Hilton Foods Regulatory News (HFG)

Hilton Food Group plc

Preliminary results for 2012

WELL POSITIONED FOR GROWTH

Hilton Food Group plc, Europe's leading specialist retail meat packing business supplying major international food retailers in thirteen countries, today announces its preliminary results for the 52 weeks ended 30 December 2012.

2012 FINANCIAL HIGHLIGHTS

2012 BUSINESS HIGHLIGHTS

·; Revenue growth of 5.1% to over £1bn.

·; Volume growth of 4.8% despite challenging market conditions.

·; Cash generation of £20.5m, after the maintenance of a high level of investment in equipment and facilities, and a 72% reduction in net debt, from £18.7m to £5.2m.

·; Strong balance sheet with gearing at 0.1 times EBITDA and interest cover at 21 times underpinning future expansion and a progressive dividend policy.

·; Dividends increased by 8.1%

·; The joint venture with Woolworths Limited in Australia announced in January 2013 marks the Group's first expansion beyond Europe into the faster growing Asia Pacific region.

Commenting, Robert Watson OBE, Chief Executive said:

"I am pleased to report that in 2012 Hilton has delivered another resilient performance. The Group has maintained a high level of investment in its meat packing facilities across Europe while exploring opportunities to progressively and profitably expand its business. Our joint venture with Woolworths in Australia represents the Group's first expansion beyond its European heartland and illustrates well the transferability of its business model."

Enquiries

Hilton Food Group Tel: 01480 387214

Robert Watson OBE, Chief Executive

Nigel Majewski, Finance Director

Citigate Dewe Rogerson Tel: 020 7638 7591

Tom Baldock

Clare Simonds

Chairman's statement

A SOUND PLATFORM FOR GROWTH

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

SUMMARY OF GROUP PERFORMANCE

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

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

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

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

OUR MANAGEMENT AND EMPLOYEES

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

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

THE BOARD

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

HILTON'S STRATEGIC APPROACH

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

● Building volumes and extending product ranges and services to existing customers;

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

● Entering new territories with new customers or in partnership with existing customers.

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

OUR DIVIDEND POLICY

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

THE OUTLOOK

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

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

Sir David Naish DL

Non-Executive Chairman

27 March 2013

Chief Executive's summary

CONTINUED INVESTMENT ON BEHALF OF OUR CUSTOMERS

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

FINANCIAL OVERVIEW

Our European businesses comprise two distinct operating segments:

Western Europe

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

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

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

Central Europe

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

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

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

OUR FOCUS ON QUALITY, INNOVATION, EFFICIENCY AND FOOD SAFETY

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

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

OUR SUPPLY CHAIN PARTNERSHIPS

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

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

OUR PEOPLE AND CULTURE

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

DIVERSITY

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

FUTURE GROWTH

Hilton's business model has been successful across a range of European countries, appropriately adapted by working in close collaboration with its local customers to meet their specific requirements. We believe it can be transferred over time to a number of new countries and aim to achieve similar levels of benefit delivery with Woolworths in Australia. Our strategy is very straightforward and at its core is focused on strongly supporting our customers' brands and their development in their local markets, whilst achieving attractive and sustainable rates of growth and returns for our shareholders. This single minded and uncomplicated approach has generated continuous growth over an extended period and, with well invested facilities and a strong balance sheet, the Group remains well placed to achieve further progress.

Robert Watson OBE

Chief Executive

27 March 2013

Financial review

A STRONG FINANCIAL BASE

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

BASIS OF PREPARATION

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

2012 FINANCIAL PERFORMANCE

Revenue

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

Operating profit and margin

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

Net finance costs

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

Profit before taxation

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

Taxation

The taxation charge for the period was £5.8m (2011: £5.9m). This represented an effective taxation rate of 23.5% (2011: 24.1%) reflecting a lower corporate tax rate in the UK.

