Nichols plc Regulatory News (NICL)

18 Mar 2008 07:00

Nichols PLC18 March 2008 Date: Embargoed until 07.00am, Tuesday 18 March 2008 Contacts: John Nichols, Non-Executive Chairman Brendan Hynes, Chief Executive Nichols plc Telephone: 01925 222222 Website: www.nicholsplc.co.uk Alistair Mackinnon-Musson Nicola Savage Richard Evans Hudson Sandler Brewin Dolphin Ltd (nominated adviser) Telephone: 020 7796 4133 Telephone: 0845 270 8600 Email: nichols@hspr.com Photographs available: On request from Hudson Sandler, as above Nichols plc PRELIMINARY RESULTS "2008 is Vimto's Centenary Year" Nichols plc, the soft drinks group, announces its preliminary results for theyear ended 31 December 2007. The Group is a highly focused soft drinks and dispensed cold drinks business,comprising two operations: 1. Soft Drinks (sales and marketing of the Vimto brand throughout the world, where it is now available in over 65 countries and of the Panda & Sunkist brands in the UK) and 2. Dispense Systems (namely the Cabana, Beacon & Cariel cold soft drinks on draught 'dispense' businesses) Highlights: • Group profit before tax and exceptional items up 13.3% • Group sales up 5.7% • EPS (pre-exceptional items) up 12.5% • Proposed total dividend per share up 6.1% for the year • Core brand - Vimto - again outperformed the UK market and grew its share • Overseas sales up 30% Commenting John Nichols, Chairman, said: "2008 is Vimto's centenary, so I am delighted to report in this very specialyear that in 2007 the group continued to perform strongly and we produced anexcellent set of results. We are also confident of delivering further progressin the coming year". Chairman's Statement In my statement last year I said the group was a stronger, more focusedbusiness, with a stable of well performing brands and that we expected furtherprogress to be made. 2008 is Vimto's centenary, so I am delighted to report in this very special yearthat in 2007 the group continued to perform strongly and we produced anexcellent set of results. This news is particularly pleasing when taken againstthe backdrop of extreme wet weather conditions that prevailed throughout lastsummer. In our Soft Drinks Operation, during 2007 our core brand Vimto again grew itsoverall UK share in what was a particularly competitive market andinternationally, Vimto's overseas business saw further profitable growth. When combined with the successful transformation of our Dispense SystemsOperation, I believe our overall progress is testament to the strength of ourbusinesses. An increasing international presence has also helped our resilience,especially given the difficult UK trading conditions. Results In the year to 31 December 2007, group profit before tax and exceptional itemsincreased by 13.3% to £9.0 million (2006: £7.9 million), on revenues up 5.7% to£55.3 million (2006: £52.3 million). Revenue includes £1.4 million of salesrelating to Cariel Soft Drinks Limited acquired in April 2007. Earnings per share (pre-exceptional items) increased 12.5% to 17.36 pence (2006:15.43 pence). An exceptional charge of £0.98 million is shown in the accounts, which includesthe professional charges associated with the lapsed Offer discussions that endedin September 2007 and the costs of integrating Cariel into our Dispense SystemsOperation. IAS 19 costs, including interest charges, relate to the group's adoption of thenew accounting standard in relation to the final salary pension scheme, nowclosed to new members. As at 31 December 2007 the group had net positive cash of £7.8 million, up from£7.5 million in 2006. Dividend Given the underlying strength of the business and our confidence in the future,the Board is pleased to recommend an increase of 6.1% in the final dividend to6.90 pence per share (2006: 6.50 pence). Together with the Interim dividend,this would bring the total dividend for the year to 10.40 pence (2006: 9.80pence), representing an increase of 6.1% on last year. If approved, the final dividend will be paid on 15 May 2008 to shareholdersregistered on 18 April 2008, the ex-dividend date being 16 April 2008. Operational Review We are very pleased with the excellent progress made in 2007, with our coreVimto brand again outperforming the market - despite trading