A year of investment for future growth

25^th March 2015

Hilton Food Group plc

A year of investment for future growth

Highlights

Hilton Food Group plc, the specialist retail meat packing business supplying major international food retailers in thirteen European countries and Australia, today announces its preliminary results for the 52 weeks ended 28 December 2014.

Strategic highlights

·    Our joint venture with Woolworths Limited in Australia is performing well. The conversion of the Bunbury site in Western Australia to substantially increase retail packed meat production was successfully completed in the first half of 2014.

·    Construction of a new dedicated retail packed meat facility, near Melbourne in Victoria, to be operated by our joint venture with Woolworths is on schedule to commence production in the third quarter of 2015.

·    Investment to modernise and expand the capacity of the Group's Huntingdon site in the UK and service increased volumes for Tesco is well advanced, with the new production facilities fully commissioned.

Operating highlights

·    Volume growth of 3.5%, with growth in the UK and Holland partly offset by continuing pressure on consumer spending in other countries.

·    Revenue reduced by 2.3%, reflecting both the impact of unfavourable movements in exchange translation of 4.6%, with Sterling appreciating materially against all the overseas currencies in which the Group trades, and of lower raw material meat prices flowing through into reduced selling prices.

·    Operating profit at £26.1m ahead of last year (2013: £25.8m) despite an increased level of start-up costs in the UK and the impact of unfavourable movements in exchange translation.

·    Substantially higher investment in the year at £43.3m (2013: £18.4m) covering major re-investment programmes in the UK and Sweden.

·    A free cash outflow of £2.1m (compared to an inflow of £17.0m in 2013) reflecting the £24.9m increase in the level of investment expenditure, with net debt at £7.7m at the year end.

·    A strong balance sheet providing a solid platform both for future expansion and a progressive dividend policy.

Commenting, Robert Watson OBE, Chief Executive said:

"I am pleased to report that during 2014 Hilton made sound progress in underpinning its future growth strategy, including the continued development of our Australian joint venture and the major UK capacity expansion. The high level of investment made in our meat packing facilities in 2014 was essential to facilitate the Group's planned future growth. We will continue to seek out available opportunities to progressively and profitably expand the scale and scope of our operations, employing a business model that remains resilient, relevant and internationally transferable.

Enquiries

Chairman's introduction

Strategic progress achieved in 2014

The Group made continued strategic progress during the year. The initial task of the joint venture with Woolworths in Australia was the conversion of Woolworths' existing meat processing facility at Bunbury in Western Australia in order to substantially increase production of retail packed product lines. This was completed as planned in early 2014, with the new product lines being well received by the local market.

The construction of a new meat processing facility for Woolworths near Melbourne in Victoria, which will be operated by our joint venture company, remains on schedule, with production currently targeted to commence in the third quarter of 2015. This represents a major milestone in the continuing development of our joint venture.

Having announced last year a long term supply agreement with Tesco for the UK, under which the volumes supplied by Hilton are planned to increase substantially, a major investment program was undertaken at the Group's UK site in Huntingdon during 2014. This involved both a material extension of the site's processing and packing capacity, the addition of a further production unit and the streamlining and modernization of the complete facility. The level of start-up costs involved in executing this complex project around a live production environment was higher than initially expected, but the project is now well advanced with the new production facilities fully commissioned.

Board composition

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 business experience, which is available to support and guide our management teams across a wide range of countries. There have been no changes in Board membership during 2014 and I would like to take this opportunity to thank my colleagues on the Board for their continued support, sound counsel and expertise.

Group performance and dividend policy

Further volume growth was achieved during 2014, despite challenging market conditions. Notwithstanding the higher than expected start-up costs incurred in connection with the Huntingdon redevelopment and the material impact of adverse exchange translation movements, continued profit progress was achieved in 2014.

The Group's net income in 2014 at £18.1m was slightly higher than in 2013 (£17.8m) with basic earnings per share at 25.0p in line with last year. Hilton has continued to generate significant cash flow during 2014 which enabled the Group to keep net borrowings at modest levels, despite a £24.9m increase in the level of investment expenditure.

During 2014 we made major new investments to secure the Group's future growth potential. The principal items of expenditure involved the redevelopment of the Group's facilities in Huntingdon to enable the planned UK volume increases for Tesco and a re-investment programme at Vasteras in Sweden to replace production lines at the end of their economic life with state of the art equipment designed to achieve higher line speeds, reduced manning requirements and reduced unit packing costs.