Earnings per share

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

Free cash flow and net borrowing levels

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

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

TREASURY RISK MANAGEMENT POLICIES

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

Foreign exchange rate movements and country specific risks

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

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

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

Interest rate fluctuation risk

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

Customer credit and pricing risks

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

Liquidity risk

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

FORWARD LOOKING STATEMENTS

The Chairman's statement, Chief Executive's summary, Financial review, Business review and other reports which together comprise the Enhanced Business Review, contain forward looking statements that are inevitably subject to risk factors associated with, amongst other things, economic, political and business developments which may occur from time to time across the countries in which the Group operates. It is believed that the expectations reflected in these statements are reasonable, but all forward looking statements and forecasts are inherently predictive, speculative and involve risk and uncertainty, simply because they relate to events and depend on circumstances that will occur in the future.

GOING CONCERN BASIS

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

The Group's internal budgets and forecasts, which incorporate all reasonably foreseeable changes in trading performance, are regularly reviewed in detail by the Board and show that it will be able to operate within its current banking facilities, taking into account available cash balances, for the foreseeable future. The going concern basis is, accordingly, adopted by the Board in preparing the financial statements.

On behalf of the Board

Nigel Majewski

Finance Director

27 March 2013

Business review

A strong base for future growth

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

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

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

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

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

Our key resources and relationships

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

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

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

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

● Our wide and progressively deepening employee skill base;

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

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

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

How we measure our performance

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

How we manage risk

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

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

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

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

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

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

Note: References in this preliminary announcement to the Directors' report, the Remuneration report, the Corporate Governance statement and the Corporate Social Responsibility report are to reports which will be available in the Company's full published accounts.

Responsibility statement of the Directors in respect of the Annual Report and Accounts

Each of the Directors whose names and functions are set out below confirms that to the best of their knowledge and belief:

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

·; the management reports (which comprise the Chairman's statement, the Chief Executive's summary, the Financial review, the Business review and the Directors' report) include a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties they face.

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

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

R Watson N Majewski

Director Director

Hilton Food Group plc - Registered number: 06165540

The notes are an integral part of these consolidated financial statements.

Notes to the financial statements

1 General information

Hilton Food Group plc ("the Company") and its subsidiaries (together "the Group") is a specialist retail meat packing business supplying major international food retailers in thirteen countries. The Company's subsidiaries are listed in a note.

The Company is a public limited company incorporated and domiciled in the UK. The address of the registered office is 2-8 The Interchange, Latham Road, Huntingdon, Cambridgeshire PE29 6YE. The registered number of the Company is 06165540.

The Company maintains a Premium Listing on the London Stock Exchange.

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

This preliminary announcement was approved for issue on 27 March 2013.

2 Summary of significant accounting policies

The accounting policies are consistent with those of the annual financial statements for the year ended 1 January 2012.

Basis of preparation

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

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

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

The financial information included in this preliminary announcement does not constitute statutory accounts of the Group for the years ended 30 December 2012 and 1 January 2012 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

3 Segment information

Management have determined the operating segments based on the reports reviewed by the Executive Directors that are used to make strategic decisions.

The Executive Directors have considered the business from both a geographic and product perspective.

From a geographic perspective, the Executive Directors consider that the Group has six operating segments: i) United Kingdom; ii) Netherlands; iii) Republic of Ireland; iv) Sweden; v) Denmark and vi) Central Europe including Poland, Czech Republic, Hungary, Slovakia, Latvia, Lithuania and Estonia. The United Kingdom, Netherlands, Republic of Ireland, Sweden and Denmark have been aggregated into one reportable segment 'Western Europe' as they have similar economic characteristics as identified in IFRS 8. Central Europe comprises the other reportable segment.

From a product perspective the Executive Directors consider that the Group has only one identifiable product, wholesaling of meat. The Executive Directors consider that no further segmentation is appropriate, as all of the Group's operations are subject to similar risks and returns and exhibit similar long-term financial performance.

The segment information provided to the Executive Directors for the reportable segments is as follows:

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

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

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

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

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

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

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

6 Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year.

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

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

Land and buildings are held under short leaseholds. Details of bank borrowings secured on assets of the Group are given in note 10. Depreciation charges are included within administrative expenses in the income statement.

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

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

Amortisation charges are included within administrative expenses in the income statement.