LAST year was one of retrenchment for foods group Hillsdown after

years of rapid growth through acquisition. Chairman Sir John Nott said

the company had ''now got to pause''. Its priorities in the short-term

are to withdraw from less satisfying activities, strengthen cashflow,

reduce exposure to commodity-type businesses and build on the new

executive management structure.

Sir John replaces Sir Harry Solomon, founder and previous chairman,

who retires after April's AGM but will remain a non-executive director

of Hillsdown. Following his retirement, the role of chairman and chief

executive will be split, with David Newton becoming chief executive.

Profits last year were hit by depressed margins, particularly in the

third quarter. The company experienced recession in its two major

markets of the UK and Canada and reduced sales, often as a result of

disposals. Profit before tax fell by 17.5% to #154.1m on 6.1% less

turnover. However, turnover on continuing businesses actually rose 6%.

Earnings per share declined by 35% from 21p to 13.6p but the dividend

was maintained at 8.8p.

Sir John said Hillsdown had ''established a firm earnings base for the

future''. It is following the route taken by many companies in this

recession of divesting of non-core activities and those deemed to be

providing an inadequate return. The poultry business, which has been a

problem area for some time, has been reorganised with a greater emphasis

on fresh produce. It continues to suffer from overcapacity in Europe and

last year faced the additional problem of adverse currency movements.

Various other divisions such as tea and beverages are being merged to

sharpen their focus in areas such as sales, marketing and new product

development.

Hillsdown is to cease property trading and is in the process of

disposing of its property portfolio. Its Fairview Homes business was

adversely impacted last year by ''Black Wednesday'' and the ensuing

collapse in consumer confidence. However, since the year-end, trading

has improved. But it is thought unlikely that Fairview will be floated

on the London Stock Exchange this year.

In total, around 17 businesses were closed down or sold in the last

year. An extraordinary provision of #92.3m was made in last year's

accounts to cover the cost of reorganising Hillsdown businesses, about

half of which has been completed although Sir John said he did not

expect there to be a need for further large provisions this year. The

company refused to break down the nature of the provision, although a

large chunk of it will relate to the property portfolio.

At the year-end, gearing was 35.9% up from just over 12% at the start

of the year. A number of factors including currency effects and goodwill

write-offs on acquisitions were to blame.

Although profits declined last year, the City was relieved that at

last some management action was being directed towards streamlining the

business. This was reflected in an early price rise of 8p but the shares

eventually settled back to be unchanged at 163p. They are are supported

by a generous 7.2% yield.