The Group has maintained a progressive dividend policy since flotation and the Board considers that this remains appropriate given both the continued strategic progress achieved in 2014 and Hilton's continuing level of cash generation. The 4.4% increase proposed in the final dividend for 2014 will increase the total dividends paid in respect of 2014 by 4.3%, as compared to last year.

Annual General Meeting

This year's AGM will be held at the Old Bridge Hotel, 1 High Street, Huntingdon, Cambridgeshire PE29 3TQ on 12 May 2015 at noon and my colleagues and I very much look forward to seeing many of you there.

Sir David Naish DL

Non-Executive Chairman

24 March 2015

Chief Executive's summary

Business model

Our business model is simple and straightforward. We operate large scale, highly mechanised, extensively automated and robotised meat processing and packing facilities for major international multiple retailers on a dedicated basis. The one exception is in Central Europe, where our facility in Poland supplies three multiple retailers in order to achieve critical mass, in terms of volumes supplied and the consequent ability to achieve competitive unit packing costs.

Raw material meat is sourced, in conjunction with our retail partners, from a wide international base of proven suppliers. It is then processed, packed and delivered to the retailer's distribution centres. Our plants are highly automated and use advanced robotics for the storage of raw materials and finished products. This developing technology has been extended in recent years both in the production environment and to the sorting of finished products by retailer store order, achieving material supply chain efficiencies for our customers.

In Europe we have six facilities each run by a local management team enhanced by specialist central leadership, advice and support. These businesses operate under the terms of five to ten year Long Term Supply Agreements with our retail partners, either on a cost plus or agreed packing rate basis. This serves to maximise volume throughput whilst minimising unit packing costs. In Australia our joint venture company receives a volume related management fee in respect of the facilities it operates on behalf of Woolworths.

Under the long term agreements we have in place with our customers the parameters of our revenue are clearly defined. As well as income derived from the supply of retail packed meat products there are also provisions whereby our income can be increased or decreased subject to achievement of certain pre-agreed and pre-defined performance measures and targets.

To ensure our continued competitiveness, we seek to keep ourselves at the forefront of the meat packing industry. We constantly seek to drive further efficiencies, with a pipeline of clear identifiable cost initiatives and a willingness to continually challenge the status quo. We consider our modern, very well invested facilities to be a key factor in keeping unit packing costs as low as possible. Over the decade to December 2014 we have invested continuously across all areas of our business, including the sourcing of raw materials, the design of packaging materials, increased efficiency in processing and storage solutions and updating our IT infrastructure. Capital expenditure over this period has totalled nearly £200m.

We are a committed and loyal partner with a continuing record of delivering value through quality products with the highest levels of food safety, traceability and integrity, whilst providing a range of services which enable our customers to evolve and improve their meat supply chain management. Our customer base comprises high quality multiple retailers and our in depth understanding of our customers' needs, together with those of their consumers, enables us to play an active role in managing their meat supply chains whilst providing agile responses to supply chain challenges as they arise. As our customers' markets change and competition increases, we need to keep a constant focus on the challenges they face so as to be able to put forward flexible solutions, together with continuing increases in efficiency and cost competitiveness.

The strength of our long term partnerships with our retail customers has been a key driver of our growth since the Group was formed and will continue to underpin the Group's strategy. Hilton's business model has proved successful across a range of European countries, appropriately adapted in each case by working in close collaboration with its local customers to meet their specific requirements. Our experience to date continues to indicate that our business model can be successfully transferred to a number of new countries.

Strategy and objectives

Our strategy is designed to support our customers' brands and their development in their local markets, whilst achieving attractive and sustainable rates of growth in value for our shareholders. This single minded approach has generated growth over an extended period of time and, with a strong reputation, well invested modern facilities and a robust balance sheet, the Group remains well positioned to achieve further progress.

Hilton builds long term customer and shareholder value by focusing on:

● Growing volumes and extending product ranges supplied and services provided to existing customers;

● Optimising the use of our assets and investing in new technology;

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

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

We will continue to pursue measured and well considered geographical expansion, whilst at the same time 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 businesses.

Geographical footprint

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

The facility in Tychy 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. The facility at Zaandam also supplies Albert Heijn stores in Belgium.

The joint venture with Woolworths in Australia involves the joint venture company managing Woolworths' meat processing and packing facilities at Bunbury in Western Australia and Brisbane in Queensland and, from the third quarter of 2015, a greenfield state of the art meat packing facility near Melbourne, in Victoria.

In 2014 66% of the Group's turnover was earned in countries outside the United Kingdom, together with 75% of the volumes of meat delivered. These percentages have declined since last year reflecting the increase achieved in sales in the UK during 2014.

