Nichols plc Regulatory News (NICL)

15 Mar 2007 07:01

Nichols PLC15 March 2007 Date: Embargoed until 07.00hrs, Thursday 15 March 2007 Contacts: John Nichols, Executive Chairman Brendan Hynes, Group Finance Director Nichols plc Telephone: 01925 222222 Website: www.nicholsplc.co.uk Alistair Mackinnon-Musson Nicola Savage Hudson Sandler Telephone: 020 7796 4133 Email: nichols@hspr.com Photographs available: On request from Hudson Sandler, as above Nichols plc PRELIMINARY RESULTS Nichols plc, the soft drinks group, announces its Preliminary results for theyear to 31 December 2006. The Group is now a highly focused soft drinks and dispensed cold drinksbusiness, 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 cold soft drinks on draught 'dispense' businesses) Highlights: • Pre-tax profits up (pre exceptional items) 15.8% (excluding Balmoral - sold in 2005) • Turnover up 1.6% from continuing operations • EPS (basic) up 47.3% • Recommended full year dividend up 5.9% • Year-end cash balances of £7.5m (2005: debt £6.3m) • Vimto continued to grow its market share in both volume and value terms • Overseas Vimto consumption at all time high - up 6.6% to 306m litres (2005: 287m litres) • Dispense Systems made good progress in underlying profits • Excellent progress made in migrating Dispense Systems to an 'external distributor model' Commenting John Nichols, Chairman, said: "We are pleased with the solid progress made in 2006 and the Group is now astronger, more focussed business with positive cash flows and cash balances, noborrowings and a stable of brands that are continuing to perform well in a toughmarket". "Looking forward, whilst we expect the market to remain competitive, weanticipate that our core brands will continue to show growth in both the UK andoverseas. The Board has great confidence that further, sustainable progresswill be made in the coming year". Chairman's Statement With the Group's re-shaping complete, we ended 2006 in excellent health, with amuch stronger balance sheet, positive cash (following the complete eliminationof debt) and solid trading results. Once again I am pleased to report that 2006 saw further progress made againstour strategic goals, principally with the completion of the disposal of Balmoral(previously our hot beverages business) and subsequently the successfultransformation of our Dispense Systems Operation towards an 'externaldistributor model' (see below). Operationally, our core brand Vimto continued to grow its market share, despitea highly competitive soft drinks market (particularly in the UK) and DispenseSystems made good progress in underlying profits. Nichols plc is now a highly focused soft drinks and dispensed cold drinksbusiness, comprising two operations: Soft Drinks - sales and marketing of theVimto brand throughout the world, where it is now available in over 65 countriesand of the Panda and Sunkist brands in the UK; and Dispense Systems - namely theCabana & Beacon cold soft drinks on draught 'dispense' businesses. All ourefforts and investments are now entirely concentrated on these two specificareas. Results In the year to 31 December 2006, profit on ordinary activities before tax (andexceptional items) was only marginally ahead of last year at £7.4 million (2005:£7.0 million), however, the progress made in underlying profitability isactually much greater than the headline figures suggest, due to the distortingeffects of the Balmoral disposal at the end of the previous financial year.Excluding Balmoral, profits would have been up by 15.8% over 2005 - withturnover from continuing operations up by 1.6% to £52.3 million (2005: £51.5million). As background, Balmoral made non-recurring profits of £0.5 million in FY 2005,inflating the comparative figure for 2005, but made a nil contribution in FY2006. Earnings per share (basic) increased 47.3% to 15.94 pence (2005: 10.82 pence). The exceptional loss of £0.44 million, consists of exceptional gains of £2.03million on the disposal of Balmoral and £0.13 million on the disposal of ourGolborne property, offset by £2.60 million of exceptional charges relating tothe restructuring of our Cabana business and consist mainly of non-cash assetimpairment and lease costs. The disposal of Balmoral for £6.5 million in cash, together with £6.1 million ofproceeds from the disposal of the Golborne property, increased cash inflows(before use of liquid resources and financing) to £13.8 million from £6.0million outflow in 2005. This resulted in the Group recording year-end positivecash balances of £7.5 million (2005: debt £6.3 million). Profit before tax includes costs of £0.18 million for FRS17 charges relating tothe company's final salary scheme, which is closed to new members and £0.1million for FRS20 "Share Based Payments" which has been adopted for the firsttime in 2006. Dividend In line with our progressive dividend policy, our positive cash position and thesolid progress made in 2006, the Board is pleased to recommend an increase of6.5% in the final dividend to 6.50 pence per share (2005: 6.10 pence). Togetherwith the interim dividend, this brings the total dividend for the year