Last checked at 17 Jul 2019 07:00
Date: | Embargoed until 0700 Wednesday 17 July 2019
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Contacts: | Marnie Millard, Group Chief Executive Officer Tim Croston, Group Chief Financial Officer Andrew Milne, Group Chief Operating Officer
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Nichols plc | ||
Telephone: 01925 222 222 | ||
Website: www.nicholsplc.co.uk | ||
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Alex Brennan/ Hattie Dreyfus |
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Hudson Sandler | Richard Lindley/ Rachel Hayes | |
Telephone: 020 7796 4133 | N+1 Singer (Nominated Adviser and Broker) | |
Email: nichols@ hudsonsandler.com | Telephone: 0207 496 3000 Website: www.n1singer.com | |
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Nichols plc
2019 INTERIM RESULT & BOARD CHANGES
Nichols plc ('Nichols' or the 'Group'), the soft drinks Group, announces its Interim results for the half year ended 30 June 2019 (the 'period').
Financial Highlights:
*EBITDA is the statutory profit before tax, interest, depreciation and amortisation | Half Year ended 30 June 2019 | Half Year ended 30 June 2018 | % movement |
| £m | £m |
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Group Revenue | 71.6 | 65.0 | 10.2% |
Operating Profit | 13.3 | 13.1 | 2.1% |
Operating Profit margin | 18.6% | 20.1% |
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Profit Before Tax (PBT) | 13.3 | 13.1 | 2.0% |
PBT Margin | 18.6% | 20.1% |
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EBITDA* | 15.3 | 14.0 | 9.7% |
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Earnings per share (basic) | 29.63p | 28.81p | 2.8% |
Interim dividend | 12.4p | 11.3p | 9.7% |
John Nichols, Non-Executive Chairman, said:
"Nichols plc has delivered another good trading performance in the first half of 2019, with growth across both the UK and international markets. As a result, revenue, profit before tax and earnings per share have all increased during the period, and we have increased the interim dividend by 9.7%."
Chairman's Statement
I am pleased to announce that the Group has delivered a good trading performance for the first six months of 2019. The Group's revenue, profit before tax and earnings per share have all increased during the period, and we have increased the interim dividend by 9.7%.
Trading
Total Group revenue in the period increased by 10.2% to £71.6m against the prior year (H1 2018: £65.0m). Across the Group, revenue from Still products has increased by 11.6% to £33.9m driven by Vimto dilute in the UK and Vimto concentrate sales to the Middle East. Sales of Carbonate products grew by 8.4% to £37.7m as a result of the Africa performance and Out of Home (OoH) growth.
Sales were strong in our international markets, albeit against softer prior year comparatives. International revenues totalled £14.5m in the period (H1 2018: £11.2m), with sales to the Middle East in line with expectations at £4.6m (H1 2018: £2.1m). Elsewhere in our international markets, sales to Africa grew by 12.6% to £7.6m, driven by strong execution in our core markets.
In the UK, revenue increased by 6.2% to £57.1m (H1 2018: £53.8m) as sales of Vimto grew by 4.0%, against very strong prior year comparatives (H1 2018: +9.0%). Year to date growth in the total soft drinks market was 4.1% (Nielsen to 15 June 2018) reducing from 5.7% in May (Nielsen to 18 May 2019) as the industry laps last year's record summer weather. Elsewhere in the UK business, OoH sales increased by 11.8% to £21.5m (H1 2018: £19.2m).
Profit
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) increased by 9.7% to £15.3m (H1 2018: £14.0m).
To support the trading growth, the Group has invested in its infrastructure during the period. In addition, administrative expenses include the retranslation cost of US Dollar and Euro currency balances reflecting adverse forex movements.
Profit Before Tax at the half year was £13.3m, 2.0% ahead of the prior period.
Dividend
Reflecting the Board's ongoing confidence in the Group's financial position, we are pleased to recommend an interim dividend of 12.4 pence per share (H1 2018: 11.3 pence).
The interim dividend will be paid on 30 August 2019 to shareholders registered on 26 July 2019; the ex-dividend date is 25 July 2019.
The Board intends to deliver continued returns to shareholders through a progressive dividend policy, with increases aligned to growth in earnings per share with the alignment being fully implemented by 2021.
Board changes
After 14 years with the Group and 10 years as Group Chief Financial Officer, Tim Croston has informed the Board of his intention to step down from the Board by 30 June 2020. The notice that Tim has given the Board affords sufficient time to ensure a smooth transition to his successor, with the recruitment process commencing immediately.
Separately, we are delighted to announce that Andrew Milne who has served on the Board since January 2016 as Group Commercial Director has been promoted to the role of Group Chief Operating Officer with immediate effect.
On behalf of the Board I would like to thank Tim for his significant contribution to the Group during the last 14 years and wish Andrew every success in his new role.