The wide geographical spread increases the Group's resilience by minimising its dependence on the fortunes of any one individual economy, but makes its results reported in Sterling sensitive to changes in the value of Sterling as compared to the range of overseas currencies in which the Group trades. During 2014 Sterling strengthened materially against all the other currencies in which the Group trades, expressed as an average for the year as follows:

Euro +5.3%

Danish Krone +5.3%

Swedish Krona +10.8%

Polish Zloty +5.0%

Australian Dollar +12.6%

People

We believe that successful businesses are all about having the right people in the right positions at the right time working together as "one team", with local management teams empowered, encouraged and advised in specialist areas to enable them to support their local customers. The Group benefits from each of its businesses being part of a larger organisation, which enables them to share best practice solutions across country boundaries, including equipment selection, IT solutions and ways of working along with the collaborative sharing of new learnings and techniques.

We are committed to providing an inclusive working environment where everyone feels valued, respected and able to fulfil their potential. We recognise that people from different backgrounds, countries, experiences and abilities can bring benefits to our business. We fully recognise the benefits of gender diversity and details of the gender composition of our staff are set out in our Corporate and social responsibility report.

The Group currently employs 2,541 employees, in six European countries. Our business model is, as previously described, largely decentralised, with capable, largely self-sufficient management teams running our businesses in each local country. We consider this devolved structure to be essential, as it achieves very close working relationships with our customers, who benefit from dedicated, flexible and rapid local support.

The Board fully understands and appreciates just how much our progress relies on the effort, personal commitment, enthusiasm, enterprise and initiative of our employees. I would like to take this opportunity, on behalf of the Board, to personally thank all of them both for their dedicated efforts during 2014 and their continuing commitment to the Group's on-going growth and development.

Business development

Our business comprises three separate operating segments:

Western Europe

Operating profit of £27.1m (2013: £27.9m) on turnover of £1,016.8m (2013: £1,028.7m)

This operating segment covers the Group's businesses in the UK, Ireland, Holland, Sweden and Denmark. Volume growth of 5.5% was achieved in 2014, reflecting volume growth in the UK and Holland, driven respectively by gaining an increased share of our customers' business with expanded meat packing capacity and the introduction of new product lines. Volumes in Ireland and Denmark were reduced with consumer spending remaining under continuing pressure whereas in Sweden volumes remained relatively steady. Turnover declined by 1.2% reflecting the impact of adverse exchange translation movements and lower raw material meat prices resulting in reduced selling prices.

The robotic store order picking facility for Coop Danmark which handles, in addition to our own production, a range of third party Coop products such as poultry, has continued to build volumes. 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 offering. A facility of this type is being incorporated into the new Melbourne meat packing facility for Woolworths due to commence production in the third quarter of 2015.

The redevelopment of the Huntingdon site was a complex project involving the re-equipment and re-alignment of the site and the addition of a further production area whilst working around a live production environment with the highest customer service levels needing to be maintained throughout the process. Similarly the re-equipment of the Vasteras site in Sweden has faced the same challenges. Although the level of start-up and disturbance costs at Huntingdon has been higher than had previously been expected, both projects have been executed successfully.

Central Europe

Operating profit of £2.4m (2013: £2.5m) on turnover of £82.2m (2013: £96.1m)

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. In 2014 this multi-customer business supplied Ahold stores in Czech Republic and Slovakia, Tesco stores in Hungary, Czech Republic, Poland and Slovakia and Rimi stores in Latvia, Lithuania and Estonia. In very competitive market conditions volumes declined by 6.8% in 2014, and, reflecting the impact of lower raw material meat prices and unfavourable exchange rate movements, turnover decreased by 14.5%.

The resumption in due course of volume growth combined with an unremitting focus on cost control remain the keys to achieving the very low levels of unit packing costs required for our customers to be able to compete strongly and grow in these very competitive developing markets.

Central costs and other

Net operating cost £3.4m (2013: £4.6m)

This segment includes our share of the management fee earned by our joint venture with Woolworths of £1.3m (2013: £0.5m), start-up costs in connection with the joint venture of £0.9m (2013: £1.4m) and central costs of £3.8m (2013: £3.7m).

In Australia the Group is involved in a joint venture with Woolworths, under which it earns a fifty per cent share of the agreed management fees charged by the joint venture company for operating certain Woolworths' meat processing and packing plants, based on the volume of retail packed meat delivered to Woolworths' stores.