being difficult ina highly competitive sector, exacerbated by the extremely poor summer weatherlast year. We are also pleased with the continuing improvement in our DispenseSystems Operation, which is now very well positioned as we move into 2008. Soft Drinks Operation The Group's Soft Drinks Operation consists of the sales and marketing of theVimto brand throughout the world, where it is available in over 65 countries,along with sales of the Panda and Sunkist brands in the UK. 2007 revenues in the Soft Drinks Operation increased by 4.5% to £41.7 million(2006: £39.9 million) and operating profits increased by 7.1% to £8.3 million(2006: £7.7 million). The strong increase was mainly as a result of overseasgrowth, particularly in our core Middle East and African markets. In the UK, the poor summer weather followed by abnormally deep, market widepromotional activity, presented difficult and challenging conditions for thesector as a whole. Despite this, we continued to win market share, particularlyin the 'carbonate' and 'ready to drink' categories, although inevitably at lowermargins in order to remain competitive. We view as exceptional the promotional activity experienced in the UK during2007, therefore our core strategy of driving volume growth whilst maintainingmargin, remains in place. As reported previously, we re-launched and re-positioned Panda, our children'sdrinks brand in 2006 and it continues to grow its share of the 'still' and 'water' categories. Panda carbonates suffered, however, as a result of thegeneral trend towards non-fizzy drinks, particularly in the children's category. Overseas, our expansion into new territories remains a key area of opportunityand growth and we made good progress in 2007 on a number of fronts. Within theSoft Drinks Operation, international revenues for 2007 reached a record £8.9million (2006: £6.8 million) showing very healthy year on year growth of 30%. Working with our local partners, we were able to create and execute sustainablebrand awareness and increased visibility, which continues to build the Vimtobrand presence abroad. This was reflected in strong volume growth of 12% during2007, with annualised consumption of the Vimto brand reaching a record 342million litres during the year (2006: 306 million litres). In the Middle East, a 'viral' marketing campaign via "YouTube", as well as moretraditional in-store displays and presentations, helped us reach our targetconsumers. The results achieved delivered another record year for sales of VimtoCordial in this important territory for us. We also continue to optimise sales of the Vimto brand in other areas around theworld, through the use of differing products and formats which best meet thedemands of our local consumers. In Africa, for instance, we accelerated theexpansion of locally manufactured carbonated Vimto in PET (plastic) bottles,with a major launch in Senegal at the end of 2007. Dispense Systems Operation This division consists of our Cabana, Beacon and Cariel businesses and isentirely focused on dispensing cold soft drinks on draught. In 2007 we began to see the benefits of having transformed the Operation into an'external distributor model' - designed to reduce operating costs whilstincreasing brand share and penetration. This change means the costs ofproviding both the original dispense equipment and its subsequent ongoingmaintenance are now the responsibility of third party distributors. It is pleasing the switch to this new model is bearing fruit and as a result,the Dispense Systems Operation increased revenues by 9.7% to £13.6 million(2006: £12.4 million) and produced operating profits up 75% to £0.7 million(2006 : £0.4 million). In April 2007, to strengthen Cabana's presence in Scotland, we acquired CarielSoft Drinks and we are now in the process of fully integrating it into ourScottish operation. Once this has been completed, we will have in place anational distribution network and the scale to continue to grow market share inthe dispense market. People I would like thank our Board, management and employees for the hard work andcommitment shown in the year, particularly during the uncertainty created by theOffer Period discussions. Our progress stands testament to their