Summary and outlook
The Board is pleased with the Group's performance in the first six months of 2019 in both our UK and international markets.
While UK trading conditions are expected to remain challenging, as a result of the Group's diversified business model and sales momentum, the Board is confident that full year earnings will be delivered in line with its expectations.
John Nichols
Non-Executive Chairman
16 July 2019
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
Notes to Editors:
Nichols plc is an international soft drinks business with sales in over 85 countries, selling products in both the Still and Carbonate categories. The Group is home to the iconic Vimto brand which is popular in the UK and around the world, particularly in the Middle East and Africa. Other brands in its portfolio include Feel Good, Starslush, ICEE, Levi Roots and Sunkist.
CONSOLIDATED INCOME STATEMENT
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| Unaudited | Unaudited | Audited |
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| Half year ended | Half year ended | Full year ended |
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30-Jun-2019 | 30-Jun-2018 | 31-Dec-2018 |
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| £'000 | £'000 | £'000 |
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Revenue | 71,611 | 64,989 | 142,037 |
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Operating Profit | 13,337 | 13,058 | 31,638 |
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Finance income | 120 | 75 | 192 |
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Finance expense | (118) | (60) | (77) |
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Profit Before Taxation | 13,339 | 13,073 | 31,753 |
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Taxation | (2,419) | (2,436) | (6,238) |
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Profit for the financial period | 10,920 | 10,637 | 25,515 |
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Earnings Per Share (basic)
| 29.63p | 28.81p | 69.23p |
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Earnings Per Share (diluted) - all activities | 29.62p | 28.79p | 69.19p |
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Dividends paid per share | 26.80p | 23.40p | 34.70p |
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Unaudited |
| Unaudited |
| Audited |
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| Half year ended 30-Jun-2019 |
| Half year ended 30-Jun-2018 |
| Full year ended 31-Dec-2018 |
|
£'000 |
| £'000 |
| £'000 |
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Profit for the financial period | 10,920 |
| 10,637 |
| 25,515 |
Items that will not be reclassified subsequently to profit or loss
Re-measurement of net defined benefit liability | - |
| - |
| (412) |
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Deferred taxation on pension obligations and employee benefits | - |
| - |
| (44) |
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Other comprehensive income/ (expense) for the period | - |
| - |
| (456) |
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Total comprehensive income for the period | 10,920 |
| 10,637 |
| 25,059 |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Unaudited |
| Unaudited |
| Audited |
| 30-Jun-2019 |
| 30-Jun-2018 |
| 31-Dec-2018 |
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| £'000 |
| £'000 |
| £'000 |
ASSETS |
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Non-current assets |
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Property, plant and equipment | 20,885 |
| 14,391 |
| 14,572 |
Goodwill | 38,585 |
| 33,726 |
| 34,451 |
Intangibles | 8,414 |
| 7,767 |
| 7,748 |
Deferred tax assets | 835 |
| 1,065 |
| 835 |
Total non-current assets | 68,719 |
| 56,949 |
| 57,606 |
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Current assets |
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Inventories | 8,767 |
| 6,212 |
| 7,164 |
Trade and other receivables | 42,440 |
| 34,120 |
| 38,153 |
Cash and cash equivalents | 29,504 |
| 37,148 |
| 38,896 |
Total current assets | 80,711 |
| 77,480 |
| 84,213 |
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Total assets | 149,430 |
| 134,429 |
| 141,819 |
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LIABILITIES |
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Current liabilities |
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Trade and other payables | 26,437 |
| 26,296 |
| 22,339 |
Current tax liabilities | 2,531 |
| 2,479 |
| 2,814 |
Total current liabilities | 28,968 |
| 28,775 |
| 25,153 |
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Non-current liabilities |
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Trade and other payables | 3,093 |
| - |
| - |
Pension obligations | 2,215 |
| 2,521 |
| 2,755 |
Deferred tax liabilities | 2,013 |
| 1,602 |
| 1,801 |
Total non-current liabilities | 7,321 |
| 4,123 |
| 4,556 |
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Total liabilities | 36,289 |
| 32,898 |
| 29,709 |
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Net assets | 113,141 |
| 101,531 |
| 112,110 |
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EQUITY |
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Share capital | 3,697 |
| 3,697 |
| 3,697 |
Share premium reserve | 3,255 |
| 3,255 |
| 3,255 |
Capital redemption reserve | 1,209 |
| 1,209 |
| 1,209 |
Other reserves | 666 |
| 157 |
| 666 |
Retained earnings | 104,314 |
| 93,213 |
| 103,283 |
Total equity | 113,141 |
| 101,531 |
| 112,110 |
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CONSOLIDATED STATEMENT OF CASH FLOWS
| Unaudited
Half year ended 30-Jun-2019 | Unaudited
Half year ended 30-Jun-2018 | Audited
Full year ended 31-Dec-2018 | |||
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| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
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Profit for the financial period |
| 10,920 |
| 10,637 |
| 25,515 |
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Cash flows from operating activities |
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Adjustments for: |
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Depreciation and amortisation | 2,009 |