The joint venture company is currently responsible for the operation of Woolworths' Western Australian meat processing centre in Bunbury the conversion of which has enabled a substantial increase in retail packed meat production. This was completed in the early months of 2014. The building of a purpose built retail packing facility near Melbourne in Victoria which will be operated by the joint venture company is on schedule and expected to commence production in the third quarter of 2015.

Key past and anticipated future trends

As the larger retail chains have progressively gained a greater share of the grocery markets in most countries, they have increasingly turned to large scale, centralised meat packing solutions capable of producing private label packed meat products more safely and cost effectively. In doing so, they have rationalised their supply base, achieving lower costs with higher food safety, food integrity, traceability and quality standards. This has allowed supermarket groups to focus on their core business and maximise their return on available retail space whilst addressing consumers' continuing requirement for quality and value.

Grocery retail markets are expected to remain extremely competitive, with continuing pressure on consumer expenditure. The trend towards increased use of centralised meat packing solutions is still continuing, however, albeit at different speeds across the world. This gives rise to a wide range of potential future geographical expansion opportunities for Hilton, but inevitably in a range of different timescales.

Within retail markets patterns are also changing fairly rapidly, with increased internet based ordering and a growth in the number of "click and collect" facilities. Following pressures on consumer expenditure over a number of years there has been increased use by cost conscious consumers of local convenience stores and discount outlets, to shop more frequently for a reduced overall basket cost per visit. These developments which may be structural rather than cyclical will all tend to reinforce the overall trend towards retail packed meat, as this is the meat offering in all these growth areas. However they do pose logistical challenges and opportunities for the retailers, given the increasing need to be able to deliver smaller drop sizes on a cost efficient basis.

Current trading and outlook

With the completion of the capacity expansion and site redevelopment investment at Huntingdon in the UK and the planned start of production with our Australian joint venture partner near Melbourne in the third quarter of the year, Hilton's medium term growth prospects remain encouraging. The shorter term economic outlook in our European markets continues, however, to be challenging with consumer spending likely to remain constrained, despite a slightly better overall economic outlook in some countries aided in part by recently reduced oil prices.

During 2014 Sterling appreciated against all the currencies in which the Group trades. It has strengthened further in the early months of 2015 and, whilst future currency movements are inevitably difficult to forecast, they can have a material translational impact on the Group's profit performance expressed in Sterling, with over two thirds of Hilton's operating profit being earned in currencies other than Sterling.

In the early months of 2015 Hilton's operating performance has been in line with the Board's expectations. The Group's business model has proved resilient over recent difficult trading conditions and the Board expects to make continued progress.

Robert Watson OBE

Chief Executive Officer

24 March 2015

Performance and financial review

Financial review

Hilton's financial performance was robust in 2014, despite head winds from adverse currency movements, higher than expected start-up costs and a continued challenging economic environment across Europe. Substantial capital investment was made during 2014 at the Group's Huntingdon and Vasteras sites to increase capacity and cost efficiency. Despite investing £43.3m in the year, principally at these two facilities, year-end debt was restricted to a modest level. These investments, together with a continuing strong cash flow, leave the Group well placed to deliver future growth. This performance and financial review covers the main highlights of the Group's financial performance and position in 2014.

Basis of preparation

The Group is presenting its results for the 52 week period ended 28 December 2014, with comparative information for the 52 week period ended 29 December 2013. The financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

2014 Financial performance

Revenue

Volumes grew overall by 3.5% with strong volume increases in the UK and Holland offset by volume reductions in Ireland, Denmark and Central Europe in difficult trading conditions. Further details of volume growth by business segment are set out in the Chief executive's summary. Revenue fell by 2.3% to £1,099.0m, as compared to £1,124.8m in 2013, reflecting unfavourable exchange rate movements and the effect of lower raw material prices on selling prices.

Operating profit and margin

Operating profit, at £26.1m was above the previous year's level (2013: £25.8m) after bearing increased start-up costs incurred in the UK and the impact of adverse exchange translation movements.  The operating profit margin in 2014 was 2.4%, as compared with 2.3% in 2013, reflecting both the higher operating profit level and the impact of lower raw material meat prices, which do not under all Hilton's pricing arrangements give rise to a corresponding margin decrease. Operating profit per kilogram of packed meat sold was 11.3p (11.5p in 2013).

Net finance costs

With careful cash management, net finance costs, at £0.9m, were in line with the previous year's level (2013: £0.9m) despite the increase in debt levels over the second part of the year. Interest rates paid have remained at historically low levels, reflecting continuing low LIBOR and other Interbank rates, which determine the interest rates on the Group's principal borrowings. Interest cover in 2014 increased marginally to 30 times, as compared with 29 times in 2013.