combinedefforts, for which I am most grateful. In November 2007, we announced the Board had accepted my request to move frombeing Executive Chairman to become Non-Executive Chairman. At the same time Iwas delighted to announce the appointment of Brendan Hynes, formerly GroupFinance Director, to Group Chief Executive. The new structure is working welland we are in the process of recruiting a new Finance Director to complete theexecutive team. In line with our commitment to the wider community, during 2007 we raised fundsfor our chosen charity, the Derian House Hospice, an outstanding organisationthat exists to provide care and support to life threatened children and theirfamilies. Outlook These are a strong set of results, especially given the degree ofweather-related difficulty generally experienced by the soft drinks sectorduring 2007. I am also pleased to report we have a strong, focused business that isgenerating good returns and positive cash. Our core brand Vimto is well positioned both in the UK & internationally and itcontinues to outperform the market. Our Dispense Systems Operation, which had avery good year in 2007, is also performing strongly. Despite the uncertainty around the economic and consumer environment for 2008,we will maintain our successful strategy of focusing on growing UK market sharewhile continuing to develop our business overseas. We are confident these measures will deliver further progress in the comingyear. John Nichols Non-Executive Chairman 17 March 2008 Consolidated income statement Year ended 31 December 2007 Before Exceptional Total Before Exceptional Total exceptional items exceptional items items items 2007 2007 2007 2006 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 55,276 0 55,276 52,296 0 52,296 Cost of sales (27,321) 0 (27,321) (24,764) 0 (24,764) Gross profit 27,955 0 27,955 27,532 0 27,532 Distribution expenses (3,795) 0 (3,795) (3,721) 0 (3,721) Administrative expenses (15,418) (978) (16,396) (15,914) (2,482) (18,396) Operating profit 8,742 (978) 7,764 7,897 (2,482) 5,415 Finance income 291 0 291 156 0 156 Finance expense (7) 0 (7) (98) 0 (98) Profit before taxation 9,026 (978) 8,048 7,955 (2,482) 5,473 Taxation (2,672) 293 (2,379) (2,296) 1,058 (1,238) Profit from continuing 6,354 (685) 5,669 5,659 (1,424) 4,235operations Profit on disposal of 0 0 0 0 2,038 2,038discontinued operations Profit for the financial year 6,354 (685) 5,669 5,659 614 6,273 Earnings per share (basic) - 15.49p 17.10pall activities Earnings per share (diluted) - 15.47p 17.08pall activities Earnings per share (basic) - 15.49p 11.54pcontinuing operations Earnings per share (diluted) - 15.47p 11.53pcontinuing operations Dividends paid per share 10.00p 9.40p Consolidated and parent company balance sheetsYear ended 31 December 2007 Group Parent 2007 2006 2007 2006ASSETS £'000 £'000 £'000 £'000 Non-current assetsProperty, plant and equipment 2,448 3,179 638 750Goodwill 10,910 9,624 5,480 5,480Investments 0 0 7,696 6,331Deferred tax assets 1,197 2,201 1,187 2,142 Total non-current assets 14,555 15,004 15,001 14,703 Current assetsInventories 2,509 2,169 1,546 1,162Trade and other receivables 13,177 12,364 11,199 11,361Cash and cash equivalents 7,814 7,460 6,777 6,714 Total current assets 23,500 21,993 19,522 19,237 Total assets 38,055 36,997 34,523 33,940 LIABILITIES Current liabilities Trade and other payables 8,828 8,366 7,941 7,553Current tax liabilities 1,058 598 842 700Provisions 681 1,211 117 424 Total current liabilities 10,567 10,175 8,900 8,677 Non-current liabilitiesPension obligations 3,635 6,504 3,635 6,504Deferred tax liabilities 356 309 192 86 Total non-current liabilities 3,991 6,813 3,827 6,590 Total liabilities 14,558 16,988 12,727 15,267 Net assets 23,497 20,009 21,796 18,673 Equity Share capital 3,697 3,697 3,697 3,697Additional paid in capital 3,255 3,255 3,255 3,255Capital redemption reserve 1,209 1,209 1,209 1,209Other reserves (492) (487) 283 288Retained earnings 15,828 12,335 13,352 10,224 Total equity 23,497 20,009 21,796 18,673 Consolidated statement of cash flowsYear ended 31 December 2007 2007 2006 £'000 £'000 £'000 £'000 Profit for the financial year 5,669 6,273 Cash flows from operating activitiesAdjustments for:Depreciation 782 794Loss/(profit) on