| 934 |
| 2,179 |
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Loss on sale of property, plant and equipment | 2 |
| 32 |
| 127 |
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Finance income | (120) |
| (75) |
| (192) |
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Finance expense | 118 |
| 60 |
| 77 |
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Tax expense recognised in the income statement | 2,419 |
| 2,436 |
| 6,238 |
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Change in inventories | (1,332) |
| (1,321) |
| (2,274) |
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Change in trade and other receivables | (2,812) |
| 684 |
| (3,347) |
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Change in trade and other payables | 1,008 |
| 3,079 |
| 1,197 |
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Change in pension obligations | (540) |
| (400) |
| (578) |
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| 752 |
| 5,429 |
| 3,427 |
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Cash generated from operating activities |
| 11,672 |
| 16,066 |
| 28,942 |
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Tax paid |
| (2,760) |
| (2,555) |
| (5,679) |
Net cash generated from operating activities |
| 8,912 |
| 13,511 |
| 23,263 |
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Cash flows from investing activities |
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Finance income | 120 |
| 75 |
| 192 |
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Acquisition of property, plant and equipment | (3,288) |
| (2,314) |
| (3,857) |
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Acquisition of trade and assets | - |
| - |
| (143) |
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Acquisition of subsidiary | (4,718) |
| (1,549) |
| (3,814) |
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Net cash used in investing activities |
| (7,886) |
| (3,788) |
| (7,622) |
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Cash flows from financing activities |
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Payment of lease liabilities | (529) |
| - |
| - |
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Dividends paid | (9,889) |
| (8,633) |
| (12,803) |
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Net cash used in financing activities |
| (10,418) |
| (8,633) |
| (12,803) |
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Net (decrease)/ increase in cash and cash equivalents |
| (9,392) |
| 1,090 |
| 2,838 |
Cash and cash equivalents at beginning of period |
| 38,896 |
| 36,058 |
| 36,058 |
Cash and cash equivalents at end of period |
| 29,504 |
| 37,148 |
| 38,896 |
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NOTES
1. Basis of Preparation
The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2018, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) and on the same basis and using the same accounting policies as used in the financial statements for the year ended 31 December 2018, aside from the fact that this is the first set of the Group's financial statements where IFRS 16 has been applied, the impact of which is detailed in section 2 below. The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.
2. New Accounting Standards
IFRS 16, Leases
IFRS 16, Leases has replaced IAS 17, Leases with effect from 1 January 2019. The adoption of IFRS 16 has resulted in the Group recognising right-of-use assets and lease liabilities on the consolidated statement of financial position for all contracts that are, or contain, a lease. The new standard removes the distinction between operating and finance leases, with all leases now being accounted for by recognising a right-of-use asset and a lease liability except for leases of low value assets and leases with a term of 12 months or less ("short term leases").
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease.
The Group has identified non-cancellable operating lease commitments totalling £4.7m as at 1 January 2019, relating to property leases for operational sites and motor vehicles. The Group has applied the modified retrospective transition approach to its leases with effect from 1 January 2019, whereby the asset and liability values recognised are equal to one another, with no adjustment to opening reserves. The impact of adopting IFRS 16 on a modified retrospective basis was therefore to recognise a right-of-use asset and a lease liability of £4.1m at 1 January 2019.
The Group has presented right-of-use assets within property, plant and equipment, with the corresponding liabilities presented within trade and other payables split between current and non-current liabilities on the consolidated statement of financial position.
The Group has classified the principal portion of lease payments within financing activities and the interest portion within operating activities on the consolidated statement of cash flows. Lease payments for short-term leases and low-value assets not included in the measurement of the lease liability are classified as cash flows from operating activities.
The application of IFRS 16 has resulted in an increase in depreciation and finance costs offset by a decrease in rental costs, resulting in no material impact on Profit Before Tax. However, the application of IFRS 16 has increased reported EBITDA by the amount of its current operating lease cost, which for the 6 months ended 30 June 2019 was £0.5m.
3. Dividends
The interim dividend of 12.4 pence (2018: 11.3 pence) will be paid on 30 August 2019 to shareholders registered on 26 July 2019; the ex-dividend date is 25 July 2019.
4. Earnings Per Share
Basic earnings per share are based on the weighted average number of shares in issue in the six months to 30 June 2019 of 36,857,600 (six months to 30 June 2018 of 36,857,624 and 12 months to 31 December 2018 of 36,857,758).
Interim Report
The interim report will be available on the Group's website (www.nicholsplc.co.uk) on or around 17 July 2019.
Cautionary Statement
This Interim Report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Interim Report should not be relied on by any other party or for any other purpose.