘financial assets at amortised cost’.
NOTES TO THE FINANCIAL STATEMENTS continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
192
32 ALTERNATIVE PERFORMANCE MEASURES
The Group’s performance is assessed using a number of alternative performance measures (APMs).
The Group’s alternative profitability measures are presented before exceptional items, amortisation of certain intangible assets and
depreciation of fair value adjustments made to property plant and equipment acquired through business combinations and the
impact of IFRS 16 – Leases.
The measures are presented on this basis, as management uses these measures to assess business performance internally and
therefore believe they provide useful additional information about the Group’s performance and aids a more effective comparison of
the Group’s underlying trading performance from one period to the next.
Adjusted profitability measures are reconciled to unadjusted IFRS results on the face of the income statement below.
| Add back: | |||||||
| Amort and | |||||||
| Add back: | Less: IAS | depn of | |||||
| IFRS 16 | 17 Lease | Reported | acquisition | ||||
| Depreciation | accounting | excluding | Exceptional | fair value | |||
| 52 weeks ended | Reported | and interest | costs | IFRS 16 | items | adjustments | Adjusted |
| 31 December 2023 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| Operating profit – | |||||||
| excluding exceptional | |||||||
items | 90,004 | 18,910 | (23,449) | 85,465 | – | 9,516 | 94,981 |
Exceptional items | (3,875) | – | – | (3,875) | 3,875 | – | – |
Operating profit | 86,129 | 18,910 | (23,449) | 81,590 | 3,875 | 9,516 | 94,981 |
Net finance costs | (37,491) | 8,556 | – | (28,935) | – | – | (28,935) |
Profit before income tax | 48,638 | 27,466 | (23,449) | 52,655 | 3,875 | 9,516 | 66,046 |
Profit for the period | 37,996 | 24,521 | (23,449) | 39,068 | 2,654 | 7,133 | 48,855 |
| Less non-controlling | |||||||
interest | (1,616) | – | – | (1,616) | – | – | (1,616) |
Profit attributable to members of the parent | 36,380 | 24,521 | (23,449) | 37,452 | 2,654 | 7,133 | 47, 239 |
Depreciation and amortisation | 79,429 | (18,903) | – | 60,526 | (1, 955) | (9,516) | 49,055 |
EBITDA | 165,558 | 7 | (23,449) | 142,116 | 1,921 | – | 144,037 |
Earnings per share | pence | pence | pence | ||||
Basic | 40.6 | 41.8 | 52.8 | ||||
Diluted | 40.2 | 41.4 | 52.2 |
NOTES TO THE FINANCIAL STATEMENTS continued
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
193
32 ALTERNATIVE PERFORMANCE MEASURES CONTINUED
| Add back: | |||||||
| Amort and | |||||||
| Add back: | Less: IAS | depn of | |||||
| IFRS 16 | 17 Lease | Reported | acquisition | ||||
| Depreciation | accounting | excluding | Exceptional | fair value | |||
| 52 weeks ended | Reported | and interest | costs | IFRS 16 | items | adjustments | Adjusted |
| 2 January 2023 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| Operating profit – | |||||||
| excluding exceptional | |||||||
items | 65,922 | 20,780 | (23,815) | 62,887 | – | 8,257 | 71,144 |
Exceptional items | (11,896) | – | – | (11,896) | 11,896 | – | – |
Operating profit | 54,026 | 20,780 | (23,815) | 50,991 | 11,896 | 8,257 | 71,144 |
Net finance costs | (24,412) | 8,758 | – | (15,654) | – | – | (15,654) |
Profit before income tax | 29,614 | 29,538 | (23,815) | 35,337 | 11,896 | 8,257 | 55,490 |
Profit for the period | 19,492 | 28,215 | (23,815) | 23,892 | 11,751 | 6,370 | 42,013 |
| Less non-controlling | |||||||
interest | (1,786) | (3) | – | (1,789) | – | – | (1,789) |
Profit attributable to members of the parent | 17,706 | 28,212 | (23,815) | 22,103 | 11,751 | 6,370 | 40,224 |
Depreciation and amortisation | 77,769 | (20,780) | – | 56,989 | – | (8,257) | 48,732 |
EBITDA | 131,795 | – | (23,815) | 107,980 | 11,896 | – | 119,876 |
Earnings per share | pence | pence | pence | ||||
Basic | 19.8 | 24.8 | 45.1 | ||||
Diluted | 19.7 | 24.6 | 44.7 |
Segmental operating profit reconciles to adjusted segmental operating profit as follows:
| Add back: | |||||||
| Amort and | |||||||
| Add back: | Less: IAS | depn of | |||||
| IFRS 16 | 17 Lease | Reported | acquisition | ||||
| Depreciation | accounting | excluding | Exceptional | fair value | |||
| 52 weeks ended | Reported | and interest | costs | IFRS 16 | items | adjustments | Adjusted |
| 31 December 2023 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
UK and Ireland | 29,183 | 3,242 | (3,795) | 28,630 | 1,778 | 5,084 | 35,492 |
Europe | 35,131 | 4,021 | (4,683) | 34,469 | 1,950 | 4,432 | 40,851 |
APAC | 33,559 | 11,530 | (14,812) | 30,277 | – | – | 30,277 |
Central costs | (11,744) | 117 | (159) | (11,786) | 147 | – | (11,639) |
Total | 86,129 | 18,910 | (23,449) | 81,590 | 3,875 | 9,516 | 94,981 |
| Add back: | |||||||
| Amort and | |||||||
| Add back: | Less: IAS | depn of | |||||
| IFRS 16 | 17 Lease | Reported | acquisition | ||||
| Depreciation | accounting | excluding | Exceptional | fair value | |||
| 52 weeks ended | Reported | and interest | costs | IFRS 16 | items | adjustments | Adjusted |
| 1 January 2023 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
UK and Ireland | 9,453 | 3,202 | (3,689) | 8,966 | 2,214 | 2,449 | 13,629 |
Europe | 23,863 | 5,467 | (5,895) | 23,435 | 6,800 | 5,808 | 36,043 |
APAC | 28,825 | 12,111 | (14,231) | 26,705 | – | – | 26,705 |
Central costs | (8,115) | – | – | (8,115) | 2,882 | – | (5,233) |
Total | 54,026 | 20,780 | (23,815) | 50,991 | 11,896 | 8,257 | 71,144 |
NOTES TO THE FINANCIAL STATEMENTS continued
Hilton Food Group PLC Annual Report and Financial Statements 2023
194
REGISTERED OFFICE
2–8 The Interchange
Latham Road
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Cambridgeshire
PE29 6YE
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Statutory Auditors
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REGISTERED OFFICE AND ADVISORS
OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION
Hilton Food Group PLC Annual Report and Financial Statements 2023
195
NOTES
Hilton Food Group PLC Annual Report and Financial Statements 2023
196
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HILTON FOOD GROUP PLC
2-8 The Interchange
Latham Road
Huntingdon
Cambridgeshire
PE29 6YE
www.hiltonfoods.com