to 9.80pence (2005: 9.25 pence), a 5.9% increase on last year. The final dividend will be paid on 18 May 2007 to shareholders registered on 20April 2007, subject to AGM approval. The ex-dividend date is 18 April 2007. Soft Drinks Operation Once again our core Vimto brand successfully grew its market share in 2006, inboth volume and value terms. Despite the highly competitive nature of themarkets in which we operate, we will continue to pursue our strategy ofvigorously marketing the Vimto brand to drive volume growth and maintain margin. In April 2006 we re-launched the Panda brand, which was purchased in January2005, removing artificial colours and flavours and reducing its sugar content.As expected during the pre-launch period, sales of the 'old' Panda product werebelow last year and there was also a decline in Panda carbonate volumes in linewith the downturn in the children's carbonate market generally. Despite thesefactors, we are pleased with the progress made in the first year of there-launched Panda product, particularly Panda still and Panda flavoured water. Overseas, Vimto continued to perform extremely well in its core markets of theMiddle East and Africa, which both showed significant increases in sales at theconsumer level during 2006. In order to balance the quantity of locally heldstocks in our international supply chain, there were slightly fewer bulkshipments made from the UK in 2006, however, we have already returned to a morenormalised pattern for the current year. In 2006 sales in the Soft Drinks Operation increased by 1.5% to £39.9 million(2005: £39.3m) and operating profits by 4.2% to £7.4 million (2005 £7.1m). Dispense Systems Operation With the disposal of Balmoral in January 2006, this division now consists of ourCabana and Beacon businesses and is entirely focused on dispensing cold softdrinks on draught. During the year excellent progress was made in successfully migrating ourDispense Systems Operation towards an 'external distributor model' - meaningthat in 17 of the 19 UK regions covered, provision of the actual dispenseequipment hardware and liability for its subsequent maintenance are now theresponsibility of third party distributors, without any ongoing obligation forthese aspects applying to Nichols. Having effectively 'out-sourced' much of the systems side of the business,five-year supply agreements are now in place with the 17 external distributors,whereby Nichols will supply only the consumable elements in future - namely thesoft drink 'syrups' and 'juices' from which the dispensed drink product is mixedat the point of sale. In 2006 we also successfully attracted six new distributors to Cabana and this,combined with the changes made to the business model, have now firmlyestablished the Group as the third largest operator in the dispense sector inthe UK, with much healthier prospects for 2007. Sales in the Dispense Systems Operation for the year were £12.4 million (2005:£12.2m) and operating profit was £0.3 million (2005: £0.2m). People The pace of change in our core markets is increasing and the support, hard workand commitment of all our employees in the face of such change, is a credit toour Group. I would therefore like to take this opportunity to thank them all onyour behalf for their continuing enthusiasm and dedication. In December 2006 we announced that, after four years with Nichols, Brendan Hyneshad resigned as Group Finance Director, to take up another position outside theGroup. Brendan has been instrumental in the transformation of Nichols plc into amuch stronger, more profitable and focused business. I would therefore like tothank Brendan personally on your behalf for his support and the majorcontribution he has made to the business during the last four years. We wishhim every success in his new role. In line with our continued commitment to the community, during 2006 I am pleasedto report we raised funds to provide a further 2 Vimto Variety Club SunshineCoaches for charitable use by disadvantaged children. This brings the totalnumber of coaches we have provided to 32 since we began supporting thisworthwhile cause in 1998. Outlook We are pleased with the solid progress made in 2006 and the Group is now astronger, more focused business with positive cash flows and cash balances, noborrowings and a stable of brands that are performing well in a tough market. Looking forward, whilst we expect the market to remain competitive, weanticipate our core brands will continue to show growth in both the UK andoverseas. This, combined with our Dispense Systems Operation being much betterpositioned as we move into 2007, provides the Board with great confidence thatfurther, sustainable progress will be made in the coming year. John Nichols Chairman 15 March 2007 Consolidated Profit and Loss Account Year ended 31 December 2006 Restated Restated Before Exceptional Total Before Exceptional After Exceptional items Exceptional items Exceptional items items items 2006 2006 2006 2005 2005 2005 £'000 £'000 £'000 £'000 £'000 £'000TurnoverContinuing operations 52,296 0 52,296 51,521 0 51,521Discontinued operations 0 0 0 11,815 0 11,815 