Taxation

The taxation charge for the period was £5.6m (2013: £5.5m). This represented an effective taxation rate of 22.4% (2013: 22.2%) reflecting the fact that a lower proportion of the Group's overall taxable profits were earned in low corporate tax regimes such as those of Ireland and Poland.

Profit for the year

Profit for the year, at £19.6m, (2013: £19.4m) was slightly higher than last year reflecting the increase in operating profit partly offset by a slightly higher effective rate of taxation.

Earnings per share

Basic earnings per share at 25.0p (2013: 25.0p) were in line with last year, with a 1.4% increase in the level of net income being fully offset by the dilutive effect of an increased number of shares in issue, following the exercise of executive and all employee share options. Diluted earnings per share were 24.7p (2013: 24.8p).

Free cash flow and net borrowing levels

Cash flow remained strong in 2014, with the Group incurring a £2.1m free cash out flow before dividends and financing, after incurring capital expenditure of £43.3m. This represented an inflow reduction of £19.1m as compared with last year, after an increase in capital expenditure levels of £24.9m. Group borrowings were £43.3m at the end of 2014 and, with net cash balances of £35.6m, this resulted in a closing net debt position of £7.7m, as compared with a net cash level of £4.9m at the end of 2013. At the end of 2014 the Group had undrawn overdraft and loan facilities of £46.5m (2013: £18.3m).

Despite the major strategic investments made in 2014, the Group had modest gearing at the end of 2014, with a net debt to EBITDA ratio of 18%; this strong financial position gives the Group considerable flexibility for potential future expansion.

Dividends

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 and has recommended a final dividend of 9.5p per ordinary share in respect of 2014. This, together with the interim dividend of 3.8p per ordinary share paid in November 2014, represents a 4.3% increase in the full year dividend, as compared with last year. The final dividend, if approved by shareholders, will be paid on 26 June 2015 to shareholders on the register on 29 May 2015 and the shares will be ex dividend on 28 May 2015.

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 "KPI's" to measure the Group's performance over time in building shareholder value and achieving the Group's strategic objectives. The nine headline "KPI's" used by the Board for this purpose, together with our performance over the last two years, is set out below:

Although these KPI's are measured separately, the relationship between them is also monitored. In addition, a wider range of KPI's are continuously tracked at business unit level.

Treasury management

Hilton does not engage in any 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 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, two thirds of its revenues are earned in other currencies, currently principally the Euro, Swedish Krona, Danish Krone 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 has to date decided not to hedge its foreign exchange rate exposures, but this policy is kept under continuing review and may be reappraised over time as the Group's geographic spread continues to widen. 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 in the main limited to its equity investment in each overseas subsidiary and joint venture.

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 with some countries still 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 and other Interbank rates which fluctuate over time. The Board's policy is to have an interest rate cap on a proportion of this borrowing. 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 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

This has for many businesses represented a significant area of concern over recent years, 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.

Going concern and cautionary statements

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 forward 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.

Forward looking statements

This Strategic report contains 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 based on current knowledge, 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.

Nigel Majewski

Financial Director

24 March 2015

Risk management and principal risks

Risks and risk management

As a leading food processor in a fast moving environment it is critical that the Group identifies, assesses and prioritises its risks. This, together with the adoption of appropriate risk mitigation strategies, enables us to monitor, minimise and control both the probability and potential impact of these risks.

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. Responsibility for risk management across the group resides with the Board which believes that a successful risk management framework carefully balances risk and reward, and applies reasoned judgement and consideration of potential likelihood and impact in determining its principal risks.  The Group has a well-developed structure and range of processes for identifying, assessing, prioritising and mitigating these key risks, as the delivery of our strategy depends on our ability to make sound risk-informed decisions.

The most significant risks the Group faces

The six most significant identified business risks the Group faces, are, as might be expected with a relatively straightforward business model, unchanged from previous years. These risks, 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, as 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 designed to mitigate those risks.

All types of risk applicable to the business are regularly reviewed and a formal risk assessment is carried out to highlight key risks to the business and to determine actions that can reasonably and cost effectively be taken to mitigate them. 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. It must be realised that systems of internal control are designed to manage rather than completely eliminate any identified risks.

Note: References in this preliminary announcement to the Strategic report, the Corporate and social responsibility report, the Directors' report and the Corporate Governance statement 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 financial statements

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 Strategic report 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 24 March 2015 and is signed on its behalf by:

Directors

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 European countries and Australia. 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 28 December 2014 (prior financial year 52 weeks to 29 December 2013).

This preliminary announcement was approved for issue on 24 March 2015.