sale of property, plant and equipment 27 (98)Sale of discontinued operations 0 (2,038)Equity-settled share based payment transactions 192 100Interest receivable (291) (156)Interest payable 7 98Tax expense recognised in the income statement 2,379 1,238Change in inventories (299) 163Change in trade and other receivables (570) (194)Change in trade and other payables 159 (2,326)Change in provisions (530) 2,491Change in pension obligations (347) (504) 1,509 (432) Cash generated from operating activities 7,178 5,841 Tax paid (1,800) (1,654) Net cash generated from operating activities 5,378 4,187 Cash flows from investing activitiesInterest received 291 156Proceeds from sale of property, plant and equipment 455 7,474Acquisition of property, plant and equipment (336) (837)Disposal of discontinued operation, net of cash disposed of 0 6,455Acquisition of subsidiary, net of cash acquired (1,365) (120)Acquisition of subsidiary's net cash overdraft (144) 0 Net cash used in investing activities (1,099) 13,128 Cash flows from financing activities Interest paid (4) (72)Repayment of borrowings 0 (6,308)Repurchase of own shares (224) 0Dividends paid (3,697) (3,475) Net cash used in financing activities (3,925) (9,855) Net increase in cash and cash equivalents 354 7,460 Cash and cash equivalents at 1 January 7,460 0 Cash and cash equivalents at 31 December 7,814 7,460 Statement of recognised income and expense Year ended 31 December 2007 2007 2006 £'000 £'000 Group Defined benefit plan actuarial gain 2,522 91Deferred taxation on pension obligations (933) (27)Income and expense recognised directly in equity 1,589 64 Profit for the financial year 5,669 6,273 Total recognised income and expense for the year 7,258 6,337 Nichols plc NOTES TO THE PRELIMINARY FINANCIAL INFORMATION Basis of Preparation The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2007 or 2006, but is derivedfrom those accounts. Statutory accounts for 2006 have been delivered to theRegistrar of Companies and those for 2007 will be delivered following thecompany's Annual General meeting. The Auditors have reported on these accounts;their reports were unqualified and did not contain statements under s.237 (2) or(3) of the Companies Act 1985. Historically, Nichols plc has prepared its consolidated financial statements inaccordance with UK Generally Accepted Accounting Principles. As a result of AIMrule changes, Nichols plc has prepared consolidated financial statements inaccordance with International Financial Reporting Standards (IFRSs) for the yearended 31 December 2007. The comparative information has been restated inaccordance with IFRS. The effective date of transition to IFRS was 1 January2006. Earnings per Share The calculation of basic earnings per share is based on earnings attributable toordinary shareholders divided by the weighted average number of shares in issueduring the year. Shares held in the Employee Share Ownership Trust and EmployeeBenefit Trust are treated as cancelled for the purposes of this calculation. The calculation of diluted earnings per share is based on the basic earnings pershare adjusted to allow for the assumed conversion of all dilutive options. Basic earnings per share is 15.49 pence (2006: 17.10 pence) Basic earnings per share (pre exceptional items) is 17.36 pence (2006: 15.43pence) Dividends The proposed final dividend of 6.90 pence per share (2006: 6.50 pence), ifapproved, will be paid on 15 May 2008 to shareholders registered on 18 April2008. The ex dividend date is 16 April 2008. In addition, an interim dividendof 3.50 pence was paid on 7 September 2007. Annual Report The annual report will be mailed to shareholders on or around 11 April 2008.Copies will be available after that date from: The Secretary, Nichols plc,Laurel House, Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH. Annual General Meeting The Annual General Meeting will be held at the Registered Office, Laurel House,Woodlands Park, Ashton Road, Newton-le-Willows, WA12 0HH on 14 May 2008 at 11.00a.m. Copies of the announcement can be found on the Investors Relations section ofthe company's website: www.nicholsplc.co.uk - ENDS - This information is provided by RNS The company news service from the London Stock Exchange