52,296 0 52,296 63,336 0 63,336 Cost of sales 24,764 0 24,764 30,235 0 30,235 Gross profit 27,532 0 27,532 33,101 0 33,101Net operating expenses 20,147 2,610 22,757 25,429 1,002 26,431 Operating profit Continuing operations 7,385 (2,610) 4,775 7,135 (1,002) 6,133 Discontinued operations 0 0 0 537 0 537 7,385 (2,610) 4,775 7,672 (1,002) 6,670 Profit on disposal of subsidiary 0 (2,166) (2,166) 0 0 0undertakings and tangible fixedassets Net interest (receivable)/payable (58) 0 (58) 707 0 707 Profit on ordinary activities 7,443 (444) 6,999 6,965 (1,002) 5,963before taxation Tax on profit on ordinary 2,210 (1,058) 1,152 2,299 (300) 1,999activities Profit for the financial year 5,233 614 5,847 4,666 (702) 3,964 Earnings/per share (basic) - all 15.94p 10.82pactivities Earnings/per share (diluted) - 15.92p 10.79pall activities Earnings per share (basic) - 15.94p 9.79pcontinuing activities Earnings per share (diluted) - 15.92p 9.76pcontinuing activities Dividends paid per share 9.40p 9.25p Balance Sheets At 31 December 2006 Group Parent Restated Restated 2006 2005 2006 2005 £'000 £'000 £'000 £'000Fixed AssetsIntangible assets 9,112 9,504 5,070 5,355Tangible assets 3,179 13,563 750 6,653Investments: shares in group undertakings 0 0 6,331 7,460 12,291 23,067 12,151 19,468Current AssetsStocks 2,169 3,972 1,162 1,157Debtors 12,364 14,592 39,611 34,327Cash at bank and in hand 7,460 0 6,714 0 21,993 18,564 47,487 35,484CreditorsAmounts falling due within one year 8,964 17,532 36,503 35,631 Net current assets/(liabilities) 13,029 1,032 10,984 (147) Total assets less current liabilities 25,320 24,099 23,135 19,321 CreditorsAmounts falling due after one year 0 750 0 750 25,320 23,349 23,135 18,571 Provisions for liabilities 1,184 1,452 233 680 Net assets excluding pension liabilities 24,136 21,897 22,902 17,891 Pension liability 4,553 4,906 4,553 4,906 Net assets including pension liabilities 19,583 16,991 18,349 12,985 Share capital and reservesCalled up share capital 3,697 3,697 3,697 3,697Share premium account 3,255 3,255 3,255 3,255Capital redemption reserve 1,209 1,209 1,209 1,209Merger reserve 0 0 775 775Other reserves (487) (658) (487) (658)Profit and loss account 11,909 9,488 9,900 4,707 Shareholders' funds 19,583 16,991 18,349 12,985 Consolidated Cash Flow Statement Year ended 31 December 2006 2006 2005 £'000 £'000 £'000 £'000 Cash inflow from operating activities 5,841 9,704 Returns on investments and servicing of financeInterest received 156 51Interest paid (72) (626) Net cash inflow/(outflow) from returns on investments andservicing of finance 84 (575) Taxation (1,654) (2,004) Capital expenditure and financial investmentPurchase of tangible fixed assets (837) (1,653)Purchase of intangible fixed assets 0 (44)Proceeds of sales of tangible fixed assets 7,474 141 Net cash inflow/(outflow) from capital expenditureand financial investment 6,637 (1,556) Acquisitions and disposalsDisposal of subsidiary undertakings net of cash costs 6,455 0 Additional consideration in respect of prior acquisition (120) 0 Purchase of subsidiary undertakings 0 (7,608) Net overdrafts acquired with subsidiary 0 (607) Net cash inflow/(outflow) from acquisitions and disposals 6,335 (8,215) Equity dividends paid (3,475) (3,309) Cash inflow/(outflow) before use of liquid resources andfinancing 13,768 (5,955) Management of liquid resourcesDecrease in short term deposits with bank 0 2,750 Financing(Decrease)/increase in borrowings (6,308) 217 Net cash (outflow)/inflow from financing (6,308) 217 Increase/(decrease) in cash in the year 7,460 (2,988) Statement of Total Recognised Gains & Losses Year ended 31 December 2006 Restated 2006 2005 £'000 £'000Profit for the period 5,847 3,964 Actual return less expected return on pension scheme assets 256 1,004Experience gains and losses arising on the scheme liabilities 836 (1,194)Changes in the assumptions underlying the present value of the scheme (1,001) (2,316)liabilitiesMovement on deferred taxation relating to pension liability (27) 752 Total recognised gains and losses for the period 5,911 2,210 Prior year adjustments (40) (1,579) Total recognised gains and losses since last financial statements 5,871 631 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 2006 or 2005, but is derivedfrom those accounts. Statutory accounts for 2005 have been delivered to theRegistrar of Companies and those for 2006 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. Comparative figures have been restated to reflect the adoption of FRS20 'ShareBased Payments'. 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. Earnings per share (basic) is 15.94 pence (2005: 10.82 pence) Dividends The proposed final dividend of 6.50 pence per share (2005: 6.10 pence), ifapproved, will be paid on 18th May 2007 to shareholders registered on 20th April2007. In addition, an interim dividend of 3.30 pence (2005: 3.15 pence) waspaid on 15 September 2006. Annual Report The annual report will be mailed to shareholders on or around 7 April 2007.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 Thursday 17 May 2007at 11.00 a.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